As Trump and Xi spar, an ancient trap awaits both

 Like Britain and Germany before 1914, the US and China risk making a huge error

A hundred years ago the First World War was entering its final phase. The last desperate effort by the Germans to achieve a decisive breakthrough on the western front was petering out. The summer of 1918 would see the tables turned, as the British Army launched what proved to be the offensive that won the war.

No one in either Berlin or London had set out to expend so vast a quantity of blood and treasure on four years of industrialised slaughter. As I argued 20 years ago in The Pity of War, the First World War was perhaps the greatest error of modern history.

Historians often look back to the events of the 1890s and 1900s in an effort to trace the origins of the Anglo-German antagonism. The long-established narrative goes something like this. The German economy was overtaking the British economy, a trend summed up in the words “Made in Germany” that were stamped on a rising proportion of imported manufactures.

Germany had imperial ambitions too, acquiring colonies in Asia and Africa. And it was building a fleet that was obviously intended to rival the Royal Navy.

Increasingly, as their economy boomed, the Germans saw their political system — in which the parliament (the Reichstag) had much less power than its British equivalent, and the monarch much more power — as superior. Their material successes bolstered an already deep-rooted nationalism. A Pan-German League was formed to make the case for more German territorial expansion.

The ultimate result was that Britain and Germany followed the ancient example of Sparta and Athens: the incumbent power and the rising power ended up going to war. The Harvard political scientist Graham Allison calls it the “Thucydides trap”, after the historian of the Peloponnesian War.

Are America and China on the way to repeating this classic historical mistake? Having just spent a fascinating week in Beijing and Shanghai, I fear they may be.

China’s economy has already, by at least one measure, overtaken that of America. The Chinese have come up with a strategy to catch up in terms of technology too. It’s called “Made in China 2025”.

President Xi Jinping has his own version of the Germans’ imperial Weltpolitik: the Belt and Road initiative, which implies a global expansion of Chinese infrastructure and influence. And the People’s Liberation Army is pursuing the goal (as one Chinese academic told me) of being the world’s strongest military by the time the People’s Republic celebrates its centenary in 2049.

Like the Germans a century ago, the Chinese no longer worry that Anglophone democracy might be superior to their political system. The Communist Party’s monopoly on power is now touted as a source of strength. Xi was praised by everyone I spoke to, rather as I imagine Kaiser Wilhelm II once was in Berlin.

As for nationalism, there is no mistaking its growing importance. “There is also a Chinese populism,” I was warned.

Yet, as the events of 1918 proved, Germany overestimated itself and underestimated Britain. I fear some Chinese are beginning to make this mistake about America, with the encouragement of other Asians. My old friend Kishore Mahbubani, formerly Singapore’s UN representative, has just published a punchy little book entitled Has the West Lost It?. His answer is a blunt yes.

“The biggest act of strategic folly that America could commit,” he writes, “would be to make a futile attempt to derail China’s successful development before China clearly emerges as No 1 in the world again.”

When we met last week in Beijing, Mahbubani told me he thinks America is nevertheless going to make that mistake — beginning with Donald Trump’s declaration of a trade war — because “the West subconsciously cannot accept China’s rise”.

Such talk encourages a certain bravado in Beijing. Chinese officials I met insisted they could withstand a trade war. Several made the argument that such a war would not last long anyway because the American democratic system would undermine the US negotiating position. Were not the mid-term elections a mere six months away? Were not American farmers already grumbling about the impact of the trade war on their exports of soya beans to China?

It is indeed possible that Trump’s Art of the Deal will be defeated by the rather more subtle Art of War immortalised by the ancient Chinese sage Sun Tzu. Yet the reality is that the Chinese depend more on the current global trade arrangements than the Americans and stand to lose more in a trade war. The US market matters much more to China than the Chinese market matters to America.

Moreover, China’s economy is not quite as strong as it may appear. One influential economist I met made clear that while he did not anticipate a Chinese financial crisis, he did think that the continued debt-propelled operation of unprofitable state-owned enterprises was undermining the efficiency of the economy.

The Chinese people toil under a vast debt mountain. After decades of abundance, China’s workforce is now shrinking and the population ageing in ways that are strongly reminiscent of Japan in 1990s. That surely points to lower growth in future.

Western observers tend to take the rise of Xi at face value, assuming that the concentration of power in his hands is a sign of strength. Perhaps it is. But I was struck by the observation of one former minister that Xi’s ascendancy had averted a huge political crisis in 2012. He had “saved the party, the country and the military” — presumably from a drastic decline in popular legitimacy stemming from rampant corruption. A state that requires dictatorship to be stable is not as strong as it looks — just as one based on individual liberty is not as weak as it looks.

There are two ways this can now go. America and China can fall together into the Thucydides trap, starting with a trade war and escalating into a real one. The alternative is what Henry Kissinger in his book On China called “co-evolution”. That second route is not going to be easy. But it surely must be preferable to repeating the history of the Anglo-German antagonism.

A hundred and four years ago, not many Britons — certainly not my grandfather John Ferguson — knew much about their country’s treaty obligation to uphold the neutrality of Belgium. Only when Germany invaded Belgium in August 1914 did our government inform its citizens this was grounds for war.

Equally, I imagine not many Americans appreciate that, under the Taiwan Relations Act (1979), America would regard “any effort to determine the future of Taiwan by other than peaceful means . . . [as] a threat to the peace and security of the western Pacific area”, and it “maintain[s] the capacity . . . to resist any resort to force . . . that would jeopardise the security, or the social or economic system, of the people on Taiwan”.

A rigid alliance system, Kissinger argued in his book Diplomacy, condemned Britain and Germany to war in 1914. Today’s statesmen in Washington and Beijing must eschew rigidity. To repeat the mistakes that sent my grandfather to the hell of Flanders fields would be — to put it mildly — a pity.

Niall Ferguson is the Milbank Family senior fellow at the Hoover Institution, Stanford