The role of the Economy in national confrontations

Lets say China gets involved in a large confrontation with US. No land operations, but potential for air and sea battles.

Even without a sea blockade (which in itself is unrealistic, as there would surely be be a blockade) the following seems likely: All trade with US stops. All or most trade with a good deal of NATO countries stop, as well as certain Asian countries that US has influence over.

Now, of course, its a two way street. Ceasing such economic cooperation would do great damage to the other side as well. But let's leave out that wider context for now and just concentrate on China's economy.

What happens if all those western firms in China stop working? What happens if western world customers are told not to cooperate with Chinese firms and stop buying their products? What happens if Chinese firms in the West are suddenly kicked out of those markets?

Unrealistic scenario A) West and China stop cooperating, but there is little to no actual blockade and attacking the chinese interest overseas such as in S. America, Africa, Asia etc. How realistic is that chinese economy could find sufficient demand in those markets all of a sudden? And if so, to which degree could it switch its economy to work in those markets? How big of a market substitute would those be?

More realistic scenario B) In addition to the above, the US does its best to prevent any sort of trading and economy going on to/from China, with anyone. That means, in addition to political pressure over all those overseas markets, there'd be significat loss of trade through sea routes. Suddenly most trade would have to go over Russia, Pakistan, etc, which themselves could also be embargoed (Pakistan for sure, probably not Russia)

What happens to China's economy when it loses so many markets and private capital overnight? I'm really not interested in black/white explanations or doomsday prophecies. Are there some actual data, historical figures that could be used for comparison? If China suddenly had to rely on domestic consumption plus whatever markets they can efficiently reach overland - Russia, Kazahstan, Pakistan, Iran and a few more adjacent countries.

How long could political leadership survive and keep up the fight? Military itself could be supplied quite well, I'm sure, but even that, over a long term of several years might be having trouble when the economic base has suddenly weakened.

"Bright" side is that the raw materials shortage worries in such a situation seem to me really a non issue. The economy which uses biggest part of those raw materials would shrink so much that there'd be more than enough production in China itself or perhaps with a little help of Russia/Kazahstan/Iran that there'd really be no such shortages. Bigger issue is how to maintain a large economy that can, in the long term, maintain a large and powerful army that keeps fighting a prolongued war of attrition and not losing. (which doesn't mean it'd be winning either)

Re: economy's role in long wars

In a long war, three thing will determine the outcome:

1. Access to raw material to support the war economy. - you assume china will do okay, I disagree, but I will accept your view on this for sake of argument.

2. Sufficient production capacity in the war economy. - you assume china has it. I think while china may have an over abundance of many essentially productive capacity, it would find a shortage in some essential high tech manufacturing capacities relative to the US. But I will also take you side on this issue for sake of argument.

3. Existence of R&D depth, experience and skill in the economy that can be converted in wartime to keeping pace with military technological advancements in military and related technologies on the enemy side. - you didn't address this. I think here china will fall far short of the US.

Once a relatively thorough embargo by the west comes into force, the reality would be the vast majority of the world's most skilled, experiences, sophisticated technological R&D resources convertable to military use will be in the US, Europe and Japan, and will be on the American side. Even Russia's resources and abilities in this area will be very thin compare to what would be available to the US. If a war was to last a number of years, say 5, it would entail 5 year of technological, commercial and diplomatic isolation while the US side applies it much greater R&D depth, experience and resources to bear to race ahead of China. china will simply be overwhelmed by faster rate of progress of elite military technological development on the US side. The longer the war, the more pronounced would be this advantage on American side can build up.

Eventhough china appears to have endurance, and I think Mao's theory of "protracted war" encourages people to think long war is what Chinese is good at, I think the reality today is China's chance in a war against the US, such as they are, are better in a short sharp war than in a long drawn out war. If China can't pervail in a short, sharp war, China will be ground down and defeated technologically. So despite the fact China's overall war fighting ability today might appear to be substantial, China in fact faces the same dilemma as Japan on the eve of WWII.

Re: economy's role in long wars

Looks more like China's Economic Influence in Asian Countries by the charm "offensives" of the President and Prime-Minister of China during their recent involvement and participation in ASEAN and APEC Conferences, and visits to some ASEAN countries. Obama's "No Show" at these conferences were detrimental to his declared involvement and pivot to Asia. We may see a change of China's strategy, instead of military conflicts; more of the use of economic power to influence others. As mentioned by the commenters, any sea and air battle would be detrimental to China's interest at the present time (things could change 10-20 years time). If there is any conflict, it would be between China and Japan over their claimed islands - that too may likely "cool" down with continued rhetorics. The Chinese are experienced in the use of varying strategies - Sun Tzu, Deng Tsao Ping et al.



QUOTE=chuck731;250800]In a long war, three thing will determine the outcome:

1. Access to raw material to support the war economy. - you assume china will do okay, I disagree, but I will accept your view on this for sake of argument.

2. Sufficient production capacity in the war economy. - you assume china has it. I think while china may have an over abundance of many essentially productive capacity, it would find a shortage in some essential high tech manufacturing capacities relative to the US. But I will also take you side on this issue for sake of argument.

3. Existence of R&D depth, experience and skill in the economy that can be converted in wartime to keeping pace with military technological advancements in military and related technologies on the enemy side. - you didn't address this. I think here china will fall far short of the US.

Once a relatively thorough embargo by the west comes into force, the reality would be the vast majority of the world's most skilled, experiences, sophisticated technological R&D resources convertable to military use will be in the US, Europe and Japan, and will be on the American side. Even Russia's resources and abilities in this area will be very thin compare to what would be available to the US. If a war was to last a number of years, say 5, it would entail 5 year of technological, commercial and diplomatic isolation while the US side applies it much greater R&D depth, experience and resources to bear to race ahead of China. china will simply be overwhelmed by faster rate of progress of elite military technological development on the US side. The longer the war, the more pronounced would be this advantage on American side can build up.

Eventhough china appears to have endurance, and I think Mao's theory of "protracted war" encourages people to think long war is what Chinese is good at, I think the reality today is China's chance in a war against the US, such as they are, are better in a short sharp war than in a long drawn out war. If China can't pervail in a short, sharp war, China will be ground down and defeated technologically. So despite the fact China's overall war fighting ability today might appear to be substantial, China in fact faces the same dilemma as Japan on the eve of WWII.[/QUOTE]

Re: economy's role in long wars

Sorry Totoro, but I think you have the wrong scenario.

China is still a land power not maritime, which means that Chinese Maritime strategy is still about building and extending a "cordon sanitare" away from its coastal regions. Unless attacked, it will not be sucked into a confrontation where it is at the greatest disadvantage against its opposition. This is not going to change any time soon.

If you want more realistic scenario, then you need to look on land.
We had a possible taste in the summer, when for a little while, we had a situation with Syria which had the potential to drag the PRC into a regional conflict in the Shia crescent.

Re: economy's role in long wars

I was talking about a war where US, EU, Japan, Australia markets are suddenly off limits to China. That's really the basis of the whole topic. How much would that influence China's economy? How much would it influence within a month? How much within a year? How much within 2 or 5 years?

Furthermore, if one adds the portion of the trade going to/from via shipping as also not available - how would that effect the economy?

And how much would each of those influence Chinese military and military production?

I am not looking for "it'd be a distaster", "it'd be serious, but not very serious" or such answers. I am looking for ballpark percentages of gdp, billions of yuans, percentages of inflation, etc. All backed up by at least some sort of source.

I am aware those are all very broad topics but if there is some historical data pertinent to this question, that might shed a bit of light on this, i'd be grateful to receive it.

Re: economy's role in long wars

Well , I don't know about long term consequences , but the minute China stop accepting US dollars you going to feel that really , really bad Whole Western economy would fold like cheap suit in an instance , and effects of long term deindustrialization would kick-in like a mule . And I'm not talking about lack of factories , I'm talking about lack of skilled personal - from engineers to workers .

As for blockade , this would not work without Russia agreeing and I don't think they would because of huge profit they would make . In this scenario , I think even India would help China for a profit .

Basically , at this point of time, there is precious little West could do to hurt China , if they don"t want to be hurt much more themselves .

Re: economy's role in long wars

Totoro said:

I was talking about a war where US, EU, Japan, Australia markets are suddenly off limits to China. That's really the basis of the whole topic. How much would that influence China's economy? How much would it influence within a month? How much within a year? How much within 2 or 5 years?

Furthermore, if one adds the portion of the trade going to/from via shipping as also not available - how would that effect the economy?

And how much would each of those influence Chinese military and military production?

I am not looking for "it'd be a distaster", "it'd be serious, but not very serious" or such answers. I am looking for ballpark percentages of gdp, billions of yuans, percentages of inflation, etc. All backed up by at least some sort of source.

I am aware those are all very broad topics but if there is some historical data pertinent to this question, that might shed a bit of light on this, i'd be grateful to receive it.

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I think you encapsulate your own problem with the scenario very nicely.
The situation you describe would mean the collapse of the global trading system. As I cannot conceive any power making a move that would cause this to happen, then you can only really, realistically arrive at this position as a consequence of this collapse happening by other means. In which case the main terms of your enquiry are almost meaningless as the "consequences" have already happened.

At the most positive, you have a situation more 19th Century, than the 19th Century ever was. More likely however, is that the shock of global economic collapse would be; in it own way, as much a holocaust as any other war involving WMD. In this case, I see all powers mainly concerned with maintaining social order and territorial integrity, with maybe some hoovering up of resources on the periphery, where available and if possible.

The kind of war you have under these conditions are more the banditry and Warlord type.
In short previous collapses of "global" trade have resulted in onset of Dark Ages and I fail to see any significant difference in this scenario. As such, the ability of the state to project any kind of power beyond its borders is minimal or none existent.

The room for smaller more local actors however would be very different and these would be more than capable of generating mischief. Look at Afghanistan, look at Somalia etc. The difference of course is that your warlords here do not have access to DF31 or Minuteman Missiles or indeed be the Captains of Ballistic Missile Submarines.

Re: economy's role in long wars

while globalization makes world wars more costly, i don't think there's enough historical data that one can be sure there won't be another global war or cold war, where there'd be two or more economic systems severed one from the other.

What I am describing certainly is the worst case scenario, both for China and (slightly less so) for Western world.

History teaches us that even in world wars one can push the economy to unimaginable levels for several years, before it breaks. ww2 germany had much, much smaller industrial base and natural resource base than today's china, yet it withstood some serious punishment for years and kept both producing and progressing to a point.

But, in the long term, all that means little. Isolated economy WILL break at one point. Or will restructure itself in such a way that is selfsufficient but at the same time that will mean both greatly slowed down technical advances and production base.

While I don't worry about stuff like steel, aluminium or oil, I researched them and there's plenty of that to go (for a shrunk economy), I have not yet researched possible food or water issues for China in a isolationist scenario.

Once we discuss the worst case scenario for china, then the more realistic scenarios could ensue. Like the one where a good deal of Asia keeps on trading with China. Or perhaps even a scenario where Europe keeps on trading with China. It all depends on the timeframe. The more we look into the future, the broader spectrum of possibilities emerge.

Re: economy's role in long wars

SampanViking said:

I think you encapsulate your own problem with the scenario very nicely.
The situation you describe would mean the collapse of the global trading system. As I cannot conceive any power making a move that would cause this to happen, then you can only really, realistically arrive at this position as a consequence of this collapse happening by other means. In which case the main terms of your enquiry are almost meaningless as the "consequences" have already happened.

At the most positive, you have a situation more 19th Century, than the 19th Century ever was. More likely however, is that the shock of global economic collapse would be; in it own way, as much a holocaust as any other war involving WMD. In this case, I see all powers mainly concerned with maintaining social order and territorial integrity, with maybe some hoovering up of resources on the periphery, where available and if possible.

The kind of war you have under these conditions are more the banditry and Warlord type.
In short previous collapses of "global" trade have resulted in onset of Dark Ages and I fail to see any significant difference in this scenario. As such, the ability of the state to project any kind of power beyond its borders is minimal or none existent.

The room for smaller more local actors however would be very different and these would be more than capable of generating mischief. Look at Afghanistan, look at Somalia etc. The difference of course is that your warlords here do not have access to DF31 or Minuteman Missiles or indeed be the Captains of Ballistic Missile Submarines.

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Your logic is precisely the same as those who argued from 1890 to July 1914 that a general war involving all major European powers would overturn the foundation of world economy, so it absolutely can never happen, or if it happens somehow it will end within a few month as everyone come to their senses and understand just how much the war is damaging their wealth and economy.

Re: economy's role in long wars

Totoro said:

I was talking about a war where US, EU, Japan, Australia markets are suddenly off limits to China. That's really the basis of the whole topic. How much would that influence China's economy? How much would it influence within a month? How much within a year? How much within 2 or 5 years?

Furthermore, if one adds the portion of the trade going to/from via shipping as also not available - how would that effect the economy?

And how much would each of those influence Chinese military and military production?

I am not looking for "it'd be a distaster", "it'd be serious, but not very serious" or such answers. I am looking for ballpark percentages of gdp, billions of yuans, percentages of inflation, etc. All backed up by at least some sort of source.

I am aware those are all very broad topics but if there is some historical data pertinent to this question, that might shed a bit of light on this, i'd be grateful to receive it.

Click to expand...

If you want to assess a scenario realistically, we need to assess the reality of the premises first.

The US can pass a law forbidding trade with China. Why would the EU follow suit? What would cause the EU to ally with the US to sanction China? Flash points over the SCS and Diaoyu are not going to do that: the EU doesn't have treaties with Japan and/or Philippines. Even an invasion of Taiwan is not going to get the EU to speak with one voice.

China might be a net exporter to the USA, but both France and Germany make a lot of cash from the Chinese market. What kind of scenario would cause both those countries to turn against China and follow the lead of the USA?

A Japan that stops exporting to China is a Japan with a dead economy, unless they turned into a war-time economy. Perhaps Japan could be motivated into war against China, but any military activities on the part of Japan is going to pull in both Koreas. If there's one thing the North and the South can agree on, it's their opposition to a militaristic Japan.

Finally, Australia is also a net exporter to China. It also happens to be much closer to China than to the US or the EU. Australia would lose billions if they cut off trade with China, and what would they stand to gain?

The only way your scenario would make sense is if China suddenly decided to declare war on the entire Western world for no apparent reason.