The China Paradox: Arms race with US intensifies but China depends on West for trade

Way back in 1979 the world was beguiled by the disaster movie ‘The China Syndrome.’ A nuclear reactor goes suddenly into meltdown, destroying its casing, the core threatening to melt through the earth “all the way to China,” By the way, this nearly happened for real in the power plant meltdown at Three Mile Island in Pennsylvania just 12 weeks after the movie’s release.

Now we can’t keep China out of the international news headlines, with doomy forecasts about a meltdown in international relations – confrontation is on the way, maybe even conflict. Kevin Rudd, former Australian prime minister and China expert, says he thinks a new Cold War with China is becoming “quite likely.” China bids to have the world’s largest economy – and anytime between 2028 and 2032 is likely to have overtaken the United States.

Meanwhile Beijing and Washington are locked in a phenomenal arms race – headlined in this week’s revelation of a successful test in August of a Chinese earth-orbiting hypersonic missile. The Americans said they didn’t expect such an advance in technology – and the signs of panic in the Pentagon are unmistakable. Last year, Australia’s Strategic Update stated bluntly: “high intensity military conflict in the Indo-Pacific is less remote than in the past.” It was optimistic, said the review, to assume there would be a ten year warning time for a major conflict.

Today China comes into the international news in trade, technology, Taiwan, Covid-19, climate change, space and arms race – especially the arms race in space. Perhaps the western strategy, security, politics and news mindset is suffering from its own variant of the China Syndrome.

But it would be more useful to talk of the China Paradox . China reacted to the news of the new nuclear pact between Australia, the US and UK as the west trying to provoke a new Cold War. At the same time Xi Jinping told the Communist Party hierarchy that he intended “to resolve the Taiwan issue” within five years – and by force if necessary. More covert missile sites have been revealed by US satellite surveillance, and the Chinese forces have overflown Taiwan and swarmed through the South and East China Seas.

A new Asian version of the Cold War between the Soviet Union and its Warsaw pact allies and the US and its Nato allies, is extremely unlikely – as Kevin Rudd has admitted on occasion. The two super economies of America and China are still intertwined, doing an enormous amount of trade – despite the sanctions and the ‘decoupling’ of supply chain involvement in matters like medical equipment. Both giants are dependent on much the same sources for semi-conductors and new microchip technologies, a surprising amount based in Taiwan. The Covid-19 story shows that they need to cooperate, despite the recriminations and suspicion about the sources of the pathogen and initial treatments and security measures.

Climate change is another area in which they are condemned to cooperate in the long term – for mutual as well as global survival. In the short-term , however, they seem to be using the run–up to the COP-26 summit as another field for diplomatic standoffs and point scoring.

Most worrying is the arms race. Both sides are bent on showing they top dog in military prowess and technology. There is little difference from the mentality that drove the great naval arms race leading to the Great War of 1914-1918, and the decades of nuclear weapons competition from the Second World War to this day. The risk is that accident or a vagary in human behaviour could lead quite quickly to catastrophe. This is the Strangelove phenomenon – from the wonderful movie and parable in which a crazed scientist and loony general think they can drop nukes on the Commies, and triumph. Every nuclear command post in the world should have portraits of Peter Sellers and George C Scott who played the two crazed megalomaniacs so brilliantly.

The story of the new Chinese hypersonic missile, revealed by the Financial Times last week, has a touch of the Strangeloves about it. The FT revealed that US intelligence had detected a hyper-sonic missile launched into a low earth orbit from a Chinese Long March rocket back in August. The missile, travelling at five times the speed of sound, is almost impossible to detect – the best chance is to catch the place of launch – and this is best done by satellite from space. It can carry a nuclear warhead.

Another surprise was that it took a southern orbit across Antarctica. Most US and allied Anti Ballistic Missile (ABM) systems are predicated on attacks from Asia taking the northern trajectory over the Arctic. They don’t have the systems or resources allocated, apparently, to handle the southern trajectory as well.

Beijing has replied to the FT report by saying that this was merely a test of “reusable rocket” systems. But why the secrecy and why the fuss? The language is in line with other blunt statements from Xi hierarchy. Earlier this summer, China refused to attend the nuclear arms reduction talks New START with Russia and America in Vienna. Beijing has just announced that Xi won’t attend the COP-26 summit in Glasgow, nor are Putin and Modi, but Biden will go. It is not clear that President XI is turning up for the critical G-20 summit next week.

Xi has indicated he just doesn’t want to speak publicly to the Americans or much of the European West either. Hence the further sabre rattling over Taiwan. To what end? Does he really intend to invade and occupy the island, a difficult terrain defended by some of the most expert forces in guerrilla warfare?

Furthermore does he really want to destroy China’s most important source for semi-conductors?

This is the heart of the China Paradox. China is primarily a mercantile power. It needs to trade to survive – hence the push to sign up more allies and clients through the Belt and Road project. Despite waging economic guerrilla war on Canberra, China needs the millions of tons of ore and coal Australia can offer.

And it needs coal. The economy is showing signs of strain and dysfunction, with strikes and supply chain shortages. Growth had dropped to a mere 4.3 per cent last quarter. The Paradox is illustrated beautifully by COP-26. China is a world leader in clean energy technologies, yet in its current plight needs to consume increasing amounts of fossil fuels – coal especially. It dare not, and cannot, discuss setting zero carbon timetables and targets without becoming a laughing stock.

Kevin Rudd earlier this year described the balance of China’s relations with the world, and the US and Australia in particular, as between competition, cooperation and confrontation – which could just possibly lead to conflict.

The Paradox means that it will continue to shift to between the three elements. The talk may be of confrontation now. But climate, medical science, and commerce suggest China cannot go it alone. Beijing knows it has to compete and cooperate – or face catastrophic failure.