In the spring of 2001 Andrew Grove, the chairman of Intel, made a remarkable statement. Any conflict in or around the Taiwan Strait that resulted in a break in trade, he said, would result in the “computing equivalent of Mutually Assured Destruction.” The implication, at least for the vitally important electronics industry, was that the production systems of the United States and China had become entirely in- tertwined and interdependent. equally remarkable is how little attention this statement, by one of the world’s most well-known industrialists, has received in the four years since.

In part, this was a matter of timing. At the moment Grove spoke, the focus was on the diplomatic crisis that erupted after a Chinese fighter jet collided with an American spy plane in April 2001. Soon thereafter, the attention of the United States shifted dramatically, first to the at- tacks of September 11, then to the wars in Afghanistan and Iraq.

But we can put off examining the implications of Grove’s words no longer. If the United States and China do in fact depend intimately on the exact same means of production, the political ramifications are immense. And if anything, the industrial ties have become only stronger in the years since. Not only have raw trade flows continued to grow dramatically, but the number of firms that have adopted super-specialized production models similar to those of the electronics industry has increased. Which leaves us with two closely interrelated questions: how does this interdependence affect the relative power of China and the United States to exert political influence over one another, and how does it affect the likelihood that the two nations will come into conflict in the future?

The second question is especially urgent. The idea that a break in trade would cause extreme damage to both economies is increasingly taken as a sort of proof that the United States and China will almost naturally steer clear of war and war-like actions. Yet a close examination of the reality and history of industrial interdependence demonstrates that, on the contrary, we can imagine at least some instances in which deep industrial interdependence may actually increase the risk of conflict between two nations.

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