Source:
http://www.spacewar.com/reports/Walker_World_Here_Comes_China_Warns_UK_999.html

Walker's World: Here Comes China, Warns U.K.

UPI
Tuesday, December 19, 2006

The United States will cease to be the lone superpower within thirteen
years, and both the European Union and Britain will have to accept that
the transatlantic strategic partnership will no longer work. This is the
shock prediction of one of the top figures of the British foreign policy
establishment.
In his farewell address as director of the Royal Institute of
International Affairs, known as Chatham House after its prestigious
address in London's plush St. James district, Prof. Victor Bulmer-Thomas
said that the swift emergence of China as the second megapower would
transform the world's strategic map.

"Just as the world is currently shaped to a large extent by the
international priorities of the United States, so it will be shaped to a
significant degree by the international priorities of the two megapowers
in 2020," he told a blue ribbon audience of British officials and
politicians and international diplomats.

China will also seek to curb and to reduce American influence in the
Asia-Pacific region, he predicted, using all available non-military
tools such as trade deals, soft loans, and strategic investments. He
also expected China to demonstrate "a more aggressive approach to the
Taiwan issue."

"A period of strategic rivalry between the United States and China while
this process is underway can be confidently predicted. However, this is
not likely to lead to open conflict," he stressed. "The economic ties
between the two countries will be close and each country will have a
strong stake in the economic success of the other. There will also be
areas of cooperation, notably in tackling proliferation as well as
developing and transferring technology to combat greenhouse gas
emissions. Yet it is unrealistic to imagine that the United States will
not resist strongly the erosion of its privileged status -- particularly
when the new megapower is so fundamentally opposed to U.S. values in
religion and personal freedom."

Prof. Bulmer-Thomas' prediction that Britain and Europe would have to
reconsider their traditional ties to the United States have caused a
flurry of concern and speculation in European diplomatic circles, which
are still digesting the imminent end of Prime Minister Tony Blair's
political career after the Iraq misadventure.

"Both the U.K. and the EU have to recognize that the old idea of a
strategic partnership with the United States -- or special relationship
in the case of the U.K. -- to solve global problems will not work in a
world of two megapowers. It may still be true that most global problems
will not have a solution without the United States, but that will also
be true of China. A strategic partnership with the United States that
ignores China will not be effective, but a strategic partnership with
both countries is unrealistic," the Chatham House director added.

Bulmer-Thomas, who has run Chatham House for the past five years and
whose tenure was shaped by the 9/11 terrorist attack and its aftermath,
warned that the recent American primacy would no longer be tenable. He
said that U.S. indebtedness and low savings rate would erode its
economic position, and "the long-term liabilities in health spending and
social security will make it very difficult for the U.S. to match the
growth of the world economy, leading to a decline in its global share of
GDP."

So while the United States would remain the world's largest economy in
dollar terms it would probably be matched or overtaken by China as a
trading nation, and in GDP as measured by purchasing power parity. The
United States would probably keep its military and technological lead
with an annual defense budget of over $700 billion, and would remain a
megapower in 2020. However, if China continues the double-digit annual
growth in its defense budget it will be spending some $400 billion a
year by 2020, double the European defense spending and four times as
much as Russia.

But the United States has been damaged psychologically by the recent
setbacks in Iraq. One key component of superpower status is public and
political support for the investment of the resources required to
sustain that position, and that is now in question. The U.S. belief in
itself and its special role "has been sharply eroded as a result of the
war in Iraq and other related policies such as the abuse of prisoners in
Guantanamo and Abu Ghraib.

"There is no doubt that self-belief has taken a sharp knock under the
Bush presidency and the traumas of Iraq and Afghanistan will weigh
heavily on the U.S. electorate for several years yet. The notion of the
United States as 'a force for good in the world' will not be as widely
accepted as before. Isolation is not an option for the United States,
but a more neo-realist approach to international affairs certainly is,"
he noted.

China by contrast has abundant belief in itself and its own special role
in the world, and is fast acquiring the financial resources to match the
United States as a megapower. China will soon be the world's largest
holder of foreign exchange reserves, he predicted, and "will strenuously
seek to convert a significant part of its international financial assets
into real assets though strategic overseas purchases. This will give it
a global presence and the book value of Chinese inward investment will
exceed that of most other countries in those developing countries that
allow foreign investment access to natural resources."

China will grow dramatically in global strategic reach and political
power, and will add to its current veto in the United Nations Security
Council with a bigger share of votes in those international
organizations like the International Monetary Fund and World Bank where
voting is determined by economic weight. By 2020 it will have developed
"a range of public policy instruments to promote its national interests
and these will include sticks as well as carrots. As the largest
importer in the world, China will have immense leverage over those
countries or regions interested in signing Preferential Trade
Agreements. At the same time, China will not hesitate to use sticks to
achieve its interests."

Europe would have to adjust to these new realities, he went on, and
learn to coordinate its international policies accordingly to defend its
own interests, since neither the United States nor China, engaged in
their rivalry, are likely to seek to strengthen international
institutions or the United Nations.

"The EU has to speak with one voice in international forums and that
requires a change in past practice by Britain and other member states,"
he urged. "The obvious starting point is the International Financial
Institutions, where the multiplicity of EU votes needs to be replaced by
a single EU representative. This will be very painful for the United
Kingdom, but there is really no choice unless we are prepared to see
Britain and the EU becoming less and less influential on the
international stage. Ultimately, the same will need to happen in the
U.N. Security Council, but that will take longer."