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Doomed to Repeat It?

From the July/August 2008 Issue

To understand the rise of China, study the Kaiser.

China's emergence over the past three decades as a global power has an eerie resemblance to the arrival of another global power a century ago. In the mid-1860s, the German nation was scattered among many small and weak states. Unification under Otto von Bismarck led to the growth of the German colossus; in a few decades, Germany became the greatest economic and military power in Europe. Needless to say, Europe failed to adjust to Germany's rise. The result was World War I. Before World War I, Europe's great powers clashed over the allegiance of small neighboring states, engaged in a naval arms race, and squabbled over access to overseas raw materials. As a consequence of China's growth, we are witnessing modern versions of these same conflicts. The question for today's statesmen is whether they will do a better job adjusting to China's rise.

Is Asia today like Europe a century ago?

In the final chapter of his book Diplomacy, Henry Kissinger had this to say about the outlook for peace in Asia:

The relations of the principal Asian nations to each other bear most of the attributes of the European balance-of-power system of the nineteenth century. Any significant increase in strength by one of them is almost certain to evoke an offsetting maneuver by the others….The stability of the Asia-Pacific region, the underpinning of its vaunted prosperity, is not a law of nature but the consequence of an equilibrium which will need increasingly careful and deliberate tending in the post–Cold War world.

While it lasted, Europe's 19th-century balance-of-power system maneuvered the continent away from a self-destructive calamity. It also created the conditions whereby Europe achieved its maximum influence around the world.

Yet that system ultimately collapsed in a great disaster, World War I. Bismarck's complex diplomacy—19th-century Europe's version of "increasingly careful and deliberate tending"—could not survive the end of his tenure in office. Ultimately, Europe could not adjust peacefully to Germany's rapid expansion in economic and military power. France, Russia, and in the end, Great Britain, felt compelled to unite against what they saw as an overwhelming German threat.

China's expanding military power and political influence will place the Asian balance-of-power equilibrium under increasing stress. In trying to foresee what China's rapid rise between 1980 and 2010 portends, it may be interesting to examine the effects of Germany's rise between 1880 and 1910.

Just as China has been an economic phenomenon for the past quarter century, so too was Germany for the three decades before the outbreak of World War I. This economic boom delivered to Germany's leaders the means to become a giant military power. It also gave Germany's leadership, and its citizens, the confidence to assert Germany's power.

Before Bismarck unified Germany under Prussian leadership in 1871, the numerous small German states provided no threat to either France or Russia. After its unification, no country in Europe benefited more from the Industrial Age than did Germany. In the 25 years between 1888 and 1913, Germany's industrial production expanded by 2.8 times, a nearly 4.2 percent compound annual growth rate.

Just as China has been an economic phenomenon for the past quarter century, so was Germany for the three decades before World War I.

Of more interest was the growth in Germany's production of militarily important steel. From 1888 to 1913, German production of steel ingots expanded more than tenfold, a 9.7 percent compound annual growth rate, to 18,935,000 metric tons. During this same period, French steel production also expanded, but totaled only 4,687,000 metric tons in 1913. Germany's economic success during this period delivered to the German state the resources to build the most powerful army in the world at that time.

China's stupendous economic growth over the past 25 years is now well known. Measured in yuan, China's gross domestic product, adjusted for inflation, has expanded more than tenfold in the 25 years between 1980 and 2005, a 9.8 percent compound annual growth rate. China's arrival as a world economic power has influenced global commodity and financial markets. It has also brought the country and its leaders under intense scrutiny.

China's military presence in Asia today in no way compares to Germany's in Europe in 1914. The U.S. Defense Department, in its annual report on China's military capabilities, says that China is transforming its military from a low-technology mass army useful only on Chinese territory to a military force capable of conducting short-duration, high-intensity operations along China's periphery.

The Pentagon believes China's ability to project military power at a distance is "limited." This is in stark contrast to the German military machine of 1914.

However, Chinese military spending has grown nearly as fast as the Chinese economy. Between 1989 and 2006, China's military expenditures, adjusted for inflation, increased at a compound annual rate of 8.5 percent. The U.S. Department of Defense estimates that Chinese military spending has accelerated during the last 10 years of this period.

Where is China directing this military spending? According to the Pentagon, priorities include ballistic missiles of various ranges, including missiles for strategic nuclear missions; advanced tactical aircraft, both imported and domestically produced; naval surface and submarine forces; air defense systems; better military training; and China's defense industrial complex.

The opacity of China's defense program compels the U.S. government and other observers to have to guess China's true defense spending. The Pentagon's low estimate for China's defense spending in 2007 exceeded Russia's expenditures by almost two times, was almost two and a half times larger than Japan's, and was more than triple the amount spent by either South Korea or India. Assuming China's defense spending increases continue to roughly match its economic growth, we should expect these gaps with China's neighbors to expand in the future.

Any amount that grows at a compound annual rate of 8.5 percent or higher soon becomes a very large number. Will China's neighbors feel compelled to make adjustments to their security strategies, as Germany's neighbors did before World War I?

Flash points

It is the expressed intention of statesmen from the United States, China, and throughout the Asia-Pacific region to adjust peacefully to China's prominence. However, potential points of conflict loom over the horizon. First is Taiwan. China has never renounced the option of using military force to assert its authority over the island. In fact, the buildup of China's military power, especially its surface-to-surface ballistic missile forces, has been concentrated in provinces near the Strait of Taiwan.

An outbreak of war between China and Taiwan would have its parallels to the chain reaction of events that occurred in July and August of 1914.

Although this buildup continues, the Pentagon's report on Chinese military power doubts that China currently has the capacity to seize and control the island. In addition, there are numerous factors deterring such a move. And the departure of Chen Shui-bian from Taiwan's presidency would seem to remove a possible source of ignition.

Even if the probability is small, an outbreak of war between China and Taiwan would have its parallels to the chain reaction of events that occurred in July and August of 1914. Regardless of the cause of the conflict, the U.S. military would have to intervene, in order to maintain its reputation as a reliable ally and to check Chinese military expansion. U.S. bases on Okinawa, Japanese territory, would likely come under attack, perhaps bringing Japan into the conflict. In any case, both the United States and Japan would suffer a geostrategic setback if China were able to occupy Taiwan and fortify it as an air and naval base.

During the 19th century, Britain's Royal Navy dominated the world's ocean trading routes. In peacetime, Britain kept these lanes open to global commerce. But in wartime, the Royal Navy could and did shut off ocean-going trade to enemy belligerents. Germany's naval expansion program in the decades before World War I was motivated in part to address this vulnerability.

Today, the U.S. Navy keeps open the ocean's trading routes, including those routes that bring crude oil and raw materials from Africa, the Middle East, and Asia to China's ports. In a hypothetical conflict with the United States, China currently has little ability to prevent the U.S. Navy from shutting down China's oceangoing commerce. However, China's naval forces are well represented in its defense budget. As that budget continues to expand at an 8.5 percent or greater annual rate, it seems inevitable that the Chinese fleet will become a greater presence in the western Pacific and Indian oceans, currently dominated by the U.S. Navy.

The eventual collapse of authority in North Korea and the reunification of the Korean peninsula
represent another potential flash point. The breakdown of the North Korean regime will result in a humanitarian crisis, acute security problems, and a financial black hole for someone to bear. China, Japan, South Korea, and the United States all have interests, often conflicting, with respect to this scenario. There are many ways to mishandle the situation that would leave one or more of these powers feeling insecure.

Finally, there is Africa. The cover of the March 15, 2008 edition of The Economist was titled "The New Colonists," and it depicted Mao Zedong with the Chinese flag leading a camel caravan through an Arabian desert. The story discussed how China's seemingly insatiable thirst for natural resources is leading to a Chinese foreign policy that would have been familiar to any 19th-century statesman. Rather than seeing natural resources as global commodities markets, China may be taking a 19th-century view of these resources. By this view, China sees itself needing to secure reliable supplies by establishing client relationships with specific supplier countries. In many cases, these are countries that are now considered rogues in the West, such as Sudan, Myanmar, Iran, and Venezuela. It is easy to see how China's resource agenda could clash with the West's foreign policy objectives.

Why so surprised?

No economy has benefited more from today's relatively open global trade and investment regime than China's. With great success, China has pursued the export-driven growth strategy that Japan, Singapore, South Korea, and Taiwan previously employed. And it is hard to find a major multinational corporation that has not attempted to stake a claim in China. Shouldn't China's deep integration with the global economy be enough to steer its leaders away from a reckless foreign policy?

The world economy was open and integrated in the years before World War I. Few restrictions on cross-border investment and trade existed. All of the major powers seemed to benefit from free trade and open investment policies. Yet such practices did not prevent the outbreak of the war.

In the case of today's China, all indications are that China's leaders do in fact want to focus on economic and social development. The massive migration of rural peasants from the interior to the coastal cities, combined with the winding up of many loss-making state-owned enterprises, means that China's leadership must maintain a rapid pace of economic growth to smoothly absorb displaced workers into productive employment. For China to achieve this, it needs to maintain a high export growth rate and the importation of foreign technology, business practices, and direct investment.

The U.S. government has rejected a confrontational approach to China, with apparent benefit to all. But how long can this policy last?

Yet even if due only to accidents or misunderstandings, it is inevitable that frictions or confrontations with China will arise. It is always a good practice for statesmen to question their assumptions. Factors which seem to be logical deterrents from one culture's perspective may be inoperative from another culture's perspective under certain circumstances.

In his book Preventing Surprise Attacks: Intelligence Reform in the Wake of 9/11, Richard Posner examines the history of surprise attacks and what causes these attacks to be so surprising to the victims. Such attacks are surprising because the victims invariably considered the purpose of the attack, its target, and its method to be illogical, at least from the victim's prior point of view. Dysfunctional intelligence and military bureaucracies have played a role as well. But the biggest culprit is usually that the victim was unable to see the world from the attacker's perspective and was thus caught completely off guard. What the attacker considers to be the costs and benefits of the intended attack may differ greatly from the victim's prior estimates, at least under certain circumstances.

There seems little doubt that China's rise will disrupt Asia's equilibrium. How China's neighbors and the United States will respond remains uncertain because so much about China's intentions—especially the purpose of its military buildup—remains uncertain.

Lingering historical grievances among China's neighbors are another reason for Asia's uncertain response. Fear of making a currently stable situation unstable may also be a cause of inertia concerning China policy.

The United States and China's neighbors have so far granted China the benefit of the doubt. With this course of action, these countries also see themselves acting in their own economic interests.

And yet the fateful day may arrive when the United States and China's neighbors find themselves compelled to explicitly align against China, just as France, Russia, and eventually Great Britain did when they chose to align against Germany. The U.S. government has rejected a confrontational approach to China, with apparent benefit to all. But how long can this policy last? And what will cause U.S. statesmen to change their minds?

Robert Haddick is the founder of Westhawk, a website on national security issues. He was a consultant at the Fremont Group, a private investment firm, and an officer in the U.S. Marine Corps.

Photo illustration by Matt Selva; Photographs by Getty Images, iStockPhoto.

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