443 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. borrowers instead of just one. All of this leads us to believe that it is unlikely to happen. The Chinese government may give orders to stop investing in treasury securities, but both countries will ultimately lose. Leon Panetta, Secretary of Defense, was also of this opinion when, in 2011, he made the following statement in a report to Congress: “Attempting to use U.S. Treasury securities as a coercive tool would have limited effect and likely would do more harm to China than to the United States” There is always the possibility that, in the event of an open conflict between the two countries, China could use its investment in U.S. debt as a weapon, even though this would also have adverse effects for the Asians. This is not the subject of our analysis, however. We are concerned with how global imbalances between China and the United States will affect the balance of power between the two countries in the near future. And, as we demonstrated earlier on, this is what is going to happen, if indeed it is not already happening. China does not need to use any kind of coercive tool or threaten to not buy any more U.S. securities, because this is what will inevitably happen. Washington has to worry about its deficit and reduce it. Otherwise it will not be able to fund it in the medium term. Therefore, whether it reduces expenditure in order to tackle the deficit or because it lacks funding, the prospect of reducing public and, hence, military spending in the United States is inevitable. 5. Conclusions In this article we have demonstrated that the balance of power between the United States and China is going to change, and, therefore, so too will U.S. military strategy. The change will come about as a result of a narrowing of the technology and economic gap between the two powers, which has largely been caused by the adjustment of global imbalances. This implies that in the near future, funding the current account deficit of the U.S. will not be as cheap as it has been up to now. Higher interest rates will mean that an increasing amount of public and private resources will have to be allocated to its payment. Furthermore, China, the main lender, will have fewer funds available for lending or will be less willing to continue funding the U.S. deficit. The reduction in the funds available for lending is a result of the change in China’s growth model. Indeed, in the near future, China will find itself constricted by the growth model it has been implementing up to now. The Chinese authorities are perfectly aware of this and have decided to make every effort to change the model so that they are less dependent on the export of cheap, low value-added goods to the rest of the world. Instead, they aim to stimulate internal demand for these same goods and others of a superior quality and added-value. In doing so, they will reduce their current account surplus and, therefore, the amount of funds available to finance other countries, particularly
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