Who is funding China's military rise? We are.

Posted by mmcmullan on 03/13/2014

The Washington Post editorial board has noticed another year of accelerated defense spending in China.

In an editorial this morning, they asked:

The puzzle is not whether China can afford such a budget — clearly it can — but what does it need it for? What are China’s intentions and capabilities?

Their conclusion:  

China’s defense boost comes at a time when the United States and its allies are struggling with shrinking military spending. The United States has declared a broad pivot toward Asia, and it seems a wise priority, given China’s behavior and its resources. Even with breakneck increases, China’s defense spending, at official levels, is still just 1.5 percent of its gross domestic product, far lower than that of the United States. China can probably afford to fulfill its ambitions. That is no puzzle and will be a challenge to the United States and its allies for years to come. [Emphasis added.]

Yes. the Post is right, China can afford to fulfill its military ambitions, and their budget is opaque and ominous. But the editors are asking the wrong question. Here's what they should be pondering:

Q: How can China afford such a budget?

A: China has accumulated a massive trade surplus with the U.S., and they're using it on a military spending spree.

Q: Why does China enjoy such a huge bilateral trade surplus with the U.S.-- the largest in World history?

A: Because Washington laid the groundwork for it.

We said the same thing briefly when we read a recent New York Times editorial on this very subject. America ran a $318 billion goods trade deficit with China in 2013.  That lost income has essentially traveled overseas to pump up China's economy. In 2012, that trade deficit was $315 billion. In 2011, it was $295 billion. And it essentially follows the same trend all the way back to 2000, when Congress and the Clinton administration tag-teamed to grant the Chinese government normalized trade relations, which essentially opened the door to a free-for-all of unregulated trade.

China's entry into the World Trade Organization gave Beijing steady access to America's enormous consumer market.  The ensuing profits have ensured that Beijing's military spending  has grown by about 10% annually ever since.

Ironically, the Washington Post appears oblivious to their own culpability in China's rise.  The Post has served as a cheerleader for unfettered trade with China.  And they've maintained a casually dismissive attitude toward any concerns about Beijing's currency manipulation, dumping, and massive subsidies.  But those predatory trade tactics have served (quite successfully) to fill their bank account.  So, it should be no surprise now, when Beijing is spending the money.

Bottom line: If everyone’s so concerned about China’s military rise, then we should consider what’s funding it-- the favorable terms we granted Beijing at the trading table.

Read the Washington Post editorial right here.

Image via Flickr user gadgetdan, following Creative Commons guidelines.

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