International Studies Perspectives (2006) 7, 3135.

Power and International Relations: The Rise of China and Its Effects
RICHARD ROSECRANCE Harvard University
The study of international relations inevitably involves the study of power relations among major states. But power is a Protean term, and there are many types of such relationships. Some are denominated in relative terms and involve constantsum conicts among participants. Others take place in arenas in which variable-sum outcomes apply, and the amount of conict is thereby reduced. But the most important point to understand is that the amount of power that a nation possesses does not dictate its policy or behavior. If sometimes nations act in accord with the amount of power they possess, sometimes they either fail to exert the power they have or seek to act more aggressively than their power would technically permit. In either case, discontinuities and sometimes instabilities ow from the over or underuse of power. Tensions particularly accumulate when an overuser confronts underusers, and no balance ensues. There are two main approaches to the role of power in international relations and both have difculties. The rst has been described as defensive realism and is characterized by the work of Kenneth Waltz.1 Waltz has offered a disarmingly simple insight into the regularities of international behavior in claiming that nations have a tendency to balance the power of other states. If they do not do so, they may suffer the consequences and may be eliminated from the system. The disposition of nations to balance against power, however, is only a tendency. It may or may not occur in concrete circumstances, and it may represent a delayed response to the aggressive behavior of other states. Defensive realism is like weather forecasting. Like weather forecasters, a theorist can predict a 30 percent chance of balancing (or rain) and be right regardless of what actually transpires. Defensive realism may be a useful way of conceptualizing some of the differences between domestic and international affairs, but it does not technically tell us what states will do. It is consistent with any range of international behavior except perhaps that of the abolition of the system of states itself. It is therefore largely unfalsiable and is to that degree unhelpful theoretically and empirically. A second approach is offensive realism, largely typied by the work of John Mearsheimer.2 Unlike Waltz, Mearsheimer actually seeks to predict what nations will do when faced by opposing power. They will either balance or buckpass in response, but they will not generally bandwagon. Strong powers will seek to dominate their regions and to achieve regional hegemony. Only the United States, however, has succeeded in this task. Nonetheless, countries in Europe, Asia, and the Middle East have sought, so it is argued, to achieve regional hegemony, although none in fact has achieved it. The problem with offensive realism is different from that with defensive realism. It is eminently falsiable, but it is also demonstrably false. Countries do not always assert the power they possess, sometimes remaining content with a sotto voce role in international politics. Japan is such a country today,
1 2

K. N. Waltz, Theory of International Politics (Reading, MA: Addison, Wesley 1979). John Mearsheimer, The Tragedy of Great Power Politics (New York: Norton 2002).

r 2006 International Studies Association. Published by Blackwell Publishing, 350 Main Street, Malden, MA 02148, USA, and 9600 Garsington Road, Oxford OX4 2DQ, UK

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and the United States played such a role in the 1920s and 1930s. Equally, between 1840 and 1860, Great Britain was at the top of the international pyramid of power in industrial terms but did not seek to exercise that power. This is not because it was insular, but because it was seeking industrial growth through trade and did not need additional territory in Europe to pursue that vocation. Its domination of the seas would have permitted invasion of vulnerable coastal powers, but it did not seek to exercise that manifest potential. Equally, other states have sometimes sought to exert more power than they actually possessed. Japan and Germany in the 1930s are clear examples. So is Frederick the Greats Prussia after 1740. Japan and Germany could not compete with a combination of the United States and Russia; yet, they undertook to put themselves at war with those two powers serially or in combination.3 They were defeated. Frederick could not beat the Kaunitz coalition of France, Austria, and RussiaFeven with English helpFand managed to retain his throne only because of a coup in St Petersburg, bringing his friend Catherine II to power. Prussia lost 500,000 lives in the process and retreated from international diplomacy thereafter. If this is true, it follows that intentions are equally important with capabilities4 in determining state behavior. Countries may seek to exercise all or only some of the power they possess. Sometimes, they may be expansive, and other times not. Domestic as well as international imperatives dictate the outcome. The literature has already established that democratic states behave differently toward each other than they do toward authoritarian states, rarely engaging in war with other democracies.5 This applies as well to the problem of hegemonial transition. There is no inevitability to war occurring as a result of one power overtaking a previously hegemonic state.6 The result depends equally upon intentions that are not determined by power position. At the turn of the century, the United States passed Great Britain without war. In economic terms, Japan moved ahead of the Soviet Union in 1983 but neither country was tempted to ght over the transition. The German rise vis-a-vis Britain at the end of the nineteenth century would not have been a problem had it not been that the Kaiser decided to build a great navy and challenge Britain both at home and overseas. If Germany had remained a land powerFas it opted to do under BismarckFit would not have caused British opposition or provoked an arms race. Again, particular German intentions are the villains of the piece, without which the tension leading to World War I would not have occurred. There was nothing axiomatic about Anglo-German rivalry, and Bismarck and Disraeli managed just ne, thank you, in 1878 when they solved the RussoTurkish crisis together, and they could have maintained that cooperation had Bismarckian policies been followed by his successors. In addition, the pursuit of power may sometimes occasion demands for extra territory and sometimes not. Through the nineteenth century and a part of the twentieth century land was the most important factor of production. Land, labor, and capital have always represented the key factors in industrial and economic growth. In past history, the acquisition of land meant gaining new peasants and grain supplies. In the nineteenth century, it meant acquiring coal and iron as well as food production for the victor. It was not surprising that war had an economic rationale in
3 Their only hope was to defeat Russia and the United States one after the other, and this had no chance unless Russia was defeated rst. But Germany and Japan never combined their arms against Russia despite the opportunity in the fall of 1941. Instead, Japan decided suicidally to attack the United States. 4 For a good example of such realist work, see the writings of Stephen Walt, e.g. The Origins of Alliances (Ithaca, NY: Cornell University Press, 1987). 5 See Michael Doyle, Kant and Liberal Legacies in Foreign Affairs, Parts 1 and 2, Philosophy and Public Affairs (Summer, Fall 1983); and R. Bruce and John Oneal, Triangulating Peace: Democracy, Interdependence and International Organization (New York: W. W. Norton, 2001). 6 See A. F. K. Organski, World Politics (Chicago: Universtiy of Chicago Press, 1958); and A. F. K. Organski and J. Kugler, The War Ledger (Chicago: University of Chicago Press, 1980).

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this period for the returns to the factor of land were quite high. Until the Industrial Revolution and its aftermath, they were greater than the returns to nancial and manufacturing capital. As late as the 1970s, the seizure of land containing oil and natural gas had an economic justication in an energy-short world. Oil prices were high, and they imposed a constraint on transportation, machine production, and on the generation of energy. But since World War II, returns to the factor of land (including oil) have been less than that to manufacturing capital.7 The result of oil price increases in the 1970s was that industrial prices rose even more, cancelling the short-term advantage to oil producers in the Middle East. Saudi Arabia briefly suffered a deficit in its trade accounts. It will do so again as industrial prices rise to counter the recent increases in the price of oil. More importantly, since the 1970s, the prices of high-level services have risen even more rapidly than the prices of manufactured goods. The return to human capital has gone up correspondingly,8 and it now constitutes about 64 percent of world gross domestic product. The net result has been to raise questions about the economic profitability of seizing other peoples territory. Land was a hard assetFit could be seized and developed through coercive force. But nancial capital and machine capital were quite different. Financial capital could not be seized by military force. Like quicksilver, it would melt away, morph in form, and end up in other hands. Machine capital could be theoretically seized (as the Russians sought to appropriate and disassemble West German industrial plants after 1945), but more generally such capital would be bombed and perhaps destroyed in high-intensity warfare. No aggressor could guarantee that he would capture his opponents industry intact. In addition, occupied populations could raise the costs of invasion and attempted assimilation of conquered territory, as the Iraqi insurgents have done. Security is so uncertain in todays Baghdad that (at this writing), the cost of a taxi ride from Baghdad Airport to the Green Zone has been as high as $35,000 for a one-way trip, and it may go higher still. Insurgent groups make life difcult for any occupier, raising the costs and diminishing the benets of aggressive war. Perhaps, regime change can be accomplished through bombing, but that does not guarantee unhindered possession and disposition of the assets of the decapitated state. The costs of military and territorial expansion remain high, and the benets are declining. Under these likely-to-be-continuing circumstances, intensive development through economic growth is generally preferable to military and extensive expansion. With new investments, a country can transform its position through industrial expansion at home and sustain it through international trade. Access to the economies of other nations is sufcient; a rising nation does not need territorial control of them. Peaceful development can thus take the place of aggressive expansion. Since World War II, a number of economies have adopted this principle, including Germany, Japan, China, and other East Asian nations. They have prospered as a result.

The Rise of China

It is of course true that what has happened in the past may not foretell the future. Chinas rise to eminence will be different from that of other powers. Despite its dependence on international trade and foreign direct investment, Beijing has not yet adopted democratic principles. The regime does considerable polling to determine sentiment in the provinces and has a good grasp of popular needs and demands, but it has not yet submitted itself to the electoral judgment of the whole population. Village elections have been introduced but these have taken place among Communist Party candidates and have not yet included representatives
7 See Enzo Grilli and M. C. Yang, Primary Commodity Prices, Manufacturing Goods Prices, and the Terms of Trade of Developing Countries: What the Long Run Shows, World Bank Economic Review 2 (1988):147. 8 New York Times, September 19, 1995, B12, citing a World Bank study.

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from opposition parties. And there will be a time when the regime will possibly depend less on the outside world than it does now. The rise of the Chinese middle class to 400 million or so will provide a domestic market for goods that otherwise would have to be sold abroad. Chinese growth then will no longer largely depend upon exports but on local demand and consumption patterns. Foreign technology will still be critical for Chinese development, and best practice standards achieved elsewhere will continue to be relevant to Chinese industrial progress. Some believe that there will be a attening of the international economic playing eld in the future so that many new countries will gain advantages over their highly developed predecessors.9 The new countries will be as high-tech as the old, but their costs will be much lower. Textiles will migrate to China, information services to India. The auto industry will no longer be centered in the northern hemisphere. Civilian aircraft producers will migrate. Computer-assisted manufacturing will allow new states to combine technology with low costs, and jobs will leave previous locations in Europe, the United States, and even Japan. Even nance could theoretically become a third-world specialty. Such an outcome, however, appears quite unlikely. Processes are being attened and performed in many different countries and industrial contexts. Components in industrial and service goods can derive from many different states. But the nal product may be integrated by only a few suppliers. Summarizing widespread research, The Economist has concluded that the size of producing units has declined. The number of workers in each unit has also been reduced. But the corporations in an industry are fewer in number, and industries are becoming more concentrated. Oligopoly begins to take hold. Economies of scale (based on declines in long-term cost curves) are being attained in many elds. Brian Arthur lists software, insurance, and nance as examples and there are many other instances of integration. Civilian aircraft may have two or three major producers on a worldwide basis. Autos were produced by more than 200 rms in 1890, but now the number of efcient producers is less than seven and the number may well decline further. GM and Ford are now under assault and may not survive. Consolidation is the order of the day in the automobile industry. Finance and publication are also becoming more concentrated with a few major rms staking out claims to a world market. It is not clear how many independent rms can survive. Under the circumstances, rms merge with one another to gain the scale to remain competitive, further reducing the total. China will enter a world market in which many of the spoils have already been appropriated. Although growing rapidly, Chinese industries may often be subsidiaries (or joint venture partners) of major world corporations located somewhere else. States may become more equal economically as capital shifts to the southern and eastern hemispheres.10 But fewer and fewer major rms may actually dominate the world economy. Some countries, like Mexico, will possess few, if any, decreasing cost industries. They will have to send their labor elsewhere to retain economic advantage. China will be studded with United States, Japanese, and European rms contributing high technology to Chinese development. Aside from textiles, however, it is not clear how many purely Chinese industries will attain economies of scale. Under these circumstances, even very strong countries economically will be at least partly dependent on industries headquartered somewhere else. Even today, America does not represent the attainment of unipolarity in economics, whatever its military might. It is dependent upon money market and foreign direct investment from China, Japan, and Europe. Economic concentration today has three or four different nodes, not just one. The same will be true in 2020 or 2030. Decreasing cost (increasing returns) industries will be located in different zones and no one
9 10

Tom Friedman, The World Is Flat (New York: Farrar, Straus and Giroux, 2005). Robert Lucas, NBER paper (Summer 2002).

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Great Power will monopolize them all.11 Europe will boast the LondonFrankfurt and ZurichMilan corridors. America will nd large-scale competitive champions in two zonesFBoston to North Carolina and San Diego to Seattle. China will have industrial or software concentrations in north China, Fujian, and Guangdong terminating in the Pearl River Delta. But no country, however powerful in terms of GDP, will incorporate all worldwide industrial or service potential. It is even possible that the defense industry on an international basis is one of increasing returns to scale. Under the circumstances, there will be overlapping zones of economic competency among Great Powers, and some countries will be left out altogether. The assumed result of one Great Power hegemony replacing another and a shift between unipolarities will not be obtained in the next few decades. Thus, even very powerful countries militarily will nd themselves needing the products and markets of countries (and corporations) located somewhere else. In theory, a very strong power militarily might be able to expand to take over the industries on which it has become dependent, but for a host of reasons this is unlikely. Again, costbenet reasons would cut against any attempt at conquestFopenness would provide access to such industries much more efciently than seizure, a seizure that would not be successful in the longer term. One does not wish to neglect here the danger of conict between China and the United States over Taiwan. It has been much discussed in the press, and China remains committed to Taiwanese accession to the mainland. On the other hand, the process of economic development will increasingly lead Taiwanese corporations to invest across the Straits and to move population and labor to the mainland. This will be done on attractive terms as Beijing lures capital away from Taipei. Already, Chinese leaders have forged relations with the KMT and the nationalist party in Taiwan, anticipating the elections a year from now. These connections have been popular in Taiwan, even though DPP leaders have denounced them. Chen Shuibian has had to make his own proposals to Beijing in response. In 1914, Great Powers were not dependent upon the commercial ties forged among Britain, France, and Germany. Those ties could be replaced by other suppliers and markets. Foreign direct investment did not ow between major powers; it proceeded from metropole to colony and even then in small amounts. Portfolio investment was the order of the day. But this was highly liquid and could be sold off when war began. Vulnerability interdependence did not occur in the globalization of the pre-1914 era. One, of course, cannot be sure that the more full-throated globalization of the present and future will remedy the difculty. History shows that states sometimes engage in war for insufcient reasons, neglecting the ties that bind nations together. Short-term motives take precedence over long-term maximization. But they are not likely to do so between the United States and China, both long-term maximizers. China is especially sensitive to the advantages of intensive growth and will not wish to disrupt essential economic arrangements that have been crucial to her success. In addition, should she decide otherwise, there are neighboring powers that would present barriers to extensive expansion. Japan, a unied Korea, India, and Russia all border on China. Even if the United States were not a major power guarantor of the existing settlement, these powers would make Chinese external expansion difcult if not impossible. Japan, perhaps, has traditionally underused her power, but this is not true of Russia or India. A unied Korea will represent another uncertainty for China. Again, economic ties with these nations will be preferable to military expansion against them. And the presence of the United States and its military bases will occasion additional hesitation. No one can be certain that relations among Great Powers will be peaceful ones over the long term. But the current economic, political, and military relationships make that prospect much more likely than it has been in the past.
11

See Paul Krugman, Geography and Trade (Cambridge, MA: MIT Press, 1991).