What Game Theory Says about China’s Strategy

On March 19, 1956, The New York Times carried an interview with Matyas Rakosi, who was described as “Hungary’s ebullient Communist boss.” Rakosi said that his enemies had accused him of using “salami tactics,” that is, cutting away all opposition slice by slice. He didn’t deny it: “That is the job of any good political party — including the Communists,” Rakosi said.

Salami-slicing may have originated as a metaphor in Hungary, but in the decades since, it has entered the vocabulary of politicians, military tacticians and editorial writers far from the banks of the Danube.

China, for instance. In August, The Global Times, a newspaper published under the auspices of the Chinese Communist Party, wrote, “The Biden administration has been gradually advancing ties with the island of Taiwan by using salami-slicing tactics.” China itself has been accused of salami-slicing tactics with its encroachments in the waters around Taiwan, in the South China Sea and on its border with India in the Himalayas. (The Chinese term for salami-slicing is “can shi,” meaning nibbling like a silkworm.)

Economics, specifically the discipline known as game theory, has a lot to say about salami slicing. The strategy is to move against a foe in small increments, always staying below the threshold that will provoke a response.

Thomas Schelling, the game theorist who received the Nobel Memorial Prize in Economic Sciences in 2005, memorably described the strategy in his 1966 book, “Arms and Influence”:

“Salami tactics,” we can be sure, were invented by a child; whoever first expounded the adult version had already understood the principle when he was small. Tell a child not to go in the water and he’ll sit on the bank and submerge his bare feet; he is not yet “in” the water. Acquiesce, and he’ll stand up; no more of him is in the water than before. Think it over and he’ll start wading, not going any deeper; take a moment to decide whether this is different and he’ll go a little deeper, arguing that since he goes back and forth it all averages out. Pretty soon we are calling out to him not to swim out of sight, wondering whatever happened to all our discipline.

One countermove against salami slicing is to draw a red line: this far and no further. Announcing one’s red line is not just a communication; the announcement itself enhances the obligation by making it harder to back away from, Schelling writes in “Arms and Influence.”

To be effective against salami slicers, though, the commitment must be more than cheap talk. Otherwise the salami slicer will not be deterred. President Bashar al-Assad of Syria successfully called President Barack Obama’s bluff after Obama vowed in 2012 that any use of chemical weapons by Assad would cross a red line. Assad remains in power today.

Getting a reputation for being a little crazy, and occasionally overreacting, is another way to deter a salami slicer. As Schelling puts it, “If one cannot buy clearly identifiable and fully reliable tripwires, an occasional booby trap placed at random may serve somewhat the same purpose in the long run.”

That brings us back to Hungary’s Rakosi, the original salami slicer. Rakosi, a Stalinist, thought he could extinguish the opposition one bit at a time. But he misjudged. Just four months after he was interviewed, he was forced to resign and leave for the Soviet Union. And just three months after that, Hungary erupted in a short-lived uprising against the Stalinist domination that Rakosi had led. Sometimes the salami refuses to be sliced.

5.9 percent

The change in China’s industrial output in August from a year earlier, according to an estimate by Action Economics of Boulder, Colo. That would be down from a yearly change of 6.4 percent in July and 8.3 percent in June. China’s production has been restrained by “flooding, higher raw material costs and anti-pollution curbs,” according to FocusEconomics of Barcelona, Spain. China’s National Bureau of Statistics will report the official number tomorrow.

“Money makes the world go around.”

— Fred Ebb, lyric from “Money, Money” from “Cabaret” (1966).

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