The Coming China Wars

1. China's "Weapon of Mass Production" is the China Price

The China Price. They are the three scariest words in U.S. industry. Cut your price at least 30% or lose your customers.

Drivers of the China Price. China's economic ascent is fueled by its ability to offer the "China Price," significantly undercutting foreign competitors. This is achieved through a combination of factors, including low-wage labor, minimal worker protections, lax environmental regulations, and government subsidies. These practices, while driving economic growth for China, create unfair competition and sow the seeds of future conflict.

Unfair Trade Practices. While some drivers of the China Price, such as efficient industrial organization ("network clustering"), are legitimate, many others violate international trade standards. These include currency manipulation, government-sanctioned counterfeiting, and protectionist trade barriers. These unfair practices allow China to dominate export markets while undermining fair competition.

Economic and Social Consequences. The China Price has led to a massive shift in economic power, with China becoming the world's "factory floor." This has resulted in job losses and wage depression in other countries, contributing to economic instability and social unrest. The long-term consequences of these unfair trade practices could be catastrophic for the global economy.

2. China's State-Sanctioned Piracy Undermines Global Innovation

The larger truth is that the Chinese economy has staked a great deal on its counterfeiters.

Economic and Health Risks. China has become the world's largest pirate nation, counterfeiting everything from luxury goods to pharmaceuticals. This poses grave health risks to consumers who unknowingly purchase fake medications or products with substandard safety features. It also destroys global intellectual property law protections, stifling innovation.

Government Complicity. The Chinese government's tacit support of counterfeiting and piracy is driven by economic factors, including controlling inflation, creating jobs, and expanding the tax base. Local protectionism further exacerbates the problem, as local officials often support counterfeiters who contribute to the local economy.

Cultural and Ideological Factors. Cultural norms that revere imitation, combined with a legacy of Maoist ideology that disregards private property, contribute to the widespread acceptance of counterfeiting in China. This creates a perfect storm for intellectual property theft, undermining the global innovation ecosystem.

3. China's Air Pollution Crisis Extends Far Beyond Its Borders

China’s population is so big and its resources so scarce that if we continue to ignore our environmental problems, that will bring disaster for us and the world.

Environmental Catastrophe. China's rapid industrialization and lax environmental controls have made it the most polluted nation on Earth. With 16 of the world's 20 most polluted cities, China's toxic emissions are spewing well beyond its borders, impacting neighboring countries and contributing to global warming.

Regional and Global Impact. Acid rain, originating from China's sulfur dioxide emissions, damages forests and crops in Japan and Korea. Dust storms from China's desertification blanket Korea and Japan with toxic dust. Chinese smog, or "chog," reaches as far as North America, impacting air quality in cities like Los Angeles and Vancouver.

Root Causes. China's heavy reliance on coal, coupled with weak environmental regulations and enforcement, is a primary driver of its air pollution crisis. The lack of a functioning legal system to protect workers and the environment further exacerbates the problem, creating a dangerous and unsustainable situation.

4. China's Thirst for Oil Drives Amoral Foreign Policy

China’s undervalued currency encourages undervalued Chinese exports to the U.S. and discourages U.S. exports because U.S. exports are artificially overvalued.

Global Oil Demand. China's rapid economic growth has made it the world's second-largest petroleum consumer, driving up global oil prices. To secure its oil supplies, China has adopted a foreign policy based on "just business, no political conditions," leading to controversial alliances with rogue nations.

Blood for Oil Diplomacy. China's amoral approach has resulted in the slaughter and impoverishment of millions, as it supports dictators and regimes in exchange for oil. This has also led to a rapid spike in nuclear proliferation in the Middle East and Asia, as China ships ballistic missiles and transfers nuclear weapons technologies to countries like Iran.

Geopolitical Instability. China's pursuit of oil has destabilized international relations, as it uses its diplomatic veto in the United Nations to shield terrorist regimes and facilitate the looting of public treasuries by dictators. This has created a dangerous and unsustainable situation, threatening global peace and security.

5. China's "New Imperialism" Exploits Developing Nations

China is the epicenter of the counterfeits boom . . . Just a few years ago, counterfeiting was all Gucci bags and fake perfume. Now it’s everything.

Weapons of Mass Construction. China is engaging in a new form of imperialism, using "weapons of mass construction" to build infrastructure in developing countries in exchange for access to their natural resources. This involves offering lavish, low-interest loans and sophisticated weapons systems as bait.

Debt Trap Diplomacy. After these countries are driven deeper into China's debt, China extracts their raw materials, such as tin, copper, nickel, and gold. This imperialistic quid pro quo enriches despotic rulers while impoverishing the peasants they rule over.

Exploitation and Environmental Degradation. China's "new colonies" are exploited for their resources, with little regard for environmental protection or the well-being of the local population. This creates a cycle of poverty and dependence, perpetuating the exploitation of developing nations.

6. China's Dam Building Threatens Water Security and Regional Stability

China’s state-run banks have routinely extended loans to state-owned-enterprises that are not expected to be repaid.

Dam-Happy Nation. China is the dam-happiest place on Earth, constructing mega-dams on its major rivers despite the protests of downstream countries. These dams threaten the food supply, transit routes, and livelihoods of millions of people living in the Lower Mekong River Basin.

Water Wars. China's dam construction is creating a severe water crisis, pitting angry farmers against encroaching industrialists and downstream countries against upstream provinces. This is leading to fierce diplomatic battles and potential military conflicts.

Environmental and Social Costs. China's dam projects have resulted in the displacement of millions of people, the destruction of natural habitats, and the disruption of river ecosystems. These projects also pose a significant risk of catastrophic dam failures, threatening the lives and livelihoods of millions more.

7. China's Internal Conflicts Threaten Social and Political Stability

China’s state-run banks have routinely extended loans to state-owned-enterprises that are not expected to be repaid.

Rising Social Unrest. The number of protests and riots in China has risen to nearly 100,000 annually, fueled by income inequality, worker exploitation, environmental degradation, and government corruption. This social unrest poses a significant threat to the ruling Communist Party's grip on power.

Rural Discontent. The Chinese countryside has become a slave labor camp and dumping ground for pollutants, with rural peasants being exploited by corrupt government officials and developers. This has led to widespread anger and resentment, threatening social stability.

Ethnic Tensions. Ethnic separatist tensions continue to smolder in China's western prairies, fueled by the ongoing "Hanification" of the mostly Muslim population. This ethnic strife poses a significant challenge to China's territorial integrity and social cohesion.

8. China's Demographic and Health Crises Loom Large

China’s state-run banks have routinely extended loans to state-owned-enterprises that are not expected to be repaid.

Graying Nation. China is rapidly aging, facing a pension crisis that will make solving the unfunded social security liabilities of other countries look easy. This demographic shift will put tremendous strain on China's economy and social welfare system.

Environmental Health Crisis. Environmental pollution is serving as a deadly catalyst for an explosion of cancers and respiratory and heart diseases. This rapid rise in ill health is coming precisely when China's once-vaunted public health-care system has totally unraveled.

HIV/AIDS Epidemic. Adding to these extreme pressures is an HIV/AIDS epidemic that may soon become the worst in the world. This epidemic, fueled by a blood donor scandal, rampant drug use, and a burgeoning sex trade, threatens to destabilize Chinese society.

9. The U.S. and China are in a Mutually Parasitic Economic Codependence

China’s state-run banks have routinely extended loans to state-owned-enterprises that are not expected to be repaid.

Intertwined Destinies. The U.S. and China have developed a mutually parasitic economic relationship, with the U.S. relying on China to finance its debt and China relying on the U.S. to purchase its exports. This codependence creates a dangerous situation, as each country's economic stability is tied to the other.

Financial Blackmail. China's massive holdings of U.S. debt give it the power to destabilize U.S. financial markets and plunge the country into recession. This creates a "balance of financial terror," where the U.S. is hesitant to challenge China's unfair trade practices for fear of economic retaliation.

Breaking the Cycle. To escape this codependence, the U.S. must get its own fiscal house in order, reducing its reliance on foreign debt and promoting domestic manufacturing. This will require difficult choices and a willingness to challenge China's economic dominance.

10. China's Military Modernization Poses a Geopolitical Challenge

China’s state-run banks have routinely extended loans to state-owned-enterprises that are not expected to be repaid.

Military Buildup. China's military spending is growing even faster than its economy, with a focus on developing a longer-range military reach. This military modernization poses a geopolitical challenge to the United States and its allies.

Potential Flashpoints. Several potential flashpoints could trigger military conflict between China and the U.S., including Taiwan, the South China Sea, North Korea, and China's growing influence in Latin America and the Middle East. These conflicts could have devastating consequences for global peace and security.

Strategic Planning. The U.S. needs a clear strategic plan for dealing with China's rise, balancing economic engagement with a strong military presence in the region. This will require a nuanced approach that recognizes both the opportunities and the risks of China's growing power.

Last updated: April 4, 2025