Have the economic/strategic lessons of WWI been learned? How the West is handling the emergence of China and India.

One of the big mistakes responsible for the outbreak of WWI was that existing Western powers actively tried to contain the influence of emerging powers. England and France tried to hold on to all their colonies and keep Germany out of the colonial game. Conversely, Austria and Germany were wary about Russia’s growth and housed opinions that advocated war as a means of halting the growing threat. The notion of aggressively holding on to the current division of the spoils was a large factor in the outbreak of WWI. It seems a valid question to ask whether we are making the same mistake with China and India now, or whether ‘we’ have apparently learned our lesson.

Thinking about the openness of markets, the West has learned its lesson well. Export growth of China and India is hardly contained by new trade barriers at all, even surviving the recent financial crisis. Comparing this to the collapse of trade relations during the great Depression of the 1930s, one has to see this as a victory of reason. Slightly worrying is that this support for continued relatively ‘free’ international trade had to be carried by elites (governments and economists) rather than by whole populations. Lessons might have been learned, but apparently not by whole countries.

Thinking about access to resources, the question is whether the West is allowing China a growing share of overseas spheres of influence in order to secure its supply of raw materials, i.e. is China allowed to encroach upon the traditional overseas dependent territories? Here again, it has to be said that the West is not making great efforts to keep the Chinese from gaining footholds in the regions of great natural resources. The explicit Chinese program of investment in natural resource sectors of other countries has not been opposed, and the buying up of mineral deposits in Africa and Latin America of the Chinese is still proceeding relatively unopposed (for a discussion of China’s investment in Africa and Latin America see here). It is the case that the recent introduction of the resource tax effectively means we Australians have cheated the Chinese out of some of their expected profits from investing in Australian mining, but in the scheme of things this is small potatoes.

Thinking about ego-rents, it is also clear that the West is allowing both China and India their ‘place in the sun’. The Olympics were in Beijing; skilled Chinese and Indian migrants are welcomed in Australia and the US; China has a permanent veto at the UN security council; Taiwan and Tibet are not recognised as separate countries by most Western countries; thinking about the future, Taiwan will clearly be abandoned as an ally to appease the Chinese and no-one will seriously interfere in Tibet; Western governments are not talking up the threat of Chinese investments in their army; etc.

On balance, you would have to say that the West seems to be applying the main lessons of WWI when it comes to China and India. It recognises that China is the next world superpower and is letting it happen without too much fuss.

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Richard Tsukamasa Green
Richard Tsukamasa Green(@richard-green)
11 years ago

I think it’s probably too optimistic to say policy has learnt the lessons and avoiding the mistakes of the lead up to WW1 (and WW2 in the pacific for that matter).

But I think it’s entirely justified the say it seems to be avoiding the same mistakes because the field is set out differently this time…fortunately. I think that the importance of the ideas behind mercantilist or freeish trade policies will prove less important in this regard than the inertia of them already being in place. The status quo and any given time is self validating for many, and it also produces a class of people to defend it and perpetuate it, whether the rent seekers of the colonialist era or the globalites of the current era.

There are two areas of concern that could arise for me (neither to do with natural resources).

The first is if there’s a reappearance of the notion that consumer markets are scarce and need to be fought over. We often forget that colonialism was as much about securing places to sell to as to buy from. The continuing problems with the valuation of the RMB and pressure to appreciate may result in this. I don’t think this is too likely though. The PRC leadership seems aware that current policy is unsustainable (for other reasons as well) and at least looks like it is trying to get away from beggar thy neighbour policies. I actually suspect they would have made greater moves if they had not been under US pressure, and thus would not look like they were acquiescing.

The latter is the fragility of the social contract within China, and more importantly the affects this could have on the balances of power within CCP. If growth falters, if inequality gets out of hand and instability rises in China this could weaken the leadership. Not enough to cause popular revolution or anything close, but enough to give the go ahead to elements in the party to take the opportunity to go for more power.

Afterall, it only took mildly bad polls to give the go ahead to go after Kevin Rudd. The CCP is far from a monolithic block, it’s both bigger than all but a handful of the world’s nations (with the accompanying diversity and divides) and has spent decades fighting over internal power with incredible ferocity. Pervious internal power struggles have spilt out in into the broader world without failure, from the Anti Rightist Movement, to the Great Leap Forward, to the Cultural Revolution and to the multiple crackdowns in Tiananmen Square from 1975 to 1989 and others.

The current leadership seems to be aware of keeping down inequality, or keeping growth going, but it only takes so much for one part of the party to start a fuss, which as a stalking horse can create enough instability for others to take their shots. Eventually someone will turn to saber rattlings as a tried and tested favourite.

Saber rattling was abandoned towards Taiwan after the 1990s because it proved so ineffective in pursuing Chinese interests as a whole, but this would be overlooked when the rattlers are seeking their interest in a internecine struggle. Taiwanese politicians, like in the 90s, would then find it politic to proudly defy the rattling, and a potential flashpoint could occur despite the sensible heads currently all round.

But it may not occur.

Nicholas Gruen
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Nicholas Gruen(@nicholas-gruen)
11 years ago

There are no ego-rents at Troppo.

Tel
Tel
11 years ago

I’ll respectfully disagree that the start of WWI had anything to do with any particular politics. The empires of Europe had regularly been fighting wars against each other (at least one per decade) going back to ancient Rome. Warfare was just a standard human activity like any other: careers were made, territory gained and lost, disputes settled, and of course people died (as we all do, sooner or later).

A combination of the Haber-Bosch process, improvements in metallurgy, railway technology, rifle improvements, machine guns, radio and quite simply higher populations, made WWI exceptional even though the warlike behaviour was nothing unusual for the time. It was a turning point in political history, but for technological reasons (your going to see this as the point of view of a technocrat, which it is).

[In the context of avoiding war…] Export growth of China and India is hardly contained by new trade barriers at all, even surviving the recent financial crisis.

China never showed any signs of wanting a serious war, and the USA rarely picks opponents with any capability of defending themselves. Besides on an ideological level the USA can already claim victory (without fighting) by dint of China moving towards a market economy and being successful at it. Encouraging world Capitalism has been US foreign policy since Communism was invented, why would they make it difficult for China?

I’ll point out that not only has the US recently enjoyed vast supplies of material goods, they still haven’t got round to actually paying for them. Hard to refuse an offer like that.

Paul Frijters
Paul Frijters
11 years ago

Richard,

you may be right that it has less to do with conscious reflections on power politics and more to do with a knee-jerk following of local incentives. The ‘globalites’ as peace keepers. I do think there is a bit more awareness now than in the 1910s of the dangers in denying mayor powers their place under the sun, because I dont think it was the globalites who gave China their permanent place in the security council but rather seasoned politicians who had lived through two world wars.

_Tel,

None of us were alive and part of the political establishment in the run-up to WWI, but the reasons I gave are part of the standard curriculum. That doesnt make them true, but they certainly seemed persuasive to me.
I would also be a bit more generous towards US policy on China than you. I seem to recall it was the USA that prevented the Brits from dividing China after WWII, and that it was partially the USA who kept China out of the Western abstraction of the communist block. It would have been easy to demonise China in the 1970s and 1980s when it was not yet an economic force, but it didnt happen. Perhaps it is wishful thinking, but I find it hard to believe that happened without some conscious thought towards it somewhere in the Western military-diplomatic establishment.

Richard Tsukamasa Green
Richard Tsukamasa Green(@richard-green)
11 years ago

Paul – Remember the seat was originally given to Chiang Kai Shek, and not to the communists, since he was an available ally against the greater rival in the USSR (since his rivals were allies of the USSR). Note that it only moved to the PRC when the US acquiesced under Nixon when it became apparent that Mao now considered the USSR a rival. Just like 19th century balance of power stuff that resulted in the alliances of 1914.

So whilst it did turn out to recognise a rising power, the way it would be replicated, say with India, would be because India was valued because it was apprehensive about China.

I am optimistic, and I do believe there is far greater awareness. I just don’t think that awareness is reflected in the actions of policymakers (at least based on observed evidence).