I’ll be blogging and podcasting soon people, but until then I want to share with you the thoughts of Dale Copeland, on trade and interdependence re: China and the US.

It made me think about this financial situation and the constraints it has put on Chinese growth – such as the idea that this is the end of the Chinese export led economy; as well as the certainty of Chinese oil supplies and other important trade.

Aaron Friedberg didn’t think economic interdependence was a guarantee of peace when I spoke to him a few years ago. (Today I would ask him about ‘financial interdependence’ of course.)

Dale Copeland has interesting things to say regarding the same issue. And I cannot think of a more pertinent article at this time. Hopefully, I will have more on his ideas in the next program.

Here are some excerpts from a chapter he wrote in 2003 called ‘Economic Interdependence and the Future of US-Chinese Relations’.

He looks at the historical interplay of economic interdependence, trade expectations and conflict.

In examining Japan’s position prior to World War Two he states:

‘The shift to a more aggressive policy after 1929 is directly connected to the impact of the Great Depression and the subsequent trade restrictions by other great powers.

US and European protectionist policies internally undermined the argument that economic growth through trade was the best means to Japanese security: pessimistic expectations for future trade lowered the expected value of trade, making military options more attractive.

In this environment, the value of areas such as Manchuria occupied in 1931, was manifest. As one government publication put it, the ‘shortage of the prime necessities of life in Japan, and the instability of their supply made Manchuria essential to national security.

Even if others wanted to supply Japan, their own expanding needs meant that Japan was reasonable to fear as to whether advanced industrial countries will long continue to supply the material to our industries which compete with their own...if the economic policies of advanced industrial countries should be directed toward the prohibition or restriction of the export of raw materials to this country, the blow dealt to us would be very heavy’

‘A vicious dilemma was developing: if Japan did nothing, difficulties in securing supplies would exacerbate its declining position; if, however, Japan expanded in Southeast Asia by force, or even by political means, America would tighten its embargo and simply accelerate the decline.’

Prime Minister Konoye, 1941: ‘If we allow the present situation to continue, it is inevitable that our empire will gradually lose the ability to maintain its national power....If the diplomatic measure should fail to bring about a favorable result within a certain period, I believe we cannot but take the ultimate step in order to defend ourselves.’

‘But after the 1930, with the beginning of highly protectionist British and American policies, Japan saw its national survival ties to expansion against its Asian neighbors – peacefully if possible, by military means if necessary. Although London and Washington had created their own economic realms using less-than-peaceful means, they would not tolerate Japan’s use of similar means.

By late November 1941, Japanese leaders saw war, despite its high costs and risks, as preferable to the certain destruction that would come if Japan met the new US price for reinstated trade. War had become the tragic lesser of two evils.’

‘Given the presence of nuclear weapons. Chinese leaders over the next few decades have even more reason to avoid a war with America against each others homelands......

As the Chinese navy grows and modernizes, power projection southward might seem to pose acceptable costs and risks should western trading practices turn hostile. The potential for Chinese miscalculation, and subsequent escalation to militarized conflict or war with the United States, cannot be easily dismissed.’

‘Yet the problem with containment in the current environment situation is clear: if conflict is not inevitable, containment now will undoubtedly make it much more likely. It will provoke China into a more hostile posture, fueling both its incentive to engage in an arms race and to expand territorially.’

‘This chapter has not explored the controversial question of whether Roosevelt deliberately drew the Japanese into war by imposing demands he knew Japan cold not meet.

But it is clear that his unwillingness to moderate US sanctions in return for a moderation of Japanese policy made conflict in the Pacific inevitable.’

Interesting stuff as the global world turns...