The American Interest
Analysis by Walter Russell Mead & Staff
Experts Warn About Asian War

Jon Huntsman, the former Ambassador to China, is getting nervous about how things are playing out in Asia:

“The tensions are real,” he said, citing the two nations’ maneuvering over islands in the East China Sea. Risks also are being raised by expanding activities such as surveillance flights in the region by other nations, including South Korea and Russia, he said.

“I worry about the military maneuvers in crowded airspaces and sea lanes” where an incident can escalate into something “beyond anyone’s ability to then de-escalate it,” Huntsman said in an interview on Bloomberg Television’s “Political Capital with Al Hunt” airing this weekend.

Jon Huntsman isn’t the only person with a lot of experience in the region who is beginning to worry about this possibility. The subject is popping up in offline and off the record conversations among plugged in people surprisingly often these days.

We’d advise people active in financial markets to think hard not only about what would happen to their portfolios if even a short and limited military clash created uncertainty and panic, but what would happen if trade relations between the two powerhouses were curtailed for weeks or even months as a result.

We’re not ready to batten down the hatches for a Pacific War just yet and we have hopes that cooler heads will prevail. But war risk analysis needs to be part of the smart investor’s toolkit in these troubled days.

And smart CEOs need to be thinking about their global supply chains and how resilient they would be in the event of serious trade disruption. Another argument for on shoring and pointing to the increased attractiveness of North America as an investment destination in an unsettled world.

Published on February 9, 2013 9:00 am