Macromegas #22 - China: Dreaming of a Blue-Water Navy (Part 2)

China’s Missing Cornerstone Towards Global Reach - An Operational Blue-Water Navy

Hi friends,

Happy Saturday!

Second part following China, The Planned Superpower (Part 1) - How China is planning its way into becoming a superpower, whether anyone likes it or not.

China’s Missing Cornerstone Towards Global Reach - An Operational Blue-Water Navy

Let’s cut through the chase. Everything comes to the fact that China does not have a true blue-water navy.

You’ll remember from my previous post on the American Empire that the US could only reach their 5th and last imperial development stage - 5. Prevent any Potential Challengers from Rising - by first going through the 2 previous ones:

3. Control the Ocean Approaches to North America

The Pacific Ocean is where most of the maritime US focus lies. Both because of the war with Japan during WWII, and because of the strategic challenges currently raised by South East Asia (where more than half of the global population lives) and Russia.

Historically, the US has built three success lines of defence/control over the ocean, literally up to Chinese shores.

Not surprisingly, China does not keep the best memories of the last time a foreign power dominated its coastal territory because of a technically superior fleet during the Opium War.

A different - and eloquent - view using territorial waters.

Atlantic-side, the US strategy is more or less to control Europe. Problem solved.

4. Control the World's Oceans

And - just in case of doubt - Wikipedia’s list of aircraft carriers globally, ordered by tonnage:

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Even in the case where China truly is not aiming for 5. Prevent any Potential Challengers from Rising - as stated in its 2019 Defense White Paper, it still wants to come at least somewhere between its own 3. Control the Ocean Approach to China (Yellow Sea, East China Sea, and South China Sea) and 4. Control the World's Oceans. Not including the reunification with Taiwan.

Right now, only the US can claim that level.

As Wikipedia explains:

The United States Navy is considered a blue-water navy by experts and academics. It is distinguished from other power projection navies in that it is considered a global blue-water navy, able to operate in the deep waters of every ocean simultaneously. According to Todd and Lindberg's classification system, the United States Navy is a rank one "global-reach power projection navy", and the only navy to occupy this rank.
The USN maintains ten carrier strike groups (centered on the Nimitz-class aircraft carrier and Gerald R. Ford-class aircraft carriers), of which six are deployed or ready for deployment within 30 days, and two ready for deployment within 90 days under the Fleet Response Plan (FRP). The USN also maintains a continuous deployment of nine expeditionary strike groups that embark a Marine Expeditionary Unit with an Aviation Combat Element on amphibious warfare ships. The US Military Sealift Command is the largest of its kind in the world and is responsible for delivering military transport and ship replenishment around the globe.

Ok, that Wikipedia article was clearly written by Americans, but still, the facts are there.

And China cannot simply buy its way into that level as it clearly represents a zero-sum game with/against the US. Indeed, ocean control is a limited resource: if China gets more of it, someone has to give some back. And since the US currently holds all of it…

Let’s look at what China is missing to actually get there.

1. Actually building it

China is getting there. Fast.

You remember from the first half of this essay that China was boasting “Reasonable and Appropriate Defense Expenditure”. Despite extremely active militarisation.

“Defense expenditure as a percentage of GDP has fallen from a peak of 5.43% in 1979 to 1.26% in 2017. It has remained below 2% for the past three decades.
Defense expenditure as a percentage of government expenditure was 17.37% in 1979 and 5.14% in 2017, a drop of more than 12 percentage points. The figures are on a clear downward trend.”

What I really want to add here is the following: the overwhelming majority of economic analyses look at a very controversial metric, nominal GDP. In nominal US Dollars, it is true that China still has some catching up to do (IMF, 2019):

But to me, the relevant metric is PPP (Purchasing Power Parity) GDP. And there, the story changes drastically (IMF, 2019):

Also worth noting: Russia jumping back in the top from the currency devaluation following the 2014 US sanctions.

Why does it matter this much?

Because most of the cost of building a modern navy is not USD-denominated materials. It is labor. And labor is paid in PPP value, not in nominal Dollars.

Some figures from the American RAND National Security Research Division:

And the same for fixed-wing aircraft (planes), a major cost-centre for any modern navy:

It means that if we want to compare in nominal Dollars GDP, China’s labor cost is about half of the US’s, which give China a productivity 25% advantage on building a modern navy. As if everything they built had a 25% discount vs. for it being built in the US.

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2. Knowing how to use it

But this is only one part of the solution.

The second part is operational readiness. Remember the example of Napoleon and his brand new fleet vs. the experienced British navy. Let’s say Trafalgar did not turn out that well for the least experienced side.

This is why the below statement from the Military and Security Developments Involving the People’s Republic of China - 2020 Annual Report to Congress is slightly humouristic from the US:

“China is already ahead of the United States in certain areas such as shipbuilding: The PRC has the largest navy in the world, with an overall battle force of approximately 350 ships and submarines including over 130 major surface combatants. In comparison, the U.S. Navy’s battle force is approximately 293 ships as of early 2020.”

The US knows very well that the number of ships - most of them shallow-water frigates for China vs. aircraft carriers and cruisers for the US - has zero value. At similar sizes, what truly matters is experience. The US has it - many countries in the world experience it first hand. China does not.

This is why China is so actively looking to participate into maritime policing. Not for the moral beauty of it. But for the training.

Where is the worst place in the world in terms of coastal piracy? The Gulf of Aden in the Middle East.

Where is the latest Chinese naval base in construction located? You guessed it:

Read the third and last part of this series - China: Territorial and Moral High Ground (Part 3).

We’ll detail the last 2 points:

3. Gaining the ability to deploy it

4. Building up the legitimacy to use it

Thanks for reading,

V