One reason China’s recent aggression won’t result in war is that we are China’s largest debtor at about $1.241 trillion, as of June 2016. It’s not exactly an enviable position for us, but it works for us in respect that payments on this debt and the credit markers on it (which they can trade on the open market) are significant to the PRC economy. If anything happens to our economy that coulld divert these payments—such as war—the PRC economy would be severely affected. In our case, one could employ the old J. Paul Getty quote:
“If I owe the bank one million dollars, that’s my problem. If I owe the bank 100 million dollars, that’s the bank’s problem.”
We are a significant income stream and trading partner to the PRC. They are reluctant to handicap us, or we could miss the vig. That is why they slap North Korea’s hand when the PRK gets too far out of hand with their missiles into the Sea of Japan—too close to the PRK’s old enemy and our close ally, Japan.
But the most significant reason the PRC doesn’t want to confront us head-to-head militarily is that, although they have formidable armed forces well equipped with modern armament, they would not be able to bring us to capitulation because they have no way to get enough ground forces into North America quick enough to do so—and they know a nuclear exchange could ensue at that point which would result in mutual suicide. They can hurt us, and we can hurt them, but there is no way either one of us can win that war—at the moment. In the meantime, we do business.