The Chinese economy is slipping. Growth has slowed, and the national currency, the yuan, has reached an eight-year low. The United States, Europe, and other nations are seeking their manufactured goods elsewhere, like in Thailand, Vietnam, and Taiwan, where the labor is far cheaper than the ever-pricier Chinese. As growth slows, the Chinese government becomes anxious. This may be the motivation behind it continuing to build military bases in the South China Sea, and its increased hostility towards is neighbors.
Most of all, however, the Chinese economic decline could be the flash in the pan for the next global war. As a result of the yuan’s decline, the People’s Republic has been selling off its securities it bought from the US treasury to the tune of 45 billion US dollars this past week, in order to buy up yuan and keep its value from slipping. In fact, this week it lost its title as the largest foreign holder of US debt to Japan. With the President-Elect’s rhetoric encouraging tariffs against Chinese-made goods as high as 45 percent, US companies are growing far more hesitant to continue to invest in Chinese factories and manufacturing.
But as the two sides distance themselves from each other economically, the risk of another world war grows. The strong economic relationship between China and the US is in short the only thing keeping them from inciting full-scale conflict against each other, for fear of the tremendous economic depression a war would cause. However, if the US comes to rely on other Asian nations for its manufacturing, or even on own manufacturing base, the gap between it and China will continue to grow, and so too will the risk for war.
War is by no means inevitable. The possibility of the Chinese economy recovering from this temporary slump is far more likely. However, if things continue to get worse for the Chinese economy, making its government more and more desperate, then war gnaws at the edges of policy-making, becoming more and more viable. If there was to be a war, we have at least ten years to prepare. China’s army and navy are not yet on equal footing with the US, but they are quickly growing. Still, the Chinese tiger is still a paper one, at least for now.