In Part I of this report, we laid out the two narratives that the U.S. and China are using to frame relations between the two countries. This week, we will summarize the two positions and examine the potential for war using the historical examples of British policy toward the U.S. and Germany, offering our take on which analogy fits best. There will be a discussion of current American views on hegemony as well. As always, we will conclude with market ramifications. From the U.S. perspective, China’s historic economic expansion has come because it finally shunned Marxism and adopted capitalism.