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FBI, CIA Sound Alarm Over China Cold War, Warn "Most Significant" Threat Facing US

"At the end of the day, the Chinese fundamentally seek to replace the United States as the leading power in the world." -Michael Collins, CIA Dep. Asst. Dir. East Asia Mission Center

Forget the Russian hysteria: according to Michael Collins, the CIA’s deputy assistant director for the East Asia Mission Center, it is China that is waging a "quiet cold war" against the United States, using all its resources to try to replace America as the leading power in the world.

"Beijing doesn’t want to go to war", he said during a speech at the Aspen Security Forum in Colorado on Friday, but the current communist government, under President Xi Jingping, is subtly working on multiple fronts to undermine the U.S. in ways that are different than the much-publicized activities being employed by a far weaker Russia, and which the media is obssesed with.

Collins also warned that rising U.S.-China tension goes beyond the trade dispute playing out in a tariff tit-for-tat between the two nations, according to AP.

Among the numerous concerns over China subtle efforts to steal influence he cited pervasive efforts to steal business secrets and details about high-tech research being conducted in the U.S. Meanwhile, the Chinese military is expanding and being modernized even as the U.S., as well as other nations, have complained about China’s construction of military outposts on islands in the South China Sea, which Collins said he "would argue that it’s the Crimea of the East."

Collins’ comments track warnings about China’s rising influence issued by others who spoke earlier this week at the security conference. The alarm bells come at a time when Washington needs China’s help in ending its nuclear standoff with North Korea.

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Earlier in the week, FBI Director Christopher Wray also underscored US concerns about China, which he said represents the "broadest and most significant threat America faces." During an interview with NBC’s Lester Holt at the Aspen Ideas Forum on Wednesday, Wray said that the FBI has economic espionage investigations in all 50 states that trace back to Chinese activity.

“It covers everything from corn seeds in Iowa to wind turbines in Massachusetts and everything in between,” said Wray. “The volume of it. The pervasiveness of it. The significance of it is something that I think this country cannot underestimate."

And yet, when Trump cracks down on Chinese policies across various fields including trade and theft of various trade, military, government and corporate secrets (i.e. espionage), he gets promptly vilified.

The chorus of anti-China sentiment grew to three when National Intelligence Director Dan Coats also warned of rising Chinese aggression, warning that the U.S. must stand strong against China’s effort to steal business secrets and academic research.

Others joined in: Marcel Lettre, former undersecretary of defense for intelligence, said China has the second-largest defense budget in the world, the largest standing army of ground forces, the third-largest air force and a navy of 300 ships and more than 60 submarines.

“All of this is in the process of being modernized and upgraded,” said Lettre, who sat on a panel with Collins and Thornton.

He said China also is pursuing advances in cyber, artificial intelligence, engineering and technology, counter-space, anti-satellite capabilities and hypersonic glide weapons. Army Lt. Gen. Robert Ashley, head of the Defense Intelligence Agency, told a congressional committee earlier this year that China is developing long-range cruise missiles — some capable of reaching supersonic speeds.

“The Pentagon has noted that the Chinese have already pursued a test program that has had 20 times more tests than the U.S. has."

Franklin Miller, former senior director for defense policy and arms control at the National Security Council, said China’s weapons developments are emphasizing the need to have a dialogue with Beijing.

"We need to try to engage,” Miller said. “My expectations for successful engagement are medium-low, but that doesn’t mean we shouldn’t try."

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Here we bring readers' attention back to what we wrote back in May when we said that for all the talk of the escalating confrontation between the US and China, Bank of America's Chief Investment Officer Mike Hartnett believes that the "trade war" of 2018 should be recognized for what it really is: the first stage of a new arms race between the US & China to reach national superiority in technology over the longer-term via Quantum Computing, Artificial  Intelligence, Hypersonic Warplanes, Electronic Vehicles, Robotics, and Cyber-Security.

This is hardly a secret: China's long-term strategy is laid out in its "Made in China 2025" blueprint: It aims to transform “China’s industrial base” into a “smart manufacturing” powerhouse via increased competitiveness and eroding of tech leadership of industrial trading rivals, e.g. Germany, USA, South Korea; this is precisely what Peter Navarro has been raging against (even if his message is in need of some refinement) and hoping to intercept China's ascent early on while it's still feasible.

At the forefront of China ambitious growth plan, Beijing's investments in "advanced internet and communication technologies, embedded systems and intelligent machines" aim to ensure that 40% of China’s mobile phone chips, 70% of industrial robots, 75% of basic core components and 80% of renewable energy equipment are “Made in China” by 2025.

Meanwhile, the China First strategy will be met head-on by an America First strategy.  Hence the "arms race" in tech spending which in both countries is intimately linked with defense spending. Note military spending by the US and China is forecast by the IMF to rise substantially in coming decades, but the stunner is that by 2050, China is set to overtake the US, spending $4tn on its military while the US is $1 trillion less, or $3tn.

This means that some time around 2038, roughly two decades from now, China will surpass the US in military spending, and become the world's dominant superpower not only in population and economic growth - China is set to overtake the US economy by no later than 2032  - but in military strength and global influence as well.

And as Thucydides Trap clearly lays out, that kind of unprecedented superpower transition - one in which the world's reserve currency moves from state A to state B - always takes place in the context of a real - not trade, not currency  - war.

Which explains BofA's long-term strategic recommendation: "We believe investors should thus own global defense, tech & cybersecurity stocks, particularly companies seen as “national security champions” over the next 10-years."

And here's the reason why:

Because one might as well make some money before the next world war breaks out...