Xiaonian Xu, a professor of economics and finance at the China Europe International Business School in Shanghai, pointed to "the 1870s for a parallel to China's economy today: German unification under Otto von Bismarck. The "Iron Chancellor" advocated a strong bureaucracy and a private sector tightly linked to the government. That economic nationalism, Xu argued, laid the groundwork for World War I.

Read the article here if you wish.

Details, details. Bismarck did neither of the things attributed to him by Professor Xu. When he was removed from office by the Kaiser (Germany, like Britain, was a constitutional monarchy where the sovereign had the right to frown on the government provided by the legislature and ask that it provide a new one which the monarch had been busily politicking for) in 1890, the Berlin stock market had a larger equity market capitalization and more active trading than either London or New York. The "private sector" was free; and, like all private sectors, it didn't like free enterprise as much as it preferred government contracts. Bismarck was happy to practice balance of power diplomacy and saw Russia (not its rival Austria-Hungary) as Germany's natural ally. He was content to have the German Army be the preeminent ground force in Western Europe so that the French and the Austrians, with which Germany had just fought two expensive, if successful wars, would not be tempted to seek revenge; but he had no interest in seeing Germany challenge the British and French navies. That would be deliberately provocative. That left the Chancellor vulnerable to the demands of Blohm & Voss and everyone else involved in steel fabrication. Now that the railroads were built out, where would the orders come from if not for warships? Bismarck was not, in fact, an economic nationalist in the sense that Professor Xu means. He saw the self-interest of Germany as lying in its ability to export; his tariff policy protected the Prussian nobility from ruinous foreign competition in grain, but Germany was a far more open market for imports than Spain, Austria-Hungary, France or Britain in the 1880s when those countries were already busy establishing or expanding imperial preference.

But for the Kaiser's fatal decision to support Naval expansion and idiotic choice of an enemy (Austria-Hungary) over a friend (Russia) as an ally, WW I would never have happened.

It is hard to see the parallels with China, which is the dominant economic power in East Asia surrounded by wary much smaller trading partners who will be happy to look to the world's dominant naval/air power (the U.S.) for protection and support. If one wants to find parallels with European history, France in the late 17th and 18th centuries would be a much better comparison. The French had the largest economy and population and were the threat to their continental neighbors. The French did embark on a sustained campaign to challenge the British throughout the world in what can best be described as "armed trade", but it did not result in anything approaching a "world war" in terms of men and money spent. After a hundred years of fighting the French across all the oceans of the world, what provoked the British to mount the largest amphibious invasion in their history? Answer: the cheek of some smugglers in Boston.


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