Are the world’s two most powerful nations heading towards
a Thucydides Trap? Harvard Professor Graham Allison sees the US and
China stumbling into the same dynamic that led to the Peloponnesian wars
and that repeated itself between a rising England versus the Dutch
Republic in the 1600s, a rising Germany versus Britain in the early
1900s and a rising Japan versus the US in the 1940s.
a Thucydides Trap? Harvard Professor Graham Allison sees the US and
China stumbling into the same dynamic that led to the Peloponnesian wars
and that repeated itself between a rising England versus the Dutch
Republic in the 1600s, a rising Germany versus Britain in the early
1900s and a rising Japan versus the US in the 1940s.
Warning
lights of an inevitable war between China and the US are flashing red.
The tit-for-tat tariffs threaten to become a full-blown trade war that
could cripple the global economy. Following US President Donald Trump’s
ban on the Chinese telecommunications equipment maker ZTE, the trade
dispute has become more complex, revealing a broader critical landscape
in which the US pushes back against China’s advancement into the global
electronics value chain.
lights of an inevitable war between China and the US are flashing red.
The tit-for-tat tariffs threaten to become a full-blown trade war that
could cripple the global economy. Following US President Donald Trump’s
ban on the Chinese telecommunications equipment maker ZTE, the trade
dispute has become more complex, revealing a broader critical landscape
in which the US pushes back against China’s advancement into the global
electronics value chain.
Moreover, tensions over
the South China Sea point to the strong likelihood of a regional
military conflict. US Defence Secretary Jim Mattis warned last week of
“much larger consequences” if China continues to militarise disputed
islands.
the South China Sea point to the strong likelihood of a regional
military conflict. US Defence Secretary Jim Mattis warned last week of
“much larger consequences” if China continues to militarise disputed
islands.
Both the outcome of the Peloponnesian
wars and basic economics suggest that any such conflict would result in
the worst kind of disruption to the global economy. However, the world
is a very different place from ancient Greece and pre-second-world-war
era.
wars and basic economics suggest that any such conflict would result in
the worst kind of disruption to the global economy. However, the world
is a very different place from ancient Greece and pre-second-world-war
era.
Today, all-out war between large powers
have become unlikely as the nature of the economy has changed and
present-day military technology would make it extremely difficult to
replicate the second world war feats. Moreover, in an interconnected
world, the damage inflicted by a major war between large powers would go
beyond that to the two countries alone.
have become unlikely as the nature of the economy has changed and
present-day military technology would make it extremely difficult to
replicate the second world war feats. Moreover, in an interconnected
world, the damage inflicted by a major war between large powers would go
beyond that to the two countries alone.
Averting
the Thucydides Trap requires both the US and China to focus on
commonalities and find ways to deal with their differences. Regardless
of ideological and geopolitical frictions, the two countries need to
work together on global governance to tackle common challenges: building
a permanent peace mechanism on the Korean peninsula, finding solutions
to terrorism and the refugee crisis, helping to maintain balanced global
economic growth and creating an international environmental regime.
the Thucydides Trap requires both the US and China to focus on
commonalities and find ways to deal with their differences. Regardless
of ideological and geopolitical frictions, the two countries need to
work together on global governance to tackle common challenges: building
a permanent peace mechanism on the Korean peninsula, finding solutions
to terrorism and the refugee crisis, helping to maintain balanced global
economic growth and creating an international environmental regime.
Although
the Trump administration seems to disregard some of these common
challenges, China’s President Xi Jinping has consistently underscored
the country’s efforts towards building “a community of shared future for
humanity” and achieving win-win development across countries. A recent
report by the RAND Corporation, a US think tank, recommends that the US
should establish a comprehensive strategy and leave open the potential
for cooperation to manage emerging rivalry with China.
the Trump administration seems to disregard some of these common
challenges, China’s President Xi Jinping has consistently underscored
the country’s efforts towards building “a community of shared future for
humanity” and achieving win-win development across countries. A recent
report by the RAND Corporation, a US think tank, recommends that the US
should establish a comprehensive strategy and leave open the potential
for cooperation to manage emerging rivalry with China.
On
the business level, there are many similarities between China and the
US, although China follows its own distinctive development model often
questioned by the West. China’s private sector has been thriving and
driving the domestic economy for a decade or so. The sector now
contributes more than 60 per cent of China’s GDP growth and provides
over 80 per cent jobs, according to a Xinhua report last year. The new
internet-based economy represented by e-commerce and car-hailing
services grew twice as quickly as the overall gross domestic product
between 2010 and 2016.
the business level, there are many similarities between China and the
US, although China follows its own distinctive development model often
questioned by the West. China’s private sector has been thriving and
driving the domestic economy for a decade or so. The sector now
contributes more than 60 per cent of China’s GDP growth and provides
over 80 per cent jobs, according to a Xinhua report last year. The new
internet-based economy represented by e-commerce and car-hailing
services grew twice as quickly as the overall gross domestic product
between 2010 and 2016.
Chinese entrepreneurs,
such as the leaders of Alibaba, Tencent, Xiaomi and Didi Chuxing, like
their US counterparts, are risk-takers, willing to accept ambiguities
and actively looking for financial returns. They model their
organisational design on US tech companies instead of Chinese
state-owned enterprises.
such as the leaders of Alibaba, Tencent, Xiaomi and Didi Chuxing, like
their US counterparts, are risk-takers, willing to accept ambiguities
and actively looking for financial returns. They model their
organisational design on US tech companies instead of Chinese
state-owned enterprises.
These entrepreneurs
look to the West, especially the US west coast, for inspiration, with
Tencent being the second-largest foreign investor in the US tech
industry. Meanwhile, many US venture funds such as Sequoia Capital and
IDG Capital have seen high returns on their investment in Chinese tech
companies.
look to the West, especially the US west coast, for inspiration, with
Tencent being the second-largest foreign investor in the US tech
industry. Meanwhile, many US venture funds such as Sequoia Capital and
IDG Capital have seen high returns on their investment in Chinese tech
companies.
Preventing a trade war also requires a
willingness to collaborate. Kishore Mahbubani, Singapore’s former
ambassador to the United Nations, urges rational economic argument in
place of political polarisation and simplistic ideology to cool the
brewing trade war. The cold war rhetoric of blaming China for the US
trade deficit dismisses how close integration with China greatly
benefits the US economy.
willingness to collaborate. Kishore Mahbubani, Singapore’s former
ambassador to the United Nations, urges rational economic argument in
place of political polarisation and simplistic ideology to cool the
brewing trade war. The cold war rhetoric of blaming China for the US
trade deficit dismisses how close integration with China greatly
benefits the US economy.
First, exports to China
bring jobs and opportunities for many, including Americans. According
to a report prepared for the US-China Business Council, US goods and
services to China were worth US$165 billion in 2015, accounting for 7.3
per cent of all US exports and about 1 per cent of US GDP. Because China
is deeply integrated into the global supply chain, these figures
underestimate the benefit to the US economy since they do not account
for re-exported products to China from other countries or the products
bought by China’s neighbours under its influence.
bring jobs and opportunities for many, including Americans. According
to a report prepared for the US-China Business Council, US goods and
services to China were worth US$165 billion in 2015, accounting for 7.3
per cent of all US exports and about 1 per cent of US GDP. Because China
is deeply integrated into the global supply chain, these figures
underestimate the benefit to the US economy since they do not account
for re-exported products to China from other countries or the products
bought by China’s neighbours under its influence.
Second,
US investors also benefit from China’s continued growth at almost 7 per
cent per year. The report says 80 per cent of products made in China by
US companies were sold in China; if redistributed to shareholders and
spent domestically, these profits would support 103,000 jobs and US$11.9
billion to US GDP. Meanwhile, Chinese firms are beginning to invest in
the US. The combined effect of China’s direct investment in the US and
US affiliates of Chinese firms is estimated to support a total of
104,000 jobs and US$10.8 billion in GDP.
US investors also benefit from China’s continued growth at almost 7 per
cent per year. The report says 80 per cent of products made in China by
US companies were sold in China; if redistributed to shareholders and
spent domestically, these profits would support 103,000 jobs and US$11.9
billion to US GDP. Meanwhile, Chinese firms are beginning to invest in
the US. The combined effect of China’s direct investment in the US and
US affiliates of Chinese firms is estimated to support a total of
104,000 jobs and US$10.8 billion in GDP.
Third,
China’s innovation in business is growing by leaps and bounds but, in
general, American businesses have not fully taken advantage of these
opportunities. Foreign companies tend to copy and paste their business
models without reaching out to their fringes even if those fringes could
mean major upside opportunities.
China’s innovation in business is growing by leaps and bounds but, in
general, American businesses have not fully taken advantage of these
opportunities. Foreign companies tend to copy and paste their business
models without reaching out to their fringes even if those fringes could
mean major upside opportunities.
In his book,
Return of Marco Polo’s World: War, Strategy and American Interests, the
American political adviser Robert Kaplan describes an Asian century in
which Eurasia will become the centre of conflict.
Return of Marco Polo’s World: War, Strategy and American Interests, the
American political adviser Robert Kaplan describes an Asian century in
which Eurasia will become the centre of conflict.
Though
one cannot ignore the possibility of small-scale military conflict or
the escalation of the trade war, it behoves all parties to stay calm and
appreciate the importance of stability for mutual benefits. Avoiding
the Thucydides Trap requires rationalism and appreciation of dialogue,
cooperation and common goals from both sides.
one cannot ignore the possibility of small-scale military conflict or
the escalation of the trade war, it behoves all parties to stay calm and
appreciate the importance of stability for mutual benefits. Avoiding
the Thucydides Trap requires rationalism and appreciation of dialogue,
cooperation and common goals from both sides.
Source: South China Morning Post
