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Experts Warn of Security Risks in Financial Downturn

"We had 30 years of a Chinese success story, but we're now entering uncharted waters," said Adam Segal, a senior fellow at the Council on Foreign Relations.

Yet many China scholars also see great opportunity for the communist giant. Even as the global recession cuts into its export markets, the country continues to experience robust growth at home, thanks to the consumption habits of its rapidly growing middle class. A hefty economic stimulus will ensure continued, if modest, growth, even if exports flat line, said Albert Keidel, a former economist for the World Bank and the Treasury Department and now an East Asia expert at the Carnegie Endowment for International Peace.

China already was on track to surpass the United States as the world's largest economy, perhaps as early as 2030. Now, many experts believe the global recession could help it do so faster.

The implications are enormous for the global economy and for international security, Keidel said.

"If we have a long recession and China catapults itself forward with double-digit growth, those timelines move forward," he said.

China could quickly outpace the United States to become the world's influential economy, while also competing in other areas long dominated by Americans. Even if China chooses to keep its military growth on a modest pace, the country will become a significant competitor in key areas such as space exploration, several experts said.

"It's not about China moving up the ladder as much as it's about us tripping and falling down the ladder," said Derek Scissors, an Asia specialist at the Heritage Foundation, a Washington think tank.

Will the United States be able to retain its edge at a time when its own military spending is threatened with cuts? In recent interviews, several intelligence officials said they anticipate smaller budgets for military hardware and surveillance aircraft because of the economic strain.

"They are expensive programs and some are hard to understand, but they are absolutely invaluable," Allen, the Homeland Security intelligence chief, said of the surveillance systems used in Iraq and along the Afghan-Pakistani border. "The advances we have made are tremendous, but I see a slowing of our technology edge, and that concerns me."

James R. Clapper Jr., the Pentagon's undersecretary of defense for intelligence, said his aides are already looking at ways to consolidate and cut. Since the Sept. 11 attacks, counterterrorism programs have had "a lot of money -- we've been awash in it, frankly," he told the gathering of intelligence officials and defense contractors in Nashville. But in leaner times, intelligence officials will have to make tough choices.

"I always think of the apocryphal statement attributed to the chancellor of the exchequer in the United Kingdom in 1927: 'We are running out of money, so we must begin to think,' " Clapper said. "I think we are going to be in another era like that."

Staff researcher Julie Tate contributed to this report.


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