According to Nicolas Baverez of Le Figaro, China’s proposed Five-Year Plan for 2026-2030, accepted by the Fourth Plenum of the CCP Central Committee, marks China’s transition to a war economy
. At the national level, the focus would not be on rebalancing demand, but on reducing dependencies in order to resist external pressures and international sanctions. War preparations, writes the French economist, are now fully integrated into China’s economic development strategy.
In our view, it would be more accurate to speak of a rearmament economy
, since no major power has yet moved towards the proportions of a full-scale war effort, i.e., military spending historically measured in tens of percentage points of GDP. Instead, the variations have so far been a few percentage points and fractions of a point. This does not mean that there is no rearmament process affecting the economy and society as a whole, with a more or less corresponding public debate. The Chinese debate, though protected by the Great Wall of an ideogram-based language, nevertheless openly addresses some of the issues of war preparation.
Jin Canrong, of Renmin University in Beijing, starts from the position of a strategic stalemate
between the US and China to justify Chinese rearmament. After years of cooperation and competition
between 1972 and 2017, the Trump and Biden administrations launched a series of combined blows
that China successfully repelled, establishing a condition of psychological parity, or imminent parity of forces
, as Cui Hongjian, another Chinese scholar, puts it. Now, Beijing should avoid a break
with the US, keep Russia tied down
, differentiate
between the old powers, Europe, America, and Japan, and stabilise the neighbourhood
in Asia. Meanwhile, the Plenum uses the expression prepare for war
for the first time in its recommendations.
American foreign policy is outlined in the recently published National Security Strategy (NSS). As Jin Canrong sees it, the section on Asia reveals the negotiations between American factions: the diplomatic establishment
inclined to maintain primacy in Asia; Wall Street pragmatists
in favour of economic cooperation with China; the MAGA faction
, focused on the domestic economy and the Western Hemisphere and more willing to recognise the limits of American power. The currents of Trumpism will remain at odds with each other during his presidential term; moreover, it is not known whether future administrations will continue the present strategy. On the other hand, there is a certain degree of continuity between the first Trump administration, the Joe Biden presidency, and Trump II.
The US strategy document recognises China as an almost equal
competitor. Beijing, it says, responded to the trade war launched by the first Trump administration by exporting capital to Asia and making its neighbours proxies
in a proxy trade war. Washington is responding by updating the two hands of economic competition and military deterrence. The United States’ economy will grow from $30 trillion to $40 trillion in GDP in the coming years, maintaining a mutually beneficial
relationship with China. This will be accompanied by protectionist measures and by working with allies against Chinese exports of goods and capital, inserting clauses into trade agreements and encouraging Europe and Japan to view middle-income countries as a limited but growing market for their exports
. According to the NSS, allies and partners add another $35 trillion to the economic power
of the United States. One can think of this as a rather crude quantification of the hegemonic coalition between the US, Europe, and Asian countries, theorised in America by Fred Bergsten, to tackle the Dragon. Jin Canrong lets this go, but makes two observations.
Firstly, it is likely that competition from China will provoke growing reactions in European countries. The united front
with Europe remains a key option for Beijing to balance the United States, also focusing on the European push for Atlantic alliance rebalancing. However, in turn, European countries will see their vested interests and privileges guaranteed by the old order being compromised
due to China’s rise, a trend that objectively restricts China’s room for manoeuvre. In the near future, therefore, the hostility of Europe and Japan towards the Middle Kingdom will be less induced by pressure from the US and will increasingly be determined by conditions in the world market.
Secondly, there is the NSS’s demand that allies take primary responsibility for their own regions
, coordinated by the US and aligned by the economic incentives and coercions of the tariff war. A kind of realism
recognises the limits of American power but wants to keep it at the centre of all relations. Washington will want to maintain its initiative and influence in those regions: Even if Europe reaches the 5% military spending threshold
, comments Jin Canrong, it would still not be allowed to form an independent ‘European army’
. On the one hand, the NSS accompanies European rearmament, but on the other, it opposes the political-strategic dimension of Power-Europe. Here, theoretically, there is room for China to return to supporting European autonomy as a counterbalance to the United States.
The conventional military balance
along the first island chain, which runs from Japan to Taiwan, the Philippines, and the South China Sea, is the other side of US policy in Asia. The strategy document commits Washington to repelling any potential aggressor but specifies that the US military cannot and should not do this alone
. On the one hand, this recognises the impossibility of the US alone guaranteeing the military balance in the Asian epicentre; on the other, it translates into a powerful incentive for rearmament in the region, and into the American request for access to bases and the deployment of medium-range missiles in the Asian archipelagos.
The NSS, on the other hand, formulates in a milder form an extension of the Carter Doctrine – the American guarantee of an open door on the Persian Gulf – to the South China Sea: the possibility that China might control this contested stretch of water, which is vital
for international trade, is defined as a related security challenge
, potentially harmful to the American economy and interests. It would therefore be up to India, Japan, the Philippines, and South Korea to support the arms race, favouring the American balance of power in the Western Pacific.
In his lengthy article published by the Shanghai-based Guancha observatory, Jin Canrong discusses Taiwan in the section on domestic policy. The author does not hide the anxieties caused by Chinese deflation, the resurgence of social conflicts
, and the demographic problem, but links them to foreign policy signals. Washington is courting Moscow and criticising Tokyo and Brussels to push them against Beijing; diplomacy is also part of the preparations for war. Meanwhile, China is abandoning its low profile in the military sphere as well, testing a series of missiles, drones, and latest-generation fighter jets, launching aircraft carriers, and increasing its nuclear arsenal.
Contrary to the opinion that Beijing will be encouraged to attack Taiwan by the war in Ukraine, Jin Canrong believes that China has more to lose than Russia. The Russian Bear is less internationalised and is rich in all the natural elements of the periodic table, compiled, it is said not by chance, by a Russian, Dmitri Mendeleev
. In contrast, the Dragon exports on a large scale and imports cereals, oil, and mineral resources, and this is its greatest weakness
.
China has two years’ worth of cereal reserves, stored at very high cost in nitrogen, which prevents the cereals from sprouting or moulding for five years. Jin Canrong is actually optimistic
about the oil problem. Beijing imports 550 million tonnes per year, but 100 million tonnes will be recovered from domestic exploration, initiated by the previous Five-Year Plan; another 100 million tonnes will be added by rail from Central Asia, a backyard
that Vladimir Putin had to open up to China because of the war; finally, 100 million tonnes will be saved through the electrification of cars. If all maritime supplies were interrupted, there would still be synthetic petrol from coal, which is a fairly mature
technology in China, despite its high cost. But the price would not be a problem in wartime
.
The issue of foreign markets, on the other hand, remains an unresolved weakness. Beijing would be vulnerable
in terms of access to international markets in the event of war
. The counter-insurance of dual circulation
, i.e., the domestic market, is not yet sufficiently developed: There are more institutional barriers between Chinese provinces than at the international level. Entering the market of each province requires renegotiation, resulting in extremely high transaction costs. Our country is politically and legally united, but administratively fragmented
.
The American tariff offensive has hit the export centres of Zhejiang, Shanghai, Jiangsu, and Guangdong. Jin Canrong suggests that these provinces may be giving strong political backing to the drive toward a truly unified national market
, against the protectionism of China’s continental hinterland and Manchuria, as well as that of the coastal provinces themselves, which compete with one another for both domestic and foreign markets. In other words, the external trade war has its counterpart in the internal trade war, understood not only as the circulation of goods, but also of capital. Paradoxically, it would be easier for the exporting provinces to engage in a proxy trade war in Asia, exporting machinery and capital there, than to enter the domestic cycle, mediated by local powers and marked by price wars
and overcapacity.
The process generates significant political backlash, which the Indian press, always attentive to the difficulties of its giant neighbour, highlights. Shyam Saran, former foreign minister in the Singh government and security adviser to Narendra Modi, focuses on another aspect of the contrasts between Chinese provinces: their debt now stands at 88% of GDP, according to the International Monetary Fund. Nirupama Rao, former ambassador to China, writes that China’s inward turn – its ‘dual circulation’ strategy [...] – reflects a cautious and anxious superpower
. The Indian diplomat speculates that a Dragon preoccupied with its continental metabolism is forced into a strategic pause
, or at least a quiet adaptation
. In any case, this is a period that Delhi should exploit to strengthen its economic and military resilience
. To each imperialist plunderer its own economy of war preparation.