REGIONAL CHALLENGE: CHINA’S RISE TO POWER

JACEK KUGLER AND RONALD TAMEN

‘The twenty-first century is the Chinese century’

Dr. Sun Yat-Sen

The United States will retain world leadership for at least the
remainder of the Twentieth century, perhaps even for a longer time,
but the position will eventually pass to China.
A.F.K. Organski

INTRODUCTION
The tragic events of September 11, 2001 have all but obscured major
trends in world politics. The US government is now, justifiably, concentrating
on the ‘war on terrorism’ and considering how to handle this new threat.
However, the structure of world politics has not changed. While terrorist
activities can and have disturbed the relative tranquility that characterized
world affairs that followed the collapse of the USSR in the late 1980s, it is not
prudent to overlook the fundamental challenges that face the United States
today. We postulate that these challenges have not fundamentally changed
because of the new challenge by Osama Bin Laden and his terrorist group al-
Qaida, or by the renewed attention now paid to Iraq. The structural, persistent
challenges facing the United States come from Asia and to a lesser degree from
the European Union. Decisions that determine the interactions among these
major powers will determine the stability and instability of World Politics in
this century.

FORECASTING EVENTS
Straight-line projections are notoriously inaccurate. Speculation about
outlying alternatives often yields disappointments. One legitimate reason for
assuming the risks involved in predicting the future is to avoid war. We take
these risks here to outline our view of the dynamics of world politics because
the consequence of working without a rough compass is ignorance, and
ignorance can lead to conflict.

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 REGIONAL CHALLENGE: CHINA’S RISE TO POWER

Significant constraints limit our ability to forecast the future of world

politics over the next three to five decades. National units and their borders
are not constant. They change over time. Major alterations can occur through
integration, as in the case of the European Union (EU) and the North
American Free Trade Agreement (NAFTA). Changes also occur through the
disintegration of large units like the USSR. Finally, the waging of World Wars,
particularly in the nuclear era, obviously would play havoc with any forecast.
Such upheavals would redraw the global map. We sidestep such problems by
assuming in the forecasts that existing national entities like the US, China and
India will remain intact, while emerging supra-national political units like the
EU or NAFTA will expand cautiously.
In addition to reliability problems, forecasting also is difficult because of
disputes over variables. While there is general agreement that power
distributions, alliances, technological developments and political structures play
a role in the rise and decline of nations, there is serious disagreement about the
impact of these factors on national trajectories over time. Variations in
national performance can dramatically affect any future estimates and alter the
anticipated links between these variables and war and peace.
Given these risks, why is it useful to enter into the anticipation game? We
believe it is prudent for decision makers to have access to rough forecasts
because we live in an unusually critical period where current policy choices will
frame long-term outcomes—some of them involving war and peace. In other
words, the potential consequences urge us to take intellectual risks.
The past provides a guide to the future and approximations are useful
signposts. For example, economics like politics is not a precise science, but
when its basic macro tenants are disregarded societies pay dearly. In the fifty
years prior to the collapse of the USSR, for example, debate raged over
whether developing economies should adopt a centralized or free-market
structure to increase economic growth. Each camp controlled roughly half of
the world’s population. The results are in. Today, most nations that chose
democratic, open, competitive economies have successfully developed. With
rare exceptions those that chose the closed government-guided economies are
unsuccessful, and many languish in the poverty trap. The consequence of well-
meaning but incorrect policy choices is that a significant portion of the world’s
population lives in poverty, without basic rights, and dependent even today on
external capital to jump start their moribund economies.
This chapter provides a systematic sketch of the future relations among
great powers informed by recent developments in Power Transition theory.
We choose this theory because it has an established empirical record when
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 JACEK KUGLER AND RONALD TAMEN

applied to past periods of war and peace at the global as well as regional
levels.1
The chapter proceeds as follows. Sections II, III, and IV provide an
outline of the structure, elements, and dynamics of war and peace. Section II
describes the hierarchical structure of world politics. Section III outlines the
major elements of national power: population, economic productivity and
political capacity. Section IV discusses the dynamics of war and peace. Section
V focuses on European integration and the Asian hierarchy. Section VI
outlines the global implications of the changes we anticipate in world politics.
Section VII examines regional issues in Asia—the next center of world
politics. Given the uncertainties we face, we expect that these forecasts will
only provide a rough map of the future rather than a detailed set of
prescriptions.

STRUCTURE OF POWER TRANSITION: THE HIERARCHY IN

WORLD POLITICS
Power Transition theory conceptualizes world politics as a hierarchical
system. All nations recognize this hierarchy and the relative distribution of
power therein.
As we can see in Figure 1 below, a dominant nation resides at the top of
the global hierarchy. The term dominant has a special meaning in Power
Transition theory. The dominant nation is not a hegemon but rather the
recognized pre-eminent, most powerful international leader. The dominant
nation maintains its position by assembling and managing a coalition of
nations with similar preferences for the rules that structure international
interactions. For the most part, the dominant nation creates and defends the
status quo. Following the collapse of the USSR, the United States became the
dominant power and from that position it controls the largest proportion of
resources within the international system.

1 A. F. K. Organski, World Politics (New York: Alfred A. Knopf, 1958); A. F. K. Organski,

World Politics (New York: Alfred A. Knopf, 2ed., 1968); Jacek Kugler and Douglas Lemke, eds.,
Parity and War: Evaluations and Extensions of the War Ledger (Ann Arbor: University of Michigan
Press, 1996); Ronald L. Tammen et al., Power Transitions: Strategies for the 21st Century, (Chatham
House: New York, 2000); , Douglas Lemke, Regions of War and Peace (Cambridge: Cambridge
University Press, 2002), and Brian Efird, Jacek Kugler and Gaspare Genna, “From War to
Integration: Generalizing Power Transition Theory”, International Interactions, 2003 29,4, pp
293-314. Portions of the following analysis also are extended from Jacek Kugler, Ronald L.
Tammen and Siddharth Swaminathan, ’Power Transitions and Alliances in the 21st Century’,
Asian Perspective 25, 2001, pp.5-29.
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 REGIONAL CHALLENGE: CHINA’S RISE TO POWER

FIGURE 1: GLOBAL HIERARCHY

Dominant Power

Dissatisfied
Great Powers
Satisfied

Middle Powers

Small Powers

Great powers populate the second tier of international power. Each of

these nations has a significant, but not overwhelming, proportion of the power
in the international system. Current great powers include China, Japan, the EU
in toto, Russia, and potentially India. Most, but not all, great powers are
satisfied with the creation and management of rules by the dominant nation.
For example, the EU and Japan are committed to sustaining the established
status quo under US leadership. Yet among the great powers there exist
nations that are not fully integrated into the dominant power’s regime, such as
perhaps China, India or Russia today. When these dissatisfied nations
anticipate a power overtaking, they may challenge for leadership of world
politics.
Beneath the great powers are the middle powers. These include states of
the size of France, Italy, Poland, South Africa, Indonesia, or Brazil, each with
substantial resources. Middle powers can make serious demands that cannot
be dismissed, but do not have the capabilities to challenge the dominant power
for control of the global hierarchy. Further down the power hierarchy reside
the small powers. Though large in number, they have few resources and very
limited power. These nations, such as Malaysia and Iraq, pose no direct threat
to the dominant nation’s leadership of the global hierarchy.

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 JACEK KUGLER AND RONALD TAMEN

Figure 2 shows that regional hierarchies exist within the global hierarchy,
each with its own set of dominant, great and lesser powers.2 Regional
hierarchies are influenced by the global hierarchy but cannot, in turn,
fundamentally affect outcomes in the global system.

FIGURE 2: REGIONAL HIERARCHIES

Global Hierarchy

US

Regional Hierarchies

India
Israel
Pakistan
Egypt
Palestine Bangladesh

When regional hierarchies are largely isolated, they function in the same
manner and operate under similar power rules as those found in the global
hierarchy. In all cases, the dominant power in the regional hierarchy is
subordinate to the influences of the dominant power in the global hierarchy.
Power Transition theory anticipates that wars will diffuse downward from
the international to the regional hierarchies. The reason is that the global
dominant power and its main great power challengers have the ability to
directly exert power anywhere in the globe, while most regional powers can
only do so within their own region. Note that World Wars I and II involved all
the great powers and diffused to include almost every regional hierarchy. The
contending powers delivered troops to distant areas of conflict from Africa to
Asia. In contrast, the far more numerous conflicts in regional hierarchies did
not spill outside the region. When powers from the global hierarchy were

2 Douglas Lemke, and Suzanne Werner, ‘Power Parity, Commitment to Change, and War’

International Studies Quarterly 40, 1996, pp.235-60, Lemke op cit, and Tammen et al. op cit, provide
a detailed discussion of multiple hierarchies.
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 REGIONAL CHALLENGE: CHINA’S RISE TO POWER

involved, such as in Korea, Vietnam, Afghanistan or Iraq among many others,

foreign troops fought in the regional hierarchy wars but the conflict did not
escalate to the territory of those providing troops. We believe that despite the
terrorist activities in the United States that distinguish the events prompted by
the September 11, 2001 attacks on the United States, the current war on
terrorism and the invasion of Iraq are limited conflicts over control of the
Middle East regional hierarchy. These conflicts have little chance of escalating
to a major confrontation that would rival World War I or II. Thus, major wars
among powers in the global hierarchy reorder the international system while
wars fought among nations in regional hierarchies alter the local distribution of
resources but not the fundamental structures of world politics.
The September 11 attacks confounded the usual boundaries. Our leaders
perceived the terrorist attack on the United States as the equivalent of a major
war among great powers not a limited conflict centered on the Middle East
hierarchy. They compare the terrorist axis to the challenge posed by the Axis
powers during World War II. Nothing could be farther from reality. Despite
the civilian casualties and suffering inflicted on US citizens, the terrorist
activities involve a very small number of determined individuals who do not
and cannot challenge the structure of world politics. No matter the outcome in
Iraq, this conflict will not resolve structural differences that will emerge as a
consequence of the transition of power between the United States, Western
Europe and the two potential Asian challengers, China and India. This chapter
focuses on this lasting long-term challenge.

ELEMENTS OF POWER TRANSITION

The Dynamics of Power
A nation’s power produces the capability to influence the behavior of
other nations. The components of national power are population, productivity
and political capacity.3

3 A number of competing conceptualizations of power or national capabilities are available—

most notably the Composite Capabilities Index of the Correlates of War (COW) Project as
detailed in, for example, J. David Singer, and Melvin Small, ‘The Composition and Status
Ordering of the International System: 1815-1940’, World Politics, 18, 1966, pp.236-82.
Capabilities are an aggregation of world population, urban population, military expenditures,
military personnel, iron and steel production, and coal and oil consumption. Power Transition
theory uses total economic output of a nation weighted by its political capacity. The COW and
GDP measures are highly correlated. A comparison of the two measures can be found in Jacek
Kugler, and Marina Arbetman, ‘Choosing among Measures of Power: A Review of the
Empirical Record’, Michael Ward and Richard Stoll eds., Power in World Politics (Boulder:
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 JACEK KUGLER AND RONALD TAMEN

These three elements change over time at different rates. Population size is
difficult to modify in the short term while economic productivity can be
altered more rapidly. Political capacity is volatile and changes cannot be
predicted accurately. For this reason we will concentrate on population and
economic productivity to provide a glimpse into the future of world politics.
Variations in political capacity can disturb these estimates within a range but
will not determine them.
Population
Population is the sine qua non for great-power status. Population provides
the potential resource pool from which a nation can mobilize and extract
resources. Without a relatively large population, a nation cannot hope to
become either a great power or a dominant nation. The size of populations is
the condition that ultimately determines the power potential of a nation and is
the element that determines which nations will remain major powers. Recall
that France, England, and Germany once were great powers that competed
for global dominance when the rest of the world had not yet joined the
Industrial Revolution. Today, individual Western European nations cannot
compete with national populations the size of the United States, Russia, China,
or India. From this perspective, a fully functioning and politically capable EU
is the prerequisite for Europe to be a great power in the future.
Population structures are also critical in understanding how power
fluctuates in the international system. Mature developed nations have
undergone a demographic transition and have acquired stable populations that
are unlikely to expand rapidly. In fact, many developed nations such as
Germany, France, or Italy in the EU and Japan in Asia face the prospect of
declining populations in the next century. Unless augmented by immigration,
as is the case in the United States, the populations in these societies are
expected to decline in relation to those in other regions of the world.
On the other hand, large developing nations such as China and India that
are still undergoing demographic transitions have populations that will
continue to grow for a generation or more. Even after fertility patterns are
reduced to reproduction rates, total population growth figures will continue to
dwarf those of other regions.

Westview Press, 1989) and Richard Merritt and Dina Zinnes, ’Alternative Indices of National
Power’, Michael Ward and Richard Stoll, eds., op cit. While national capability measures are
effective in ranking the relations between nations they fail to capture the dynamics of power
change. For a current review see Emilio Casetti, “Power Shifts and Economic Development:
When Will China Overtake the USA?”, Journal of Peace Research, 2003 40,6 pp 661-675.
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 REGIONAL CHALLENGE: CHINA’S RISE TO POWER

FIGURE 3: RELATIVE SHARE OF POPULATION TOTAL AND RELATIVE BIRTH

RATES FOR MAJOR CONTENDORS 1950-2070*

60

50
Relative Population (%)

40
India
30 China
US
20 EU
Russia
10

0
1930 1945 1960 1975 1990 2005 2020 2035 2050 2065 2080
Year
* Size of nation circles represents the birth rate per 1000

Figure 3 outlines these demographic phenomena over the next fifty years.
The position of each circle represents the relative shares of population while
the size of each circle represents the birth rate.4 Figure 3 makes it clear that the
United States, as in the case of Great Britain, cannot remain the dominant
nation in the long run. Both China and India have populations four times
larger and this gap cannot be bridged because birth rates in Asia exceed those
in the US and the EU. Based on population potential alone, China and India
are poised to become the dominant nations of the future. Figure 3 also shows
that due to their overwhelming initial population size advantages and birth
patterns, no further demographic overtakings are likely to take place once the
center of politics shifts to Asia.

4 Demographic data for all the countries in this study are taken from the International

Database of the US Census Bureau (online at www.census.gov/ipc/www/idbnew.html).

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 JACEK KUGLER AND RONALD TAMEN

Economic Growth
National output generally is measured by gross domestic product. Recent
developments in endogenous growth theory displayed in Figure 4 refine the
characteristics of the S curve of development and lend reinforcement to the
tenets of Power Transition.5 Politically capable governments have the
capability of extracting resources from their populations; managing the
economic productivity of individuals in their societies; and reducing birth rates
in the early stages of development. In contrast, nations with limited
productivity per capita and low political capacity face expanding populations.
Frequently some of these underdeveloped societies struggle with economic
growth and fall into a ‘poverty trap’. With a change in political capacity these
underdeveloped societies can rapidly transform into developing nations and
initiate a period of rapid, sustained economic growth that exceeds population
expansion. This means that developing nations can close the productivity gap
between rich and poor nations because the dynamics of endogenous growth
suggest output convergence over time.
Figure 4 illustrates the likely growth paths for societies with varying levels
of political capacity.6 Nations with high political capacity grow rapidly and
achieve sustained growth earlier. On the other hand, low political capacity
governments preserve low rates of economic growth and continue to flirt with
the possibility of falling into the poverty trap. International economic
intervention does not change the dynamics of national growth. Internal
political factors prompt changes in population, which then alter the physical
and human capital resources that drive technology and lead to sustained
growth.

5 Yi Feng, Jacek Kugler, and Paul Zak, ‘The Politics of Fertility and Economic Growth’,
International Studies Quarterly, 44, 2000, pp.667-693.
6 This figure is derived in Feng, Kugler, and Zak op cit. Their study develops a formal dynamic

model of politics and economic growth based on fertility decisions, physical and human capital
accumulation. Politics critically affect fertility choices that, in turn, determine the transmission
of human capital from parents to children. Human capital provides the foundation for
sustained increases in living standards as individuals with new ideas enter into the production
processes. Politics is also identified as a primary cause of countries falling into a low-income
poverty trap. An expectation of political instability increases the likelihood of a poverty trap
because it adversely affects income and raises fertility, thus allowing human capital to decrease
over generations and causing reductions in future output.
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 REGIONAL CHALLENGE: CHINA’S RISE TO POWER

FIGURE 4: THE ENDOGENOUS GROWTH TRAJECTORY OF PER CAPITA

OUTPUT
Future Gross Domestic Product

Balanced
Growth
45q
High Political Capacity
Trajectory

Low Political Capacity

Transitional
Trajectory
Growth
Dynamics

Poverty Trap

Current Gross Domestic Product

When two societies with similar populations are at different stages in their
growth paths, one dominates the other. When they are at the same stage, they
are at parity. We will show that the dynamics of growth alter these
relationships and have implications for war and peace. Consider the evidence:
Figure 5 shows the probable evolution of total output into the next
century. The size of the circles indicates the per capita productivity of the
population. Note that the high differential in GDP levels between the US, EU,
and China is a temporary condition.
The EU will gain on the US, and with the possible inclusion of Eastern
Europeans—not included in the figure—should become the largest economy
in this century. Unless a stronger central authority emerges, the political
weakness of the EU will remain and inhibit its emergence as a competing
dominant power.

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 JACEK KUGLER AND RONALD TAMEN

FIGURE 5: RELATIVE SHARE OF TOTAL OUPUT AND PRODUCTIVITY PER

CAPITA OF MAJOR CONTENDERS 1950-2070*

70

60
Relative Power Shares (%)

50

40 EU
US
30
China
20 India

10

0
1930 1945 1960 1975 1990 2005 2020 2035 2050 2065 2080
Year

*Size of nation circle represents per capita productivity

Turning to Asia. Note that future US annual economic growth rates

compare poorly with those of China.7 Short of partition or internal turmoil,
China will become the world’s largest economy within the next 50 years. India
will follow in the second half of this century. This process is no different from
the overtaking of the United Kingdom by Germany in the mid-twentieth
century and later the overtaking of both by the United States and the USSR.
These dynamics have important policy ramifications for relations among the
US, EU, China and eventually India.

7Estimates of annual growth rates are taken from Angus Maddison, Monitoring the World
Economy 1820-1992 (Paris, 1995); Angus Maddison, Chinese Economic Performance in the Long Run
(Paris, 1999); and Ajai Chopra et al., India: Economic Reforms and Growth (Washington D.C.,
1995). Maddison estimates China's total output to grow at 5.5 percent up until 2015. For
developed societies growth rates are 3.5 percent, which are currently seen as achievable
objectives. Estimates for India, ranging from 7.5 to 9 percent are taken from Chopra et al.
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 REGIONAL CHALLENGE: CHINA’S RISE TO POWER

THE BOUNDARIES OF POWER

Status Quo
The status quo represents the joint satisfaction of the challenger and
defender within the dyadic relationship between these two nations. We refer to
the relationship between the global dominant nation within the global
hierarchy and the set of similar policies and preferences for each dyad in the
regional hierarchy. Power Transition postulates that satisfaction with this
dyadic status quo is a major determinant of conflict but gains and losses will be
attained directly from dyadic interactions among participants.
While the status quo can be conceptually identified, empirically there is
little consensus about what determines variation in satisfaction or
dissatisfaction.8 In this work we estimate the full degree of variations in the
status quo to show alternate paths nations could follow in the presence and
absence of cooperation. Future work will address means of forecasting the
status quo.
Conflict and Cooperation
The final boundary relates to the conflict- cooperation continuum. As the
values on either end of this continuum become more extreme the intensity of
either conflictual or cooperative relations increases. Therefore, the likelihood
of discrete events, such as war on the conflictual side and integration on the
cooperative side, also increases.
Power transition theory argues that the propensity to engage in either war
or integration is driven in part by the relative power of the challenger and
defender and in part by the degree of conflict or cooperation among nations.
To approximate this theoretical insight we measure militarized interstate
conflict and degree of cooperation expressed by levels of integration achieved
across countries. Basic data for conflict are derived from standard measures of
militarized interstate conflict (MIDS) developed by the Correlates of War

8 The notion of a status quo is compelling but we know little about what causes changes in

satisfaction. There is speculation that it might be attributed to similarity in political systems

(Douglas Lemke and William Reed, ‘Regime Types and Status Quo Evaluations’, International
Interactions, 22, 2: 1996, pp.143-164, and Tammen, et al., op cit.). Once preferences are given
they can be analyzed with sophisticated decision making tools like game theory but we have
little knowledge of their origin or evolution.
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 JACEK KUGLER AND RONALD TAMEN

Project.9 Measures of cooperation are derived from the integration scores

developed by Genna.10
Hierarchy
The global hierarchy creates a sense of order as a consequence of the
concentration of power at the top, and potential lack of order when parity
among contenders is achieved. The global hierarchy should not be viewed as a
fixed structure; rather it is constantly in flux, reflecting variations in relative
power distributions driven by differential growth rates across countries.
Recently Lemke developed hierarchy measures that apply to the global and
regional structures that incorporate distance and power reach.11 Since here we
are concerned only with global hierarchy we use a simplified structure based
on continental reach alone as described by Efird, Kugler and Genna.12

MODELING THE DYNAMICS OF POWER TRANSITION

We are concerned with the underlying power dynamics that change the
equilibrium conditions of world politics because these dynamics have been
empirically related to war, peace and integration. In a straightforward
formalization of the Power Transition concept, Efird proposes a simplified
dynamic model that traces the interactions between power, hierarchy,
satisfaction and political outcomes with a simple non-linear structure.13

9 Note 3 above.
10 Gaspare Genna, ‘Changing Power, Sovereignty, and Loyalty in the European Union’,
unpublished Ph.D. Dissertation, Claremont Graduate University, 2002 see also Efird, Kugler
and Genna, 2003 op.cit.
11 Douglas Lemke, Regions of War and Peace (Cambridge: Cambridge University Press, 2002)
12 Efird, Kugler and Genna, op cit.

13 Ibid. Efird’s theoretical relationship is defined as follows: CI P  S P3  H

CI = degree of war or integration
P = relative power
H = hierarchical structure
S = Degree of satisfaction with the status quo
P is expressed by Gross Domestic Product that combines population and productivity (Kugler
and Arbetman op cit). The S term represents the joint satisfaction of the challenger and
defender with the status quo. While this element can be assessed through the correlation of
alliances, trade and military buildups it cannot be forecasted at this time. The H term
represents the constraint imposed by the concentration of power in the hands of the global or
regional dominant nation. Low values indicate that the dominant power is preponderant and
the hierarchy is well ordered, while high values indicate that several great powers are at a
balance and compete for dominance in an unordered hierarchy. This structure is estimated
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 REGIONAL CHALLENGE: CHINA’S RISE TO POWER

FIGURE 6: DYNAMICS OF POWER TRANSITION

High

Severe conflicts
Probability of War

Unstable alliances
and confrontation

Integration

Low
Di
ss a
tisf
ied
n g er
Sa Peace and Challe nt
t i sf Stable alliance ndera
act Sa Parity Prepo
ion tisf
ied de r
w er
Defen erant
ive Pond
R e la t Prepo
Relative Power, and Satisfaction, and the Probability of War

As Figure 6 indicates, Power Transition theory contends that the

propensity to engage in either war or integration is driven by changes in the
relative power of the challenger and defender prompted by differential growth
in populations and output. While these contenders cannot directly control
such changes, they are able to alter the status quo to generate political
satisfaction or dissatisfaction.14 In a well-ordered hierarchy, conflict is
anticipated under conditions of overtaking in about half of the cases. Such
conflict is relatively rare but intense, while integration is likely for a broad set
of cases. In such a dominated hierarchy, integration is possible when the
defender is preponderant because the potential challenger may be forced to
cooperate even when it is dissatisfied with the dyadic relationship.

endogenously in the model. CI represents the degree of conflict or cooperation among

nations.
14 This particular functional form for the conflict-integration equation is chosen to reflect the

verbal arguments power transition theorists have been making and testing for the last 40 years.
Indeed, using the cube term shifts the highest level of conflict to just past the parity point and
reflects the curvature for the conflict-integration term with respect to relative power, as
derived by Bruce Bueno de Mesquita, and David Lalman, War and Reason, (New Haven: Yale
University Press, 1992) and empirically derived by Kugler and Lemke op cit. The interaction
with satisfaction is consistent with findings by Lemke and Werner op cit.
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 JACEK KUGLER AND RONALD TAMEN

Expected outcomes in an unordered hierarchy indicate little variation in

conflict-or-integration because of changes in satisfaction. If the defender and
challenger are dissatisfied and as their relative power approaches parity, the
degree of conflict increases. The stronger the challenger vis-à-vis the defender,
the more likely is the use of war to resolve disputes. In the case where the
challenger is preponderant and both defender and challenger are dissatisfied,
the likelihood of war is maximized. As the contenders move toward
satisfaction, the probability of conflict decreases. The likelihood of conflict is
much lower and concentrates around parity. Grievances are less pronounced
and more easily reduced, transforming the challenger from a dissatisfied to a
satisfied actor before it challenges for dominance. Integration is likely after a
power transition between satisfied countries since the two countries have a
history of cooperative relations and they have passed through the overtaking
without conflict. Integration takes place as the previous challenger becomes
increasingly preponderant.
This framework may be used to anticipate developments in the global
hierarchy over the next half-century.

A GRAND STRATEGY
Stable alliances are coalitions of states that share similar evaluations of the
status quo. Stable alliances are not agreements of convenience that can be
altered easily or without consequences. They are arrangements of persuasion
where nations associate because of commonly held commitments to existing
rules. The economic and security gains thus derived keep such alliances vital.
Members of stable alliances tend to be satisfied. They establish long-term
relations and seldom defect from obligations generated by alliances.
The potential contribution of alliance members, and the resulting stability
of such alliances in the face of war is a critical issue facing the elites in status
quo powers set on preserving international peace. During peacetime, alliances
are created and sustained by the commonality of preferences among actors.
NATO, for example, was created after World War II to combat fascism and
communism, and also to maintain peace among Western European nations.
Unstable alliances, on the other hand, are arrangements created in the shadow
of war, such as the agreement between the USSR and Germany at the onset of
World War II, or the alliance between the Allied forces and the USSR after the
German invasion. Nations seek unstable alliances only in order to avoid defeat,
they seek stable alliances to preserve lasting peace.

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 REGIONAL CHALLENGE: CHINA’S RISE TO POWER

Assessing the Present

Alliances are created by the dominant power to strengthen the stability of
the system by ensuring the preponderance of satisfied countries. A successful
dominant power attracts those great, middle powers and some small powers
that support the dominant nation’s leadership. Consider in Figure 7 the
relations between the EU and the United States after 1945.

FIGURE 7: US-EU RELATIONS 1960-2050

War
Increasing Likelihood
of Conflict

Neutrality
Increasing Likelihood
of Cooperation

Dis
Integration sati
sfie
d
1960 Sat
1970 1980 isfa
1990 2000 Sat
isfie ctio
2010 2020 2030 2040 d n
2050

Western European nations joined the dominant power to become part of a

status quo alliance system. US foreign policy in the post-war era provides a
clear example of preponderance through satisfaction of allies. The objective of
NATO was to defend the associated nations from an attack for this reason. As
Figure 7 shows, the US and the current members of the EU cooperated both
to ensure security and economic coordination. An equally important and
perhaps even superior objective of the US was to maintain stability within
Europe. NATO’s preponderance insured that power-overtaking among
France, England, and Germany did not lead to a repetition of World Wars I
and II. This paved the way for the formation of the EU.

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 JACEK KUGLER AND RONALD TAMEN

Looking toward the future, can this process continue with the integration
of new members into the security and economic grouping thus converting
dissatisfied nations into satisfied nations? The incorporation of Poland,
Hungary, and the Czech Republic into NATO is encouraging. These nations
share common values: democracy, free markets, and acceptance of the status
quo. Likewise, the potential expansion of the EU into Eastern Europe argues
well for the integration of economic interests in Europe.
The addition of Eastern European nations to the security and economic
grouping does not, however, substantially alter the distribution of power and it
does not change fundamental relationships in the international system.
Fundamental changes in the structure of world politics would follow only if
Russia joins NATO and the EU (See Figures 3 and 5). This addition could
make a large impact on preserving peace by strengthening the international
hierarchy. Russia’s entry into NATO would increase cooperation as fears
diminish that the expansion of NATO to Eastern Europe is anti-Russian. It
would help shift this nation into the satisfied group. Moreover, Russia’s pool
of resources would significantly help the dominant US and EU coalition to
postpone the overtaking by China. The United States can only ensure stability in the
next quarter century if the EU members are satisfied and Russia is a full member of this
dominant coalition.
Despite the promise of stability through cooperation, there are some
disturbing indicators to the contrary. The Bush administration has backed
away from a number of treaties that could have solidified the relationship
among the EU, the United States and the emerging cooperation with Russia.
Opposition to the ban on the testing of nuclear weapons, antiballistic missiles
restrictions, the imposition of global environmental standards and the
establishment of an international court of justice are prominent examples of
US actions that untie mutually binding agreements and diminish cooperation.
These unilateral actions do not enhance stability. Perhaps the continuing need
to wage the war on terrorism will deflect the US from this early pattern of
withdrawal and disassociation and once more move the US to the forefront of
international cooperation.
Alliance consolidation and expansion, however, is only a short-term
solution. Even under the most favorable conditions of a US-EU-Russia super
bloc, peace can only be insured for the next quarter or at most the next half-
century. Beyond that the challenge of Asia looms large.

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 REGIONAL CHALLENGE: CHINA’S RISE TO POWER

Forecasting the Future

The primary goal of US foreign policy must be the creation of a satisfied
China. In no way does this mean appeasement or concessionary policies.
Creating a satisfied China relates to the conditions that lead to the emergence
of internal policies and preferences in China for accepting the international
status quo. Some of this can be managed from abroad. Some cannot.
China’s entry into the WTO was a good first step. Economic interactions
create the opportunities to socialize China into the prevailing rules and norms
of commerce. Security arrangements could follow. Here the status of Taiwan is
critical. Potentially, the most explosive issue in Asia is the debate over the
reunification of China and Taiwan. The management of this confrontation will
shape the long-term relationship between the United States and China. How
both nations handle this controversy will influence, if not determine, their
permanent long-term relationship. The dynamics of the US-China relationship
are defined by their changing relative power. This dynamic is illustrated in
Figure 8.

FIGURE 8: CHINA AND THE USA

F o r e c a s t : U S - C h in a , 1 9 9 6 - 2 0 5 0
W ar

C o n f li c t

N e u t r a lit y

C o o p e r a t io n

Di
ssa
t is
fie
I n t e g r a t io n d
1996 2006 Sa Sa
2016 2026 t is tis
2036 2046 fie fa c
d tio
Y ear n

Note that China’s power is growing relative to that of the US. China will
overtake the United States in the next thirty to fifty years, long before it is an
advanced developed nation. The potential confrontation will be—as in the
case of Germany and the USSR in World War II—one between a very

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 JACEK KUGLER AND RONALD TAMEN

advanced nation and a developing giant. Whether one assumes slow or rapid
growth is less important than the essential trend.
These overall trends can lead to a peaceful or contested transition
depending on the actions by the two giants. A major point of contention
between them remains the political dispute over Taiwan. China surely
recognizes that time is on its side, and may even see the benefits of an
autonomous Taiwan. Patience on the part of the Chinese leadership could
bring the reward of reunification without the use of force. The longer that
China postpones the use of force, the greater is the relative power shift from
the US to China and the higher the likelihood that an accommodation that
maximizes autonomy for Taiwan can be reached. Indeed as Figure 8 indicates,
there is greater room for accommodation under a cooperative US leadership.

FIGURE 9: CHINA, USA AND TAIWAN RELATIONS.

Forecast: US+Taiwan vs China, 1996-2050

War

Conflict

Neutrality

Cooperation

D is
sa t
i sf i
ed
Integration
1996 2006 Sat S at
2016 2026 2036 is fi is f a
2046 ed ct i o
Year n

51
 REGIONAL CHALLENGE: CHINA’S RISE TO POWER

The fundamental question is how long can this expectation be sustained

without generating the preconditions for a global war? Figure 9 shows the
three-way interaction between the US, China and Taiwan.
Had Taiwan declared its independence very early in the overtaking process,
perhaps immediately following the recognition of China by the United States,
Taiwan may well have succeeded without generating a regional or a global
conflict. This is no longer the case. Today, using its economic and military
preponderance, the United States can force China to back down in any crisis.
The overwhelming majority of studies indicate that the US today certainly
would win any military encounter in the Pacific because the US navy can
protect Taiwan against an invasion. Our estimates suggest that in the Asian
hierarchy US preponderance should last for 25 years and then the tables will
start to turn. This is not a long time to alter international structures and
perceptions.
It is in the interest of both China and the US to find ways to postpone the
day of reckoning over Taiwan. An early regional conflict prior to the
anticipated transition would result in a likely defeat for China, but the
resentment would then set up a later confrontation that carries with it the
extraordinarily high costs of a global conflict. In the nuclear era a global
conflict of this magnitude would be devastating. From the Power Transition
perspective the goal of a stable US policy is the addition of China into
economic and security arrangements. The first step in the direction of
cooperative relations was achieved when US support assured China’s
membership in the WTO. However, a NATO-like security membership is
lacking.

GRAND STRATEGY POLICY IMPLICATIONS

Power Transition implies that lasting stability can be attained if China, the
EU, Russia, and eventually India join forces in an economic and security
arrangement. Strange as this concept may sound, in the long term, the goal of
the US and EU should be the expansion of NATO not only to Russia but
China and India as well. Perhaps this would occur under a different name or
structure. That is less important than the fact that a security system is
developed based on shared preferences. This arrangement would create the
global hierarchy needed to insure peace and avoid the preconditions for a
global war.
The United States is the dominant power in world politics and can set the
conditions for cooperation and conflict. Continued support for the status quo

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 JACEK KUGLER AND RONALD TAMEN

by the EU and eventually Russia is essential to maintain peace in the next

quarter century. The treatment of China is even more important. Unless ways
are found to minimize China’s dissatisfaction, the world will face the prospect
of global war. For this reason it is imperative to find a way to settle the dispute
over Taiwan while subtly socializing China into the existing international
system. If China were satisfied, the anticipated transition to Asian dominance
would have little effect on world structures and standards. Existing norms in
the international system would remain even though they are likely to be guided
and influenced by the new dominant nation.
On the other hand, if dissatisfaction grips China or less likely the EU and
Russia dyad, the preconditions for a global war emerge in the middle of this
century. Given technological advances, the winner of that war will rewrite the
international rules and norms of a new international hierarchy. That has been
the pattern of the past. It is what we expect of the future.
China’s participation in NATO or a similar organization is essential
because peacetime alliances aggregate nations with similar preferences. This, in
turn, ensures security. While China may cooperate over trade and human
rights, this would not assure peace. What can be done through the WTO—a
weak agreement compared to the EU—is to reduce economic dissatisfaction.
However, as long as China does not enter into international security
agreements their level of satisfaction will be low. There is evidence that nations
that reach agreements on security and trade minimize conflict while those that
reach security agreements alone likewise seldom fight. But those that reach
agreements on trade alone engage in conflict as frequently as those that have
no agreements or counter agreements. A combination of trade and alliance
produces the strongest links to peace, but without security agreements peace is
tenuous even among trading partners.

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