National Security Evidence File

Nov18: New National Security Information: Indicators and Surprises
Why Is This Information Valuable?
The Role of AI in Future Warfare”, by Michael O’Hanlon, published by Brookings
SURPRISE
Good, concise overview. The author concludes that, “Robotics and AI could take on a central, and very important, role in warfare by 2040—even without anything resembling a terminator or a large killer robot.” Critically, this increases the risk of faster escalation of future conflicts.
U.S.-China Economic And Security Review Commission, 2018 Report To Congress
The U.S.-China Economic and Security Review Commission is mandated by Congress to investigate, assess, and report to Congress annually on “the national security implications of the economic relationship between the United States and the People’s Republic of China.”

This very thorough, 539 page report provides extensive evidence to support key findings that have become familiar but are still critical and in many cases unmet.

Economic Challenges

“China’s state-led, market-distorting economic model presents a challenge to U.S. economic and national security interests. The Chinese government, directed by the Chinese Communist Party (CCP) leadership, continues to exercise direct and indirect control over key sectors of the economy and allocate resources based on the perceived strategic value of a given firm or industry. This puts U.S. and other foreign firms at a disadvantage— both in China and globally—when competing against Chinese companies with the financial and political backing of the state.”

“The Chinese government continues to resist—and in some cases reverse progress on—many promised reforms of China’s state led economic model.”

“Chinese President and General Secretary of the CCP Xi Jinping has prioritized efforts to consolidate control over economic policymaking. However, this strategy may have unintended consequences for China’s economic growth. Increased state control over both public and private Chinese companies may ultimately reduce productivity and profits across a range of industries, with firms pursuing CCP—rather than commercial—objectives.”

“China’s debt burden poses a growing threat to the country’s long-term economic stability. Even as Chinese banks’ nonperforming loans rise and unofficial borrowing by local governments comes due, Chinese policymakers continue to spur new credit growth to combat fears of an economic slowdown.”

“The Chinese government structures industrial policies to put foreign firms at a disadvantage and to help Chinese firms. Among the policies the Chinese government uses to achieve its goals are subsidies, tariffs and local content requirements, restrictions on foreign ownership, intellectual property (IP) theft and forced technology transfers, technical standards that promote Chinese technology usage and licensing, and data transfer restrictions.”

“China has reaped tremendous economic benefits from its accession to the World Trade Organization (WTO), and participation in the rules-based, market-oriented international order.”

“However, more than 15 years after China’s accession, the Chinese government’s state-driven industrial policies repeatedly violate its WTO commitments and undermine the multilateral trading system, and China is reversing on numerous commitments.”

Security Challenges

“China signaled a decisive end to its more than quarter century- old guidance to ‘hide your capabilities and bide your time, absolutely not taking the lead’ as President Xi issued a series of new foreign affairs and military policy directives calling on China to uncompromisingly defend its interests and actively promote changes to the international order.”

“The United States faces a rising power in China that sees the security structures and political order of the Indo-Pacific as designed to limit its power. The widening gap in military capability between China and the rest of region also enables Beijing to coerce its neighbors with the increasingly credible implied threat of force.”

“Beijing is currently capable of contesting U.S. operations in the ground, air, maritime, and information domains within the second island chain, presenting challenges to the U.S. military’s longstanding assumption of supremacy in these domains in the post-Cold War era.”

“By 2035, if not before, China will likely be able to contest U.S. operations throughout the entire Indo-Pacific region…China’s large-scale investment in next-generation defense technologies presents risks to the U.S. military’s technological superiority. China’s rapid development and fielding of advanced weapons systems would seriously erode historical U.S. advantages in networked, precision strike warfare during a potential Indo-Pacific conflict.”

“China continues to develop and field medium- and long-range air, sea, and ground-launched missile systems that substantially improve China’s capability to strike both fixed and moving targets out to the second island chain. China’s ability to threaten U.S. air bases, aircraft carriers, and other surface ships presents serious strategic and operational challenges for the United States and its allies and partners throughout the Indo-Pacific.”

“Prior to the PLA [Chinese military] achieving its objectives of becoming a “modern” and “world-class” military, Beijing may use coercive tactics below the threshold of military conflict rather than resorting to a highly risky use of military force to achieve its goals in the region. However, as military modernization progresses and Beijing’s confidence in the PLA increases, the danger grows that deterrence will fail and China will use force in support of its claims to regional hegemony.”
A Fifth of China’s Homes Are Empty: That’s 50 Million Apartments”, Bloomberg News, 8Nov18
SURPRISE

This article provides further evidence that improvements in China’s military capabilities are occurring at the same time as its financial system and economy’s situation is becoming more fragile and precarious.

“The nightmare scenario for policy makers is that owners of unoccupied dwellings rush to sell if cracks start appearing in the property market, causing prices to spiral. The latest data, from a survey in 2017, also suggests Beijing’s efforts to curb property speculation -- considered by leaders a key threat to financial and social stability -- are coming up short.”

In “China’s Real Estate Market”, Liu and Xiong provide more important background on this issue.

As they note, “The real estate market is not only a key part of the Chinese economy but also an integral component of China’s financial system. In 2017, housing sales totaled 13.37 trillion RMB, equivalent to 16.4% of China’s GDP. The real estate market is also deeply connected to China’s financial system through several important channels.”

“First, housing holdings are the biggest component of Chinese households’ asset portfolios, partly due to a lack of other investment vehicles for both households and firms in China’s still underdeveloped financial markets.”

“Second, China’s local governments heavily rely on land sale revenues and use future land sale revenues as collateral to raise debt financing.”

“Third, firms also rely on real estate assets as collateral to borrow, and since 2007, firms, especially well-capitalized firms, have engaged heavily in acquiring land for investment purposes.”

“Finally, banks are heavily exposed to real estate risks through loans made to households, real estate developers, local governments, and firms that are either explicitly or implicitly backed by real estate assets…”

Through the third quarter of 2016, property-related loans totaled 55 trillion RMB, accounting for about 25% of China’s banking assets. Among these loans, mortgage loans to households accounted for 17.9 trillion, loans to real estate developers accounted for 14.8 trillion (including 7 trillion in regular loans, 6.3 trillion in credit through shadow banking, and 1.5 trillion through domestic bond issuance), and loans collateralized by real estate assets to firms and local governments accounted for 22.2 trillion. This heavy real estate exposure of banks makes the real estate market systemically important in China’s financial system.”
Risks in China’s Financial System”, by Song and Xiong“
The authors argue that while “a financial crisis in China is unlikely to happen in the near future, the ultimate financial risk lies with declining Chinese economic growth.” They point to “a vicious circle of distortions in the financial system has lowered the efficiency of capital allocation and thus economic growth, which will eventually exacerbate financial risks.”
Chinese Influence and American Interests”, published by the Hoover Institution
“For three and a half decades following the end of the Maoist era, China adhered to Deng Xiaoping’s policies of ‘reform and opening to the outside world” and “peaceful development.’

“After Deng retired as paramount leader, these principles continued to guide China’s international behavior in the leadership eras of Jiang Zemin and Hu Jintao. Admonishing Chinese to ‘keep your heads down and bide your time,’ these Party leaders sought to emphasize that China’s rapid economic development and its accession to “great power” status need not be threatening to either the existing global order or the interests of its Asian neighbors.”

“However, since Party general secretary Xi Jinping came to power in 2012, the situation has changed. Under his leadership, China has significantly expanded the more assertive set of policies initiated by his predecessor Hu Jintao. These policies not only seek to redefine China’s place in the world as a global player, but they also have put forward the notion of a “China option” that is claimed to be a more efficient developmental model than liberal democracy.”

“While Americans are well acquainted with China’s quest for influence through the projection of diplomatic, economic, and military power, we are less aware of the myriad ways Beijing has more recently been seeking cultural and informational influence, some of which could undermine our democratic processes. These include efforts to penetrate and sway—through various methods that former Australian prime minister Malcolm Turnbull summarized as ‘covert, coercive or corrupting’—a range of groups and institutions, including the Chinese American community, Chinese students in the United States, and American civil society organizations, academic institutions, think tanks, and media…”

“China’s influence activities have moved beyond their traditional United Front focus on diaspora communities to target a far broader range of sectors in Western societies, ranging from think tanks, universities, and media to state, local, and national government institutions. China seeks to promote views sympathetic to the Chinese Government, policies, society, and culture; suppress alternative views; and co-opt key American players to support China’s foreign policy goals and economic interests.”
China’s Xi Jinping revives Maoist call for ‘self-reliance’”, Financial Times 12Nov18
SURPRISE

Even as Xi has sought to position China as a champion of globalisation amid the US retreat into protectionism, the call for “self-reliance” highlights how he is also advocating mercantilist policies that could reshape global supply chains…
False hopes of trade truce between US and China after the G-20 meeting in Argentina were quickly dashed by the arrest in Vancouver of the CFO of Huawei (on a charge of conspiring to evade US sanctions on Iran), and China’s subsequent threat to impose grave consequences on Canada if she is not released.
Make no mistake. The Second Cold War has begun.

As Ely Ratner notes in Foreign Affairs this month, “There is No Grand Bargain with China”:

“The days when the world’s two largest economies could meet each other halfway have gone. Over the course of his first five-year term, Xi passed up repeated opportunities to avert rivalry with Washington. His increasingly revisionist and authoritarian turn has instead eliminated the possibility of a grand bargain between the United States and China. On most issues of consequence, there is simply no overlap between Xi’s vision for China’s rise and what the United States considers an acceptable future for Asia and the world beyond.”
Change in Post-Putin Russia?” by Andrew Wood, in The American Interest
SURPRISE

This is an excellent analysis that should improve investors’ mental model(s) of the forces driving future scenarios for Russia.

“Putinist authoritarian rule has returned Russia to the dilemma confronting the Soviet Union at the end of the Brezhnev era: whether it can rethink or reformulate its fundamental purposes without un-leashing forces that its rulers cannot control.”

“Russia has reverted to a condition comparable to that which led in the end to the fall of the USSR. Today’s Kremlin, like its Soviet predecessor, has proved unable to adequately address the linked questions of how to secure beneficial relationships with the outside world, responsible governance, and stable economic and social development.”

“Putin’s Russia is ruled by an opaque and shifting power structure centered on the Kremlin. It is now devoid of authoritative institutions beyond that framework that would enable Russia to develop into a fully functional or accountable state.” Can this change? Putin’s mission was from the beginning to re-establish “order,” with the recipe of a centralized KGB/FSB as its mandatory magic ingredient. Maintaining such order is still his central purpose, within Russia and beyond it.”

“Putinist authoritarian rule has thereby returned Russia to the dilemma confronting the Soviet Union at the end of the Brezhnev era: whether it can rethink or reformulate its fundamental purposes without unleashing forces that its rulers cannot control. Putin’s Kremlin has in consequence become increasingly determined to centralize decision making and to preserve its hold on power.”

“Rethinking Russia’s options as to its international relations, system of governance, and economic and social policies has thereby over time become more difficult and more risky than it once might have been…Putin has no compelling view as to what new domestic policies he can or should offer his public. That has made the myth of defending a besieged Fortress Russia an essential buttress for his regime.”

“Russia’s governing structures have become predominantly staffed and directed by law enforcement and security agencies (Siloviki). The KGB was never in overall political charge in Brezhnev’s time, or even Andropov’s. It occupied a much-reduced place under Yeltsin. But the FSB in its various guises is now at the undisciplined heart of government under Putin, expressed in a variety of security organs under differing acronyms and troubled by internal rivalries. The link between the Russian security organs and Putin’s preoccupation with Russian nationalism is an essential element in that dominance, a preoccupation naturally shared with Russia’s military organizations.”

“The Siloviki, broadly defined, also have parallel interests in the opportunities for enrichment opened up to them by their role. Those interests extend to cooperation with organized crime groups and working with illegitimate but tolerated vigilante forces.”

“The Siloviki will have their say in determining whoever or whatever succeeds Putin. There may well be divisions among them but it would take a stubborn courage to suppose that any of their leaders might perhaps favor liberalizing reform…Absent a change of direction over the next few years, [the Siloviki] will inherit a Russia weakened by an economy and society troubled by low growth, secured in place by the politically determined structures imposed upon it.”

“It follows from the above account that Russia will not in the predictable future find a way to address the linked questions of how to secure beneficial relations with the outside world, responsible governance, and stable economic and social development.

“Those Russians who fear that a car crash is inevitable sooner or later, and possibly even before 2024, have a persuasive case to make. There are a number who judge that only such a catastrophe will enable Russia to escape from its present travails. If the fear of an imminent internal crisis while Putin is still in charge proves justified, its implications for the West could well prove troubling. That would also be the case if, as seems more plausible, the next Russian leadership proves unable to establish and legitimate its authority.”
“Providing for the Common Defense”, by the independent, non-partisan “Commission on National Defense Strategy for the United States”, established by the US Congress.
SURPRISE

This report reviews the 2018 National Defense Strategy published by the Trump Administration.

Its key conclusion is blunt, and needs to be seen in the context of the Report of the US-China Economic and Security Review Commission.

“The security and wellbeing of the United States are at greater risk than at any time in decades. America’s military superiority—the hard-power backbone of its global influence and national security—has eroded to a dangerous degree. Rivals and adversaries are challenging the United States on many fronts and in many domains. America’s ability to defend its allies, its partners, and its own vital interests is increasingly in doubt. If the nation does not act promptly to remedy these circumstances, the consequences will be grave and lasting.”
The Power of Nations: Measure What Matters” by Michael Beckley
SURPRISE

Most quantitative assessments of relative national power are based on comparisons of gross resources. Beckley argues (and provides evidence) that comparing net resources is a better measure.

Using this metric, he claims that the United States’ net power advantage over China is still substantial. A very thought provoking challenge to a lot of today’s conventional wisdom.

“China may have the world’s biggest economy and military, but it also leads the world in debt; resource consumption; pollution; useless infrastructure and wasted industrial capacity; scientific fraud; internal security spending; border disputes; and populations of invalids, geriatrics, and pensioners. China also uses seven times the input to generate a given level of economic output as the United States and is surrounded by nineteen countries, most of which are hostile toward China, politically unstable, or both. Accounting for even a fraction of these production, welfare, and security costs substantially reduces the significance of China’s rise.”
What Deters, and Why” by Mazarr et al from RAND
SURPRISE

Another report from RAND that will improve our mental models of conflict.

“The challenge of deterring territorial aggression, which for several decades has been an afterthought in U.S. strategy toward most regions of the world, is taking on renewed importance. An increasingly belligerent Russia is threatening Eastern Europe and the Baltic States with possible aggression, conventional and otherwise. China is pursuing its territorial ambitions in the East and South China Seas with greater force, including the construction of artificial islands and occasional bouts of outright physical intimidation. North Korea remains a persistent threat to the Republic of Korea (ROK), including the possibility of large-scale aggression using its rapidly advancing nuclear arsenal.”

“Yet the discussion of deterrence—as a theory and practical policy requirement—has lagged in U.S. military and strategy circles. This study aims to provide a fresh look at the subject in this context, with two primary purposes: to review established concepts about deterrence, and to provide a framework for evaluating the strength of deterrent relationships…”

“The study stems from a specific research question: What are the requirements of effective extended deterrence of large-scale military aggression? … Our research highlighted several specific themes about successful extended deterrence, including:”

“Potential aggressors’ motivations are highly complex and typically respond to many variables whose interaction is difficult to anticipate.”

“Generally, opportunism in aggression seems less common than desperation caused by real or perceived threats to security or status.”

“Clarity and consistency of deterrent messaging is essential. Half-hearted commitments to allies risk being misperceived.”

“A ‘firm but flexible’ approach strengthens, rather than weakens, deterrence; leaving an adversary no way out is not an effective way to sustain deterrence. Compromise and concession are typically part of any version of successful extended deterrence of large-scale aggression.”

“Multilateral deterrence contexts are especially dangerous. Deterring an aggressive major power while restraining an ally from taking provocative actions at the same time is extremely difficult…”

“In sum, this analysis suggests that aggressor motivations serve as the first, and in some ways decisive, variable for interstate deterrence outcomes. Weakly motivated aggressors are easy to deter; intensely motivated ones, whose level of threat perception verges on paranoia, can be impossible to deter….”

“This analysis also suggests that clarity in what is to be deterred, and how the United States will respond if deterrence fails is the second essential element of a successful deterrent posture.”
Uncertainty in Western Europe continues to increase.
Brexit confusion has only gotten worse this month. Meanwhile, France is faced with worsening street demonstrations over tax increases (and Macron’s policies more generally); in Germany the CDU party struggles to decide on a successor to Angela Merkel who is sufficiently conservative to slow the growth in support for the (right) populist AfD party without moving so far the the right that they lose support of in the center; and Italy continues to play a game of budget chicken with the EU.
Oct18: New National Security Information: Indicators and Surprises
Why Is This Information Valuable?
Beijing’s Nuclear Option: Why a U.S. – Chinese War Could Spiral Out of Control” by Caitlin Talmadge, in Foreign Affairs (Also, “Would China Go Nuclear?” by Caitlin Talmadge in International Security)
SURPRISE.

“The odds of a U.S. – Chinese confrontation going nuclear are higher than most policymakers think.”

Chinese nuclear forces are embedded with conventional forces, and thus vulnerable to loss in US deep strike against the latter, which could create a “use them or lose them” situation.
America’s New Attitude Towards China is Changing the Countries’ Relationship” in The Economist 18Oct18
A broadly-based interdependence ties Beijing’s pigs to Iowa’s fields, interweaves supply chains and distribution networks across the Pacific and has seen copious Chinese investment in America. That had, until recently, led observers in both China and America to think attitudes like Mr. Trump’s could be nothing but bluster.”

“Though relations might be testy from time to time, the economic logic which favoured getting along was simply too strong to ignore. But American unease about China’s growing technological heft, increasing authoritarianism and military strength is now overriding that logic.”

“America is undergoing a deep shift in its thinking about China on right and left alike. There is a new consensus that China has a deliberate strategy to push America back and impose its will abroad, and that there needs to be a strong American response”.

Meanwhile in China, “Well-connected scholars and retired officials have shared their concerns with Western contacts about a febrile mood within China’s national security establishment. They detect genuine excitement over the prospect of a great-power contest in which China is one of the protagonists. This coincides worryingly with the squeezing of public space for discussion. Scholars are not now supposed to debate foreign policy in the open, and strident nationalists dominate what debate there is.”

“Even the idea of an expensive arms race with America strikes some Chinese experts as a fine plan, given their confidence in the long-run potential of their economy. In this dangerous moment, blending grievance and cockiness, it seems astonishing to remember that less than a generation ago Chinese leaders assured the world that they sought only a ‘peaceful rise’.”
Many stories about China’s mass detention of several hundred thousand to more than one million Muslim Uighurs in the western province of Xinjiang
China has stopped denying, and is now defending its actions in Xinjiang, calling the camps “vocational and educational training centers”. This further worsens China’s relationship with Western nations, and especially the US.
China Faces a Debt Iceberg Threat, Warns Rating Agency”, Financial Times, 16Oct18
“China could be facing a “debt iceberg with titanic credit risks” following a boom in infrastructure projects at local governments around the country, rating agency S&P Global has warned.”

“Local governments could have accrued a debt pile hidden off their balance sheet as high as Rmb30tn to Rmb40tn ($4.5tn to $6tn) following “rampant” growth in borrowings, said S&P Global.”

“The mounting debt in so-called local government financing vehicles, or LGFVs, hit an “alarming” 60 per cent of China’s gross domestic product at the end of last year and was expected to lead to increasing defaults at companies connected to small governments across the country.”
This month saw more indicator stories about protests by Chinese homeowners angry at falling prices; by parents angry at the education system; and by veterans angry at their treatment. (The Economist has a story about the broader context of these protests (“Why Protests are So Common in China”) and concludes that they are all indicators of rising social stress.
Protests add to pressure on the Chinese government to stimulate the economy, despite already high debt levels and the declining marginal productivity of debt (the amount of GDP growth produced by additional amounts of debt).

While Xi Jinping appears to be firmly in control, protests indicate an underlying level of dissatisfaction, which, at some point, could support rapid change in China.
Danger: Falling Powers” by Hal Brands
SURPRISE.

“We often lose sight of a different pathway to great-power war, for peril may emerge when a country that has been rising, eagerly anticipating its moment in the sun, peaks and begins to decline before its ambitions have been fulfilled. The sense that a revisionist power’s geopolitical window of opportunity is closing, that its leaders cannot readily deliver the glories they have promised the population, can trigger rashness and risk-taking that a country more confident in its long-term trajectory would avoid.”
China’s Coming Financial Crisis and the National Security Connection” by Stephen Joske
This article offers a scenario that is an example of Brand’s thesis.
Improving C2 and Situational Awareness for Operations in and Through the Information Environment” by Paul et al from the RAND Corporation
Noting that “defeat is a cognitive outcome” RAND analyzes the extent to which information operations (IO) in the information environment (IE) have been integrated with situation awareness and operations in the land, sea, air, and space environments. The authors conclude that the integration of IE situation awareness and operations with the other environments has, up to now, been weak.

This echoes findings from Defense Science Board 2018 Summer Study on “Cyber as a Strategic Capability”, which concluded that, “Current cyber strategy is stalled, self-limiting, and focused on tactical outcomes. The DoD must build and adopt a comprehensive cyber strategy.”
US Vice President Mike Pence’s 4Oct18 speech at the Hudson Institute
SURPRISE.

Pence effectively declared a new Cold War with China. His speech complemented the new US National Security Strategy that describes “a new era of great power competition.”

“America had hoped that economic liberalization would bring China into a greater partnership with us and with the world. Instead, China has chosen economic aggression, which has in turn emboldened its growing military.”

“Nor, as we had hoped, has Beijing moved toward greater freedom for its own people. For a time, Beijing inched toward greater liberty and respect for human rights. But in recent years, China has taken a sharp U-turn toward control and oppression of its own people”

“By 2020, China’s rulers aim to implement an Orwellian system premised on controlling virtually every facet of human life — the so-called “Social Credit Score.” In the words of that program’s official blueprint, it will “allow the trustworthy to roam everywhere under heaven, while making it hard for the discredited to take a single step.”

While there have been many indicators that a return to the previous relationship between China and the United States is increasingly unlikely, this speech was a surprisingly blunt statement that the US administration’s view that the relationship will be characterized by higher levels of conflict in the years ahead.
Interagency Task Force Report: “Assessing and Strengthening the Manufacturing and Defense Industrial Base and Supply Chain Resiliency of the United States

Also: GAO Report: “Weapons Systems Cybersecurity
This new report found significant vulnerabilities, particularly dependence on foreign made components (including components manufactured in China), as well as weakening worker capabilities in the United States.

The GAO concluded that, "The Department of Defense (DOD) faces mounting challenges in protecting its weapon systems from increasingly sophisticated cyber threats. This state is due to the computerized nature of weapon systems; DOD’s late start in prioritizing weapon systems cybersecurity; and DOD’s nascent understanding of how to develop more secure weapon systems. DOD weapon systems are more software dependent and more networked than ever before.”

“Automation and connectivity are fundamental enablers of DOD’s modern military capabilities. However, they make weapon systems more vulnerable to cyber attacks. Although GAO and others have warned of cyber risks for decades, until recently, DOD did not prioritize weapon systems cybersecurity. Finally, DOD is still determining how best to address weapon systems cybersecurity.”
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Sep18: New National Security Information: Indicators and Surprises
Why Is This Information Valuable?
In addition to headlines about the growing China-US trade war, (and to a lesser extent high Chinese debt/GDP and the fragility of its shadow banking system), other stories appeared in September, including growing frustrations as increasing automation produces rising layoffs, repression of Marxist student movements that have attempted to unionize workers, protests by People’s Liberation Army veterans over their treatment, and parental anger over school crowding.
As summarized by George Magnus in his new book, “Red Flags: Why Xi’s China is in Jeopardy”, increasing use of repression in China – from growing use of surveillance technology to Uyghur concentration camps to forced acquisitions of private companies by state owned companies – comes in response to evidence of growing dissatisfaction within the nation. In the context of Chinese history, this is a pattern that repeats. These indicators provide a reminder that as China-US conflict increases, its domestic problems are also serious.
China Doesn’t Want to Play by the World’s Rules: Beijing's plans are much bigger than the trade war.” By Abigail Grace

“Securing economic growth is a question of existential importance for Xi and his comrades. The Chinese Communist Party knows that it must deliver a higher quality of life to Chinese citizens in order to retain popular support—or else increase repression of internal dissent.

Xi has personally staked out hypernationalist positions and silenced any opposition to his authority, thereby increasing his own personal culpability for losses in a trade war. In fact, rumors that Xi could be facing domestic political trouble have abounded in recent weeks, raising questions about the costs of his shift away from the collective leadership model.

China’s leadership knows that addressing the U.S.-China trade imbalance is a personal priority for
Trump and is priming its own population for a long and ugly fight.

Despite U.S. pressure, China remains committed to its own economic agenda because it believes that achieving technological supremacy today will enable it to write tomorrow’s rules…As long as Chinese leaders
think that the key to winning tomorrow is dominating today’s technology through all means short of war, they will remain unwilling to address the structural issues driving economic tensions between the United States and China.”
An insightful compliment to Magnus’ book, that helps to develop a better mental model of the various forces driving Chinese behavior, that could push us closer to, or away from, potential critical national security thresholds.
The Perfect Weapon: War, Sabotage, and Fear in the Cyber Age” by David Sanger “Bluntly, there are no effective laws which govern cyberhacking originating in St Petersburg or Shanghai— or, for that matter, in Tehran or Pyongyang”
Further evidence of the profound change that is occurring in the nature of international conflict, which has substantially heightened uncertainty and the potential for non-linear events with substantial negative impact.
Assessment of the Role of Cyber Power in Interstate Conflict” by Eric Altamura.

“To understand how actors attack computer systems and networks to accomplish limited objectives during war, one must first identify what states actually seek to accomplish in cyberspace… Achieving such an advantage requires targeting the key functions and assets in cyberspace that enable states to accomplish political objectives…To deny an opponent the ability to utilize cyberspace for its own purposes, states can either attack information directly or target the means by which the enemy communicates its information.

Once an actor achieves uncontested use of cyberspace, it can subsequently control or manipulate information for its own limited purposes, particularly by preventing the escalation of war toward its total form…access to information through networked communications systems provides a decisive advantage to military forces by allowing for “analyses and synthesis across a variety of domains” that enables rapid and informed decision-making at all echelons. The greater a decision advantage one military force has over another, the less costly military action becomes.

Secondly, the ubiquity of networked information technologies creates an alternative way for actors to affect targets that would otherwise be politically, geographically, or normatively infeasible to target with physical munitions.
Finally, actors can mask their activities in cyberspace, which makes attribution difficult. This added layer of ambiguity enables face-saving measures by opponents, who can opt to not respond to attacks overtly without necessarily appearing weak.

In essence, cyber power has become particularly useful for states as a tool for preventing conflict escalation, as an opponent’s ability to respond to attacks becomes constrained when denied access to communication networks.
Societies’ dependence on information technology and resulting vulnerability to computer network attacks continues to increase, indicating that interstate violence may become much more prevalent in the near term if aggressors can use cyberattacks to decrease the likelihood of escalation by an adversary.”
Surprise.

This article caused me to expand my mental model based on a more detailed understanding of the logic that could guide nations’ use of cyberweapons in future conflicts, and how a cyber advantage could actually lead to an increased probability of kinetic conflict.
How China’s Middle Class Views the Trade War”, by Cheng Li in Foreign Affairs.
Up to now the middle class has quietly criticized Xi; but harsher trade sanctions may shift them to blaming Trump.
National Will to Fight” by McNerney et al from RAND Corporation
Surprise.

The authors “define national will to fight as the determination of a national government to conduct sustained military and other operations for some objective even when the expectation of success decreases or the need for significant political, economic, and military sacrifices increases.” They also note that it is “poorly analyzed and the least understood aspect of war.” This initial study is the beginning of an attempt to change that, and improve our mental models for thinking about this critical issue.
Clash of Civilizations – Or Clash Within Civilizations?” by Cropsey and Halem in The American Interest
Surprise.

On the 25th anniversary of the publication of Samuel Huntington’s classic essay on “The Clash of Civilizations”, the authors analyze how well this concept has stood the test of time, and how it needs to be modified to better understand interstate conflict drivers in today’s world, including conflicts within and not just between civilizations. It should provide a significant improvement to many people’s mental models of international competition and conflict. It also integrates well with RAND’s “National Will to Fight.”