Carl Delfeld - Power Rivals: America and Chinas Superpower Struggle

Copyright 2022

THE ECONOMIC SECURITY COUNCIL, INC.

All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without permission in writing from the Economic Security Council, an organization devoted to increasing American economic, financial and national security.

To my wife Marilou to whom I owe everything.

Contents

Also by Carl T. Delfeld

The China Skeptic

The New Global Investor

Red, White and Bold: The New American Century

Comments about Red White & Bold: The New American Century

Carls perspective is truly unique and insightful in understanding the global economy and the geopolitical situation today, which is why this book is so helpful and timely.

Steve Forbes

Delfelds conservative blueprint to renew Americas prosperity is right on the money.

Larry Kudlow

PROLOGUE

THE SILK CURTAIN

From the Sea of Japan in the north to the Straits of Malacca in the south, a Silk Curtain has descended on the Asia Pacific region as an increasingly intense US-China rivalry unfolds in Chinas backyard, more than six thousand miles from the coast of California.

This Silk Curtain differs in several ways from the Iron Curtain at the center of Winston Churchills 1946 speech in Fulton, Missouri, widely thought of as the starting gun for the Cold War between the Soviet Union and the United States.

First, the Silk Curtain is flexible, constantly moving to and fro as the winds of events and alliances shift. Second, it is permeable as cyber attacks, trade, investment and shipping move through it despite the risks. And third, it is more flammable with flashpoints all along the curtain throwing off dangerous sparks. How do you handle a low altitude, hypersonic Chinese vehicle moving at five times the speed of sound and six times faster than a Tomahawk missile?

In the 21 st century, China has become the largest economy and arguably the most dominant power in Asia, representing 50% of the regions GDP and military spending. China aims to end Americas reign as a superpower and return glory and Taiwan to the motherland by 2030.

Chinas strategy is stunningly simple; dividing both America and the West while expanding its economic power in Asia and the Eurasian landmass. This rivalry extends to Russia centered at the keystone of Asia and Europe. Russia is a de facto ally of China due to its history, authoritarian roots and as a significant geopolitical and energy player. It is also Americas leading cyber and nuclear threat.

This book is about how this power duel between America and China and their allies will play out in this decisive decade as world leaders and investors continually weigh the probabilities either way. My goal is to help you see where the rivalry sits today, and more importantly, what America, China, Europe and the rest of the world might look like in 2030.

In our complex age of technological and financial upheaval, this is a time for Americans to confront its peer rival and choose its path forward. First, choose whether it is important that America remains the worlds superpower. Second, choose to support and execute an agenda that will strengthen America in its rivalry with China. For example, for Republicans, this means deciding whether to become a majority, governing party, rather than just settling for a role as an opposition, blocking party.

In 2021, a pugnacious General Secretary Xi Jinping stated that regardless of a world in turmoil and the challenges China faced, it was invincible and is a great wall of steel. China is indeed a formidable rival but it also has a number of flaws that could derail its ambitions. For one, militant authoritarianism and nationalism will not eliminate opposition; it will more likely drive it underground.

This decade will likely determine the outcome of this power rivalry because it represents Chinas window of opportunity and Americas window of vulnerability. Restoring Americas brand, balance sheet, and the financial security and mobility of the middle class is the linchpin to win the rivalry. We must face the future with both paranoid equanimity and naked confidence.

My goal is to highlight the intensity and gravity of the US-China rivalry and to explain how America can meet its quest to remain the worlds superpower. To provide some light and heat to the overly simplistic or wonkish commentary that has thus far dominated the debate.

For example, it would be a grievous mistake to frame the rivalry as just between America and China.

This drama will unfold across the globe as both rivals seek allies to turn the balance of power in their favor. Thucydides forces us to confront the fact that conflict and war, as a contest for power, is caused by perceptions of fear, honor, and interest. Given that all three are already present in the threads of US-China rivalry, consummate diplomatic skill and overwhelming deterrence will be necessary to avoid this cold war from evolving into armed conflict.

Afghanistan and Iraq aside, there may be times for America to turn isolationist but this is surely not one of them. And if Europe is weighed on the basis of its economic and strategic heft, it is a peer power rival in its own right while Russia is essentially an energy and nuclear power. China has leveraged its economic heft and burgeoning consumer market to pull Russia into its orbit and push Europe into a near neutral stance regarding America and China. Therefore, the rivalrys primary geographical pivot is as much Eurasia as the Indo Pacific.

Consider this book your tip sheet to the great rivalry of our age. The key battlegrounds will be finance, investment, data, and technology rather than trade. The rivalrys global chessboard ranges from geography and resources, finance and debt, diplomacy and deterrence, the frontiers of space, nuclear power, maritime supremacy, techno-nationalism, and clashes of digital sovereignty between a digital dollar and a digital Yuan.

These two power rivals represent an evolving clash between an open, private and market-oriented brand and an ascendant Beijing Consensus brand based more on a managed, closed, state-directed brand. And in case you missed it, China is already an Asian superpower.

To be more specific, China has become an Orwellian totalitarian state with 415 million surveillance cameras watching your every move.

Pure chance, fate if you prefer, played a major role in my getting involved in Asia at all. Born in the age of Eisenhower in the heart of the Middle West, my first encounter with Asia was as a student at a Jesuit university in Japan. Instead of academic grand strategy, my take is backed by experience in the trenches of Republican politics, banking and finance and as an emerging markets analyst. This is why I squint at this rivalry through a different lens and frame than most China experts, multinational corporate executives, or Washington think tankers.

Washington, D.C. was my home just long enough to be inoculated rather than infected with stints at the U.S Joint Economic Committee, Senate Finance Committee and the U.S. Treasury before heading off to represent America on the executive board of the Asian Development Bank in Manila. This opened my eyes to Chinas fire in the belly and the strategically important and complex region of Southeast Asia.

Furthermore, over the past two decades, my base has been in the Rockies, far away from the miasma of opportunism on K Street and Wall Street. From my perch in the shadow of Pikes Peak, my perspective of America and China went from concern to alarm. This is why I returned to Washington three years ago to build a private rare earths stockpile, launch the Economic Security Council , and to write this book.