Since the first Gulf War in 1991, the Chinese have been increasing their military budget roughly by 11 percent a year on average. There's no way that China will be able to sustain that sort of military expenditure. And then the most important reason is because of its population changes.

We're seeing China push very hard in its immediate neighborhood, particularly in the maritime zone surrounding China, to kind of create a security zone for itself, trying to lock in the territorial and maritime gains that it can now, before a period of much more difficult choices arises some time in the 2020s.

Emphasis in China is done aggressively. Sometimes, this is done rudely, but most of the time it's just done routinely. It's just a normal thing in the course of your encounters with Chinese people in every walk of life.

When you arrive in China nowadays, one of the first things you note is the emphasis placed on you, a non-Chinese person, being an outsider.

China will have the biggest aging crisis that the world has ever seen over the next generation, and this happens at a time when Chinese ambitions, geopolitically speaking, are expanding.

Soon numbers of Chinese people will exit the work force, and the Chinese work force, which has already begun to shrink, will shrink in a vastly accelerated way. And so China's going to face huge retirement costs and Social Security costs, health care costs, related to this immense aging of the population.

China has its own Baby Boom generation. And China's baby boom generation, because of the size of China itself, is the world's largest baby boom generation.