[EAI·JoongAng Sunday Joint Project] Does US-China Interdependence Deter War? World War I Was Also Ignited by a Third Country

EAI·JoongAng Sunday Joint Project ① The Myth of Broken Interdependence

World War I is often cited as a prime example of economic integration failing to lead to peace. The eve of World War I sometimes appears similar to the current world order. Just as in 1914, suspicions may arise that highly interdependent great powers could push the world into the vortex of a third world war. What went wrong with globalization in 1913? To answer this, we need to examine empirically and theoretically whether the assertion that "economic interdependence brings peace and prosperity" is merely a myth.

The "Parallel Theory" of 1913 UK-Germany and 2026 US-China

It is true that the world of 1913, while centered in Europe, had achieved a level of globalization incomparable to previous eras. As a result of the first wave of globalization, which rapidly progressed after the Industrial Revolution, Britain and Germany, the leaders of the world economy at the time, recorded the highest trade interdependence in the world at 17.5% and 16.1% respectively. Moreover, the two countries were so interdependent that they were each other's first and second largest trading partners. The dramatic increase in interdependence fundamentally changed the perception of the utility of war, which had persisted for thousands of years. In the age of the Industrial Revolution, the military resolution of conflicts between economically interdependent states was not as attractive an option as before, due to its immense economic costs and the difficulty of governing occupied territories. The notion that victory in war brings significant economic benefits was a "great illusion." The logical conclusion was that "in an era of economic interdependence, war is difficult to imagine, and if it breaks out, it will not last long; therefore, economic interdependence is a practical means of ensuring a state's good behavior."

However, we already know that the theory of interdependence was only half true. It is true that the damage and costs of war increased exponentially due to interdependence. Despite winning the war, Britain faced a reality worse than before the war. In addition to over 710,000 casualties, it lost 10% of its material assets and had to deplete 24% of its overseas investments, which Britain prided itself on, to finance the war. However, the optimistic prospect that interdependence would bring peace vanished into myth, as it failed to prevent the war between Britain and Germany, its major trading partners.

Counterarguments to the critique of interdependence theory proceed in two directions. First, there is the explanation that focuses on the misjudgment of the belligerent parties, particularly Germany's belief that the war could be ended quickly. The belief that the development of military technology at the time strengthened offensive doctrines in the debate between offense and defense further reinforced this misjudgment. However, a counterargument is possible that they only believed the economic shock would be manageable if the war were short, and did not fail to understand that the economic damage from interdependence would be far greater than in past wars.

Second, there is the explanation that frequent conflicts and disputes among Eastern European countries, where the level of interdependence was relatively low at the time, triggered regional and ultimately global military conflicts. While conflicts persisted for decades before World War I even among countries with high economic interdependence, they were generally resolved before escalating into bloodshed. No great power intended to directly initiate World War I. In contrast, countries with low economic interdependence not only showed a more war-prone tendency but also ultimately sought to draw the interdependent great powers into their own alliances. The war, in essence, was the result of less interdependent minor powers involving highly interdependent great powers. The conclusion drawn from this is that if the Eastern European countries had achieved a high level of interdependence like the Western European countries, the "Great War" could have been avoided.

Will the catastrophe of 1913 be repeated in the 21st century? While the competing nations for world order have changed from Britain and Germany to the United States and China, a high degree of interdependence exists as a common denominator between the two periods. The successive regional conflicts, such as the Russia-Ukraine war, the Israel-Hamas conflict, and the Iran conflict, raise concerns that they may not end as localized wars but could become the fuse for a world war. The fact that a significant portion of current regional conflicts are driven by countries with low levels of interdependence strangely resembles the parallel theory of 1913 and 2026.

However, a simple comparison between 1913 and 2026 is dangerous. While interdependence is the keyword that runs through both periods, the nature of interdependence has changed, making the risks of 2026 fundamentally different from those of 1913. As seen in Britain's naval blockade of Germany, major powers in the pre-war world used economic coercion through asymmetric interdependence as a primary means of pressuring their rivals. The dilemma lies in the fact that this approach entails significant costs and sacrifices for the aggressor nation as well. Major powers, including Britain and Germany, went to war despite their interdependence.

Graphics by Lee Hyun-min

Possibility of a Trigger Outside of Strategic Competitors

In contrast, in 2026, the United States and China pressure each other through weaponized interdependence. A prime example is the US leveraging its dominance in the upstream semiconductor value chain, including intellectual property, to impose export controls on China, and China retaliating by leveraging its control over materials and raw materials like rare earths. While the specific means employed by the US and China differ, there is no fundamental difference in that they maximize economic impact on the other party while minimizing their own economic costs. If 1913 was a "carpet bombing" relying on asymmetric interdependence, then the weaponized interdependence of 2026 is a "precision strike" utilizing "choke points" within the value chain. This difference manifests as World War I in 1914 and a "war without gunfire" in 2026.

Weaponized interdependence also has its paradoxes. This is because there is a potential conflict of interest between states that need to check and pressure strategic competitors and corporations that cannot afford to forgo commercial interests. The Trump administration's attempt to delay China's AI rise through export controls on AI semiconductors, only for Nvidia to argue for the necessity of AI semiconductor exports and ultimately obtain export approval, is just one example. This demonstrates the limitations of states in weaponizing interdependence without corporate cooperation, and it also signifies that corporations serve as the ultimate safety net to prevent strategic competition from escalating into catastrophe. The transnational interests of corporations capable of playing this role are more intricately intertwined than in 1913.

One of the lessons from 1913 is to pay attention not only to strategic competitors but also to third countries. Conflicts between minor powers with low levels of economic interdependence became the fuse for World War I. If excessive focus is placed on strategic competitors, the trigger for war may be pulled from an unexpected direction. In the 21st century, the power of less interdependent nations willing to engage in conflict to involve great powers coexists with the power of connecting countries that mediate between the US and China to reduce the possibility of direct conflict. Connecting countries play a role in maintaining and increasing indirect interdependence between the US and China, which have been striving to reduce their dependence on each other in recent years. In essence, the US and China have entered a process of new demarcation using connecting countries. However, their medium- and long-term effects remain unclear. Whether the US and China will expect the peace-promoting effects of connecting countries or view them as Trojan horses and seek to eliminate them will determine the direction of the reorganization of the world order.

Lee Seung-ju is a professor of Political Science and International Relations at Chung-Ang University. He holds a Ph.D. from UC Berkeley and has previously taught at the National University of Singapore and Yonsei University. His publications include "The Political Economy of the Digital Trade Order" and "The Political Economy of China's 'Space Rise'."

[Source: JoongAng Ilbo, Reporter Ko Jeong-ae] https://www.joongang.co.kr/article/25417440