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. China's somewhat dysfunctional and opaque authoritarian system is in fact blameworthy. To be fair, both sides have frequently pushed the boundaries over the disputed islands in the East China Sea. But the growing evidence that the People's Liberation Army - more assertive, reckless and uncompromising than the country's civilian leaders - is increasingly calling the shots in Chinese policy and diplomacy is of deep concern. Unlike in Japan, (and the other major Asian powers) where civilian leaders are firmly in control of national policy and diplomacy, PLA officials have consistently led the escalation of hostile words between the two countries over the past few years. Perhaps Chinese civilian and military leaders are acting out prescribed roles of good and bad cop. Even so, and having fanned the flames of nationalism to entrench Communist Party rule since the Tiananmen protests in 1989, studies and surveys reveal that the PLA are highly popular with Chinese elites schooled on a curriculum that emphasises the country's victimisation by foreign powers (including the Japanese). In an authoritarian system that still relies on Mao Zedong's maxim that "political power grows out of the barrel of a gun", it is no easy thing for civilian leaders to silence PLA officials. This is particularly the case since the military's brashness, combined with impressive advances in military capabilities, is coming to represent a nation's pride associated with the return to a Chinese-led Asian century. An undisciplined and largely unaccountable military, fuelled by hubris and supported by double-digit annual budget increases from a deeply insecure regime, is rarely a force for stability and restraint. Civilians in China are officially in charge of foreign policy. But in a system where the extent of the party control over the PLA is still contested and opaque, the possibility of a rash decision - leading to unintended escalation - by the PLA Navy against a Japanese vessel on the high seas is that much higher. The Chinese and Japanese navies may yet stand down for the moment. Angell was spot on then, and now, that there are no winners in war between two economically integrated giants. But even 100 years after his time, it pays to remember that it was Angell and not the naysayers that mistakenly embraced "the great illusion". Dr John Lee is the Michael Hintze Fellow and adjunct associate professor at the Centre for International Security Studies, Sydney University