History has shown that the successes of all countries depend on sustaining the strengthening forces without
producing the excesses that lead to their declines. The really successful ones have been able to do that in a big
way for 200-300 years. None has been able to do it forever.
Thus far in this book we looked at the history of the last 500 years focusing especially on the rise and decline
cycles of the Dutch, British, and American reserve currency empires and the last 1,400 years of China’s dynasties,
which has brought us up to the present. The goal has been to put where we are in the context of the big-picture
stories that got us here and to see the cause/effect patterns of how things work so that we can put where we are into
better perspective. Now we need to drop down and look at where we are in more detail, hopefully without losing
sight of that big picture. As we drop down, imperceptibly small things—TikTok, Huawei, Hong Kong sanctions,
closing consulates, moving battleships, unprecedented monetary policies, political fights, social conflicts, and
many others—will start to appear much larger, and we will find ourselves in a blizzard of them that comes at us
every day. Each warrants more than a chapter-long examination, which I don’t intend to do here, but I will touch
on the major issues.
History has taught us that there are five major types of wars—1) trade/economic wars, 2) technology wars, 3)
geopolitical wars, 4) capital wars, and 5) military wars—that need to be considered. While all sensible people wish
that these “wars” weren’t occurring and that cooperation was occurring in their places, we must be practical in
recognizing that they exist, and we should use past cases in history and our understandings of actual developments
as they are taking place to think about what is most likely to happen next and how to deal with it well. We see
them transpiring in various degrees of play now. They should not be mistaken as individual conflicts but rather
recognized as interrelated conflicts that are extensions of one bigger evolving conflict. In watching them transpire
we need to observe and try to understand each side’s strategic goals—e.g., are they trying to hasten a conflict
(which some Americans think is best for the US because time is on China’s side because China is growing its
strengths at a faster pace) or are they trying to ease the conflicts (because they believe that they would be better off
if there is no war)? In order to prevent these from escalating out of control, it will be important for leaders of both
countries to be clear about what the “red lines” and “trip wires” are that signal changes in the seriousness of the
conflict. Let’s now take a look at these wars with the lessons from history and the principles they provide in mind.
The Trade/Economic War
Like all wars, the trade war can go from being a polite dispute to being life-threatening, depending on how far the
combatants want to take it.
Thus far we haven’t seen the US-China trade war taken very far—it just includes classic tariffs and import
restrictions that are reminiscent of those we have repeatedly seen in other similar periods of conflict (e.g., the
Smoot-Hawley Tariff Act of 1930). We have seen the trade negotiations and what they achieved reflected in a very
limited Phase One Trade Agreement that is in its early stages and is being tentatively implemented. As we have
seen, this “negotiation” was about testing each other’s powers rather than looking to global laws and judges (like
the World Trade Organization) to achieve fair resolution. That—i.e., via tests of power—is how all these wars will
be fought. The big question is how far these tests of power will go and what form will they take.
Beyond the trade dispute there are three major economic criticisms the US has about China’s handling of its
economy.
1. The Chinese government pursues a wide range of evolving interventionist policies and practices aimed at
limiting market access for imported goods, services, and businesses, thus protecting its domestic industries by
creating unfair practices.
2. The Chinese offer significant government guidance, resources, and regulatory support to Chinese industries,
most notably including policies designed to extract advanced technologies from foreign companies,
particularly in sensitive sectors.
3. The Chinese are stealing intellectual property, with some of this stealing believed to be state-sponsored and
some of it believed to be outside the government’s direct control.
Generally speaking the United States has responded to these things both by trying to alter what the Chinese are
doing (e.g., to get them to open their markets to Americans) and by doing its own versions of these things (closing
American markets to the Chinese). Americans won’t admit to doing some of the things they are doing (e.g., taking