Here's When China Will Win The Arms Race With The US, And How BofA Is Trading It

For all the talk of the escalating confrontation between the US and China, Bank of America's Mike Hartnett writes that the "trade war" of 2018 should be recognized for what it really is: the first stage of a new arms race between the US & China to reach national superiority in technology over the longer-term via Quantum Computing, Artificial  Intelligence, Hypersonic Warplanes, Electronic Vehicles, Robotics, and Cyber-Security.

This is hardly a secret, as the China strategy is laid out in its “Made in China 2025” blueprint: It aims to transform “China’s industrial base” into a “smart manufacturing” powerhouse via increase competitiveness and eroding of tech leadership of industrial trading  rivals, e.g. Germany, USA, South Korea; this is precisely what Peter Navarro has been raging against and hoping to intercept China's ascent early on when it's still feasible.

At the forefront of China ambitious growth plan, Beijing's investments in "advanced internet and communication technologies, embedded systems and intelligent machines" aim to ensure that 40% of China’s mobile phone chips, 70% of industrial robots, 75% of basic core components and 80% of renewable energy equipment are “Made in China” by 2025.

Meanwhile, the China First strategy will be met head-on by an America First strategy.  Hence the “arms race” in tech spending which in both countries is intimately linked with defense spending. Note military spending by the US and China is forecast by the IMF to rise substantially in coming decades, but the stunner is that by 2050, China is set to overtake the US, spending $4tn on its military while the US is $1 trillion less, or $3tn.

This means that some time around 2038, roughly two decades from now, China will surpass the US in military spending, and become the world's dominant superpower not only in population and economic growth - China is set to overtake the US economy by no later than 2032  - but in military strength and global influence as well.

And, as Thucydides Trap clearly lays out, that kind of unprecedented superpower transition - one in which the world's reserve currency moves from state A to state B - always takes place in the context of a war.

Which explains BofA's long-term strategic recommendation: "We believe investors should thus own global defense, tech & cybersecurity stocks, particularly companies seen as “national security champions” over the next 10-years."

And here's the reason why:

Because one might as well make some money before the next world war breaks out...

Comments

Adullam Fri, 05/25/2018 - 22:22 Permalink

One thing we have learned from Russia's military upgrading is that it is not just the amount of money spent that makes an efficient military.

Quality outperforms quantity in the long run in almost every sphere.

EddieLomax The_Juggernaut Sat, 05/26/2018 - 06:41 Permalink

Not at all either.

Weapons win battles, logistics win campaigns.  That's how I think it here, and China are going to be very hard pressed to keep 1.3+ mouths fed and content let alone have the energy to go around re-arranging the neighbourhood like the US did just after WW2.

I see a much more balanced future ahead bar any massive collapses as various countries size each other up and decide what sort of alliances bests suit their circumstances.   The Chinese 9 dash line is a classic that surely will create a perfect counter alliance.

In reply to by The_Juggernaut

Joe Trader skbull44 Sat, 05/26/2018 - 15:57 Permalink

Comparing on the basis of cost alone is deceitful. I don't think the chinese communist party lets unions have their way with them, and it's china - the vessel of our fake economy, make things cheap over there, put them on a boat and mark it up 600% over here!

A better comparison would be comparing capabilities, like # of ships, armored, aircraft, size of army, and throw in the effectiveness of weapons - that's the ideal comparison. Alexander the great's "technological advantage" was having the longest spears. The great Polish Hussars - the greatest horse mounted cavalry of all time - won many times after being outnumbered 10-1.

China's R&D will have to step up big time. Stealing our intellectual property will only get them so far. They can't even make advanced jet engines, nor do they have the same metallurgy capabilities for military ships, that's on the same quality level as American and Russian materials.

In reply to by skbull44

38BWD22 lolmao500 Fri, 05/25/2018 - 22:36 Permalink

 

China also has a long history of blowing it just when they have been on the verge of greatness.  I am not worried, as it seems probable to me that they will screw up again.  

Example: demographics and environmental problems are horrific there.

If I'm wrong, well, in 2038 I'll be 82 yrs old.  20 years is a long time from now.

In reply to by lolmao500

MoreSun 38BWD22 Fri, 05/25/2018 - 23:12 Permalink

While China grapples with the arms race:

AGING HOLOHOAX "SURVIVORS" STILL GRASPING FOR STUFF !

http://www.tomatobubble.com/holohoaxers_still__want_stuff.html

the jews will never stop exploiting the holohoax until we all call them on it in unison.

It's called the greatest hoax of the 20th century !  It should also be called the greatest scam of the 20th century, but the jew supremacist federal reserve holds that title, the holohoax comes in 2nd.

In reply to by 38BWD22

gdpetti MoreSun Fri, 05/25/2018 - 23:59 Permalink

True... but it goes way deeper than that... and most of that exploitation is basic propaganda stuff, which serves as a test for all the sheeple waking up... which is the game here in 'Purgatory'... which is where these 'Jews' come in.... think sheep dogs helping their 'dark' master control the herd... the 'Chosen People of Satan'... but most so-called 'Jews' don't have a clue, they just grow up with the BS like the rest of us... Christian, Buddhist, etc....

Those 'survivors' are few in number these days, same with those that survived our nucs over Japan or the fire bombing that killed more... and most of them are against their govt's policies.. for this reason of exploitation, propaganda etc... they see it as the same BS from long ago.

As for China in '38? Forget about it... Mother Nature will have arrived by then... .and any look at the geologic records point to dominant species extinction rate being very, very high... same as usual.... which is the real reason the SG are busy building those deep, deep tunnels... and no, those 'trumpet sounds' aren't digging sounds, but the layers of atmosphere sliding across each other... EM discharge.

In reply to by MoreSun

Iskiab The_Juggernaut Sat, 05/26/2018 - 08:02 Permalink

The US has issues too.  The military is already overextended.  They’ve had to drop recruiting standards to fill the needs of the army, poor nutrition has also contributed to more injuries during training.   Recruits come raised on a diet of unhealthy food, they come into the army fat with weak bones from being raised on fast food.  

 

An army of unhealthy 18 year old kids isn’t going to be effective in combat.  

In reply to by The_Juggernaut

sizzler944 roddy6667 Sat, 05/26/2018 - 08:07 Permalink

Prior to the Black Death of 1348, european fecundity was what it is today.  The constraints of access to a secure family home and the ability to sustain a family on the income the parents were able to generate, were the cause.  Following the Black Death, the population had declined by 1/3.  Land was cheap, serfs became workers for hire, landlords became the owners of capital seeking to put their assets to work.  A huge re-allocation of income, assets and power took place.  Yet the population continued to decline in to the 1400s.  It took until 1600 for the population to get back to it's 1300 level.  Behind this slow return of the population size is a simple truth.  We tend to have families that are the same size as the family we grew up in.  Enormous rises in relative living standards can increase fecundity, but it is a slow process over +10 generations to move fecundity rates from below to above the replacement level, even for societies without contraception.

The chinese communist party will be a distant and embarrassing blip in china's history by the time the population size stabilises.

In reply to by roddy6667

uhland62 Adullam Fri, 05/25/2018 - 22:36 Permalink

Pst, not allowed. I'd like to be an optimist today.

Maybe China will look at others as their future customers and avoid smashing them - as opposed to drum obedience into people with threats of annihilation or crushing them. Military spending is taxpayers'money and people can't be duped all the time. One existential threat today, tomorrow another keeps taxpayers willing - but after the 5th time they'll call the bluff for what it is: Kabuki to empty people's wallets. 

In reply to by Adullam

Posa Adullam Fri, 05/25/2018 - 22:51 Permalink

Correct. The US MIC operates as a bloated, kleptocratic rent-seeking black hole doubling as a welfare system to boot... the same or better military can be bought at a fraction of the price than US expenditures...Since the US industrial base has been plundered by the Predator Class, the US military is hopelessly dependent on their designated adversaries for components and semi-finished products as well as fuel and feeder stocks... PLUS the US has slashed R&D across the boards for decades, so other nations are becoming more advanced in basic and applied science... The US was finished as the Sole Super-Power in the Eighties...

 

On a grand strategic scale, China- Russia have already eclipsed US military might

In reply to by Adullam

Parrotile Adullam Fri, 05/25/2018 - 22:59 Permalink

China was offered Western investment in return for cheap labour. They accepted this very significant gift, since (unlike the very short-term thinking "financial wizards") they looked ahead to the long term benefit of such "technological assistance for free".

Arguably China has used the "Cheap Chinese Shit" strategy to develop their industries - and so develop (and implement) quality strategies , just as the West, and of course, Japan have done in recent decades. Never forget, the first Japanese cars were mocked; nowadays . . . . ? ?

It can be easily argued that China has already surpassed the US. Better quality / dollar spent, and far less "diversion" of spending into the pockets of the connected (although that will happen - Human nature is Human nature, Worldwide).

If you are prepared to look carefully and pay - China DOES produce World-quality product (your SmartPhones, Laptops and desktops have a lot of Chinese content), as do almost all "Western" vehicles. Their "military spend" may be less than the US - but they are already getting more product per dollar spent (as evidenced by army and navy expansion - China's nave is now the World's second-largest, and their plan to enlarge further is pretty ambitious - https://thediplomat.com/2017/11/chinas-navy-inducts-2-more-sub-killer-s… (one new Corvette every SIX weeks . . . . .).

 

In reply to by Adullam

Posa Parrotile Sat, 05/26/2018 - 10:01 Permalink

Parrottile: +1000 ... the folly and greed of the US Predator Class is something out of Aesop's Fables... the Predators hand over the goose that lays the golden eggs the Chinese farmers becasue they're too lazy to tend themselves, and the Chinese breed massive flocks of other such geese and then annihilate the US using the wealth of the Golden Goose they were given... Funny but true

In reply to by Parrotile

Son of Captain Nemo Fri, 05/25/2018 - 22:29 Permalink

BofA?...

The one that got bailed out by the American taxpayer when their debit column was 3 times bigger then their credit column in 2008?... And that has at least x100 under that debit column 10 years later with derivatives they haven't even named yet???... That BofA???!!!!...

Yeah!..  They sure know how to do correlation analysis and predict what a nuclear super power will have in 20 years when our Country will more then likely be worse off then Honduras or Nicaragua.... And that is if we're lucky enough not to start WWIII with them?...

LMFAO!!!

same2u Fri, 05/25/2018 - 23:11 Permalink

Honestly, they are thousands of miles apart...you have to be a real idiot to believe any of these super military powers can conquer the other...and if they were seriously threatened, I bet they would use nuclear weapons, I truly believe that they are that stupid...

roddy6667 Fri, 05/25/2018 - 23:39 Permalink

The chart is wrong. America will cut back on spending after a while, not increase. The collapse of the American economy will rid the world of American hegemony. 

freethinker69 Sat, 05/26/2018 - 03:24 Permalink

The xenophobic force is strong with ZH and the US military industrial complex. The US currently outspends( @ over 700 Billion per annum) Than next 10 countries combined; and most of the top 10 countries are allies of the USA.

What is the total spend of US, NATO, South Korea, Japan, Australia and ASEAN?

USA has enough nuclear weapons to destroy the WORLD at least 5 times over.

The Soviet Union match and outspend the US on conventional weapons, did it make it a dominant superpower?

Is this the elite preparing the populace for the coming race war?

As to the reserve currency, I would thought the EURO would be more of a threat; is that why ZH and Trump always knocking the EU?

the Dood Sat, 05/26/2018 - 03:25 Permalink

This is all assuming China will grow at emerging markets rate, but developed economies do not grow at a parabolic rate. At some point China will reach a point when human rights, corruption and other internal issues take the forefront. When they do, they will have to go through the same growing pains we all have. The Chinese growth story is based on poor farmer moves to industrial city and works 12 on, 12 off for peanuts and for the communist party. Not sustainable indefinitely

QuadrupleH Sat, 05/26/2018 - 03:38 Permalink

Just fear mongering. I highly doubt China will waste money trying to form a hegemony beyond their backyard. They will have a smattering of bases to protect their trade routes, dominate the South China Seas, possibly absorb Taiwan and then turn inwards to deal with their own situation at home.
All these guesses about the future by western analysts always assume they want to be like USA and run the world, but it has not been their MO ever. Their MO seems to be 1. Don't embarrass them. 2. Leave them the f alone in their own neighborhood. and 3. Let's make lots of money.

truthalwayswinsout Sat, 05/26/2018 - 06:08 Permalink

These same morons told us how the Japanese were going to own everything and unless we learned to speak Japanese you would be poor the rest of your life.

Those predictions were made in the 1980's. It is 15 years past the deadline for when Japan was going to rule the world.

Well what happened? Anyone in the know who went to Japan and looked behind the curtain saw lie after lie after lie. All their tech advances were from a simple principle where you make small guaranteed changes with no technological leaps (as was done in the US). They were also inveterate liars.

Now everyone is telling me I need to learn Chinese (they don't say whether it is Mandarin or Cantonese) because the Chinese are going to rule the world. What do I know? I know that if you think the Japanese were good liars the Chinese are literally 100x as bad. They lie, cheat and steal and if you are stupid enough to let them then they do deserve to rule.

That being said all you need to do to stop the Chinese is to remove the Communist Government and things will change dramatically. How does one do that? A 100% boycott is in order. They have so many Bernie Madoff Run companies that with a boycott it would totally destroy the country and the Chinese Communists would not survive. There were over 30,000 BMB (bernie madoff bombs) ready to go off in the New Year. About 50-60 are now gone with just one of them costing China $200 billion from their US Treasury stash. If the rest go off you are looking at 5-6 times GDP if not more and no one has that much money.

Even if you just remove the trade deficits that the US allows them to have from the crooked Bush, Clinton, Bush, and Half-Breed Muslim, the Chinese Communists will not survive. If you form a trade and technology alliance with Korea, Japan, Australia, US, Canada, Germany, France, UK, and Poland, they will not survive.

So the only way China can prevail is if our politicians are crooks. Otherwise they can be taken down on any given weekend.

And even if we don't do any of that all we have to do is take NASA public and raise $800 billion in venture capital over 10 years and commercialize space and we will prevail.