Russia or China - Who Should the US Worry More About?

Developments in Crimea have shifted international attention to Russia in a manner we have not seen since the end of the Cold War.  Recent years have seen an American preoccupation with the rise of China rather than Russia as a world economic and military power but the question remains - which one might be the more significant rival?  Well, here are some recent economic numbers to put things in perspective.

Are the USA, Russia and China the three top world military powers?  Well, yes according to this website – Global Firepower (GFP).  Global Firepower does a ranking of the world’s military powers based on each nation’s potential conventional war making capabilities taking into account resources, finance and geographic size variables.  Based on this ranking, the top three military powers are the United States, Russia and China.  India comes in fourth followed by the United Kingdom, France and then Germany, Turkey, South Korea and Japan.

Figures 1-2 plot some economic numbers from the International Monetary Fund’s World Economic Outlook Database to provide an indication of relative economic weights of these three top military powers.  Figure 1 shows per capita GDP in the United States is about two and a half times that of Russia and just over five times that of China.  Neither of these countries currently can rival the United States in terms of per capita economic weight.  However in terms of total economic size, China is catching up but in 2013 total Chinese GDP was still only half that of the United States while Russia’s was about 13 percent.   However, per capita GDP growth in both Russia and China over the period 1991 to 2013 was faster than the United States – but then they are still developing economies with a lot of catching up to do.

Of course, the ability to borrow is also part of the sinews of war.  Figure 2 shows that general government gross debt share of GDP is highest in the United States at well over 100 percent.   China and Russia are at about 20 percent.  Indeed, Russia appears to have come a long way since the mid 1990s in reducing its debt to GDP ratio.  Unfortunately, there are no net debt figures for China or Russia so gross debt was used.   However, if the relative size of your debt is an issue in projecting your military power, the Russians and the Chinese appear to have a lot of room for their gross public debt to grow should they need to borrow heavily.

Also of interest is what is currently being spent on defense.  The numbers for 2013 from the GFP website say that the total annual defense budget of the United States dwarfs that of either Russia or China.  The USA spent 612.5 billion dollars in 2013 followed by China at 126 billion USD and then Russia at 76.6 billion USD.  As a share of their respective GDP, this works out to 3.7 percent for the United States, 1.4 percent for China and 3.6 percent for Russia.  As a share of total general government expenditure (spending by all levels of government), the Americans spend 9.6 percent of their budget on defense, while the Russians spend 9.8 percent and the Chinese 5.7 percent. 

Who should the Americans be worried about?  At the moment, the United States is still the paramount military and economic power and has the global reach and military infrastructure to match.  In some sense, its concerns about its security reflect a fundamental insecurity and lack of faith in its own position and abilities in a rapidly changing world. However, the other two are catching up because their economies have been growing faster than the United States and their fiscal situations – at least as measured by gross debt levels – are in better shape. 

In the short run, the Russians should be a more pressing concern because of their path dependent military role rooted in the Soviet era (after all, they have a substantial nuclear arsenal too) as well as the fact they spend equivalent proportions to the United States of both GDP and total government expenditure on defense.  The Russians are busy reclaiming the global role they had in the Soviet era and which they fell away from during the post-Soviet transition.   In the long run, China will be the more pressing concern simply because they are growing so much faster.  They will be developing a global role based on their new economic position. 

What the Russians want and might do in a sense can be predicted from a reading of Russian history for the last few centuries – themes of autocracy, reform from above, and geographic expansionism spring to mind.  Their recent moves in Crimea should not be a big surprise given Crimea’s past roles in Russian history.  What the Chinese will want in a new global role will be the undiscovered country and in a sense is far more interesting.  Unless you want to go back to the middle ages for examples, this is China's first modern foray into an influential global economic and military economic role.  There is much more uncertainty here.

 

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Comments

[Bob Smith]

I'm not sure that comparing public debt/GDP ratios in the way you do really adequately reflects the "sinews of war" of the US vs. Russia or China. All else being equal, yes, a lower debt/gdp ratio might suggest greater economic capacity to wage war. On the other hand, a higher debt/GDP ratio may well indicate a greater capacity to borrow - i.e., economic strength, rather than weakness. Does Russia have a lower debt/gdp ratio because it is economically strong, or because no one in their right mind would lend them money. The fact that US government bond yields are a quarter of Russian government bond yields (despite the higher US debt/GDP ratio) is probably suggestive.

The ability of the UK to fund its wars in 18th-20th centuries largely through debt (rather than taxes or inflation) was an indicia of its economic strength - it could persuade people to lend it money, rather than having to rely upon destructive taxes and inflation (or in the case of Napoleonic France, plunder and theft). It is telling that Russia's current debt/GDP ratio (20%) is roughly equal to that of France circa 1815 (http://personal.lse.ac.uk/ritschl/pdf_files/Stockholm_reconstructed.pdf), at which time the UK's debt/GDP ratio was 200%. But in 1815, France was defeated, and the UK was on the start of a century long reign as the world's dominant power.

[Jacques René Giguère]

Germany,Turkey or Korea could barely project a couple of brigades 200 kms away and keep them supplied.
Russia, for all its posturing and Republican idiocy is still in the same situation as always:bottled up in the Black and Baltic Seas with no real means of projecting beyond its shore (where are its logistics bases?). They can be a nuisance in Crimea and the Tatars will be miserable for decades. But hey have used essentially all their projection forces. They could use the same argument for sending troops to Donetsk and yet they don't. Because they don't have either troops or logistics lines. And NATO,besides political will and unity can't send more than a couple divisions to Kiev. It took six months to build up for the Kuwait war and the facilities were way better...

[Paul Friesen]

Interesting post.

I, too, am not sure about what debt/GDP ratios might tell us. As far as I know, U.S., Chinese, and Russian arms industries are all pretty self-contained. As in WW1 and II, any of these countries could just finance purchases within their own countries by borrowing from their central banks and controlling inflation through rationing etc. They don't need to borrow from external sources. The exception could be China, which probably would need to import oil.

But next time I get worried about China's muscle flexing in the South China Sea or wherever, it might be good to remember how relatively little it spends on its military.

[genauer]

Jacques

Germany has the capabilities it needs. We will not be drawn into provoked wars of agression.

please sea

http://jackmatlock.com/2014/03/ukraine-the-price-of-internal-division/

for more sane "old hands" in the US

Obama should fire Kerry and Nuland. Dangerous idiots.

[Bob Smith]

Paul,

That strategy (of financing war by borrowing from your central bank and trying to control inflation through rationing) as been tried before, notably by Germany in WW1 - it ended poorly.

Mind you, as a practical matter, in the event of a war between Russia and the U.S. if we survive long enough to have to deal with inflation, we'll all be grateful.

[Jacques René Giguère]

genauer: that was my point. All the talk about military budget, share of GDP or whatnot means nothing much. Those who can project forces are potentially dangerous to the extent of their abilities. The others are honestly doing their basic job of protecting themselves.