Chinese leaders must keep a brash and reckless PLA in check - or risk war

Some four years before the outbreak of the first world war, British author and politician Norman Angell published The Great Illusion, a best-seller that argued that war was obsolete between closely integrated economies. At the time, many of Britain's elites who believed that war was bad for business welcomed Angell's thesis and chastised those warning that there could be darker days ahead.

Excited by the potential opportunities provided by a rising China, this same sentiment is carried by many of Asia's business elites today. The problem is that this benign view of rising powers rarely plays out in history. And the ongoing dispute between Japan and China over the Senkaku/Diaoyu Islands - or any number of other Chinese disagreements with its neighbours - could serve as the trigger for a catastrophic escalation towards major war.

First, some history. Prior to the first world war, Angell's logic - that the disruption to the international credit and trading system in the event of major war would be catastrophic for the major powers - was seemingly impeccable. Up to 1914, annual trade volumes of Britain, Germany and France were a substantial portion of their gross domestic product, with much of the trade between these three powers. The people-to-people and cultural connections between Western European states were far more profound than China's with Japan or the United States today. But we know what happened in 1914.

Fast forward to the current state of East Asia. While China is Japan's largest trading partner, both share a historical rivalry that spans centuries. Moreover, there is good reason to believe that tensions between China and Japan (in addition to the US) are likely to worsen even if more optimistic scenarios about regional economic integration come to pass.

One reason is structural, and also strategic. When Japan re-emerged as Asia's greatest economic power after the second world war, it remained a relatively inhibited military power due to its post-war constitution imposed onto it as a defeated power; a situation that was tolerable since Japan also emerged as a key ally of the American-led "hub-and-spokes" security system.

But China's re-emergence is fundamentally different. China has not emerged under the American security umbrella and sees itself as the "natural" paramount power in Asia. Neither is China an inhibited military power, with defence expenditure outpacing GDP growth for the past decade. Blocking future Chinese ambitions are a still-dominant America and its re-invigorated system of alliances.