Odd Lots - Graham Allison on the Risks of a US-China War

Episode Date: November 27, 2025

The US and China are in a "Thucydides Trap," whereby the risk of war is heightened when an established power is threatened by a rapidly rising power. This is the framework that's been popularized by Graham Allison, the Douglas Dillon Professor of Government at Harvard University. Professor Allison has been writing about China and the US-China relationship for decades. He's been focused on the growing odds of a violent conflict between the two powers. On this episode, he explains his work and the conditions that drive greater risk of armed conflict. He also tells us what both sides get wrong about each other, and what it will take to reduce the odds of military involvement.More: Henry Wang on China's Role in the New Emerging World Order Subscribe to the Odd Lots NewsletterJoin the conversation: discord.gg/oddlotsSee omnystudio.com/listener for privacy information.

The news doesn't stop on the weekends. Context changes constantly. And now Bloomberg is the place to stay on top of it all. Hi, I'm David Gurra. Join us every Saturday and Sunday for the new Bloomberg this weekend. I'm Christina Rafini. We'll bring you the latest headlines, in-depth analysis, and big interviews. All the stories that hit home on your days off.

And I'm Lisa Mateo. Watch and listen to Bloomberg this weekend for thoughtful, enlightening conversations about business, lifestyle, people, and culture. On Saturday mornings, we put the past week's events into context, examining what happened in the markets and the world. That on Sundays, we speak with journalists, columnists, and key political figures to prepare you for the week ahead. Join us as soon as you wake up and bring us with you wherever your weekend plans take you. Watch us on Bloomberg Television. Listen on Bloomberg Radio, stream the show live on the Bloomberg business app, or listen to the podcast. That's Bloomberg this weekend.

Saturdays and Sundays starting at 7 a.m. Eastern. Make us part of your weekend routine on Bloomberg Television, radio, and wherever you get your podcasts. Bloomberg Audio Studios. Podcasts Radio News. Hello and welcome to another episode of the Oddlots podcast. I'm Tracy Alloway. And I'm Joe Wisenthall. Joe, in preparation for this conversation today.

I sat down this morning. We're recording on, what is it, November 20th. That's correct. And I typed U.S. China into Google News results. You see what the latest is? Here is a selection of headlines. U.S. Commission says China could invade Taiwan with little advance warning. China leveraged India-Pakistan conflict to trial and tout its military strengths,

Pacific Islands on front line of future U.S.-China War. And then finally, the U.S.-China-CHIP war. That's right. Are we ready? I was just going to say, I feel like the chips in particular every other day there's a different headline about what's allowed or what's not. But to your point, this is the story. I mean, there's AI, there's a couple other things.

and then the U.S.-China relationship. Absolutely. And it seems almost inevitable at this point that we talk about U.S. and China in competitive terms, right? And also in militaristic terms. And this has been going on for as long as I can remember at this point. It's building up, right? Like really in the last decade, you know, when we were younger, I thought, oh, we're just

going to trade together. And maybe they'll even liberalize or become a liberal democracy one day. It didn't happen. But in the last 10 years or nine years, it's really picked up how much people are are framing this in military terms. Well, I wrote that paper back in like 2002 that China was going to invade Taiwan by the 2008 Olympics. So my view of this might be different to yours.

My view has also been proven to be incredibly incorrect. So I'll leave it at that. But, you know, we recorded this episode with Henry Wang a few months ago where we were talking about U.S. China relations. And he mentioned one person. Yeah. And he said, you've got to get him on the show. You got to get his perspective on this view.

view of U.S.-China competition and are we doomed, destined to end up in a military conflict. So here we are. We're going to do it. We're in his office. Let's do it. All right. We have, in fact, the perfect guest. We have Professor Graham Allison. He is the Douglas Dillon Professor of Government at Harvard University. And he, of course, is the one who coined the term the Thucydides trap to describe the potential outcome of U.S. China competition. So really the perfect person to speak to. about this. Professor Allison, thank you so much for coming on all thoughts. Thank you so much for having me. So I mentioned the Thucydides trap, and I think a lot of listeners will know what it is, and probably a substantial portion of our listeners are really into ancient Greek history and know all about it.

But when you first came up with that term, was there a light bulb moment in your head where you thought, like, this is the way to characterize the future of U.S. and China relations? So thank you. And the answer is yes. I think I had actually speaker, Kevin McCarthy here in a forum event a couple of nights ago. And he was reminding me that when he was trying to figure out what was happening with China, he called me up and said, would you give me a tutorial? I said, of course, I'd be under two. We've started this conversation. And his first question when we began was, what the hell is going on here? That should have been my first question. It's a very good question. Basically, here every day and every way, somehow or another, there's a story about China threat, China, competition, China, China, China. I said, in a word, if you're trying to capture this, one of a phrase, this is a classic lucidity

and rivalry. So China is a meteoric rising power. Never before in history has a nation risen so far, so fast, on so many different dimensions. A country that we couldn't even find in our rearview mirror at the beginning of the century because it was so far behind us, it's very hard to find in our rearview mirror today because it's either beside us or ahead of us if you think of an arrival.

So a meteoric rising power. The U.S. is a colossal ruling power. Never since Rome has a country been so powerful in so many different dimensions for such an amazing period of time. In fact, I just have a piece. They'll be in foreign affairs next week on the longest peace. This is the longest period without Great Power War since Rome. So 80 years we celebrated in September without Great Power War.

Historically, every generation or two for the last few thousand years, there's been Great Power Wars. So amazing colossal ruling power, who's not only been good for itself, but actually good for an international peace. So Thucydides, when he was trying to understand what the hell was going on in ancient Greece, wrote about what he called the rise of Athens and the fear that this instilled in Sparta that made war virtually inevitable. So think about a seesaw on a kid's playground. out and one heavy is on the one end and one light is on the other. And the heavy is kind of in control. I can jiggle you if I want to, blah, blah, blah.

Now all of a sudden the light starts heavy. Start gaining weight. Gaining weight. And he gets a little bigger and a little bigger. Pretty soon I'm feeling, wait a minute, maybe I have only one foot on the ground. Maybe I'm feeling less. So when you see this tilt of the seesaw in the tectonic self-power, Basically, this concretes a discombobulation for both parties.

The ruling party thinks, hey, wait a minute, what's happening here? I used to look down on you. Now you're looking me straight on or maybe even, so my perspective, I used to be able to push a button and things would happen. And now I push the button and the things don't happen because my relative power has changed. psychologically. I'm accustomed to being at the top of every backing order. Americans, my wife says about me, wash the cosmetics off my chest, and it says, USA is number one. Number one is who we, that's our identity. If you do that television, they scorn, you know, whatever, people hold up their number one for their team, whatever, whatever. So the idea that

somehow somebody is challenging my position as, well, used to be the biggest to economy. Now, I've an economy, I used to be the main trading partner of everybody. Now, I used to be everything that was made was made by us. Now was made. So as this happens, historically, we've seen over and over this discombobulation that leads them to lots of misperceptions, miscalculations, misjudgments. And unfortunately, in about three-quarters of the cases, this ends up in more often a catastrophic war. So, sorry, that's a long version. No, that's perfect. So Sparta ended up attacking Athens, right?

Because they were scared of the rising power. Basically, what happened? I mean, it's a little more complicated than that. But yes, basically, as the discombobulation was occurring, and Athens became more and more full of itself, as the rising power always does. And the ruling power become more and more fearful. Then it turns out that some third-party activity in Coursera

that wouldn't have mattered to the two parties otherwise. So something that's otherwise incidental or easily managed, throw in a layer of misperceptions and miscalculations, and you get there. Another wonderful example, I think the one that's closest to what we're now seeing, is the period from 1900 to 1914 that led to World War I. So if you ask yourself,

how in the world could a assassination of an Archduke in Sarajevo, which was so inconsequential that it didn't make the front page of the newspapers in New York. Within five weeks, all of Europe was caught up in a war. And when you looked afterwards, people said, how did you guys let this happen? And as Bulo, the chancellor for Germany, he said, ah, if we only knew. So the rising distrust and the anxiety about status position, it's not that it directly provides the impetus for war, per se, but that it creates the conditions such that when there's an incident or an event

that, oh, because there's no trust, because there's all this concern, it can be that random thing, a large duke, some people in a third city, that can be the capitalist. Something happens in Taiwan. Something happens here. Something happens here. And because as the, as the seesaw is shifting, as the rising and ruling, the tectonics are moving, the misperceptions are magnified, and miscalculations multiply, and the impact of third-party incidents are actually amplified. So things that would otherwise be manageable, hey, this is just nonsense.

Let's deal with this problem. All of a sudden, I see it as you doing something, and then when I see that, you see something. One thing leads to the other. So if you look in the case of Athens and Sparta, that Corinth, a city-state that neither of them cared much for, and in particular, trusted at all, gets involved with Coursera, which is now Corfu, and there's a fear that they're going to have a navy that will be able to challenge Athens so that the Athenians get more excited.

So one thing leads to the other. You get kind of a vicious cycle of misperceptions and miscalculations that then all of a sudden happens. And once something happens, oh, my God, I have to react. Action and reaction. And there you get to somewhere you don't want to go. We don't talk about ancient Greek history enough on this podcast, in my opinion. But I do need to bring it up to date.

So, you know, some people would argue that China has been on the rise for decades now. And I'm sure people have different starting points, but let's say since the 1990s. And, you know, now 30 or 40 years later, we're at a point where there is competitive rivalry, both militarily and. economically. But we haven't had war so far. As you just noted, we've had 80 years of peace between the great powers, which is our good news story of the day. But why is that? And does it mean that you need to reconsider the Thucidian framework? Well, again, Thucydides was very thoughtful about this. He didn't say that there was a specific moment or point in the story. and in the book that I wrote called The Destin for War in the U.S. and China escape through

these traps, I look at the last 500 years and find 16 incidents or 16 cases in which a rising power seriously threatens a ruling power, the World War I being one interesting and dramatic example. So in these, sometimes before the rising power has actually overtaken the ruling power, something happens, sometimes after, so it's not, nothing, through city is not about some specific moment in time, it's about a dynamic that then when something happens, something happens. So if you look, for example, at the Cold War, which is one of the, so in the 16 cases, 12 Indian War, if you want a model for war, think World War I, but four, Indian no war. So that's good news.

One of which is called Cold War. So it's called War, but it's not War. It's war on every four bombs and bullets. So in the Cold War, we had several very, very close calls. For example, the Cuban Missile Crisis about which I wrote about. And if you look at that little chart over there on the wall, that's Kennedy's Doodles during the Cuban Missile Crisis in the Yellowwood. Thinking about the choices that he's making. He thought there was between a one in three and even chance this would end in a nuclear war.

But it ended in a nuclear war, we would have had a couple hundred million people killed. We wouldn't be doing this interview. So it could have happened in that instance, but it didn't. Now, how did it come not to happen? First, there was some brilliant statecraft, for example, to get out of an incident that could have otherwise. There was a great glob of grace and good fortune, I'd say. But also, there was a rivalry that went on for long enough in which one of the parties, the Soviet Union, end up hollowing, being hollowed out by the contradictions that were part of a Soviet command and control system, turned out not to be competitive over the lower. So that's how one story ended, successfully.

And that could be a possible analog for the current U.S.-China rivalry in which Chinese would say, we see in your divisions in your society and in your corrupt, the decadent, you know, whatever, whatever, whatever, maybe you'll be the one thing. Right, they perceive us as the Soviet Union. And we, many Americans, trying to tell our side of the story,

say, well, they're going to be sort of like the Soviet Union because actually they were communists and blah, blah, blah. On April 4, 23, around 2 in the morning, A man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16.

You know, obviously we look to the U.S. Soviet relationship for perhaps lessons from history. China feels in many ways very different from the Soviet Union in some ways with respect to foreign policy. You know, like I read Henry Dr. Kissinger's book on China and he starts off by pointing out that China has never been particularly interested in people beyond its borders outside of the territorial questions, say, related to Taiwan or Tibet. And even still today, it's not obvious that China's interest with the rest of the world expands much beyond the goods trade or trade at all. Does that affect your calculation, the sort of internal, when you think about these statistics, the fact that, yes, there are these patterns of history, but also countries are different internally and may have different motivations. Absolutely.

And I think, I mean, again, you can take it kind of level one, level two, level three, level four. Obviously, each of the country's story is different. If you look at Portugal and Spain, which is the first of these 16 cases back of the time of Christopher Columbus, they both were Catholic and there was a pope. And so when the conflict got to the edge of a conflict, the Pope said, I got a solution. Here's the line. I'm going to draw the line down here. This side is going to be Portuguese. This side is going to be Spanish.

Now, that's why people in Brazil speak Portuguese, because they got on the Portuguese side of the line. But you had a situation in which you had a kind of a ruling guru who could make a declaration. Unfortunately, there's no such person today to do that. But looking at the Chinese case, just as you say, China's history has been one in which, historically, it has wanted to be and thinks of itself as the sun around which everything else rotates. They've got a line about, there can be only one, you know, tiger in the valley. But it's literally called the Middle Kingdom, right?

The middle country. And the middle kingdom was the meaning of it was the middle between the earth and heaven. So we're the, we're the, that, but not about the Soviet, not like the Soviet Union wanting to convert everyone. Right, like China's never had a come in turn, for example. And they haven't been trying to take over territories of other parties other than just, you know, in their periphery. And they haven't had an aspiration. Henry actually has a good line about this. He said, you know, that the Americans and Chinese are very similar in that both of us have a superiority company.

complex, but only one of us is a missionary. The other one doesn't think people are even good enough to be Chinese. So they'd like for you to mimic their behavior, but they don't think you're ever going to become Chinese, and they don't want you to become Chinese. They don't want you to rule your country the way Chinese do. They want you to have respect. Yeah. And they want to be in their own domain. And I would say that's roughly right. Le Quineau was the best, the most insightful China Watcher and Xi China Watcher was Lee Kuan Yew. Lee Kuan Yew was the founder and father builder of Singapore. And he was one of my mentors.

I wrote a little book about it. And he said about China, this is going to be the biggest player in the history of the world. It's going to be very uncomfortable for Americans to get used to it, especially the idea that some smaller yellow, there's a racial element in the history. history and whether. He said, but he believed that it was possible that the U.S. and China could find their way if they were smart to share the Pacific in the 21st century. And I would say

that would be the good news home. So both Joe and I did international relations, I guess, in the early 2000s? Late 90s, yeah, around that time. And a line of thinking back then was that globalization was going to save us all. And we were going to have our economies so enmeshed with each other, that the idea of going to war or military competition would just be completely insane because it would mean mutual self-destruction, not with bombs, but with, I don't know, consumer goods like the boo-boos. I had to throw that in there. Do people still believe that? Because on the other hand, it seems like the central conflict between the U.S. and China right now is economic, but on the other hand, we haven't had outright military war. So good to

remember how the cycles go, and I think I remember that period since I've been teaching for a long time, the theory that somehow economic entanglement would prevent war was a famous theory in the beginning of the 20th century as well. So the best-selling book in the decade before World War I was Norman Angel's book. I write about this actually in Destin of a War, called The Great Illusion. And he said, there's not going to be wars anymore because the cost of war will so greatly exceed the benefits that the winner will be a loser. And if you ask to Andrew Carnegie, who was the richest man of the time, in 1914, for Christmas 1913, 14, he sent out Christmas cards to his favorite 4,000 people who included the... pids of every state. And he said, there's not going to be war anymore because now we have this, you know. Merry Christmas. No more war. Exactly. And he said, and I have built the peace palace

at the Hague where people can go and resolve disputes. So it's not going to be necessary to have a fight of war. I would say, that's a grand delusion. It turned out not to be right. Now, what's right and wrong about it, interesting? So is it true that the U.S. and China, both financially and in terms of supply chains and in terms of economy are so entangled today that this should provide some counterbalance to the geopolitical and military impulses for confrontation. Absolutely right. And this is what you can see in Trump and she at their recent summit.

I mean, of the people in the current foreign policy world, Trump is a far, far, far outlier in this respect, in that he thinks it's possible that the U.S. and China can actually both be involved in such a kind of economic relationship that it'll be beneficial to both parties. Now, partly that's because I think he's some of the people who are pessimistic about this, have kind of given up on American competitiveness and thinking, you know, maybe we're not as competitive. Trump has kind of a, I think, a romantic view that the U.S. can win, you know, every race. On the other hand, he also has a businessman's view that's possible to put people to be entangled in ways in which they can be fierce rivals and can also be somehow cooperating. So I've been stretching for silver linings because there's many, many, many things not to like about Trump.

But I think it's conceivable. If you look at see what he said after the summit when he tweeted. At first, he said it was a great success for us on a 10-point scale. It was a 12th. Actually, what he understood was he came up against somebody who's his strong and has as many cards as he does. So you have to find a way to cooperate with him. But if that's true, if both of the parties are searching for ways to cooperate,

Could this be a stabilizer in what would otherwise be? I would say, yes, it could. And could this end up in some kind of a, of a... So, Henry, who was my other most, you know, mentor about China, kept saying... Which Henry are we talking about? Henry Kissinger. Okay.

Sorry, that we need a new strategic concept that's comprehensive enough that encompass the fact that we're going to be the fiercest lucidity and rivals at all times. Each of us really, really does want to be number one, and it matters in many, many. But at the same time, we're so entangled that we require cooperation of the other for our own survival. So this sounds like a contradiction, it is. But we managed a version of that a little bit in the Cold War. This was much more complicated because the Soviet Union was never really a serious economic rival by the time you got to a high Cold War. In the Chinese case, China is immediate.

Is there something in that space? I think there is. How did, see, so you mentioned that, like, compared to many others, Trump is a U.S.-China optimist and maybe even a dove by many measures, which is a little weird given that, but it clearly is. How did this happen? Like, how did so much of the foreign policy elite in the U.S.

Over the last several years, it feel like, becomes so doomer, jaded, pessimistic about the prospect of peaceful coexistence? I think the main driver was structural in the Thucydidean story. So if you look at the British in the period from 1900 to 1914, they become to be more and more shocked by the fact that the Germans are doing things that are supposed to be ours. They're producing something that we're supposed to be in charge of. Actually, it's interesting, and I again describe this in the book, is a famous document called the Crowe. CROWE memorandum. So the King of England asks his foreign minister, he says, why is it that we're being so nasty about the Germans? This is my cousin, Kaiser Wilhelm. Literally his cousin. They're

literally his cousin. They go on vacation together in the summer. And he says, but every time I read anything, every time I see anything, everybody is blaming them for everything. Why is this? And Quo explains for him, the sea song is shifting. And as the seasho shifts, everybody's perspective is impacted and they exaggerate. And this is kind of like normal. And I think if you look at that Athens-Sparta story, you can find a very similar thing. The Athenians are doing what they're doing. And the Spartans are talking to the show.

These guys are hopeless. Look and see what they do. Every day they get up and they think of some other thing to be vicious. Just real quickly, if we zoom forward to World War II, in that scenario, is the U.S. the rising power that Hitler was completely anxious about? Is that how you fit it into that story? I would say the World War II cases, a complicated one, but a good question, where Hitler is attempting to become a rising power in a situation that's already stabilized. But then he has actually such territory, in most of the cases, the rising powers don't have great territorial or imperial or imperial.

aspirations. In the Cold War, in the Soviet Union, I mean, the Soviet Union did really believe in their ideology that every country should be ruled by a communist government and that they needed to have a continuous expansion in order to basically legitimize their own rule. Fortunately, most of those cases don't have that. I'm June Grosso, inviting you to join me for the Bloomberg Law Podcast Every weekday, we help you make sense of the legal stories that shape the nation and the world. Listen for complete analysis of the biggest court cases, the latest actions from Congress and regulators, and the legal moves driving the markets. From corporate law to constitutional law and from state courts to the Supreme Court. At Bloomberg Law, we go beyond the day's headlines.

We speak with top attorneys, judges, scholars, and policy experts to break down what the rulings, really mean. We do this every weekday, then bring you the best conversations in our daily podcast. Search for Bloomberg Law on YouTube, Apple, Spotify, or anywhere else you listen. On the East Coast, listen as you start your day. And on the West Coast, catch up in the evening. That's the Bloomberg Law podcast with me, June Grosso. Subscribe today wherever you get your podcast. How much of the current tension between the U.S. and China? tension, discomfort, discombobulation. How much of that is down to China rising as a power

versus the U.S. declining as a power? I would say in the good question. So in the China's meta-narrative, you ask Xi Jinping or when they're talking, it's the inexorable rise of China. So there is confident, and he's just confident that they're rising into what will be a Chinese century, as Teddy Roosevelt was, if you take the equivalent period in American history. But the other component of this, which was not part of Teddy Roosevelt's, was that the U.S. is irreversibly declining. That's what she believes. That's what she believes.

And the person who works for him, who's his number four and his closest ideological person, is one who need. I've, by some accident and good fortune, have become one of their people whom they, one of the people whom they enjoy talking to. I think mainly because Kissinger, I'm, you know, was his mentor or mentee, and because I introduced them to lucidities. I mean, as one who said, I was the best publicity agent for a author of anybody ever had in China because they've sold more copies. of Thucydides' Peloponnesian War in Mandarin since my book than in the previous 2000 years. So in any case, Juan Huning is a serious thinker. He was a political scientist originally. He came to the U.S. in 1989 on an American Political Science Association Fellowship or something to study at the university.

or to be a fellow at the university. And then he traveled all around the U.S. And he wrote a book that's called America Against America. And you could go, and it's in English, you can see the English copy. And it's as the analysis of the factors that were going to splinter the country, it's pretty good for the time. Pretty guttled. And they clearly continue thinking about that.

I was there just before the Trump Xi summit in Korea, talking again to a couple of people in the first circle. And they were saying about the U.S., you know, the U.S. I mean, here's one guy. He said, he was just stranger than we thought. I said, what's strange? He said, well, let me just, let me give you to start down the list. He says, New York is the city is the largest Jewish population in the world.

and they're going to elect a Muslim mayor. New York City is the Yempe Center of Global Capitalism. They're going to elect somebody who's a socialist. We're socialists. The U.S. is, the government is providing food for one in nine people in the U.S. and now they're talking about withholding it. We used to do that, you know, when we had people who were poor. But we think that's one of our great achievements.

We don't hand out food and people have food. The U.S. is sending troops to cities. We remember Tiananmen. Is this like Tiananmen? I said, no, this is not like 10. So the division of income has now become. so great. They said, we saw this data that two-thirds of the consumption is now by the top 20% of the income earners. Well, excuse me, in most societies, the people who were not,

that were being left out would riot. That would be, that's probably why we say we have to be a modern socialist state because they have to, so, you know, they're going down a list like that. I said, what do you have to remember is this is a strange country? It's absolutely good. A land of contradictions. A contradiction. I sometimes say a kaleidoscope of contradictions. Because every time you move it, it's another one.

On the other hand, it's been remarkably resilient. And no other society with no other governing system has been as successful over so long a period of time as this one. And then I usually do my lines about, God looks after drugs little children in the U.S. to say. But I would say reasonable person could look at the country today and say, this looks pretty strange. Yeah. So obviously, there are the big structural questions that will last for a long time, both China's economic rise, U.S. internal tensions, et cetera. But this year, in particular, Tracy started the episode with all these headlines, and that's daily. And Trump himself is, you know, there's the contradictions within the White House, et cetera. But just the events of this year, had they, from today,

from January 1st to today or from the inauguration to today, have your views changed? Are you more optimistic? Less optimistic? What have you learned in 2025? That's a good question. So I would say two-thirds or 80% of the story is baked into the structure. Yeah. So if and as China continues rising, which I believe it will, and growing at about twice the rate we do, which I think it will, and advancing in technologies the way it has been, which I think it will, even though it has many, many, many problems. But I think they'll manage more or less on that path. And Americans will wake up more and more every day that China's in your face doing something or whatever. So that's point one.

Point two, in this lucidity and rivalry again, it's natural for the ruling power to blame the rising power for everything. and blaming China or hyping China threat or demonizing China is kind of normal. And I would say the Spartans were demonizing. The Athenians, maybe not quite at the extent. So for Americans, we do it our way, but I would say that part is right. So those are the negative components. While it may seem strange, especially in Cambridge, for somebody to look for some signs of hope or silver linings in Trump, I think Trump understands that nuclear war would be catastrophic

and really, really worries about that in a way that the only other person in the foreign policy establishment equivalent lately that has done that was Biden, not Obama, not, you know, 80% of the others. So that's number one, more he understands very big bit. Secondly, he somehow has this respect for Xi, he admires China. Some of what he admires is there are autocratic rule. He says, how in the world did you manage to rule 1.5 billion people with so little objection? I wish I could manage my press the way you do, blah, blah, blah. You've got a lease on life.

I mean, he's a leader for life. Is anybody any suggestions for me? So he admires that. he wants to be a great peacemaker. So I think it's not inconceivable that we might come to have a strategic concept that would be something like a partnership, which would then balance. I think will the Thucydidey rivalry continue in every case? Yes, I believe it will.

And will it mean that this feeds of fear and all the things that will be normal. But if it's also the case that my survival, as a country depends on a degree of cooperation with you so that we don't have a nuclear war, because at the end of a nuclear war, my country's gone. So that AI doesn't end up ruling us all with the two AA leaders. So could we find so financial system? In 2008, we would have had a, the financial crisis would have become a depression had it not been for a joint U.S. China statement. Oh, trade.

I mean, if we look at the rare earth story, I mean, that's what those are. there. Oh, yeah. I was fiddling with this piece of metal on a Graham's table. We were going to ask, so there are a bunch of, these are mission coins, is that right? Or? These are just from, from services, but this gear, see if you can separate it. Oh. These are rare earth magnets. And you can see, wow. Wow. I got one. I got one. Okay. That's okay. But in any case, we'll get it. We have become dependent upon China for how many things in our supply chain. And they unfortunately depend on us for how many things. So part of the reason why they got the stalemate in the current, what would otherwise be, you know, Trump's bullying another country is that he comes up against somebody

as strong as we are. So in that case, he's adapting and adjusting. So I would say, you know, if I'm looking for silver linings, I'm looking in that space. I hate to end on a down note and I'm conscious of the time and you have to run off. But in terms of the U.S.-China Cold War, turning into a hot war, what should we be looking out for? Because as we started this conversation, every day, there's a new headline about, you know, China's moving this naval vessel into this particular body of water. And there's propaganda airing in China that's prepping the population for an imminent Taiwanese invasion, that sort of thing. What would you actually look for as a warning sign? So I think most of the newslines that we hear or statements from people are China hype.

And you cannot accuse China of anything today in the U.S. without getting a resonance. So nobody, I mean, I get blamed occasionally for being a China sympathizer by simply say, what you're asserting is false. Yes, of course, there's many, many things China's doing, but it does. So, for example, one of the favorite clauses now is China has the fastest nuclear buildup in the world because they're going from about 500 weapons to about 1,000 weapons in 2030, which answers, well, that's a historical statement. And if you look at the number of warheads we went to from in the Eisenhower period or the Kennedy period, in both cases there were more. So it just happened not to be true.

But there'll be many, many, many accusations of that kind. And I think those will continue because, so China has developed a manufacturing ecosystem. It basically can produce anything at scale that half the price that we can. Well, lo and behold, if you go to Walmart or to Home Depot, half the stuff or more is made in China. people will complain about that. So that part seems right. But I would say that most of this is just hype. Where you find danger is where there are third parties whose initiative might,

like the story of Coursera, produce a set of reactions. And they're the leading candidate of Taiwan and the current president of Taiwan lie, who's taken many, many, many dangerous actions. I think, fortunately, both in the Biden administration and in the Trump administration, they've had conversations at the leader level about not letting this person by some irresponsible action, Dregoshoftism. The other is that the Chinese rules of engagement in their exercises in the Straits and in the South China Sea are now such that it's not very difficult to imagine a collision of a ship or a plane.

We saw that at the beginning of the Bush administration when they collided with one of our spy planes. So could that escalate? And I think that's why, again, getting back to communication channels between the two parties where they can talk candidly and privately in order to have a circuit breaker if some accident happens, which I think on the current path would be likely to happen. I'm going to ask one more very quick question because you brought up manufacturing just then. And something else that we've been noticing lately is there's a tendency among a lot of Western economies, especially, to talk about building up their own manufacturing capacity, including in terms of munitions and rare earth minerals, as you just mentioned. There was a headline, I think just yesterday, about the UK wanting to build ammunition within its own borders instead of relying on allies. what's the underlying motivation there? Because most people would look at a headline like the UK wants to make its own bullets

as a predecessor maybe to some sort of military conflict. Well, it is puzzling and there are a lot of puzzling things, but I would say that whenever it's pointed out to people that you're dependent on some other party for supply of something. So, for example, for the U.S., rear-ear earth magnets are required for almost everything. So for cars, for iPhones, for laptops, for F-35s, for Kama-Hook missiles, or whatever. So how would we allow ourselves to be dependent on China? Because that gives them something that they can squeeze that supply chain and be coercive.

So I would rather be independent on that. And so any politician would then make an announcement, okay, we're declaring that we're going to be independent. Asking what would be required to be done in order to reach that stage, people are not asking. So that would be at the next level. Similarly, if you look, for example, for most pharmaceuticals, most of the pharmaceuticals and the pharmaceutical precursors that we use for any medicines come from either China or from India. well, maybe we should do these ourselves. Unitions, we shouldn't be giving out a... So the fact that politicians, when they see somebody says,

here's a dependency or a vulnerability, declared that we're going to be independent, as I would say predictable. If you look and see what behaviors follow from that, the answer is not very many. So I'm almost ready to accept the proposition that we're going to be inextricably entangled in supply chains and economy.

economics, in which case some version of mutual deterrence of the sort that we found in the nuclear balance, maybe where we end up. Now, is that a good place to be compared to the elsewhere? No, I'd rather be independent. But compared, I mean, is that something we can manage if you have competent governments managing? And I would say, you know, yes. All right. Professor Allison, thank you so much for coming on Audlaw. and inviting us to your office here at Harvard. Thank you so much. Yeah.

A lot to look at. I'm honored to have you here. I'm glad to be on the problem. I thank you. Good questions and glad to see two serious students of international bears. We took our IR background and went into financials. Just the highest praise. Joe, that was a real treat.

It was a real treat. Just being in Dr. Ellison's office was really nice. I just, I could go, you've heard me already say this, but, Like being a professor at an elite American university. A tenured professor. A tenured professor. It's so sick. And then like it's like such a, it's like such a dream career to have.

You know what bothers me is you and I both did international relations. Oh yeah. And I think we have a similar complaint. But like that conversation that we just had with Professor Allison was what I thought international relations was going to be. You know, we were going to sit there and pontificate about U.S.-China relations and then compare it. to Sparta versus Athens in ancient Greece. And instead, it was basically all philosophy. It was like game theory. Yeah, I know. It's such a joke. And like it was so abstract. Like I think I had entire courses where we didn't even name a single country like by name. It was just if country A does this,

what does country B do? It's such a weird discipline for that reason. And as an adult, I've like tried to read some international relations books. And it's all this like weird game theory and tables and stuff like that and just not my thing. I think there's probably, I know we're going off on a little bit of a tangent here. It feels a little bit like, you know, the same phenomenon in economics, for example, like you study economics. You're going to think about like, well, what's going to happen to the unemployment rate? What's going to happen with the stock market, et cetera? And then you read academic economics. And I'm not as like, you know, I'm like, as I've grown older, as I've matured. I'm like, you know, I appreciate academic econ more than I did when I was in my youth.

And I was like, all this done with all these equations and stuff like that. It's all fake. I don't think that is much anymore. But it does feel like kind of disconnected from like, wait, I thought economists talked about, you know, the unemployment rate and stuff like that. And then you read what a paper is about. It's very abstract. You're right.

One thing that did surprise me was when the professor was talking about his latest trip to China. Was it his latest trip? Well, one of his trips to China where he was. talking and hearing from Chinese policymakers about how they're very confused by America. And in particular, the example of capitalist New York electing a socialist mayor. And I thought, like, if anyone can understand socialism with capitalistic characteristics, it must be the Chinese, right? It should be very intuitive.

No, I thought that was like just overall, though, a very grim. I mean, it was a little bit grim, the idea that almost like we're kind of on borrowers. time here. It's like it's been a really long time since a great powers war by historical standards. And so it's already been a long time. Historically, they come along more frequently. And now the conditions are in place for this, you know, the so-called Thucydides trap as he sees it. I'm not thrilled that in the best case scenario for the rest of my life, there's always going to be a risk of that being right around the corner the moment some third-party country does something, you know, off the leash.

The other thing, and again, this goes back to why I'm so frustrated with IR as an academic discipline. But like the emphasis on good statecraft, good statecraft makes a difference. Yeah. Right? You know, he talked about the Cuban Missile Crisis and JFK and we came very, very close to absolute disaster there. But it was ultimately averted by the individual actions of human beings, both in Russia and in the U.S. And I feel like that's kind of what's missing in IR. It's that like emphasis on individual choice and motivations and incentives and how to actually do good statecraft rather than just like look at everything through the prism of either neoliberalism or realism.

Power. Yeah. Or did you ever do gender theory? I don't think I took that. There's an interesting one. The reason we had the Cuban Missile Crisis is because men and large objects. I buy it. I am really interested in this idea that unlike the U.S., so he used the term, I think he said missionary,

sort of to characterize how the U.S. sees it spread democracy and liberalism and capitalism. And of course, the Soviet Union also had this impulse to spread communism. And everywhere there was a communist party, it felt some tug to back them up. And that's how the Soviet Union got mired in Afghanistan for years and years. China doesn't really seem to have that. It wants to trade. I mean, outside of, it wants to consolidate its physical territory, but it does not seem, you know, like, you know, there's a great story several months ago. Apparently, the Cubans came to China and asked for advice. I've said, well, have you tried liberalizing your economy? Have you tried basically not being

communist? Like, it doesn't have that impulse the same way the Soviet Union did. And nor does it have it like the U.S. does. So I'm curious, like, as China truly becomes a global power, is a great power, it seems fairly rare historically for it to have so little interest in how other countries manage their affairs. Yeah, I did, I enjoyed the line about, you know, like, it's not really about getting more people to be Chinese because it's special to be Chinese in the first place. We're not good enough to be Chinese. Yeah. All right. Shall we leave it there, Chinese, Joe? Let's leave it. Let's leave it there. This has been another episode of the All Thoughts podcast. I'm Tracy Allaway. You can follow me at Tracy Allaway. And I'm Jill Wisenthall. You can follow me at the stalwart.

Follow our guest, Graham Allison. He's at Graham T. Allison. Follow our producers, Carmen Rodriguez, at Kermannerman. Dashel Bennett at Dashbot and Kale Brooks at Kail Brooks. For more Odd Lots content, go to Bloomberg.com slash oddlots. We have a daily newsletter and all of our episodes. And you can chat about all of these topics 24-7 with fellow listeners in our Discord. Discord.g. slash odd lots. And if you enjoy odd lots, if you like it when we travel to Boston to interview Harvard professors, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad free. All you need to do is find the Bloomberg channel on Apple Podcasts and follow the instructions there.

Thanks for listening. You can get the news whenever you want it with Bloomberg News Now. I'm Amy Morris. And I'm Karen Moscow here to tell you about our new on-demand newsre newsre. report delivered right to your podcast feed. Bloomberg News Now is a short five-minute audio report on the day's top stories. Episodes are published throughout the day with the latest information and data to keep you informed. Yes, there are other products like this from a variety of news organizations, but they usually rerun their radio newscasts throughout the day. That's not what we do. We create customized episodes that can only be heard on Bloomberg News Now. And we don't wait an hour to publish breaking news. When news breaks, we'll have an episode up in your podcast feed within minutes,

so you're always getting the latest stories and developments. Get the reporting and the context from Bloomberg's 3,000 journalists and analysts. We're all over the world. Listen to the latest from Bloomberg News Now on Apple, Spotify, or anywhere you listen.