The scenario is the Korean Peninsula. The protagonists are the two Koreas, the U.S., Russia, and the People's Republic of China. Back in the day, it was Russia and China against the U.S. Today it would appear to be U.S. and Russia against China. The first Korean crisis enabled Stalin to avoid a U.S.-China geopolitical alliance. This second one enables Vladimir Putin to do the same while simultaneously allowing the U.S. to justify the movement of personnel and equipment needed to accomplish the strategic encirclement of China.
The U.S. currently has a defense budget four times that of China, which is the world’s second largest investor in terms of weaponry. The pace of growth of China's military spending is impressive, and for now, has achieved an increase in the order of 11% per annum. This has led India to pursue a major rearmament strategy courtesy of Russia that has unnerved the U.S. Therefore we have now begun a phase of operational research aimed at understanding when China's military spending at today's pace, will equal the U.S.in sheer military might.
According to the 2013 edition of The Military Balance published by the International Institute for Strategic Studies (IISS) the U.S.-China convergence will occur in 2023. This calculation, based on the extrapolation of Chinese growth data since 2001 and taking into consideration the U.S. defense budget's curtailments via sequestration (thanks entirely to the budget clash between elephants and donkeys). However, if China were to devote more funds to domestic consumption and improving the standard of living of its citizens (Resolution of the Congress of the Chinese Communist Party in 2012), the military spending rate, reduced by 50%, causes the convergence date to slide by two decades to 2042.
When considering this China-U.S. contest in the Asian "Great Game" scenario we should take into consideration the existing security guarantees the U.S. has pledged to Japan, Korea, Taiwan, Thailand, and the Philippines. In this case, having to maintain international credibility, the U.S. will increase its military investment in Asia.
Japan initiated diplomatic hostilities over the Senkaku Islands, uninhabited and Chinese all along, but privately owned by a Japanese family. In addition to that controversy we have the soap opera starring North Korea's little dictator Kim Jong-un, son of daddy dictator Kim Jong-il, and nephew of grandpa dictator Kim Il-sung, who had extremely strong ties with the USSR. Interestingly enough, and apparently unbeknownst to the mainstream media, China's influence over North Korea is more theoretical than real. The North Koreans hate foreign influence, including that of the Chinese. However, since China would never admit to that, it will stand by its ally and China's Congress will open the purse strings and launch into a military spending spree.
Russia will be happy to continue arming India, currently the largest buyer in the world. The U.S. will sell to Korea, Japan, Thailand, the Philippines, and Taiwan; however, the U.S. will moderate sales to Taiwan as not to rattle China. Simultaneously, China, afraid of a Russia-U.S. alliance will buy more U.S. bonds, maybe even medium term in addition to the short term it is buying now.
And yet, life goes on…