China Station

In my talks over the last couple of years about national energy strategies that I’ve given to State Department and other US foreign policy folks, I’ve compared China to Wilhemine Germany.  Rising powers with a major chip on their shoulders.  Each believing that theirs is a superior culture that has been held down by inferior ones.

Inferior cultures that are now in terminal decline and who should make way for the ascendence of the rising ones, but were not doing so voluntarily–and so who would have to be pushed aside if necessary.  And nations intoxicated with the writings of an American naval officer who was a contemporary of Wilhelm II, one Alfred Thayer Mahan.

One of the deans of American foreign policy intellectuals, Walter Russell Mead, has recently made the same comparison:

As China’s economy grows and its military develops new capacities, it is looking for ways to turn that potential power into actual power over events.  In the past, China has tried to attract its neighbors into its orbit with sweeteners like trade deals and aid.

But these measures apparently strike a new generation of Chinese policy makers as unsatisfactory.  China is too great a power to play nice, they think.  So they assert their territorial claims more and more boldly, and blow up disputes with Japan out of all proportion.

Wilhelm I had put his empire together (defeating Napoleon III in the Franco-Prussian War), he and his brilliant chancellor Otto von Bismarck realized that Germany’s greatest danger was to unite the surrounding powers against it.  It was time for sweet talk and flowers, or as the last generation of policymakers in Beijing used to put it, “peaceful rise”.  Wilhelm and Bismarck were nice to everyone who might join a coalition against them: Russia, England, Austria, Italy, the Ottoman Empire, America — and even France.  This was an exhausting policy and German foreign policy sometimes looked like a French bedroom farce as Bismarck hid Austria in the closet when Russia stormed into the bedroom.  Nevertheless, it worked.  Germany rose peacefully after 1871; it overtook Britain in manufacturing and its exports filled the world.  German financial firms developed a world reach and Germany even built up a colonial empire with dependencies in Africa and the Pacific.

But the old Wilhelm died and a new Wilhelm (Wilhelm II) brought a new generation of Germans into power.  Firing the elderly and crotchety Bismarck, Wilhelm read Admiral Mahan’Importance of Sea Power in History and dreamed of the blue water navy that would turn Germany into a true Weltmacht, world power.  Moreover, ‘Willi’ was sick and tired of deferring to all the neighbors.  Enough of this insipid “Dreikaiserbund“, the complicated three-way alliance between Russia, Germany and Austria!  And enough of this being nice to France.  The French were losers, has-beens.  It was time they were made to feel it.  Germany was the greatest power in Europe and it was high time people accepted this fact.

In true Mahanian fashion, China is attempting to amass rapidly a blue water navy and air and missile forces that can deny the US Navy access to vast expanses of the oceans bordering China.  It is stridently asserting expansive territorial claims with no basis in international law.  It is actively bullying neighbor states, and shrilly telling the US to butt out of these disputes.

One doesn’t need to be as hysterical and alarmist as Mark Helprin to recognize that this is a potentially dangerous emerging threat to American interests that requires (a) long term strategic planning, (b) alliance building, and (c) the maintenance of robust US naval forces that are capable of operating at will in the South China Sea and the Yellow Sea.

The US Navy’s hull count is down dramatically, to under 300 ships, and new building programs like the DD-1000/DD(X) are languishing (at best).  The current SecDef is not a big navy fan who could benefit by reading a little Mahan himself, and who has made noises about cutting back on the number of US carrier groups.  All meaning that (c) isn’t looking too good right now.

A Wilhelmine-esque China and a drifting, distracted, and enervating US is a bad combination.  As Mead points out, China’s obstreperousness is engendering a reaction that the US can use to bolster a containment-oriented strategy.  Whether we have the will to do so, or are willing to commit the resources necessary to implement it, is another issue altogether.

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About Craig Pirrong 238 Articles

Affiliation: University of Houston

Dr Pirrong is Professor of Finance, and Energy Markets Director for the Global Energy Management Institute at the Bauer College of Business of the University of Houston. He was previously Watson Family Professor of Commodity and Financial Risk Management at Oklahoma State University, and a faculty member at the University of Michigan, the University of Chicago, and Washington University.

Professor Pirrong's research focuses on the organization of financial exchanges, derivatives clearing, competition between exchanges, commodity markets, derivatives market manipulation, the relation between market fundamentals and commodity price dynamics, and the implications of this relation for the pricing of commodity derivatives. He has published 30 articles in professional publications, is the author of three books, and has consulted widely, primarily on commodity and market manipulation-related issues.

He holds a Ph.D. in business economics from the University of Chicago.

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