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Can The US and China Avoid War?

The leading geopolitical scientists are, like the rest of the world, watching the the rise of China with disbelief as at no period in history have so many people escaped poverty,  as the past 40 years in China. As China began its assent to becoming the manufacturer of the world, 40 years ago, 90 percent of the population lived on less then 2 dollars a day. Now in 2019, less than one percent of the population lives on 2 dollars a day and President Xi has promised that remaining part of the population that they will be, like the rest of the Chinese population, able to live a more prosperous life in the next 10 years. Things are moving fast in China. 

The question is how will the United States, the country that designed and constructed the Bretton-Woods system, the global system of trade and finance, react when it China becomes no longer a poverty ridden Asian nation, but a legitimate global rival. Note the US system worked well for past 75 years, but the cracks are beginning to form.

The US post-WWII system is responsible for an increase in global GDP by a factor of 10 and the global population by a factor of 3 from 1945 to 2018. Keep in mind that the rich in 1945 were wealthy, and the poor, in many counties on the planet were lived in poverty. Now the playing field, although still needing work, is far more balanced. This is evident when walking in Ginza in Tokyo, Gangnam in Seoul, Asok in Bangkok and along Orchard Road in Singapore as one hears a multitude of  languages as a new global middle class shops.

Political scientist Graham Allison of Harvard University, is of the opinion that the Thucydides Trap  seems inescapable and that history continues to repeat itself many times over the centuries. The idea was coined by the Greek historian who explained how Sparta, the existing power, started suffering from paranoia and fear, as it watched Athens, the rising power of the day. The dynamics between the existing power, Sparta and rising power Athens,  triggered a war that both city states really wanted to avoid. The result was the total destruction of much of Ancient Greece.

We saw it again in World War I and II as Germany and Japan rose to challenge the existing powers of Great Britain, France and Russia. This same dynamic is currently taking place between the United States and China. Note that US GDP (the size of the US economy) is 19.3 trillion dollars while China has a GDP of 13.5 trillion dollars and growing fast – scheduled to surpass the US in 2025. The mixture of pride, arrogance and fear of the next geopolitical move by the other drives great powers into the cycle of war that  also usually has a domino effect, like the assassination of Franz Ferdinand in Austria and the knock on effect of the system of alliances that created a World War.

Currently the US System is declining in power,  while China is building a rival system of trade, finance and even tech companies as well as a new internet. In the next decade we will be welcoming a second superpower and a second “global system” whether we want to or not. For reference, please have a look at our audiovisual presentation, China 2040, America in the Cross Hairs.

As China builds a blue water Navy to protect its trade and commerce, it trespasses on Japan, South Korea, India and the US and their trade routes in Asia. China is seizing disputed territory and  building islands in the South China Sea with airports for strategic bombers as a direct challenge to the the American and Japanese maritime forces. It is inevitable, they will bump shoulders in the coming decade. The key question is how will these powers work together, and how will they avoid direct confrontation.

We at Classiarius feel that that China will construct alternative systems that challenge the US and her allies, but welcoming the inevitable makes sense. Just as there were two superpowers in the 1970s in the United States and the Soviet Union, China will be the successor for the Soviet Union come 2025. Many believe that China wants to be a regional power in Asia and not a global power.

Moreover, and think on this, – the US has bases in South Korea, Japan and Australia – and none of these countries want Chinese bases in replacement and thus there will be a coillition of nations that work to keep China from dominating South East and East Asia.

The challenges to manage the growth of China will only grow in the coming decade and beyond.

 

Classiarius

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Disclaimer: We do not provide investment advice or strategies, this article is not intended as such but only to provide you the reader with information. Please conduct your own research before any investment of any kind.

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