US President Donald Trump in a Sino-US trade war conceptual image. Photo: YouTube

In a world where conflict is common, peace comes with a price – a price that requires equal adjustment at all levels. The 20th century was known as the Golden Century of the US, which historians now call the American Century. Since World War II, the world has grown peacefully under American hegemony despite a few small skirmishes.

The US was the principal architect and guardian of the international world order. In the 21st century, things have changed: The US no longer enjoys the same hegemony and in some areas its status quo has been challenged. One nation in particular whose astonishing rise has given nightmares to the American establishment is China. 

Impact of the rise of China

When Deng Xiaoping started the market reforms in 1978, no one thought that China’s growth story would be the talk of the decade. Never before in history had a country risen so fast in so many different dimensions.

Almost four decades ago, more than 90% of China’s 1 billion citizens were struggling to survive on less than US$2 a day. Today fewer than 1% are living in extreme poverty. A nation that didn’t even appear on any of the international league tables two and half decades ago has soared and now rivals the status quo, and in some areas surpasses them. 

 In 2004, China’s economy was just half the size of the United States’. By 2014 its gross domestic product was is equal to the US, and on the current trajectory it will be half as large again by 2024.

This change in economic clout can be felt everywhere. In 2012, China was the leading trade partner for 124 countries, while only 76 had that relationship with the US. This was a major shift since 2006, when the US was the largest trading partner of 127 countries.

That’s the challenge of the current world order: a rising China accelerating toward a seemingly immovably ruling US, on course for what could be the grandest collision in history.

This situation was best described by the ancient Greek historian Thucydides through his theory became widely known as the “Thucydides trap.” The rise of one and the reaction of another creates the toxic cocktail of pride, arrogance and paranoia that lead them both toward war. The current trade war is an excellent example. 

The 21st-century Thucydides trap

“The growth of Athenian power and the fear which this caused in Sparta made war inevitable.” With those famous words,  Thucydides laid out the analysis of why the Peloponnesian War happened. It was not by accident nor caused by individual leaders, but instead a natural outcome of long-term power shifts.

Sparta, the traditional hegemon of the Greek state, found itself threatened by the growing power of Athens. In the current scenario, China, given its rapid economic growth and gigantic size, appears to be a viable challenger to the USA’s dominance in the world economy.

The surging US trade deficit with China, as well as the ambitions of “Made in China 2025,” further reinforce American concerns about the threat of Beijing’s rising economic power. The ongoing Sino-US trade war is not a military conflict, but rather is similar to the Thucydides trap hypothesis in terms of competing for global economic dominance.

The trade war launched by US President Donald Trump’s administration was a rational response to the rising economic power of China. The Trump administration expected to use the trade war to rewrite the rules, force China to open its market further to American firms, and abandon unfair practices so that the US could compete with China on a level playing field.

The past 500 years have seen 16 cases when a ruling power felt threatened by a rising power, and 12 of them resulted in war. The bone of contention that leads to war is  the dynamics involved. 

Dynamics of Thucydides trap 

A rising power feels that its interests deserve more weight as it gains strength. It believes the current arrangements are discriminating against it, as they were established before its rise.

The rising power feels confined and wants things to be adjusted, whereas the ruling power thinks the way things are defined is great, as it should be in the future too. Yet the status quo provided an environment that actually gave a chance for the rising power to grow. But the upstart is not grateful for the conditions that the incumbent provided.

This bone of contention often resulted in war. But in those cases when the parties avoided war, it required huge, painful adjustment in attitudes and actions on the part not just of the challenger but also the challenged. 

Bottom line

If China’s dream doesn’t become a reality, then the rejuvenation of the Chinese nation will be incomplete. American exceptionalism, the conviction that the United States holds a unique place and role in human history, provides a counterpart to Chinese nationalism.

The strong belief of a special place in the world can make a country sensitive to insults. So any provocation by any means can be interpreted as disrespect, dishonor and so forth.

A risk associated with Thucydides’ trap is that a business-as-usual event, and not just an unexpected, extraordinary event, can trigger large-scale conflict. What happens is that a third party’s provocation forces one or the other to react in a way that sets in motion a spiral, which drags the two somewhere they don’t want to go, as happened in the case of the First World War. The assassination of Archduke Franz Ferdinand in 1914 initiated a cascade of reactions that in turn produced outcomes none of the parties would otherwise have chosen.

There are currently numerous flashpoints between the US and China where the divergence of interests is wide and open, such as North Korea, Iran, Hong Kong and the South China Sea. Only time will tell whether the US and China are going to follow the footsteps of history or will find a way to manage this rivalry without any bloodshed.

Ravi Kant is a financial writer with a deep passion for technology and economics, and also covers International politics and cybersecurity. He has wide experience in the financial world and some of his analysis has been published in leading magazines such as Mogul News and The Indian Economist. He tweets @Rk_humour .