by Bill O’Grady

In Part I of this report, we laid out the two narratives that the U.S. and China are using to frame relations between the two countries.  This week, we will summarize the two positions and examine the potential for war using the historical examples of British policy toward the U.S. and Germany, offering our take on which analogy fits best.  There will be a discussion of current American views on hegemony as well.  As always, we will conclude with market ramifications.

The Views in Conflict
From the U.S. perspective, China’s historic economic expansion has come because it finally shunned Marxism and adopted capitalism.  All that remains now for China to achieve its final leg of development is to become a multi-party democracy and give up the single-party rule of the CPC.

From the Chinese perspective, China’s rise was due to the unity created by the wise rule of the CPC.  Calls for democracy are nothing more than foreigners trying to create divisions within Chinese society for them to exploit and use, like the British did, to constrain and contain China’s development.

View the full report