Angle of Attack

A pair of new reports highlights where the U.S. and China are making their respective investments in each other’s backyard.

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Last year, for the first time ever, China ranked No. 1 in the world among nations expressing interest in buying U.S. firms, according to the U.S. Treasury.

Meantime, while the U.S. military says its evolving Air-Sea Battle concept of waging war isn’t aimed at any specific nation, officers privately acknowledge that the key potential foe that falls within its crosshairs is China. A new private report pegs the cost developing of that capability at $524.5 billion through 2023.

The Treasury Department requires foreign companies to notify the U.S. Treasury’s Committee on Foreign Investment in the U.S. (CFIUS) to assess what impact such sales might have on U.S. national security.

China’s 23 such notices in 2012—when Beijing invested $11.5 billion in U.S. companies—was more than double 2011’s 10 notices, and nearly 300% higher than 2010’s six notifications, according to a just-released CFIUS report. Most were for manufacturing companies, although they also included the $4.7 billion purchase of Smithfield Foods Inc. by a Chinese concern.

The U.S. government, including defense and homeland-security agencies, generally conducts such reviews in secret, although it does file annual summaries with Congress about these overseas investments. There have been persistent concerns that China, through state-owned companies, is seeking to pilfer U.S. technological secrets through its purchase of U.S. firms.

Between 2010 and 2012, China bought 20 U.S. manufacturing firms, 12 mining and construction companies and seven financial concerns. Last year, President Obama barred one Chinese firm from buying four wind farms “all within or in the vicinity of restricted air space at Naval Weapons Systems Training Facility Boardman in Oregon,” the report said. It marked the first such action by the Obama administration.

The second report examines the Pentagon’s Air-Sea Battle concept, a military means to counter a foe’s anti-access, area denial (A2/AD) strategy. “While A2/AD ideas are not new—the desire to deny an adversary both access and the ability to maneuver are timeless precepts of warfare—technological advances and proliferation threaten stability by empowering potentially aggressive actors with previously unattainable military capabilities,” the Pentagon noted in a May report, citing new generations of missiles and mines. “The range and scale of possible effects from these capabilities presents a military problem that threatens the U.S. and allied expeditionary warfare model of power projection and maneuver.”

G2 Solutions, an independent defense-analysis firm in Kirkland, Wash., has just published a new $2,800 report that “quantifies and presents program opportunities, likely effects and prioritizations brought about by the Air-Sea Battle Concept over time” (It’s a safe bet that defense contractors, eager to invest in growth areas, are the target audience for the study). Air-Sea Battle “will drive $524.5 billion in U.S. DOD [Department of Defense] procurement and research, test, development and evaluation, spending through 2023,” the company said, after studying 191 U.S. defense programs that constitute the Pentagon’s evolving way of waging war as it pivots from Europe to the Pacific.

According to a summary of the 156-page report, Air-Sea Battle “looks to prepare the U.S. and its allies to deter or defeat China’s rising military power. If deterrence fails the objective is to defeat the People’s Liberation Army, (subsequent DoD [Department of Defense] pronouncements have moved away from singling out a particular nation).”

But even American experts in the region don’t seem to believe that Air-Sea Battle isn’t aimed at a potential Chinese military threat. “China’s developing guidable ballistic missiles that threaten our aircraft carriers if they successfully test it in the Western Pacific,” J. Stapleton Roy, U.S. ambassador to China from 1991 to 1995, said last month. “We’re responding with an Air-Sea Battle concept that would involve taking out facilities on the China mainland. Whoops. We’re talking rapid escalation to very dangerous situations if we go down that route.”

The Chinese, not surprisingly, are sensitive to such saber-rattling. Senior U.S. military officials have taken pains to stress Air-Sea Battle shouldn’t been seen as targeting China. “If I’m asked, when I’m in China, about Air-Sea Battle, and `Is it aimed at China?’, the answer is `No, it’s not aimed at China,’” Army General Martin Dempsey, chairman of the Joint Chiefs of Staff, said.

But Michael Pillsbury, a longtime Pentagon China watcher, says such assurances aren’t given much weight in Beijing.

“Every executive branch person I’ve been in the presence of, when asked. . .makes that point: `This has nothing to do with China,’ or `It’s not about China,’” Pillsbury said in May. “And if you come from a culture like the Chinese culture—in which deception is praised as one of the highest values in statesmanship—and you hear the United States’ executive branch say `This is not about China,’ you know it absolutely is about China.”