A military in rapid decline

The US military is tried and found wanting by the Heritage Foundation:

Since the inaugural 2015 “Index of U.S. Military Strength,” subsequent editions have described an unsettling trend, and the 2018 “Index” leaves no room for interpretation—America’s military has undoubtedly grown weaker. A quick look at some of the findings of the 2018 “Index” readily demonstrate this fact:

  • The U.S. Air Force is currently short nearly 1,000 fighter pilots, and of the service’s 32 combat-coded fighter squadrons, only four are actually ready for combat.
  • Of the U.S. Army’s 31 Brigade Combat Teams (BCTs), the building blocks of American ground combat power, only three are considered ready to “fight tonight.”
  • In 2017, the Marine Corps’ overall strength rating was downgraded to “Weak,” given declining capacity and readiness issues. This downgrade means half of the service branches (Army and Marines) are both rated “weak.”

From the full executive summary of the study:

Overall, the 2018 Index concludes that the current U.S. military force is likely capable of meeting the demands of a single major regional conflict while also attending to various presence and engagement activities but that it would be very hard-pressed to do more and certainly would be ill-equipped to handle two nearly simultaneous major regional contingencies. The limits imposed on defense spending and the programmatic volatility created by continuing resolutions, passed in lieu of formal budgets approved on schedule, have kept the military services small, aging, and under significant pressure. Essential maintenance continues to be deferred; the availability of fewer units for operational deployments increases the frequency and length of deployments; and old equipment continues to be extended while programmed replacements are either delayed or beset by developmental difficulties. […]

As currently postured, the U.S. military is only marginally able to meet the demands of defending America’s vital national interests.

That’s not very reassuring.

Why China’s prosperity may be a mirage

Let me disabuse you

The American Enterprise Institute’s Derek Scissors, author of the China Global Investment Tracker, uses estimates of the country’s private (i.e. household) wealth to throw cold water on the idea of China as an economic superpower:

There are data, grounded in real-world calculations, that show China’s economic importance falling — not rising slowly, nor staying stable, but falling. The most important indicator is net private wealth, which is the single best measure of a country’s economic size and of the pool of resources available to its public sector for military or social spending.

In work dating back to 2000 and carried out with no geo-economic agenda, Credit Suisse has estimated private wealth. The new estimates, through the middle of 2016, show American private wealth at $84.8 trillion and Chinese private wealth at $23.4 trillion. Moreover, the gap is widening. With $60 trillion less in private wealth than the United States, China’s global economic leadership is a fable.

Private wealth is a more accurate measure of national prosperity than GDP, which measures activity only (including totally wasteful activity). Credit Suisse’s estimates for each country are probably off by at least a trillion dollars, but the broad strokes are clear. Counting public-sector assets (where China’s giant state-owned enterprises give it an advantage), Scissors reckons US net wealth to be $74.3 trillion vs. $27.4 trillion for China, a gap of nearly $47 trillion.

China’s global economic “leadership” may actually have peaked in 2009-2013.

Popular perception begins to go wrong at the beginning of this decade. America’s global wealth share hit a low of 26.9 percent at the end of 2009. It has since outpaced the increase in China’s global share. The key event was when growth in the PRC’s share stalled at the end of 2013. For at least a decade prior to 2010, China outran the United States. For the past six years, the United States has matched China in wealth growth, and for the past three years, the United States has outpaced it.

My observation is that the few years from 2008 (the start of the global financial crisis) was the era of maximum triumphalism/panic about China’s rise, a narrative that has since been replaced by concerns about China’s mounting economic problems. This is a case where the conventional wisdom may just be aligned with objective reality.

From Yiwu to London

China’s rail empire expands:

China has launched a direct rail freight service to London, as part of its drive to develop trade and investment ties with Europe.

China Railway already runs services between China and other European cities, including Madrid and Hamburg.

The train will take about two weeks to cover the 12,000 mile journey and is carrying a cargo of clothes, bags and other household items.

It has the advantage of being cheaper than air freight and faster than sea.

The proliferation of routes linking China and Europe is part of a strategy launched in 2013 aimed at boosting infrastructure links with Europe along the former Silk Road trading routes.

The old Silk Road didn’t go all the way to London

Incidentally, the route starts in the city of Yiwu, Zhejiang province, which I have not visited but which boasts the world’s largest wholesale market for cheap crap (Chinese media claims that more than 60% of the world’s Christmas decorations are made in Yiwu):

Where Christmas is made

This is another big achievement for China’s Eurasian infrastructure and trade strategy, annoyingly called “One Belt, One Road.”

Is China close to overtaking the US?

According to Anatoly Karlin, it’s getting there:

But as of this year, China is hurtling past yet another set of inflection points – the hi-tech component of its economy, roughly comparable to any of the major European Powers a mere decade ago, is now about to converge and then hurtle past that of the US by the end of the 2010s (even if in per capita terms it remains considerably behind, like South Korea 20 years ago).

This process can be proxied by three indicators: Number of scientific articles published, operational stock of industrial robots, and number of supercomputers.

It’s likely only a matter of time before China surpasses the US/Europe as a high-tech superpower. I don’t know when this will happen, as China still lags behind considerably:

China urgently needs to upgrade its industries by overcoming insufficient innovation to increase the contribution of technology to economic growth, Chinese business and government leaders concluded Sunday at a session on China’s New Business Context at the Summer Davos in North China’s Tianjin.

But it’s the trajectory that should interest us. In just a few decades, as Karlin points out, China became the world’s largest producer of coal and steel, then the world’s leading manufacturer, and is now rapidly closing the gap with the US in key measures of scientific and technological advancement. That’s a lot of progress in the space of a generation. We’re probably about to see a lot more.