Many looming crisis: Chinese and US debt crisis, Evergrand, Taiwan and India

Many looming crisis: Chinese and US debt crisis, Evergrand, Taiwan and India

While the Taiwanese crisis is still looming and the effects of the Evergrand debt crisis still unclear, the mouthpiece ot the Communist Party of China, the Global Times points to the US debt crisis and tries to blame Western media for double standards as they were not reporting about the effects and the danger the overburdening US debts could cause internationally:

“GT Voice: US looming debt crisis spells real trouble for world economy

By Global Times Published: Oct 13, 2021 08:58 PM

Every few years, America’s debt ceiling showdown takes the world economy over the precipice of disastrous financial crisis and deep recession. As the measures of raising or suspending the debt limit are now a routine to stave off an imminent default, America’s bizarre sovereign default crisis has become a growing threat to the world.

The US House of Representatives on Tuesday approved a legislation to temporarily raise the government’s borrowing limit to $28.9 trillion, which US President Joe Biden is expected to sign into law before October 18, pushing off the deadline for a sovereign default until December, Reuters reported.

Despite the fighting between the two parties, most have little doubt that Republicans and Democrats will come to their senses, albeit leaving it as late as possible. This is because everyone knows that the consequences of defaulting on its debt would be both destructive and disastrous, and could see the US credit hurt, the dollar’s value plunge and global financial markets collapse.

The US debt ceiling crisis that rolls around every few years is both an economic and political battle. The two parties often exchange accusations of fiscal malfeasance, disregard for soaring debt, leaving the country exposed to default risks, which not only creates uncertainties but also increases odds that the US may default.

What’s even worse, however, is the fact that the US national debt is on an unsustainable trajectory, which has essentially become a ticking time bomb for the global economy. First of all, generous fiscal stimulus to bail out businesses and families has driven national debt skyrocket in an out-of-control manner. Secondly, the economy is growing much slower than its debt, dashing the hope for a strong economic rebound in the post-pandemic era. The development is somehow close to what happened in the past when some countries experienced debt crises.

While the US government continues to ignore this ticking time bomb by raising or suspending the debt limit, there are fears that a delayed crisis may come with a higher price, and the US debt crisis may be the biggest threat to the world economy. 

Even if the US averts its debt default by raising the debt ceiling, it should be noted that its growing debt burden has already damaged the world economy by pushing up inflation, still leaving the global markets to risks of financial crisis.

Yet, at a time when the US debt burden is causing real difficulties for the global economy, it is incredulous to see some US politicians and Western media outlets to be more interested in China’s debt problem. 

US Secretary of State Antony Blinken recently urged China to act „responsibly“ when it comes to addressing the potential impact of China Evergrande Group’s financial crisis, Bloomberg reported. There have also been some Western media reports that hyped up Evergrande’s debt default to suggest a debt crisis in China could rattle global markets. These media outlets never mention that actively deflating the real estate bubbles is actually part of China’s economic adjustment in an aim to lay the foundation for its future development.

Diverting global attention from the real threat of US debt crisis underscores Western media outlets‘ double standards on viewing debt issues, which may be the only thing they can do to cover the US inability to solve its looming debt crisis.

Both sides act as if only the other had a debt problem. The aftermath of the Evergrand can also multiply with those of the US debt crisis and maybe even with a looming EU debts crisis or new Euro crisis. Whether a global financial crisis will emerge remains to be seen. In China not only Evergrand has overboarding debts, but many companies, government and state entities, banks and shadow banks and the continous deregulation of the financial markets in China, even till the 18th party convent of the CCP even worsened the situation. Global Review already warned of this potential risk in a comment which was published on the website of China Central Television (CCTV).And if the CCP has everything under control in the Evergrand crisis and has the overview over these intransparaent debt structures as many people fear that Evergrand even might be a snow ball system, also remains to be seen. Whether the CCP can manage this problem in a planned manner or if the Chinese debt and default crisis will create its own dynamic is still unsure. And while some experts think that Evergrand and connected entities are not such an international financial institution like Lehmann and foreign investors were not that much involved, so that there was no danger of a Lehmann effect and of a global financial crisis, others already doubt this because of the intransparancy of the Chinese financial system and the possibility that Evergrand and other entities might be some sort of snowball system-

In any case, China will slowly reduce its share of the US national debt, whereby the whole thing is done in more homeopathic doses from now $ 6.3 billion to $ 1.08 trillion.

China likely to reduce US debt holdings on default risks and uncertain political outlook: expert

By Qi Xijia Published: Nov 18, 2020 04:27 PM

China slashed $6.3 billion worth of US debt in September for the fourth consecutive month in a year, a move that indicates China is systematically reducing its holdings of US bonds as the dollar default risks rise and the outlook of the China-US ties remain uncertain under the incoming Biden administration, experts said.

China decreased its holdings of US treasury bonds by $6.3 billion to $1.06 trillion in September, remaining the world’s second-largest holder of US debt after Japan, data from US Treasury Department showed on Tuesday. 

The cut in September marks the fourth consecutive month for China to trim its holdings of US bonds in the year, after reducing $5.4 billion in August, $1 billion in July and $9.3 billion in June.

The potential risks behind surging debt level in the US could be one reason why China has gradually cut its holdings of US treasury bonds, experts said.

It is necessary for China to diversify risks and appropriately reduce the holdings of US dollar assets to avoid a possible dollar collapse, Dong Dengxin, director of the Finance and Securities Institute at the Wuhan University of Science and Technology, told the Global Times on Wednesday. 

„Loose monetary policy in the US has led to the largest fiscal deficit in its history. The imbalance of fiscal revenue and expenditure may lead to a crash of the dollar,“ Dong said.

Data from the US Treasury Department shows that the US fiscal deficit has reached a record high. 

Affected by previous large-scale fiscal stimulus measures, the US budget deficit has more than tripled in the fiscal year ending September to over 3.1 trillion dollars which amounts to 16 percent of the US GDP ending in September, the largest since 1945, a Treasury Department report showed in October.

The federal debt, which reflected the accumulated deficits and the occasional surplus, is forecasted to reach 100 percent of GDP next year.

Doubts over whether the incoming Biden administration could fix the deterioration in China-US relations caused by the Trump administration is another reason for China to sell the US bonds, experts said.

„In this context, it is necessary for China to increase the holdings of non-US dollar assets and increase the reserve of major strategic materials such as gold and crude oil,“ Dong said.

As of the end of October, China’s foreign exchange reserves were $3.12 trillion, down 0.46 percent, or $14.6 billion, from the previous month, the second consecutive month of decline, according to data released by the State Administration of Foreign Exchange and the People’s Bank of China on November 7.

On the other hand, China’s gold reserves reached 1,948 tons by the end of October, the same as the previous month.

 „China is expected to trim the foreign exchange reserves to $2 trillion in the future and dollar will be the main object. The reduction will be a persistent and steady process,“ he said.

China also has no interest in an sudden collapse of the US dollar or the US financial system as this could have unintended global effects that also could create a backlash for China.

While the Taiwan and Evergrand crisis is still looming, China also threatens India with a new conflict if it won´t accept Chinese proposals for the border conflict:

“UPDATE: India’s unreasonable demands in 13th military talks ‘risk new conflict’

By Liu Xuanzun and Chen Qingqing

Published: Oct 11, 2021 07:18 AM

After China and India failed to reach an agreement during the latest round of corps commander-level talks over the western section of China-India border issues, the Chinese People’s Liberation Army (PLA) Western Theater Command on Monday slammed India for its unreasonable and unrealistic demands, with India also sparking new incidents along the eastern section of the border recently. Chinese experts have warned of the risks of a new conflict, saying that China should not only refuse to give in to India’s arrogant demands on the negotiation table, but also be prepared to defend against another Indian military aggression.

China and India held the 13th round of corps commander-level talks at the Chinese side of the Moldo-Chushul border meeting point on Sunday, during which India insisted on unreasonable and unrealistic demands, adding difficulties to the negotiations, the PLA Western Theater Command said in a statement released on Monday.

Eyeing the overall situation in the China-India relations and the relations between the two countries‘ militaries, China has made tremendous efforts to ease and cool down the border situation and fully demonstrated its sincerity, said Senior Colonel Long Shaohua in the statement.

China’s determination to safeguard sovereignty is unwavering, and China hopes India will not misjudge the situation, cherish the current, hard-earned situation and take actions with sincerity to safeguard the peace and stability at the border by abiding to the relevant agreements and consensus reached by the two sides, Long said.

During the talks, China and India discussed further troop disengagement in the region, but as the Chinese statement suggests, India attempted to push China to make concessions to only India’s favor, which is inappropriate from China’s consideration of safeguarding sovereignty, territorial integrity and security, Qian Feng, director of the research department at the National Strategy Institute at Tsinghua University, told the Global Times on Monday.

While China focuses on the big picture, wanting both sides to meet each other half way, its patience has run out, and it had to shatter India’s arrogant thoughts with the statement, Qian said.

Song Zhongping, a Chinese military expert and TV commentator, told the Global Times on Monday that India has been conspiring to seize territories along the border, and it likely demanded for Chinese territories or unreasonable troop deployment along the Line of Actual Control. It’s a very aggressive move and compared with China’s attempts to reach mutual accommodation, India is totally against the practical needs of both sides to manage difference.

Due to Indian aggressions on the Chinese land, China and India have been engaged in a border confrontation in the western section of the two countries border since May 2020, highlighted by a clash in the Galwan Valley in June 2020, leading to 20 deaths on the Indian side and four on the Chinese side.

After many rounds of military and diplomatic talks over the past year to resolve the issue, some periodical achievements were reached, including the disengagement in locations like the Pangong Tso. A full disengagement is yet to be realized.

The strong-worded Chinese statement on India’s unreasonable and unrealistic demands at the 13th round of corps commander-level talks came shortly after Indian media outlets cited Indian government sources claiming on Friday that the Indian army temporarily detained a few Chinese troops in Zangnan area of southern Xizang (Tibet) for „incursion“ in this area.

In response, a Chinese military source was quoted by Chinese state-owned media as saying that the report was purely fabricated.

Chinese border troops conducted a routine patrol on September 28 in the Dongzhang area on the Chinese side of the China-India border and encountered unreasonable obstruction from the Indian military. The Chinese officers and soldiers took countermeasures resolutely and returned after the patrol mission was completed, the Chinese military source said.

Observers noted that Dongzhang is in the eastern section of the China-India border, and this means India has been making aggressive moves from both the western and eastern sections.

With the support from Western countries like the US and driven by domestic populism, India is increasingly making provocations on China. This is compounded by India’s economic and racial problems, which makes the Modi government to shift internal contradictions to the outside, Song said.

China should continue to negotiate with India to maintain peace and stability, but without yielding an inch of ground, Song said, noting that in the meantime, China also needs to brace for the possibility of another Indian military aggression, as India is risking a new round of conflict.

If India ignores China’s stance displayed in the latest talks, continues or even aggravates its aggressions without changing itself, the possibility of another accident or conflict could arise, Qian said.

While China seems to open a second front with India, warns India to use Taiwan as a bargaining chip for the Sino- Indian border conflict, threatens to support Indian seperatists if India supports Taiwan too openly, other commentators still ask if China will invade Taiwan. While some experts think this will happen soon or within the next 5 years and because China was a peaking power which reached its power peak and would use the window of opportunity before a coming crisis and decline, others commentators doubt this as a contribution in The Bangkok Post:

“Will China actually ever invade Taiwan?

China’s President Xi Jinping promised on Saturday that „The historical task of the complete reunification of the motherland… will definitely be fulfilled.“ That was a threat to Taiwan, but a threat without a deadline. However Chinese state media, in the form of the ever-rabid Global Times, warned that war „could be triggered at any time“.

On Sunday, President Tsai Ing-wen replied that „nobody can force Taiwan to take the path China has laid out for us“. She added that the island country of 23 million people faced a situation „more complex and fluid than at any other point in the past 72 years“. That is, since the Nationalist government of China lost the civil war and retreated to Taiwan in 1949.

And the United States, while not directly promising to defend the island at the expense of a war with China, let it be known that there are US special forces and Marines in Taiwan on training missions. Beijing already knew that, of course (Trump sent them there two years ago), but Washington’s open confirmation of it was a clear warning to China.


So there is a crisis of sorts, although a slow-moving one. As Defence Minister Chiu Kuo-Chen said in Taiwan, Beijing is capable of invading the island even now, but will be fully prepared to do so in three years‘ time.

„By 2025, China will bring the cost and attrition to its lowest. It has the capacity now, but it will not start a war easily, having to take many other things into consideration.“ What did he mean, exactly, and is it true?

In part it’s a recognition that China is rapidly accumulating weapons that will make a seaborne invasion across the Taiwan Strait possible, although it is 180km. wide at its narrowest point.

The key Chinese weapon is long-range rocket artillery that can reach all points in Taiwan with high accuracy (guidance by the BeiDou satnav system), and can be launched in such numbers that Taiwanese anti-missile defences would be overwhelmed.

Such a weapon exists. It’s called the PCL-191, and it’s a glorified version of the „Stalin organ“ and other multiple rocket launchers of Second World War vintage, but with a range of 350km. There are eight or 12 rockets on each mobile launcher, depending on the range and the explosive power required, and they can be reloaded quite fast.

There are already two brigades of these rocket-launchers stationed on the Chinese coast facing Taiwan, and the number is going up all the time. Soon, if not already, they will give Beijing the power to launch saturation strikes on all of Taiwan’s airfields, radar stations, anti-aircraft defences and ports simultaneously.

If all the runways and ports in Taiwan are shattered, then its planes and warships cannot stop Chinese assault troops crossing the Strait in ships (10 hours), and nobody else will be close enough to help even if they want to. Taiwan is at extreme range for fighter aircraft based in Japan, and the US Pacific Fleet is very unlikely to be within reach if the attack is a surprise.

So what „other things“ may still deter China from making such an attack even after it has enough rocket launchers on the coast? Just one is enough: the certainty that even if the United States could not intervene militarily in time to save Taiwan, it would certainly institute a complete naval blockade of China immediately afterwards.

That might be of little consolation to the Taiwanese, but the Chinese economy is utterly dependent on foreign trade, and China’s geography makes it extremely vulnerable to blockade.

Ships from China crossing the Pacific must pass between the „first chain“ of islands (Japan, Taiwan, and the Philippines); shipping to the Indian Ocean, the Middle East and Europe has to go through the Strait of Malacca (Malaysia and Indonesia). In practice, there’s no way out: China’s economy would be strangled within months.

Further escalation by either side would be deterred by the fear of nuclear war, and some sort of deal would have to be made. It could be very humiliating for China, perhaps so humiliating that it would even undermine the control of the Communist Party. So Xi Jinping won’t ever really risk it.

That’s the way people steeped in classic strategic thinking see it, and they’re probably right. Although you don’t get your money back if they’re wrong.

This argument is on the assumption that China will fear a maritime blockade after an invasion of Taiwan as designed by the Offshore Controll concept of the US military strategist TX Hammes. Here an older interview in which TX Hammes explains the strategy of Offshore Controll which should deter China from starting a war with Taiwan and the USA:

Global Review: Have you developed OC alone, who was and is supporting it and was OC a reaction to ASB/JOAC or vice versa or did they develop independently? When was the birth date of both concepts?

TX Hammes: I cannot pinpoint the birthdate of either concept.  ASB first became well known when the Center for Strategy and Budgetary Assessment published “AirSea Battle:  A Point-of-Departure Operational Concept” in May 2010.  Because CSBA was closely associated with Andy Marshall and the Office of Net Assessment it got a lot of attention. It dominated the discussion of a strategy for China and was driving much of the discussion on budgets and weapons procurement.  The Chief of Staff of the Air Force and the Chief of Naval Operations (the senior officers for those services) enthusiastically endorsed the concept and did joint public appearances to talk it up.

At the time, I was working on insurgency with a focus on Afghanistan.  But in the spring of 2011, the Deputy Assistant Secretary for Strategy asked my center if we could develop a proposed strategy for a conflict with China.  A major issue with ASB was affordability.  I drafted notes on a strategy using Eliot Cohen’s model – Assumptions, Ends, Ways, Means, Priority, Sequencing, and Theory of Victory.  DASD Strategy liked the idea. So I wrote a short paper and began briefing it inside the Pentagon during the summer and fall of 2011.  I turned it into the longer Strategic Forum “Offshore Control:  A strategy for an unlikely conflict.”  It took until the spring of 2012 to get it approved and published.

  1. Global Review; Have there been comparable concepts in place in the 90s and the 2000s or were there just scenarios of a confrontation with China over Taiwan as China was not yet such a seapower as today or will be as in the future?

TX Hammes: As far as I know the scenarios during that era focused on Taiwan simply because the US had overwhelming military superiority in the region.

  1. Global Review; Could you give the German audience a description what OC is? And what are the differences to ASB/JOAC?

TX Hammes; Any U.S. military strategy for Asia must achieve six objectives: (1) insure access for U.S. forces and allied commercial interests to the global commons; (2) assure Asian nations that the United States is both willing to and capable of remaining engaged in Asia; (3) deter China from military action to resolve disputes while encouraging its continued economic growth; (4) in the event that deterrence fails, achieve US objectives with minimal risk of nuclear escalation; (5) discourage friends and allies from taking aggressive steps that further destabilize the region; and (6) be visible and credible today, not years in the future.

“Offshore Control is an effective and affordable approach. Offshore Control establishes a set of concentric rings that denies China the use of the sea inside the first island chain, defends the sea and air space of the first island chain and US allies therein, and dominates the air and maritime space outside the island chain.  Offshore Control does not strike into China but takes advantage of geography to block China’s exports and thus severely weaken its economy. No operations will penetrate Chinese airspace.  Prohibiting penetration is intended to reduce the possibility of nuclear escalation and make conflict termination easier.

Denial as an element of the campaign plays to U.S. strengths by employing primarily attack submarines, drones, mines, and a limited number of air assets inside the first island chain.  This area will be declared a maritime exclusion zone with the warning that enemy ships in the zone will be sunk or boarded.  If these ships evade the blockade and trade with China, they will be subject to seizure and prize court when they pass through the 1st Island Chain on their return voyage. While the United States cannot stop all sea traffic in this zone, it can prevent the passage of large cargo ships and large tankers, severely disrupting China’s economy relatively quickly.

The defensive component of Offshore Control will bring the full range of U.S. assets to defend allied soil and encourage allies to contribute to that defense.  It takes advantage of geography to force China to fight at longer ranges while allowing U.S. and allied forces to fight as part of an integrated air-sea defense over their own territories. It maximizes US strengths in blue water sea control, theater air defense, undersea warfare, and aerospace while avoiding China’s inherent advantages on and near the mainland.  In short, it will flip the advantages of anti-access/area denial to the United States and its allies.  Numerous small islands from Japan to Taiwan and on to Luzon provide dispersed land basing options for air and sea defense of the apparent gaps in the first island chain. Since Offshore Control will rely heavily on land-based air defense and short-range sea defense to include mine and counter-mine capability, we can encourage potential partners to invest in these capabilities and exercise together regularly in peacetime.   In keeping with the concept that the strategy must be feasible in peacetime, the United States will not request any nations to allow the use of their bases to attack China.  The strategy will only ask nations to allow the presence of U.S. defensive systems to defend that nation’s air, sea, and land space. The U.S. commitment will include assisting with convoy operations to maintain the flow of essential imports and exports in the face of Chinese interdiction attempts.  In exercises, the United States could demonstrate all the necessary capabilities to defend allies – and do so in conjunction with the host nation forces.

The dominate phase of the campaign would be fought outside the range of most Chinese assets and would use a combination of air, naval, ground, and rented commercial platforms to intercept and divert the super tankers and large container ships essential to China’s economy.  For example, eighty percent of China’s imported oil transits the Straits of Malacca.  If Malacca, Lombok, Sunda and the routes north and south of Australia are controlled, these shipments can be cut off.  Interdicting China’s energy imports will weaken its economy, but exports matter even more.   These rely on large container ships for competitive cost advantage.  The roughly 1000 ships of this size are the easiest to track and divert. China could attempt to reroute this shipping, but the only possibilities must still pass through the 1st Island Chain.  U.S. assets can control all these routes.  Alternate overland routes simply cannot move the 9.74 billion tons of goods China exported by sea in 2012 — the equivalent of roughly 1000 trains per day.   While such a concentric blockade campaign will require a layered effort from the straits to China’s coast, it will mostly be fought at a great distance from China—effectively out of range of most of China’s military power.

Further contributing to Offshore Control’s credibility is the fact the United States can execute the campaign with the military forces and equipment it has today.  Unlike other approaches, it does not rely on highly classified, developmental defense programs for success.  Rather, the United States can exercise the necessary capabilities with its allies now, not a generation on.

This brings us to the ends the strategy seeks. Offshore Control assumes that attacking China’s nuclear weapons or the regime itself is too dangerous to contemplate.  We do not understand the Communist Party’s decision process for the employment of nuclear weapons, but we do know the party will risk all to remain in control.  Thus, rather than seeking a decisive victory against the Chinese, Offshore Control seeks to use economic pressure to bring about a stalemate and cessation of conflict with a return to a modified version of the status quo.  Theoretical strategists may question the lack of a path to decisive victory, but decisive victory falls outside the logic of conflict with a great nuclear power. There, one seeks to avoid the clash or, failing that, to achieve acceptable outcomes short of a nuclear exchange that enable all sides to back away.  In this sense, Offshore Control offers a more realistic and pragmatic roadmap to resolution and peace.

  1. Global Review: Critics of OC say that it would be a long-term effort which would overstretch the financial and military resources of the USA, that the naval blockade could be undermined by train, roads and air lifts. Some even say that in military history a naval blockade never could bring down an enemy alone. And last, but not least: What happens, if China could make a breakthrough trough the naval blockade? Was there a plan B?

TX Hammes: By shifting the fight from close proximity to China out to the first island chain, OC significantly reduced the demands on US armed forces.  Only a small percentage of China’s forces can operate at that range from the mainland, so we only have to fight that percentage.  The closer we fight to China the more of their force we have to fight.

To move as many containers per day over rail as are moved through China’s port would require 1000 trains of 150 cars.  That is 1000 trains per DAY.  And of course, to return the cars would require 1000 trains returning each day.  Compounding the problem is the fact the traffic has to move over the Russian or Kazakhstan railway systems – neither known for efficiency.  And because of RR gauge changes, each container would have to be taken off at China’s border, shifted to Russian gauge and then shifted again if they attempt to take it by train into Europe.  Currently a limited amount of rail traffic does go from China to Europe – the last cost estimates I saw showed it was $10000 per container by rail but only $5000 by sea.  And of course, those rail lines go through some of the hottest and coldest climates on the earth.  Many goods would be damaged by the temperature extremes.

The objective is NOT to bring down the enemy.  We do not want the CCP to go away.  If they do, who rules China?  The objective is convince the Chinese they cannot win a war with the US.  The strategy attacks two of China’s great strategic fears – the Malacca dilemma and the fear of a long war.

It attacks a great weakness – China is export driven and succeeds because of the cost advantage of its products.  However, that cost advantage goes away if it can’t freely use the sea, particularly the post-Panamax container ships.Plan B is to interdict that shipping at even greater ranges from China.  Trade to Europe must pass through the Suez or go around the Cape.  Trade with the Middle East must pass through the Straits of Hormuz or Bab al-Mandab.  Trade with the western hemisphere can be control near the coasts.

  1. Global Review: Why is ASB/JOAC not a strategy, but a concept and what is OC? What is missing to be a strategy? Some say that ASB/JOAC wouldn´t have a defined goal in opposite to OC—is that true?

TX Hammes: The authors state in their title that ASB is an operational concept.  It explains how the US can fight through A2/AD to strike into China. It never explains why we need to do so or how doing so gets China to quit fighting. The authors never claimed it was a strategy.  It is not a strategy because it never expresses a theory of victory (actually just a theory of conflict termination in a war with China or any thermo-nuclear power.)  It seems to assume that if we bomb China enough, it will quit.

As noted OC is a strategy, that attacks China’s strategic vulnerability.  Its reliance on cost advantage to sustain its trade.

  1. Global Review: Where do you see the weak points of ASB/JOAC?

TX Hammes: It is unaffordable.  It never explains how it will win.  And it assumes a US president will authorize strikes on China – to include strikes that could easily be interpreted by the Chinese as an effort to destroy China’s nuclear deterrence.  This is despite the fact multi-Presidents would not authorize strikes into China during the Korean or the Vietnam wars.

  1. Global Review: China started its One Belt-One Road Initiative (New Silkroad/ String of Pearls-Maritime Silkroad). Its a two track approach by land and by sea. OBOR will create massive infrastructure building, new roads, railways, airports, ports. Has OC to adopt to this new transportation networks? What will the proportions between transportation by land, sea and air be after the OBOR initiative is finished? Will China be more a continental land power or more a sea power—what are the effects on OC planning? Have you to complement the naval blockade by a continental blockade?

TX Hammes; As noted above, there is just too large a volume of material to move via rail or road. Some high value items can be shipped but not enough to replace the lost sea routes.  Keep in mind that although China has promised great investment.  It has not actually invested much.  Remember the much touted $4B China was going to invest in the Afghan copper mine.  That deal was made almost a decade ago and as near as I can find out only $10 to 20 M has been actually spent.Even if China invests heavily the return on investment is likely to be low.  When you examine the countries along One Belt (Pakistan, Central Asia), they are poor countries with little potential for growth. One Road is simply an expansion of already existing sea trade.  New ports will make it somewhat more efficient but remain vulnerable to blockade.

Global Review: Are there any indicators that show that the US government and the Pentagon prefer OC or ASB/JOAC? Or is the US still undecided? If a conflict with China started now, which concept would be operational?

TX Hammes: I am not currently working with the Pentagon on its military strategy so I do not know.

  1. Global Review; Do you need different weapon systems for OC or ASB/JOAC? Where is the Pentagon putting its emphasis on?

TX Hammes: ASB as expressed by CSBA emphasized expensive penetrating systems that still have to be bought.  OC assumes we would fight with what we have today.  The Pentagon’s investment portfolio is mixed – B21s but also more subsurface forces and lethal naval surface forces.  I would NOT say the Pentagon buys according to a military strategy.  Rather it is driven by service beliefs and political realities.

Global Review: A last question: How likely is it that a Sino-American war will come in the future? And would such a conflict be a regional war or had the potential to become a transregional, even a world war, also involving Russia and NATO in Europe?

TX Hammes: I think a Sino-American war is very low probability.  But never underestimate the ability of leaders to make really dumb decisions (WWI).  Like WWI, a Sino-American war will collapse the global trading economy as soon as the war starts.  The most worrying possibility is a misjudgment that leads to an incident at sea or in the air or that China mistakenly believes it can win a “short war” and thus make fairly painless gains.  This is one of the key deterrent aspect of OC.  It states up front that a US-China war will be a long, difficult war.If it should happen, I do not see it involving Europe.  I am not a NATO expert but I doubt that even if China attacks the US that Article 5 will bring in most NATO nations.  Some nations may choose to fight with us.”

Here in comparison the concepts for Airseabattle/JOAC–here the plans of the Center for Strategic Budgetary Assessment (CSBA)–in the view of TX Hammes a dangerous approach, no strategy, but the high probability that such a concept in operation could escalate to a nuclear war–therefore he designed Offshore Controll as strategy, that prevents an escalation, that let´s the USA win the war, but let´s China survive and not loose its face.

From the CSBA report on ASBC: the section entitled “Executing a Missile Suppression Campaign.”

From the CSBA report on the ASBC: the section entitled “Blind PLA ISR Systems.” Referenced from:

From the CSBA report on the ASBC: the section entitled “Blind PLA ISR Systems.” Referenced from:

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