I should not complain, as I was one of the early contributors to the “Cold War 2.0” consensus when I published an investment research report titled “Power and Politics in East Asia” in September 2012. At the time, I was a Chief Geopolitical Strategist for BCA Research, the world’s most respected investment research firm. My clients – everyone from institutional to retail investors – were obsessed with the Middle East. Occasionally, I would get asked about the longevity of the Euro area or the machinations of President Putin. But few, outside of maybe a handful in Australia and New Zealand, cared about the budding U.S.- China rivalry. But in 2021, there are no more doubters. It is obvious that the U.S.-China rivalry is the gravest geopolitical risk facing policymakers on both sides of the Pacific Ocean. However, could the linear extrapolations of the countless Johnny-come-latelies have gone too far? Has the narrative pendulum shift overshot its mark? And does it really make sense to use the Cold War analogy as an analytical crutch in the 21st century? I don’t have a crystal ball, but it’s my firm belief that extrapolating the past decade linearly into the future is a mistake. The time to forecast rising U.S.-China tensions was in 2012 , not 2021 when they are now self-evident. Going forward, the Cold War is a lazy analogy – at best – for what the relationship between China and the U.S. is likely to evolve into. And at worst, it is a self-fulfilling prophecy that – if acted upon by U.S. policymakers – will lead to global isolation and a definitive geopolitical decline.
THE YEAR IS 2021, NOT 1945 The obvious reason that the Cold War is a poor analogy is that the year is 2021, not 1945. But let me be clear about what that means. The world is not emerging from four years of vicious warfare that culminated in the use of nuclear weapons against Japan. The world’s greatest economy is not lying in ruin and poverty, as Europe was in 1945, beset with tens of millions of refugees and under a military occupation by the transcontinental powers intent on carving it up like schoolyard bullies sizing up the playground. India is not a colony of a tired empire, and China is not ripped asunder by a civil war. It is obvious that the U.S.- China rivalry is the gravest geopolitical risk facing policymakers on both sides of the Pacific Ocean. However, could the linear extrapolations of the countless Johnny-come- latelies have gone too far? It was these starting conditions that allowed the U.S. and the Soviet Union to carve up the planet in 1945. A bipolar world order emerged unnaturally and in large part due to the near complete destruction of several major powers that previously had a say in how the world was run. Today, Europe and Japan may be mired in deflation and stagnation, but they... exist. That is an improvement over their near- ruinous condition in 1945. Russia has
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American Consequences
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