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

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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.

5 Responses to "Have the economic/strategic lessons of WWI been learned? How the West is handling the emergence of China and India."
  1. “Slightly worrying is that this support for continued relatively ‘free’ international trade had to be carried by elites … rather than by whole populations.” Ordinary people support tariffs because they (mistakenly) think it will protect jobs. Not to contain China.
    “It is the case that the recent introduction of the resource tax effectively means we Australians have cheated the Chinese ….” Why the word “cheated” Paul? I guess you are aware that we cannot invest in most chinese shares at all.
    “Taiwan and Tibet are not recognised as separate countries by most Western countries.” Because the utter lunatics in Beijing would literally fire missiles if we did. You seem to be saying this is a good thing.
    Would you try and state your thesis clearly Paul? It seems to be that unless the West let China take their right place as leaders of the world without too much fuss, China will start WW3.

  2. Chris,
     
    the thesis is that we will not have WWIII partially because the West is not playing the containment game with China. As to the counter-factual, i.e. ‘would we have WWIII’ if we did support Taiwan, freedom for Tibet, etc., I am not sure but I do think there would be a non-negligeable chance of serious escalation.
     
    And you?

  3. Paul, its true free trade is’nt championed by populations, and I suspect the same will be said of the “next world superpower” once shock jocks and opportunist poiticans tell their populations about their lunch being nibled or taken away by them. Nationalism will then grow much like it did in the leadup and arms race pre WW1.

    Protectionists want protection from competitors.  Countries work in the same national interest (and while no country is squeeky clean on free trade, China is hardly a model of openess) and the resulting economic war has, as you highlight, a history of leading to fighting wars.  I think you underestimate the resistence and nationalism that will occur as these interests are challenged.

     

  4. I agree with many of the things you say, but I’ll have to disagree with your main point that the West does not try to contain China.

    Your arguments may have more support if you were to replace the word “West” with the words “Western governments”.  Nations are of course a whole lot more than just their governments. 

    I think it is fair to say that Western governments tried to contain China (and some may still be trying), but since it didn’t work, and is increasingly unlikely to work, most governments have abandoned the approach.  However that does not mean the West does not try to contain China.  In fact, I would dare say if the West (especially its media) were to stop trying to contain China, the average person’s opinion about China would change dramatically.

    Many of the things you see in the media about China and its people are just not true.  They are being artificially turned into evil villains, and therefore need to be brought down, or at least reigned in (ie, contained).

  5. Chan,
     
    every big country has inhabitants who think their country is unfairly portrayed, including the Russians, the Americans, and the Indians. I dont perceive any serious China-bashing at all. Perhaps a few examples?

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