Early in 2014, Obama teased Putin that we had grown out of military solutions. That was before Russia invaded Ukraine and US bombers returned to the Middle East. Is it a fantasy to imagine that the economy has replaced the barrel of the gun as the real source of power? Or is this a short cut to Armageddon?

Rana Mitter is Professor of the History and Politics of Modern China at Oxford University. He is also a regular presenter of Night Waves and contributor to The Financial Times, History Today, and the London Review of Books.

Here, he speaks to the IAI about China’s global economic vision and the difference between soft power and military strength.

In the debate on IAI TV you argued that economic power has trumped military strength around the globe. Could you expand on that? How has that taken place?

I was thinking specifically about the Asia-Pacific region. On the one hand there’s a very obvious and, in some ways, alarming story about the growth in military power. The most obvious example of that is the major growth in Chinese military power in the region. A country which, in 2000, was spending about 12 billion US dollars a year in defence is now spending more than ten times as much than that. Japan is one of the other significant countries in the region that is spending more than 50 billion US dollars a year on defence. When you look at those sorts of statistics it’s understandable why people think that military power is going to be a major factor, and it is certainly important.

That said, if you look at the dynamics of the Asia-Pacific region now, it’s very clear that the major approaches are economics. It’s butter rather than guns. For example, China is trying to improve its image and also create a sense of consensus and legitimacy around its presence in the region. This is part of a policy by the Chinese government called One Belt One Road, which essentially is a way of creating a new economically integrated area of trading commerce with China at the centre. This economic region would stretch all the way through the Middle East and through central Asia even as far as south-east Europe and all the way down to south-east Asia and probably Australia too.

One Belt One Road is obviously a very ambitious programme and it’s a long way from completion. It’s dependent on a number of factors, such as the establishment of the Chinese infrastructure bank which has been set up with an initial 40 billion dollars worth of funding. Nevertheless, the point is that the Chinese are pushing One Belt One Road very hard as their recipe, their message to the region. In other words, although the military remains very important, it’s clear that over the longer term, economic integration is far more central to what they want to do. They also use it as a means of trying to find a counter-argument to the presence of the United States in the region. The Americans have a very large military presence there but it’s harder for them to form directed economic integration. The major American initiative called the TPP – the Trans-Pacific Partnership – currently excludes China. By not including the major economic players in the region within the TPP it makes it much more like a security arrangement, much less like an economic one.

So those are the reasons why I think that, in the end, or for the immediate term, the arguments about how the economy can be integrated are probably going to be debated much more than the question of whether or not the Chinese are buying another aircraft carrier or not.

You’ve also argued that exercising military power is a sign of weakness. In the cases of China and Japan, is it not the case that economic strength and military strength are growing hand-in-hand? Are the two not inseparable?

I would argue that the way in which the Chinese have exercised their military power in recent years has generally been counter-productive. For instance, when they send out war ships to disputed islands, what it’s done is to encourage their regional neighbours – Japan, Taiwan, South Korea, Indonesia, Malaysia, Vietnam etc – to shrink back into an even closer relationship with the United States. Ten years ago it seemed much more likely that the US might simply be eased out of the region in some ways because the region was finding a new accommodation with China. But in the last five years I think that prospect has become much less likely. It is now felt that China’s military-backed diplomacy has become far too assertive, and therefore that it is important for the US to counter-balance in the region. That has now been noticed in Beijing which is why the military rhetoric has really been played down in last year or two. That rhetoric has not disappeared, by any means, but it is quieter than it was. They’ve realised that pushing the guns has been much less effective than talking about a new economic strategy.

China’s economic role in developing countries has been well-documented. In what ways is this shifting the global power balance in terms of access to mineral wealth, among other things?

Africa is one of the examples that is often brought up. Here, it’s certainly the case that the proliferation of Chinese investment in African countries has provided a new factor that simply wasn’t there ten or fifteen years ago. That said, if you look at China’s overall foreign direct investment (FDI), Africa only accounts for 6% of the total. This is a small proportion of the total FDI.

Within Africa itself, China’s effect has been mixed. Chinese investment is really just one factor among many. In countries like Zimbabwe China probably does help prop up the reigning regime, while in countries like Zambia, Chinese investment is accepted, even welcomed. That said, it can also create a certain kind of resentment because it doesn’t always create local employment: the Chinese often bring in their own workers rather than find local workers. China has had to learn the diplomacy lesson that one can’t simply throw money into a country and expect regional acceptance.

Beyond Africa, I’ve already mentioned the Asian infrastructure investment bank which the Chinese set up recently. Yes, this is an important initiative. However, 40 billion US dollars may sound like a lot of money, but in terms of total infrastructure payments for a region of that size, it’s actually quite small. Therefore it represents a good starting point in terms of measurement but it can’t be the end point. There has to be a strategy beyond that and I think that’s still being worked through.

Let’s turn from economics to politics. We have witnessed in recent years the global spread of liberal democracy. But China is different. How does this affect the spread of its own soft power and how does this political difference impact the countries in which China is investing?

This is a huge obstacle in China’s way. The China message is about rural development, about disease control, and about literacy. This is a very powerful one in many parts of the world and there’s a great deal of admiration for what China has done on that front. Nonetheless, this message is compromised by the fact that China has maintained a very strong authoritarian system which is just not very attractive to the other countries.

If we look at the region in which China operates, 30 years ago in the mid-1980s, the only major Asian countries that were full democracies were Japan and India. Now, the vast majority of countries in the region are either full democracies or partial democracies. The exceptions are easy to count off: Vietnam, North Korea and China. To some extent Malaysia is a partial democracy but, beyond that, the Philippines, Taiwan, Japan, South Korea etc are all countries that have grown.

I’ve just been to Seoul and I’m making a documentary there about South Korean soft power – the use of cultural power, in particular, music, movies and so forth to spread the image of South Korea. Now, there is no doubt in my mind whatsoever that what has enabled the Korean wave – the idea that Korea has a powerful status within East Asia – comes in large part because of the liberalisation of its culture under democratisation in the 1980s. It is no coincide that Korea’s best films and its K-pop music, which has taken China by storm, coincide with the increasing democratisation of Korea in the 1990s.

By contrast, China is missing out on an opportunity to liberalise and thereby really increase its soft power exponentially. It’s a very obvious move, which just has not been made.

What about China’s impact on developing countries? Does the fact that it’s not liberalising give legitimacy to other countries that also refuse to liberalise in some ways?

Parallels to China are difficult because China is by far the largest example, by masses, of a country of that sort. The vast majority of other authoritarian countries around the world are either much smaller or they exist in a rather different context – for example, states in the Middle East which are monarchies in many cases or essentially military dictatorships in one form or the other. That’s not really what’s happening in China. It is a system which has developed indigenously and which is trying to preserve on its own terms. The problem is that transferring those ideas of government to the other countries will be very difficult. Essentially China has its own unique conditions that have created that particular set of models.

Moving away from China to a more global question: what is our best response to those who want to use military force against us?

As ever we should always be absolutely certain that military force is the last resort. It’s a cliché, but it is still very much the case that peace is better than war. There have been many failed interventions as well as a small number of successful ones. This demonstrates that exercising military power is very, very difficult and it’s hard to follow through unless you have some clear idea of what’s going to happen at the other end. That’s something which people do find difficult to predict and difficult to plan for.

What about economic sanctions? Do these have a strong role in future international relations? Or should we be providing more economic support to allow countries to move away from military power and towards soft power?

All of these things will be factors. It depends on the circumstances. There is a case in Iran, for example, that economic sanctions were in the end quite successful. But there are plenty of other examples where it hasn’t necessarily been the case. What this means is that we’re often trying to apply templates of action – be they military, economic or any other kind of action – at a time when we don’t necessarily have enough in-depth knowledge of the circumstances of particular societies. So there’s no point talking about how China or Russia or Syria or any other country should change without having a really in-depth knowledge of what happens in those places. One of the things that’s been unfortunate in the last 20 to 30 years is that often the bank of knowledge that one got from diplomatic backgrounds, academic study, business involvement and so forth, seems rather to have dissipated away.

So we need more historians making foreign policy?

I’ve got a special interest in that, so maybe I’m biased! The thing is that depth of knowledge does involve understanding how countries have got to where they are now. Engagement with China without understanding something of China’s circumstances in the last 30, 50 or 100 years strikes me as a difficult exercise to follow through.

With regards to the west’s engagement with China at the moment, do you think we are demonstrating that lack of deep understanding?

An awful lot of people engage with China without knowing that much about how China got to where it is today. They see an economic opportunity; they don’t understand often the circumstances in which China came to be today. It’s not that we have to agree with everything that China does; I think most analysts would find many things to dispute. But I think the starting point for productive discussions over areas of disagreement will not be very productive if you haven’t actually bothered to find out the facts in the first place.

Much of the Guns and Butter debate on IAI TV concerned inter-state relations. But how should western countries respond when we are threatened by non-state actors? What role does soft power play in such conflicts?

Non-conventional, non-state interventions have been one of the least understood changes in the way in which the world engages with security questions in the past few years. Each particular phenomenon has to be analysed and understood on its own terms. I don’t think there is one template that can fit actions by non-state actors, on the grounds that non-state actors can be anything from terrorist organisations to insurgent groups or a whole variety of different sorts of groupings that are not necessarily defined in the same way. We have a group here in Oxford called The Changing Character of War, led by a scholar called Rob Johnson. The group spends a lot of its time speaking about this question of what war means in the 21^st century and I think one of the clearest answers one can get is that there is no simple answer. The days of Napoleon, with two national armies fighting each other across the battlefield, are not necessarily over but that’s certainly not the central core of where they are today.

What are your predictions for the roles of soft power and hard power in the future? A lot of people would argue that we’re living in such a rapidly changing world that we need to have all our bases covered. Would you agree with that stance?

Theoretically you want to have all of your bases covered. The problem is that one of the other things we’re doing is living in a world where the economy is not doing so well. During the Cold War there was a huge amount of military build-up, which was probably unnecessary, but it also operated at a time when, broadly speaking across that half century or so, the world’s economy grew very rapidly. The post-Cold War world was about the China story but it obviously became part of that equilibrium very fast. We may now be in a world where no major economy, in China, the US, or Europe, is going that fast. That has a real implication in terms of security issues: ideally, you’d spend money on covering everything, but we may have to make choices about what exactly we can cover.

If this financial instability continues, do you think that countries will turn towards military power in order to assert dominance?

Military power and soft power are very different things. Soft power is basically the ability to coerce through your own reputation. It’s not really a tactic that can be used to impose sanctions or invade another country; it’s not that sort of power. In terms of military power I suspect that one of the directions will be towards greater collective security. For example, in central Asia, the Shanghai Corporation Organisation featuring Russia, China, India and Pakistan, may be an example of countries trying to pool some of their resources at a time where they don’t want to be paying for everything themselves.

Do you think that pooling of resources may occur around the world?

I think it might happen in flashpoint areas. The prospect of conflict is probably limited to certain areas. One would be Eastern Europe, one is the Middle East which has a high prospect or reality, and the third is the Asia- Pacific. At the moment it’s fair to say that South America is probably not a major potential conflict zone and where there are regional conflicts in Africa, the idea that they would create a pan-African set of conflicts is not widely held at the moment.

The important point about these three flashpoint areas is that they have the potential to trigger wider reaction. As tragic as conflicts in Africa are, they’re probably not the biggest drag on the world’s economy. A conflict that broke out in the Asia-Pacific region would affect potentially 70% of the world’s population and a very large portion of the world economy. So its ripple effect would be much greater. In such areas I suspect international coalitions will form to try and create some sense of security.

Finally, how has the global situation changed the IAI TV debate?

Broadly speaking, there still seems to be a desire in parts of China to use non-military means, diplomatic means, to try and achieve its aims in the Asia-Pacific region. That suggests to me that, even while military spending is building up, the use of non-military methods is still China’s preferred choice of trying to assert dominance in the Asia-Pacific region. I suspect that this will continue for some time to come.