Rise of China and Strictly Business Competition in the World

There have been many books written about the rise of China and great powers going to War.

Harvard political scientist Graham Allison called the problem “the Thucydides Trap,” in which the country in relative decline so fears the rise of a challenger that it chooses to go to war to prevent it. Allison’s book is called Destined for War.

A hegemon is the rule setter and enforcer in the international order. It is typically but is not always the strongest power, because states fight for the right to establish terms favorable to their interests.

Twilight of the Titans, by Joseph M. Parent and Paul K. McDonald, use quantitative analysis of power transitions to analyze the problem. Parent and McDonald survey power transitions since 1870 and look at 16 cases. Most states respond sensibly to relative decline, undertaking prompt, proportionate retrenchment, because they seek strategic solvency—they don’t want to go bankrupt.

Limited Amount of Bullying and Signaling Power

All out war has been virtually not the focus of decisions because nuclear and other weapons ensure a high cost even for a victor. This limits the amount of bullying that can be done. In Wars leading up to World War 2, there was net value and gains to be made from fighting and winning wars against peer nations.

Now there is no net gain possible from fighting peer nations.

However, a dominant power that is able to cleanly defeat inferior militaries can demonstrate and signal readiness and efficiency to peer nations. This was done in the early weeks of the two Iraq Wars by the USA. It was also shown by Israeli in the Six Day War and in the Bekaa Valley Turkey Shoot in the 1982 Lebanon War.

Economic strength, technological strength, military readiness and military equipment can be acquired and shown to other nations.

The competition is mostly about economic, technological strength and making your own and other nations more money.

The Game of Go and the Nash Equilibrium

The Game of Go is about getting the best position over time and controlling the largest territory. The opponent cannot be completely eliminated but you can have more and the opponent can have less.

A group of players are in Nash equilibrium if each one is making the best decision possible, taking into account the decisions of the others in the game as long as the other parties’ decisions remain unchanged. Everyone can do better with the best strategy for each nation while also looking for the best outcome for other nations well.

In a World of relatively safe but competing peers then greater influence is gained by enabling allies to earn more under your rules or as your ally.

Strictly Business – an Earning

If we ignore the “regime change” aspect of the movie the Godfather, then there is aspect of organizations getting more power by earning more and by having those who work for them earn more. What is the competition was strictly business?

The World has about $100 trillion in total GDP on an exchange rate basis. Even if China surpasses the US GDP, which is currently at $21 trillion, there is still 60% of the World that is neither China or USA.

The World has grown wealthy with the US and Europe setting the rules. The US, Canada and Europe have a combined GDP of about $40 trillion.

In China can make itself and cooperative nations wealthier with Belt and Road Infrastructure, then it can be a win-win.

If the past those who were more happily under US influence did better than those that were not.

The US Marshall Plan helped Europe recover from WW2. It enabled the US to have a strong trading partners and markets for goods.
South Korea did vastly better than North Korea.
Taiwan performed better economically than China under Mao.

The UK demonstrated this as well. Hong Kong performed better under the British system.

China’s Belt and Road will be spending trillions to build up the infrastructure and technology of Asia and to connect Asia, Europe and Africa.

Mckinsey estimate that from 2016 through 2030, the world needs to invest about 3.8 percent of GDP, or an average of $3.3 trillion a year, in economic infrastructure just to support expected rates of growth. Emerging economies account for some 60 percent of that need. But if the current trajectory of underinvestment continues, the world will fall short by roughly 11 percent, or $350 billion a year.

The world could grow even faster than the expected rates of growth. In order to achieve higher rates of growth even larger infrastructure spending should be made. China has demonstrated an infrastructure focused development model for four decades.

India and the rest of Asia appear to be following China’s rise.

Building more, faster and with better technology would enable even faster rates of growth.

Singapore has been able to develop some of the highest per capita GDP and its has great influence beyond its small population. It was able to do this by being able to export systems and technology that work.

Singapore completed its rise over fifty years and has per capita income that is six times higher than China’s. Singapore’s per capita income is about three time higher than Shanghai.

The competition should is who can be the greater success and leader where others earn more when they copy.