China’s rising tensions: lessons from historical parallels
I am somewhat aghast to read of the latest tweet from the Chinese embassy in the United States. It reminds me of a disturbing historical pattern of conflict and caused me to consider the similarities with past pre-war triggers.
History is a relentless teacher, and as the aphorism goes, ‘Those who don’t listen to history are destined to repeat it’.
Why do great powers go to war?
Territorial disputes, shifting balances of power, economic desperation, and the miscalculations of unchecked leaders have long been four of the most common sparks of conflict. Today it seems these same forces are simmering beneath the surface of global politics – nowhere more visibly than in China’s actions.
And while the clock is ticking closer to midnight, Beijing’s behaviour suggests it may be winding the hands itself.
Territorial disputes
Wars have often erupted over land and borders, from the Roman Empire’s frontier skirmishes to the trench warfare of World War I. For China, territorial claims are no longer mere bargaining chips—they’re becoming non-negotiable. The South China Sea remains a flashpoint, with an uncompromising Beijing’s militarising artificial islands and aggressive naval posturing throughout Asia and now around Australia, brushing aside the objections of smaller neighbours.
Taiwan, too, looms large: Xi Jinping has repeatedly vowed to “reunify” it with the mainland, by force if necessary. Unlike past decades, when compromise or diplomacy might have prevailed, China’s stance appears to be hardening. Historically, when great powers dig in over territory – think Germany’s obsession with Lebensraum in the 1930s, where Eastern Europe represented Hitler’s “Manifest Destiny”, or Russia’s unprovoked invasion of Ukraine more recently – the result has rarely been peaceful.
Following are four historical triggers for war overlaid with today’s China.
Optimism as a precursor to aggression
A nation’s overconfidence in its military capabilities has, in the past, tipped the scales toward war. Athens misjudged Sparta’s resilience on land in the Peloponnesian War, and Napoleon overestimated his odds against Russia’s arctic winter.
Today, China’s leaders appear to be growing similarly optimistic.
The Chinese Embassy in Washington this week responded to Trump’s tariff ‘pile-on’ with the following tweet; “If war is what the U.S. wants, be it a tariff war, a trade war or any other type of war, we’re ready to fight till the end.” It represents a rather chilling echo of pre-war bravado.
With the People’s Liberation Army (PLA) boasting the world’s largest navy by ship count and an arsenal of hypersonic missiles, China might see a strategic window of opportunity before the U.S. and its allies fully recalibrate their defences in Asia. History shows old men’s chest beating often escalates first: a bold statement begets a countermove, shattering the peace.
A dictator’s two levers; economic prosperity or nationalism
In a pattern as old as tyranny itself, when prosperity falters, dictators typically reach for the lever of nationalism. It’s a way to distract the population from the regime’s economic failures. For years, here at the blog we have been writing about China’s economic slide towards pulling the nationalistic lever. With predictability, it’s now happening.
The Roman Republic distracted its restless plebeians with conquest, and Nazi Germany channelled economic despair into aggressive expansion. Now, China’s economic outlook is darkening – growth is slowing, its population is aging, and, as Apple’s recent announcement of a new manufacturing base in the U.S. reveals, global supply chains are shifting away from China.
Xi Jinping, having consolidated power into a near-total dictatorship, faces a stark choice: deliver prosperity or stoke national pride. With the former increasingly elusive, the latter becomes more likely.
Meanwhile, Beijing’s rhetoric is growing more belligerent, its actions – like buzzing aircraft and strafing flares, conducting live firing exercises off the coast of Australia, or clashing with Indian troops in the Himalayas – signal a turn outward to mask internal economic frailty. History is replete with warnings that mighty nations often lash out when economically cornered.
The dictator’s miscalculation
Dictatorships breed missteps. Without the checks of democracy, dissent or a free press, leaders like Stalin or Mao blundered into disastrous conflicts—think of the Soviet invasion of Finland or China’s own Korean War when it sent the PLA to fight alongside North Korea.
Xi’s China, now a one-man state, isn’t immune to such tactical or strategic errors – no man or woman is. His echo chamber of loyalists may overestimate the PLA’s readiness or underestimate the resolve of potential adversaries like the U.S., the UK, Indonesia, India, Japan, or even Australia.
Is China on a war footing?
Beyond these historical parallels, China’s current actions suggest preparation. The country is amassing ships, planes, and missiles in the most significant military buildup since the Cold War’s peak. It’s stockpiling food and fuel—a hallmark of a nation bracing for blockade or conflict. Its coercion of neighbours is intensifying, and history suggests this is the playbook of a nation fortifying to fight.
The clock ticks closer
The symbol of humanity’s proximity to self-destruction is the Bulletin of the Atomic Scientists’ Doomsday Clock. It’s a measure of our recklessness.
China’s trajectory – territorial inflexibility, military optimism, economic desperation, dictatorial governance, and tangible war preparations – must surely be push the clock nearer to midnight. The U.S. and its allies aren’t blameless; Trump and others could escalate tensions further, but Beijing’s current actions cast the darkest shadow.
History doesn’t repeat itself exactly, but it does rhyme. Fingers are now on the triggers that have previously plunged the world into war. Disputed borders, power imbalances, economic fear, and unchecked ambition are all dancing in concert. Hopefully, cooler heads will prevail soon, but history suggests escalation before de-escalation.
For investors, rising geopolitical tensions can bring market volatility. Defensive assets like gold, defense stocks, and energy may gain, while China-exposed businesses could struggle. Investors should stay focused on quality investments, remain diversified and be aware of geopolitical risks shaping global markets.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
