'Pentagon knows China will be America's greatest enemy starting in 2017'

The US has struck another blow at what it has dubbed "unfair trade practices around the world," as President Obama signs into being an Interagency Trade Enforcement Center. The body is being seen as a weapon to combat China’s economic might.

Obama has long accused China of subsidizing homegrown companies and allowing counterfeiting and intellectual piracy.

Analyst and author Adrian Salbuchi says the Pentagon has long understood that it is China, more than any other country, which will be America’s greatest enemy from 2017, because it will then be the world’s largest economy.

“Knowing that economy very often calls the shots, I think that the Pentagon planners, although they are not in the economic field, know what the future has in store, and they are probably the only long-term planners in the Western world. The Chinese however, who have tens of thousands of years of experience, have been long-term planners for a very long time,” Salbuchi explains.

The US move comes on the heels of a warning by the World Bank that China could face a major economic slowdown without reforms.What is more, as the world’s largest economy, it could well take the global system with it.

The report also predicts that China will become the world’s largest economy by total purchasing-parity GDP in 2016, but per capita income will stagnate unless it implements key reforms.

­'Taking their time'

Adrian Salbuchi also dismisses the view that China is a ticking bomb waiting to explode.

He believes China is doing what any intelligent country should: by not allowing the World Bank or the US or any outside agency force them to revalue their currency, they will be able to maintain big export volumes.

He says, “China is a double system. The big coastal areas have become capitalist, but the hinterland is staunchly communist. What the Chinese are doing shrewdly is taking their time – sometimes decades – to incorporate more and more areas into the new system. But they are doing it at their speed, based on their needs, not those of the US dollar or the Euro.”

­'Big danger for Western economies'

Richard Wellings from the Institute of Economic Affairs believes gradualism is simply an excuse for doing nothing.

“China should privatize some of its inefficient state industries. The problem is that politicians and officials don’t want to let go,” he says.

But the consequences of China’s inertia could be far-reaching.

“Some of the hugely indebted Western governments rely on the Chinese to buy their bonds. So there is a big danger there. If there is a big sell-off of US Treasury bonds, this could cause a big crisis in America,” says Wellings.

­