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The Rise of the Red Dragon

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The Rise of the Red Dragon

China has very suddenly become a major world power—a strong ally to some, but a threat to others. Its economic growth and ability to produce goods is virtually unrivaled. But what are the implications? What lies ahead for China, and how will it affect the world?

Learn the why behind the headlines.

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China, the world's largest country by population, and one of the largest by area, has been a topic of great interest in recent years.

Many items purchased in the “Western world,” particularly North America, have a “Made in China” label on them. North American businessmen now refer to the “China price” with a look of either fear or glee in their eyes.

When international oil and gas prices rose recently, part of the blame was directed at China's near-insatiable demand. Natural resource companies are just now experiencing a major influx of Chinese interest, investment and even control. Diplomatic and financial deals have been made in order to secure key commercial and strategic shipping routes and ports. Modern Chinese cities have greatly expanded in only ten years—indeed, they are virtually unrecognizable from 20 years ago.

On the international stage, China continues to advance its position and stature. It has been standing up to the world's so-called only remaining superpower, the U.S., on a number of issues: trade disputes, fixed exchange rates, the spy plane incident, and Taiwan. In addition, it has forged ahead with its own strategic maneuvering: trade and technology deals with Europe, energy and military deals with Russia, raising tensions with its long-time enemy Japan, and covert support for North Korea.

What does it all mean? Does the world have a new superpower? Who are its likely allies? Who are its likely enemies? We will answer these questions by examining China's history, as well as current events, to see where the country has been, what may be driving it, and how it has achieved and is using its present status. Most importantly, this article will serve as an introduction to the topic of China's role in Bible prophecy, which will be presented in more detail in a future issue of this magazine.

China—1600 B.C. to Late 1800s A.D.

For most, China is often considered one of the world's leading historical civilizations. From the 7th through the 14th century A.D., it dominated much of East Asia. Historical technology such as paper, printing, gunpowder, porcelain and silk all originated in China. Chinese culture was so dominant in ancient times that its neighboring countries reflect Chinese influence to this day.

From the 2nd millennium B.C. to the early 20th century, China was ruled by a succession of dynasties. The Ming Dynasty (1368-1644), the last native Chinese dynasty, experienced multiple raids by Mongols from the north, as well as the Japanese along the southeastern coast. In 1592, when Japanese forces attacked Korea, China sent its armies to support Korea. Seven years later, this resulted in an exhausted country with a depleted treasury. Civil unrest began intermittently, essentially unending until 1949.

The early Ming dynasty emperors established what history refers to as the “tribute system.” Foreign rulers were expected to periodically send tribute missions to the Chinese capital. Those that paid tribute received valuable gifts in return and, more importantly, were allowed to officially trade goods. This system was highly advantageous to foreigners, but also to the emperor—to the point that the Ming dynasty established several controls and limits (i.e. a monopoly) on all foreign trade and contact. Such was the socio-economic environment of China at the time of the arrival of the Europeans.

The European empires did not appreciate the limitations on trade into China and, to a large degree, forced acceptance of their terms. They achieved this by using their superior military might and through opium trade.

The Treaty of Nanjing ended the first Opium War (1839-1842) and granted large concessions to the European powers, particularly the British, who obtained Hong Kong. France joined Britain in waging the second Opium War (1856-1860), eventually forcing China to sign the Treaty of Tianjin, further expanding Western advantages in the region. Militarily weak, the emperor agreed to most demands, severely curtailing China's sovereignty.

The End of the Dynasties (Late 1800s to 1978)

In the late 1800s, the foreign powers began to dismantle the system of tributary states. This led to continued civil unrest in China and also laid the groundwork for several bi-lateral wars (China-Japan, and Russia-Japan), the eventual overthrow of the last dynasty in 1911 and the First and Second World Wars. In the decades following the emperor's fall, the devastation continued, with Chinese warlords, the Japanese army, and a civil war (1941-1949) wreaking havoc on the country. Finally, in 1949, the communist People's Republic of China (PRC) was formed, with the remaining nationalists fleeing to Taiwan (hence the China-Taiwan dispute that continues to this day).

The new Communist government immediately established alliances with the Soviet Union and the countries of its emerging bloc. Internally, China was transformed into a typical communist state, based on a communal order in which all would work together for the common good. In 1957, the party Chairman, Mao Zedong, launched a radical development plan known as the Great Leap Forward, in which he predicted that China would surpass Britain in industrial output after 15 years. However, within a few years, the plan proved to be a disaster, and China found itself increasingly isolated, both from the West and the Soviet Union. In 1966, Mao launched the Cultural Revolution, with goals of eradicating the remains of any capitalism, recapturing the zeal of the early Chinese communists and increasing his power over the government. But foreign relations continued to sour.

Ironically, at the seeming height of the Cold War, relations between the two Communist giants, China and the Soviet Union, were seemingly the worst. Territorial disputes and border skirmishes between the two countries during the 1960s and 70s were common. The Chinese were afraid of becoming a Czechoslovakia-like Soviet state, and the Russians feared a nuclear-armed, billion-person populated neighbor. While Soviet forces were diverted to protect its border with China, the Chinese government sought Western weaponry as a balance against the Soviet “social imperialism.” At the same time, China became perhaps the world's foremost promoter of European unity.

During the 1970s, the military build-up along the Russian-Chinese border was nearly unbelievable. It was estimated that close to a third of Russia's 3.7 million-man army was in the region, enforced by nuclear missiles and a large air force. At the time, China had an armed force of 4.2 million, most of which were also positioned along its northern border, enforced by nuclear missiles capable of reaching most of Russia's major cities.

Many military experts believed this was the largest arms buildup in a specific region that the world had ever seen. Some were certain that war was inevitable. However, by the mid-1970s, the Soviet Union had missed the opportunity to eliminate China's nuclear capabilities, thus bringing the two countries to the state of nuclear deterrence. This stalemate came at the end of the Cold War and provided China with another opportunity to change and prepare itself for tremendous growth.

The “New China” (1979-2000)

Shortly after Mao's death, the Chinese Communist Party reinstated Deng Xiaoping in 1977 to the post of first deputy premier. By 1978, Deng was in firm control of the Chinese government. He was known to be a moderate reformer and immediately focused on relieving poverty through economic growth. He had once said, “Reform is China's second revolution.” Indeed, the social and economic transformation that had been started at this time set China on the general course to becoming the manufacturing giant we know today.

However, bringing that to fruition was primarily left to China's Premier at that time (1980-1987), Zhao Ziyang. Together, armed with the new rationale that “production is to improve the people's livelihood” in contrast to the old dictate that “production is for the revolution,” they tackled and reformed agriculture, industry and, most important of all, China's bureaucracy. New foreign technology was imported, foreign investment was courted, students were sent abroad, and military academies were revived and expanded.

In addition, unlike China's previous leaders, Premier Zhao traveled extensively outside his native land. In 1984, he traveled to the U.S., stopping in Washington, New York and San Francisco, emphasizing the issues of trade and investment.

During the final stages of the Cold War, America found China's interest useful in leveraging relations with China against the Soviet Union. However, this was short-lived and quickly became secondary to the trade issue—money overruled strategy and security. This marked the beginning of the trans-Atlantic rift. Culturally, economically, and even strategically, America was drifting away from its traditional European allies and closer to the relatively newer relationships across the Pacific. Consider this in light of current trans-Atlantic relations.

With the fall of the Soviet Union in 1991, China became the only remaining major world power with a Communist government. Thus, China re-doubled its efforts to ensure that its own system did not follow a similar demise—continued economic liberalization, increased military spending, and all under tight political control (i.e. dictatorship). China's leaders knew that with great economic output comes increased wealth; and with increased wealth comes increased power.

Current Events (2001-2005)—Economic

In just the last few years, China's economy has been simply astonishing—at or near double digit percent increases year after year. Consider these statistics:

•  An October 2002 article in The Financial Times indicated that foreign direct investment (FDI) into China for that year was expected to reach a record $50 billion—making it the world's top investment destination for the first time.

•  A January 2003 article in the Chicago Sun-Times showed that China produces 17 percent of all microwaves, 30 percent of televisions and 35 percent of refrigerators, and used more steel last year than the United States and Japan combined.

•  In early 2004, The Financial Times reported that China recently surpassed Japan to become the world's second largest consumer of crude oil.

•  That same year, China surpassed the U.S. as Japan's largest trading partner.

•  In early 2005, the Chinese media announced that the EU has “leap-frogged” both the U.S. and Japan to become China's largest trade partner. In addition, they stated that China is the EU's second largest trade partner behind the U.S.

What does all of this mean? How does China's economy relate to or affect others, primarily the U.S.?

Consider the reduction of America's production ability. With the rise of the Far East, and in particular China, as the world's “factory,” America's ability to produce goods has been greatly diminished in the last two decades. What U.S. manufacturers, wholesalers, and retailers refer to as “the China price” has driven many to simply shut down their operation. Almost every time, on almost every product, the “China price” beats all others, and by significant margins. Yet, the appearance at the consumer level is little different, and so the general economy can keep operating at relatively normal levels (enormous trade deficits yet to be considered). Recall how important the consumer is to the U.S. economy. Strategically, a reduced production ability or capacity for the U.S. (and a greatly increased one for China) could have far-reaching effects at a time when great world trouble lies just ahead.

Consider also that while American citizens consume more and more inexpensive goods “Made in China,” the U.S. balance-of-payments deficit is nearing a record 6% of GDP. This shortfall—coupled with the U.S. budget deficit—is driving the dollar down, raising fears that cracks will appear in the global financial system. China and the rest of developing Asia now have $1.4 trillion in reserves, mostly in U.S. dollars. This is more than the combined reserves of the rest of the world (excluding Japan). They do this to keep their currencies from rising against the dollar and therefore keep their exports competitive. The upward pressure on Asian countries' currencies comes (at least in theory) from them saving too much and not spending enough, while America saves too little and spends too much. In effect, China and Asia are saving on America's behalf.

However, this can only continue for so long. The American economy cannot continue to grow at its current rate without those foreign savings. The question is whether foreigners will be happy to continue financing this growth with the dollar and asset prices at their present level. The answer is almost certainly not, but the “game” has become so complicated and inter-related that any intended “transition” by any party involved must be made painstakingly slowly—unless, of course, dramatic circumstances (i.e. a major international event) dictate otherwise.

Current Events (2001-2005)—Strategic

A December 2002 article in The Globe and Mail reported that in separate meetings, Russia and China strengthened their “strategic partnership,” while China praised recent increased co-operation between Russia and India. The apparent tri-alliance is an attempt to counter U.S. global dominance and to provide balance to cooperation with Europe. Regarding his trip to Beijing, Russian President Vladimir Putin said, “We're absolutely certain that the special strategic relationship between Russia and China will not only enable us to solve the problems facing our countries, but also will create a basis for stability in the world.”

After his visit to China, Mr. Putin traveled to India and promptly signed eight major agreements, the most important of which was a declaration for the widening and enhancing of their strategic partnership. Chinese foreign officials hailed the deals saying, “India and Russia are all China's friendly neighbors. We welcome the development of relations and the friendly cooperation between India and Russia” (

The Central Intelligence Agency's The World Factbook confirmed, “China and Russia in 2004 resolved their last border dispute over islands in the Amur and Argun Rivers, but details on demarcation have not yet been worked-out.”

To date, Russia has been China's primary supplier of weaponry. However, this is all about to change, as Europe prepares to lift military sanctions against China by the end of the year (imposed since the 1989 killing of hundreds of protesters in Tiananmen Square). This has left Russia's defense industry clamoring to compensate for the expected decline in sales due to new competition for China's business.

“'France and Germany, which are ready to offer to China hi-tech electronic reconnaissance, navigation, communications and target designation systems—the weak points of the Russian defense industry—already have their sights set on developing this market,' Dmitry Litovkin, a defense analyst wrote in the Moscow-based Izvestia” (

Both Taiwan and North Korea remain useful pawns in China's chess game with the world, particularly the U.S. In April 2003, The Washington Post reported that China had threatened to veto any Security Council statement denouncing North Korea's behavior. This is to reduce and/or eliminate U.S. influence in the region, while simultaneously (but possibly not intentionally) keeping America's attention preoccupied and off the rising powers in Europe, Russia and China. One official has said that the Pentagon has warned for years that the China-Taiwan issue will become critical in the 2005-2008 timeframe.

In April 2001, President Bush stated that the U.S. would do “whatever it takes” to help Taiwan defend itself. Since then, however, political and economic pressures have forced the U.S. to bow to Chinese demands.

Current Events (2001-2005)—Resources

Consider that the average American consumes 25 barrels of oil a year; in China, it is 1.3 barrels per year. However, there are 1.3 billion Chinese, and their economy has been booming and their living standards have greatly increased in recent years. This has resulted in a perceived future shortage of oil and therefore a race now to control supply. So far, China has been the most aggressive, seeking to buy U.S. oil giant Unocal. Venezuela's President has promised to open up his country's oil and natural gas fields to China, and Russia has entered into strategic resource agreements with China as well. In addition, China has had a free political hand to gain control of oil resources in “problem” areas such as Iran and Sudan.

The challenge is huge: If China and India's consumption were ever to reach half of the U.S. level, world oil output would have to double. This is, of course, impossible. Oil is a finite resource, and many experts believe that global output will soon peak. Amos Nur, a geophysicist at Stanford University, has concluded that “the growing demand for oil is leading to a growing global conflict,” and that recent conflicts (the 1991 Gulf War, the 9/11 attacks, and the current war in Iraq) would “pale in comparison with the looming potential conflict over oil with China.”

Jane's Defence Weekly went further by identifying a competition between China and Japan (historically bitter rival nations) for Russia's oil supplies. It indicated that China's total consumption of energy increased by 12 percent last year, and that it is now a leading oil consumer, second only to the United States. Jane's Defence Weekly stated, “One way or another, the growing dependency on oil is rapidly transforming the country's foreign and military policies: China is becoming a true global power not so much as a result of a conscious policy but more out of necessity,” and as such has been “assiduously” courting Moscow for favor.

In addition, Bill Gertz, military/strategic analyst for The Washington Times, indicated that China's rapidly expanding navy is directly related to projecting strength abroad and protecting oil shipments from the Middle East. An internal report prepared for U.S. Defense Secretary Donald H. Rumsfeld described the Chinese as adopting a “string of pearls” strategy consisting of military bases and diplomatic relations along the oil route. The report pointed to significant Chinese projects in Pakistan, Bangladesh, Burma, Cambodia and Thailand. Recent disputes in the South China Sea are less about territorial claims than about projecting power and protecting resource shipments. Beyond the region, a Chinese company with close ties to the government holds long-term leases on port facilities at both ends of the Panama Canal.

Current Events (2001-2005)—Military

A November 2002 article in The Washington Times reported that Chinese missile technology appears to be far more advanced than what intelligence sources expected, indicating that U.S. dominance of the region is indeed waning. Recent tests of a new anti-ship cruise missile showed a range of twice the distance of what was thought possible. Fired from the air, the increased range of this missile enables the deploying aircraft to remain outside the range of standard anti-aircraft defense systems. Most importantly, this gives China the capability of “over-the-horizon” attacks on naval vessels and, combined with the supersonic speed at which it travels, makes this weapon particularly difficult to stop. It also indicates that land-attack missiles with similar, longer ranges are right around the corner.

In late 2004, the Seattle Post Intelligencer reported that in a sign of their ever-growing alliance, China and Russia would hold their first joint military exercise in 2005. The announcement came as Russian Defense Minister Sergei Ivanov visited Beijing and was expected to discuss increasing Moscow's multibillion-dollar annual arms sales to China. “We promote the development of the two countries' strategic collaborative relationship in order to safeguard and promote regional and world peace,” the official China News Service quoted President Hu Jintao as telling Ivanov.

The former Cold War rivals have built military and political ties since the collapse of the Soviet Union in 1991, driven in part by a joint desire to counter U.S. global dominance. China has become Russia's largest customer of military technology and products. The 2004 package was estimated to be worth $2 billion.

While the U.S. and the EU have banned weapons exports to China since the 1989 crackdown on pro-democracy protesters, Russia has greatly assisted in advancing and growing the Chinese military, supplying it with high-performance Su-27 fighters and other advanced arms. Ivanov also met with Defense Minister Cao Gangchuan and Guo Boxiong, deputy chairman of the Communist Party commission that runs China's military. Chinese President Hu Jintao is expected to visit Moscow in May during festivities commemorating the end of World War II.

The Future (2006 and Beyond)

Is China a new superpower? Depending on the technical definition, the answer could be either yes or no. Economically, of course, it currently holds some powerful cards. With Russian and eventually European technology, combined with its own production capacity, in an extremely short time, China could become a military superpower!

What role then will China play as the end of this age draws to a close?

Bible prophecy (Rev. 9:16; Dan. 11:44) points to the development of a giant Eurasian world power, consisting of a 200-million-man army. This army, which could only be mustered by combining the military forces of Russia and China, plus other Asian neighbors, will initially compete with a European superpower, primarily for control of the Middle East (possibly for oil). Eventually, this Eurasian alliance will destroy the Beast power of the United States of Europe, during which a third of the world's population will be killed.

Will China attack the U.S.? Bible prophecy indicates that this is not likely—when it has been His purpose, God has generally used Assyria (Germany) to punish Israel. However, China may play an indirect role, and will certainly be antagonistic toward the U.S. and its allies. (For more information, read our book America and Britain in Prophecy.)

We have seen China's recent positioning and obvious goals. They, along with most of the rest of the world, will participate in the popular anti-American sentiment. The increasing power of China will play a large part in world events as we near the end. More details on the prophetic future of China will be explained in an up-coming issue of this magazine.

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