Beijing's Bismarckian Ghosts: How Great Powers Compete Economically


My colleagues Markus Brunnermeier, Harold James, and I together published “Beijing’s Bismarkian Ghosts: How Great Powers Compete Economically” in the Fall 2018 issue of The Washington Quarterly. In the article, we show great power economic rivalry is nothing new, and that the Anglo-German economic contest a century ago holds eerie parallels to today’s US-China rivalry.

The article is summarized below with nine key points.


This article argues that the economic rivalry between China and the United States in the twenty-first century holds an uncanny resemblance to the one between Germany and Great Britain in the nineteenth. Both rivalries take place amidst economic interdependence and explosive innovation; both feature a rising autocracy with a state-protected economic system challenging an established democracy with a free-market economic system; and both go beyond tariffs to feature great powers using standard-setting, technology theft, financial power, and infrastructure investment for strategic advantage. Indeed, for these very reasons, the Anglo-German duel can serve as a useful guide for policymakers seeking to understand the dynamics of the emerging Sino-American economic competition.

9 Key Points

  1. There are important parallels between the Anglo-German and Sino-American cases: Both rivalries take place amidst economic interdependence and explosive innovation. Both feature a rising autocracy with a state-protected economic system challenging an established democracy with a free-market economic system. And both go way beyond tariffs.

  2. Great power economic competition has historically gone beyond tariffs: Even a century ago, great power economic competition also included standard setting, technology theft, financial power, and infrastructure investment. This is a lesson that the United States would do well to relearn.

  3. The roots of rivalry can be found in political and economic regime type: As in today's rivalry, regime type amplified economic competition and anxiety. Laissez-faire Great Britain felt cheated by the state-protected developmentalism of a rising Germany, which eventually led to British tariffs and only amplified Berlin's distrust.

  4. Standard-setting mattered a century ago and still matters today: Today's struggles over Huawei and ZTE have precedent in Britain's monopoly on that era's ICT (telegraphy). Germany feared British control over international messages, built a rival system, & used an intl institutions to undermine the standards supporting British ICT dominance.

  5. Great powers engage in technology theft: China's technology theft has corollaries in Germany's efforts to copy many of Britain's best practices and technology, though no German effort comes close to China's Made in China 2025 in scope and ambition.

  6. Finance has long been a key instrument of coercion: The United States and Britain dominated international finance, which offered leverage over their rising power rivals. For their part, China and Germany intentionally worked to undermine that financial power to enhance their freedom of maneuver.

  7. Infrastructure investments have historically been used to reshape strategic geography: Germany and China were continental powers vulnerable to established maritime powers that controlled vital sea lanes. Germany sought a Berlin-Baghdad railway and China is pursuing a Belt and Road -- both reshape strategic geography and bypass rival navies.

  8. Protectionism and blunt-force tariffs can drive one’s allies to one’s adversaries: Threatened by German exports, Britain adopted tariffs that drove small European states into German arms and weakened Britain's strategic position. The US risks alienating Asia's swing states the same way today.

  9. What Washington Needs to Learn from the Anglo-German Example: Great power economic competition is subtle and sophisticated, often patient and long-term, and rarely emotional and reactive. Washington needs to go beyond tariffs. The United States should work with allies to strengthen rules, set standards, punish theft, fund research, safeguard financial power, and build infrastructure. China is playing a good hand well, but the United States and its allies have an even better one—but only if they work together.