441 Ángel Rodríguez García-Brazales, Jorge Turmo Arnal y Óscar Vara Crespo The effect of global economic imbalances on the military strategy of the United States and China. among the lower income groups of the population. As a result, the goods and services produced by Chinese companies will increasingly be targeted at the country’s huge internal market instead of being exported. China’s middle class is currently the world’s second largest after the United States, and the aforementioned measures will cause it to grow even further. In particular, the number of people in the lower-middle class is expected to rise, thus boosting consumption. While the individual consequences of the aforementioned measures are difficult to predict, the general ones are not: exports will drop and imports will rise because a large number of Chinese families with purchasing power will absorb part of the production of national companies – hence fewer exports - and they will also purchase more foreign goods. While the balance of trade will continue to have a surplus, the actual amount of the surplus will be smaller, and the same will occur with the current account surplus. At the same time, the financial account deficit (the money leaving the country to be invested abroad) will also decrease. As a result, China will have fewer funds to invest in U.S. treasury securities, among other things. At this point, it should be pointed out that this process is not the result of deliberate action on the part of the Chinese government, but a consequence its goals, which are to replace export-driven growth with growth fuelled by internal demand. It is an automatic and involuntary phenomenon, but one which will have serious implications for the financing of the U.S. economy and, more specifically, the federal budget. Bearing in mind the weight of military spending in the federal budget, as demonstrated previously, we can expect to see a reduction in expenditure in this area, unless the U.S. government decides to drastically cut spending in other areas or increase taxes. It is unlikely that the U.S. budget deficit can be financed through alternative sources, at least not on the scale it has been up to now with Chinese funds. We should therefore expect to see a reduction in aggregate military spending in the U.S., which will also affect the change in the power balance between the two countries. All available data and trends suggest that the evident superiority of the U.S. military will be reduced. Bear in mind that in the strategic scenario we spoke about in section two, adapting the technology required to roll out ASB in the Pacific would require, in these economic conditions, that the U.S. reduce its budget for the army and the other forces it has deployed around the globe in order to focus on this front. This would strengthen its position in the Pacific, but it would lose influence in the other scenarios. Another option would be to not undertake this project and maintain the current level of deployment in the area while strengthening ties with its traditional allies. This stance would become more and more delicate as China improves the effectiveness of its A2/ AD systems and the U.S.’s traditional allies begin to doubt its capacity to maintain security in the areas of tension. The second question we need to address is whether it is credible to assume that Chi-na would voluntarily use its holdings of U.S. treasury debt to weaken the U.S. eco-nomy and army. As demonstrated previously, China’s holdings of U.S. treasury debt is
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