Thoughts on the U.S. — China Situation, the Prisoner’s Dilemma, and WWI

The current state of relations between the United States and China has been, by now, a topic of concern for a while. As tensions continue to rise between these two global superpowers, it’s worth considering the historical parallels that exist between this moment and the pre-World War I period. Specifically, the situation can be seen as a classic example of the Prisoner’s Dilemma game — a scenario in which two parties must choose whether to cooperate or compete, with sub-optimal consequences if both choose the latter. If steps are not taken to reverse the escalation of hostilities, the potential for lasting damage to both countries and the world as a whole looms large. In this article, I’ll express my unsolicited opinion on the current situation, the reasons for the comparison to pre-WWI tensions, and the hope that the risks of further escalation will be mitigated.

I’ve always though of China, with only a few exceptions, as a nation of commercial conquerors, rather than military conquerors. The massive investments in the commissioning of the new Silk Road — the Belt and Road Initiative — were a sufficient proof of this. My take was that a war directly involving China or a territory in its commercial wake, as the war in Ukraine has been doing for more than a year, is contrary to Chinese interests. However, the recent messages sent by China have cast a doubt on my beliefs.

China’s government has revised its conscription laws, allowing retired service people to re-enlist and increasing recruitment focused on expertise in space and cyberwarfare.

China’s military simulated precision strikes against Taiwan in a second day of drills around the island

China will hold a rare joint military exercise with its landlocked neighbour Laos this month as Beijing tries to bolster security ties with regional allies to counter an expanding U.S. presence in Southeast Asia.

These are just a couple among the many Chinese initiatives taken recently, aimed at showcasing the power of the People’s Liberation Army. This attitude triggers the reactions of the power controlling the Pacific since the end of WWII: the U.S., who, convinced on its military superiority, has been adopting tactics to reduce the weight of Chinese exports on its economy, restrict Chinese investment on U.S. soil, and generally isolate China commercially.

Military analysts in the U.S. affirm the substantial superiority of the U.S. army to the Chinese one at the present moment, but they advice caution in keeping such superiority effective, with the maintenance of adequate industrial capacity and and the supply of technology and resources. Actions to ensure this and to allow an immediate intervention in Taiwan have already been taken. Other than that, subtle and explicit messages from the U.S. government worsen the overall picture.

This situation is a Prisoner Dilemma: in the case of an escalation or even a war between U.S. and China, the nation which didn’t enhance its military power in preparation for the conflict will be heavily penalized. On the other hand, if neither the U.S., nor China do that and the crisis de-escalates, the perspective of renewed commercial and political ease could entail positive payoffs for both. Unfortunately, the equilibrium of this game is a sub-optimal general military upgrading, with negative payoff for both, representing the enhanced probability of a war, in the worst case scenario, or the economic consequences of the lack of trust, certainty and serenity, in the best one. This sub-optimal equilibrium is what we will end up with if the attitude of U.S. and China doesn’t change. In fact, at the moment both powers, seem unable to talk to each other and seem to refuse the diplomatic ways to cope with the tension.

This situation is shares similarities, under this perspective, to the pre-WWI environment, where the European powers engaged in the so-called arms race. Germany and Austria-Hungary had formed the 1879 Dual Alliance, which became the Triple Alliance when Italy joined in 1882. Later, when Bismarck was forced to retirement by the new Kaiser, France had an opportunity to counteract the Triple Alliance and did so by forming the Triple Entente.

German industrial strength significantly increased after 1871, driven by the creation of a unified Reich, French indemnity payments, and the annexation of Alsace-Lorraine. This allowed Germany to build a Kaiserliche Marine, or Imperial German Navy, which was meant to compete with the British Royal Navy for world naval supremacy. Despite this, the launch of HMS Dreadnought in 1906 gave the British a technological advantage over their German rival, thing that made German military expenses divert from the navy to the army, giving up the competition on the sea. This action, however, wasn’t the result of a release of the tensions, but rather of the worry that Russia could deploy its troops faster, in case of war, due to the expansion of its railways system and infrastructure, thanks to French investments. The sum of these factors triggered a chain reaction all over Europe, that resulted in a 50% increase military spending (in real terms) by the six major European powers, from 1908 to 1913.

This is not to say that we will end up like in 1915, which would be a reductive and pointless prediction, but it’s reasonable to drag the conclusion that the probability of a war increases when the lack of trust triggers an arms race. There are also strong reasons to believe that the U.S. and China will never arrive to an open conflict, but in any case, I think that a step back by both powers towards a dialogue path is needed.