Xi/Bismarck

My SAIS colleague Charlie Stevenson, of Stevenson’s Army fame, distributed this comment today. While I disagree in general on industrial policy, which is a trap we should allow the Chinese to fall into, R&D and protection of intellectual property are certainly important.

Stimulated by a student paper which I hope will eventually be published, I see that there are valuable ways of thinking about US-Chinese relations that go beyond our current focus on things like “the Thucydides Trap” or “a new Cold War.” One of the flaws in these popular analogies is that they quickly lead inexorably to self-fulfilling prophecies, the ill-fitting anti-Soviet playbook, or even nuclear war.

Other ways of looking at the US-Chinese competition include rivalries in Europe in the 18^th and 19^th centuries. The most optimistic and least applicable analogy is the peaceful British-American transition detailed in Kori Schake’s Safe Passage.  Another example is the British-French rivalry following the Seven Years’ War in 1763.  French officials consciously adopted a policy to “enfeeble” the British, first by strengthening their continental alliances and then by trying to dismember the British empire, starting with support for the American rebels.  That worked – until the costs of that global war and other domestic problems triggered a revolution in Paris.

I’m especially intrigued by a third example: the British-German rivalry in the several decades before the First World War. I was aware of the military arms race between the two countries but needed reminding of the much greater breadth of the competition. Three Princeton economists show how Germany sought to leap ahead of Britain by promoting national technologies, using financial tools, blunt tariffs, and even massive infrastructure projects like the Berlin-to-Baghdad railway, which would have ended Berlin’s reliance on the Suez Canal. [A German geographer coined the “silk road” term.]

Consciously or not, China already seems to be copying Bismarckian Germany’s multi-pronged approach, competing with America in trade, technology, finance, and infrastructure, as well as alliances and weaponry. I worry that the United States has been narrowly focused on military capabilities and espionage, while giving insufficient attention to other technology matters and broader diplomatic and economic relations.  My takeaway is that we need a deliberate industrial policy including large government R&D expenditures and targeted technology trade measures.