Will China follow Putin’s lead?

The Chinese recently announced that they would be holding military celebrations, amassing nearly 12,000 troops for parades and other demonstrations. Also recently, China has taken aggressive military stances with Japan in the waters surrounding China and has been building up its navy. In fact, in the last several weeks, the Chinese navy has been sailing off the coast of Alaska — that’s a long way to go to saber rattle.

{mosads}The news is filled with data from China regarding the fall of its stock market, its excess capacity in housing and manufacturing, its falling gross domestic product (GDP), as well as its decision to competitively devaluate its currency, all of which have the potential to create a restive population. Does that mean that China will follow Russian President Vladimir Putin by taking actions outside of China that, in the Chinese view, will bolster the prestige of the Chinese government, and, in effect, rally the Chinese citizens to support their government while distracting those same citizens from the economic downturn?

Putin has spent much time and energy in Ukraine, seizing Crimea, moving troops to the Ukrainian border and supporting eastern Ukraine with troops and armament against the legitimate Ukrainian government. The primary goal of this saber rattling is to distract the Russian people from Russia’s own economic contagion.

The decline in China’s economic activity has a broad impact on the countries with whom it is engaged economically — not just those to whom it exports large commodities of goods, but also those from whom it buys raw materials for production of those commodities. Brazil has seen its GDP shrink in the last reporting quarter, which could have a substantial impact on that country’s stability. Sudan, Angola, Nigeria, Venezuela, Japan, Sierra Leone, Indonesia, Russia, Kazakhstan, Australia and Gabon are among those who provide energy resources, part of a supply chain that until recently was believed to last 10, 20 or 30 years. What steps, if any, will China take to attempt to stabilize or destabilize its suppliers of energy and raw materials? Along with other significant exporters, the United States — which sends nearly 8 percent of its exports to China — will also face challenges from a decline in purchasing by China and also stiff trade competition due to China’s competitive devaluation.

Economists have long recognized that the Chinese were blowing a very large bubble, which the Chinese believed could be controlled by a government-managed economy. A quick look at how Russia’s five-year plan has performed demonstrates that that is a highly unlikely outcome. It also establishes that any economy, whether free-market or managed, is subject to cyclic activity. The Chinese made many strategic economic errors as they attempted to continue an extraordinary rate of growth that was originally based upon cheap manufacturing and a depressed currency. That combination gave them a strong advantage in the world economy. It appears those tactics are coming back to haunt them.

Will the Chinese engage in military gamesmanship, or will they focus on steps necessary to repair their economy? I’m betting on saber-rattling military gamesmanship.

Owens represented New York’s North Country from 2009 until retiring from the House in 2015. He is now a partner in the Plattsburgh, N.Y. firm of Stafford, Owens, Piller, Murnane, Kelleher & Trombley, PLLC.