Bi-Weekly Geopolitical Report – Update on the U.S.-China Military Balance of Power (March 20, 2023)
Patrick Fearon-Hernandez, CFA | PDF
In early 2021, we published a series of reports assessing the overall balance of power between the United States and China in military, economic, and diplomatic terms. Looking comprehensively at both countries’ power and sources of power, we judged that the U.S. retains the greater capacity to influence the world and protect its interests. However, we noted that China has closed the gap significantly, especially in military terms. For example, China now has the world’s largest navy, and it can deploy enormous forces to the South China Sea, the East China Sea, and the Taiwan Strait. China’s coastal military forces are now strong enough to potentially deter the U.S. from intervening in a crisis around Taiwan.
In this report, we provide an update and additional analysis on China’s military development over the last two years. We extend the discussion to cover China’s rapid buildup of its strategic nuclear arsenal and how that could spur a destabilizing new arms race around the world. We conclude with the implications for investors.