*Restless Empire*

The author is Odd Arne Westad and the subtitle is China and the World Since 1750.  Excerpt:

…the Chinese on Cuba joined others in rebellion.  Two thousand fought in the Cuban forces in the first war of independence in the 1870s.  Some of the Chinese soldiers must have had battle experience, probably from the Taiping Rebellion, and they played a substantial role in the struggle for Cuban freedom up to 1902.  A monument to the fallen Chinese in Havana has the following inscription: “There was not one Cuban Chinese deserter, not one Cuban Chinese traitor.”

I found this to be an excellent book and a very good starting place for unraveling the current foreign policy crises in Asia. It does a very good job explaining the sore spots from the past.

As you may know, one of my views is that most people underrate the chance of a (non-trivial) war in Asia in the next twenty years.  I regard this chance as at least p = .05, and I do not think it is priced into securities markets at nearly that high a level.  Historically, wars are not always easily predicted in advance.  They tend to be correlated with the rise of major powers and with regional disruptions.  In many countries nationalism and regional rivalries run rampant.  It is not obvious to me that the United States is in a position to hold the whole region together.

In any case, this book will make my “one of the best of the year” list.


I've wondered how you price something like a p=0.05 when it is really a p=1/0 at p=?. That seems like a null hypothesis for real business cycle theory.

I thought this was an uncharacteristic head-scratcher from Tyler:

'most people underrate the chance of a (non-trivial) war in Asia in the next twenty years.'

What a curious opinion. Where are most people? p=0.03? How would this difference be reflected in prices in security markets- presumably by declining association with that part of the world. But there are so many other conflating factors. If and when war comes, it will be fully priced on and markets will move. In retrospect, what was p? It feels like an unverifiable and very low content opinion.

Speaking for myself, I think p is lower than 0.05. I don't buy this demonization of Imperial China, I don't think it's helpful or accurate, and while I don't think it will become a self-fulfilling prophecy, I don't rule that out either. But I'm just a single data point.

Concern troll Tyler is in the house today I see.

1) I don't see how Tyler is "demonizing" China. He doesn't even state that he thinks China will be the one to start the war. He just says that there are regional tensions that we underrate.

2) As for the "self-fulfilling prophecy" bit--you complain about people warning that China might go to war, and yet you yourself raise possibility that China is so close to the edge that the mere prediction of a war could lead them to start one. It is hard to see this as coherent.

Three possible flashpoints are the Mekong, the Brahmaputra and the Spratly Islands. Every time I have visited China, I have been disturbed and surprised by bellicose claims that Korea and Vietnam should be part of China and disturbed but not surprised by attitudes to Japan.

I'm in the same camp: I am not particularly optimistic that east Asia will remain peaceful over the next two decades.

Niall Ferguson wrote a very neat 2006 paper* on war and security prices. His results suggest bond market participants failed to anticipate the First World War, since prices did not fall significantly in the months and weeks leading up to the conflict. Lackluster price adjustment remains after accounting for other changes in the structure of international financial markets.

*Ferguson, Niall (2006). "Political Risk and the International Bond Market Between the 1848 Revolution and the Outbreak of the First World War." Economic History Review. Volume 59, Issue 1, 70-112.

The military and foreign policy experts in power in the U.S. seem to be thinking along the same lines as Tyler. A lot of assets being moved to the Pacific and E. Asia, and away from Europe and SW Asia.

I think a lot of the real potential for a large war (outside of the Taiwan situation) will depend on how large, technically able, and tactically capable the Chinese Navy can become. The U.S. Navy is still orders of magnitude more capable, but China is of course spending and buying at a high rate in this area. Will the Chinese assemble a strategically and geopolitically game-changing Navy, or simply a large and expensive one?

Is 100% of Tyler's non-trivial-war probability assigned to a war involving China?

I'm sure it isn't. What part of my post would lead you to believe that it was?

But I'd wager that China occupies the fat part of the curve.

Navy? My guess is that only submarines will prove not to be obsolete.

Aircraft carriers are far from obsolete in regional conflicts against foes who lack the means to seriously threaten them. They can project force (against land targets) in ways that submarines simply cannot.

Has an aircraft carrier ever been sunk? I imagine it an incredibly difficult job to protect a big hunk of target metal like that; especially from submarine attacks.

drone>aircraft carrier

Right now the U.S. can command air superiority anywhere in the world at will on the strength of its Navy (each of the Atlantic and Pacific fleets has more planes than any other country has in total). China would need to counter this strength in order to have any chance in a war with the U.S.--or to stop us from intervening in a war they might want to start against our wishes.

I don't think there is any existing drone technology that poses a serious risk to an aircraft carrier.

> Has an aircraft carrier ever been sunk?


Not since 1945 in combat.

Presumably China could do it if they were willing to sacrifice the bulk of their air force and missiles in one focused attempt, if they were willing to use nuclear weapons, or if their ballistic missile technology is as good as some more paranoid people suspect.

His "The Global Cold War" is very good.

I'll second that.

"Historically, wars are not always easily predicted in advance."

How far in advance are you talking? A fair number of wars (especially the major ones) were obvious to see at least a year in advance, maybe more.

No lame puns on the guy's name? That's ... strange, and different from what is usual or expected.

I'm curious what your p is for a nuclear war in Asia. As I live in Qingdao, I am avidly following all events in the South China Sea.

"It is not obvious to me that the United States is in a position to hold the whole region together." That certainly got a horse laugh.

I think Israel wil be at war with iran/hezbollah by year's end

You should be making tons of money then:


Intrade's trading at a 28% chance; lots of opportunity.

Wars tend to be predictable in the long term. Anyone reading popular fiction in the two decades prior to WWI would notice an increase in futuristic scenarios where Britain or America was at war with Wilhelmine Germany. What they are not is predictable in the short term since the specific casus belli can never be known. How were the bond traders in 1913 supposed to know that Archduke Ferdinand would be shot in June 1914?

Everyone I know in the US assumes that there will be a war with China "at some point", but that "some point" is some 20-40 years in the future. This does not mean it is inevitable. Many people thought a WW3 with the Soviet Union would happen, but it never did - but it's important to note that it was 40 years of terror with several large crises and that most people and the elite of the two superpowers actually did not want that war.

China is not just a rising power, its size and population means it is disrupting of the current system of international relations. International system tend to be based on the coaltion of victors in the last major war, and reflects the balance of power then. The current system is based on World War II. While the fall of the Soviet Union changed it somewhat, the fact that the United States was still the premier power meant that the current system was retained as the US still had a huge hand in shaping it and benefitted from it.

The issue with China is that China did not help to design the system, and it's very likely - since it does not accept the democratic rule of law norms that the US and Europe promotes - that it sees the current system as unfair to China. This means at some point - once China is confident of power - is that it will seek to change the system. This is very worrisome, as wars done with the intent to change the international system - as opposed to resolving a minor interest - always turn out to be major world wars (see any of the Wars started by France from 1690-1815 or the World Wars by Germany).

So there is a major danger. There are also trends that point against it. China's demographic aging means it will have domestic issues trumping foreign ones, and have a lack of young men to fight just when its economy gets large enough that the Chinese may begin to think they could win a war against the US. Changes in Korea and Vietnam might also mean those socieities are better positioned to stand against China as well, especially in alliance with the US, Japan, and others. I think much depends on what happens in China in the next ten years, and whether the long term political leadership of both US and China make it a high priority to preserve the peace.

What exactly is this "international system" that China'd hope to change by a war? Asides of its territorial conflicts with neighbors I don't see how the current system discriminates against China in any economically tangible form?

So Krugman is right. Considering the volume of popular literature describing extraterrestrial invasion we should prepare at once.

Seriously though, retrospectively everything looks predictable. What other predictions were made at the time in literature etc didnt occur? Offhand I can think of Seventh Day Adventists originating at that time.

Don't forget that China was a victor in the last major war, and even has a permanent veto seat on the security council. Once the PRC replaced the ROC (i.e. Chiang on Taiwan), mainland China became invested in the current system.
It already has veto power on the most important international law body relating to military force, so why is it going to try and overturn that order, to a system where it has no veto at all? It is also a member of the WTO, and the tandem of those systems of international law has been incredibly beneficial to China. The outside world only mutters about Tibet (at least at the governmental level).

Very good point.

"Wars tend to be predictable in the long term. Anyone reading popular fiction in the two decades prior to WWI would notice an increase in futuristic scenarios where Britain or America was at war with Wilhelmine Germany."

Hindsight bias. How much 20th-century fiction involved a nuclear war? Even a few years before the fall of the USSR, movies like 'Red Dawn' were coming out.

most people underrate the chance of a (non-trivial) war in Asia in the next twenty years. I regard this chance as at least p = .05,

Then I read things like this, which is on point:

The story hasn’t changed much in recent years, except that China has raised the temperature. China cites dodgy historical data and old maps (including the notorious “nine dotted line” drawn up by the old Nationalist government ) to lay claim to an area of open sea the size of the western United States, some of which may sit over oil and gas reserves. Worse, China – in keeping with Asia’s fetish for sovereignty over multinational mediation – refuses to discuss the issue and has recently escalated its disputes by naming a “regional government” for what otherwise seems more rightfully the realm of Neptune.

If you check you may find that in recent years Chinese have been quietly moving into Cuba and setting up small businesses. Before World War II German women obtained jobs in hotels in the Channel Islands. When the war broke out it was found that these women were spies.

What do you consider "non-trivial"? Would a big civil war in Pakistan (or China!) in which no outside powers intervened count as non-trivial?

I'd give the probability of a "significant" civil war in Pakistan in the next 20 years p > 0.25. On the other hand, unless it turns into a nuclear war with India, I see the global economic impact outside of Pakistan as almost-trivial. I'd give the possibility of a breakdown of CCP rule in China, leading to another era of the warlords, within the next 20 years 0.05 > p > 0.

Curious what role, if any, China's odd demographics will play in possibly sparking a non-trivial war in East Asia in the near term. The "One-Child Policy" is usually credited with causing both a noticeable gender imbalance plus an increasingly aging population. Typically, having lots of single guys around with no hope for a family and being taxed to support an older and older population isn't a recipe for stability.

Although, in the end, I don't see China wanting a serious war more than anyone else. They are rather tied into the current global system as it exists today. Why upset that? (Sole exception: an invasion or strike on Taiwan)

Maybe the North Koreans doing something militarily is more likely. At the end, what have they got to lose?

Westad's "The Global Cold War" is also a very fine work of historical scholarship:

As long as China's growth depends on exports it will avoid a "non-trivial" war. So if there is a non-trivial war in Asia it will be between India and Pakistan, if these nations come under the leadership of Hindu and Muslim fanatics respectively.
My prediction is that once China becomes the world's leading economic power, and the West continues to sink in economic turmoil, it will swallow Taiwan the way it swallowed Tibet. And the rest of the world, including the West , will just wink at it.

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