Contractors Poised to Cash in on China Threat Inflation

While the crisis over Russia and Ukraine has dominated recent discussions of U.S. foreign and military policies, it’s important to remember that the driving force behind the push for ever more Pentagon spending lies with concerns over the challenge posed by China. But to a significant degree, these concerns are both misguided and counterproductive.

On the military front, the threat posed by China has been greatly exaggerated. The U.S. outspends China on its military by a three to one ratio, has more than 10 times as many nuclear weapons in its active stockpile, and has capable allies in China’s neighborhood. The real problem is that force or the threat of force will do little to shift China’s policies on economics, human rights, or regional deployments, even as it threatens to spur an accelerated arms race or a conflict between nuclear-armed powers that could be an unprecedented catastrophe. Even so, threat inflation with respect to China will have one clear set of winners: the U.S. arms industry.

As my colleague Eli Clifton has written, key players in the arms industry are already looking forward to reaping the benefits of tensions between the U.S. and China, as well as in other global hot spots. In a recent earnings call, Raytheon Technologies CEO Gregory Hayes said the following:

“[W]e are seeing, I would say, opportunities for international sales. We just have to look to last week where we saw the drone attack in the UAE, which have attacked some of their other facilities. And of course, the tensions in Eastern Europe, the tensions in the South China Sea, all of those things are putting pressure on some of the defense spending over there. So I fully expect we’re going to see some benefit from it.”

Read the full article in Forbes.