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Why the world must listen more carefully to Asia’s rising powers

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The shifts in global power that began in the late 20th century have accelerated since the onset of the world economic crisis in 2008 and the subsequent EURO crisis. As the Dean of the S. Rajaratnam School of International Studies, at Singapore’s Nanyang Technological University and friend of MD, Barry Desker reports from Singapore, few lessons are available for the Western decision-makers.

The celebrations marking the EU’s Nobel Peace Prize are more likely to commemorate Europe’s past rather than shape its future. Europeans may highlight the “European model” as a contrast to Asia, which they see as still riven by conflicts rooted in the colonial era and World War II. However, as power shifts from the Atlantic to the Pacific, Asian views will increasingly command attention. Asian demands for the re-balancing of global institutions will grow, and Asian views that the region’s own institutions have played an effective role in ensuring Asia’s peace will become louder.

 

Ever since the mid-19th century, the global political economy has been dominated by the West. But this was not always the case; in 1700, Asia’s share of global GDP was 57.6% and China alone accounted for 22.3% of it compared to Europe’s 25.3%. By 1870, Europe’s share had increased to 37.7% while China’s fell to 17.2% and the whole of Asia accounted for 36%. Europe benefited greatly from the industrial revolution and colonial expansion, while China, India and South East Asia suffered from internal wars, foreign interventions and domestic stagnation. Now, the re-emergence of China, India and South East Asia over the past 25 years reflects stable governments, outward looking economic policies and rapid urbanisation. The change has drawn the world’s attention to the changing global power equation.

 

By 2030, Asia will overtake the United States and Europe in terms of GDP, population size, military spending and technological investment. China alone is expected to reach 19.8% of global GDP by then, in contrast to Europe which will sink to 14.6% and the United States to 14.5%. This change is likely to lead to a shift of power away from the unipolar world of 2000, in which America had emerged at the end of the Cold War as the sole superpower, to one in which a number of major powers will influence global developments.

 

The United States, Europe and Japan, will be joined by China and India along with emerging economies such as Brazil, Indonesia, South Africa and Nigeria. Because of the sheer size of China and India, these emerging economies will form a second tier. All this will highlight the shift to a world increasingly dominated by non-Western powers, accentuating the already discernible changes that have occurred since the financial and economic crisis began in 2008.

This shift in global power will not mean, though, that western states will grow poorer. Their relative hard power will decline but the United States and Europe will still enjoy high standards of living, economic growth and relative social stability. Europe will have to deal with an aging population, but the U.S. enjoys a higher birth rate and will continue to draw educated entrepreneurs as migrants from around the world, especially from Latin America, if its immigration policies are maintained. That means the U.S. is likely to remain a technological leader and a centre of innovation.

America’s challenge will be to recognise that as its relative economic power declines, U.S. military dominance and global hegemony cannot be sustained. Despite budget constraints, the U.S. is likely to retain its military advantage over possible adversaries at least until 2025.

Instead, the risk is that the U.S. will try to hang on to its pre-eminent role in the global governance institutions established after World War II, notably the United Nations Security Council, the International Monetary Fund (IMF) and the World Bank, rather than adopt new mechanisms which would allow rising powers to share responsibility for global leadership.

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In the next two decades, alongside the United States and Europe, rising powers such as China and India will increasingly seek to shape global institutions and the global discourse on the critical issues facing the world

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Reform of these institutions is currently proceeding at a snail’s pace. The imbalance in the IMF is a good example; not only do Germany, the United Kingdom and France each have a larger voting share than China, but so too do the Netherlands and Belgium when combined.
America and the Europeans might be more willing to share their leadership if they were to recognise the strength of their own soft power. It is the power of attraction generated by the culture and policies of the U.S. and Europe that draw followers and supporters from throughout our increasingly inter-connected world. Western hard power may indeed be in decline, but the influence of language, particularly English, along with Western ideas, norms and values will do much to shape the global outlook. Western music, popular culture, universities and football clubs will go on attracting audiences worldwide, exerting influence long after the powers that introduced them have faded.

This ability to shape preferences and influence the way others see you is durable and slow burning. Although the Catholic Church’s followers are now mostly in Latin America, Africa and Asia, Europeans (and above all Italians) still dominate its leadership. Other examples range from music and the arts to higher education, where Western universities, particularly in the English-speaking world, retain a special place.

Not all Western influences are so positive. Although European integration is generally viewed favourably, the current European recession and the travails of the eurozone have drawn attention to the negative impact of a common currency when it embraces varying standards of productivity and competitiveness. In the area of monetary and fiscal policy, the voices that had been championing a common Asian currency are now silent.

Asia will find its own way in an increasingly inter-dependent world. In contrast to Europe, Asian regionalism is broader and more outward looking, emphasising flexibility, adaptability and diversity. While European observers may criticise the overlapping structures in Asia, such as the ASEAN-plus Three framework, the East Asian Summit and the Asia Pacific Economic Cooperation (APEC) forum, Asian analysts emphasise the need for the inclusive and consensual approach that has been taken in the region. The result is that Asia will adopt a distinctive approach and will not follow the European model where so much sovereignty is transferred to a supranational organisation like the European Union.

In its external relations, the EU has highlighted the role of elected democracies, the sanctity of individual political and civil rights, its support for human rights and the ‘doctrine’ of humanitarian intervention. This led earlier to EU sanctions on Myanmar and a restriction on meetings with Myanmar’s leaders, bans on arm sales to Indonesia and strong criticisms of China.

In Asia, confidence in the growth paradigms of states in the region has reinforced an approach resting on a technocratic approach to governance, the significance of social rights and obligations, a re-assertion of the principles of national sovereignty and non-interference, coupled with support for freer markets and stronger regional and international institutions. Although there was in years past a preference in some countries for strong authoritarian government, the emergence of democratic governments in states like Indonesia and South Korea has meant that there are tensions within Asian regional institutions as member states attempt to shape these institutions in line with their own particular model.

In the next two decades, alongside the United States and Europe, rising powers such as China and India will increasingly seek to shape global institutions and the global discourse on the critical issues facing the world. India will certainly seek a permanent seat on the UN Security Council, and there will be pressure from the emerging powers for a single permanent European seat to replace those of the United Kingdom and France now that the EU has a common foreign and security policy. There will also be mounting pressure from the rising powers for a greater share in the leadership of the global institutions for economic governance. Ever since 1945, the IMF and the World Bank have respectively been led by a European and by an American.

Just as global institutions will be influenced by the rise of Asia, Asia-Pacific states will have to adapt to the norms, values and practices of global society. Reform of the global governance institutions will have to occur so that they are more reflective of both the established and the rising powers. Europe can learn from the consensual approaches preferred in Asia, just as Asia can learn from Europe’s support for rules and strong institutions.

We all need to recognise that there are divergent norms and values present in international society and that those differences can sometimes lead to conflict. Inclusive global institutions could serve as agents of co-operation on a larger scale. That means the strengthening and broadening of global institutions so that they are representative of East and West is of critical importance.

In the 21st century, these global institutions need to derive their norms, values and practices from global society, not just from Atlantic or Asian perspectives. Instead of the victors of a war that ended almost 70 years ago shaping the world’s political and economic security, global institutions should be inclusive and should reflect the rising powers in terms of representation and the distribution of power. Only that can provide the basis of a new global consensus.

(First published by the Europe’s World, article re-posted per author’s permission)

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East Asia

Hong Kong: No more China’s disheartened capitalism, please

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Hong Kong’s unrest started in June 2019. It was triggered by the plans to allow extradition to mainland China. Critics felt this could compromise judicial autonomy and jeopardise free-speech legacy.

Until 1997, Hong Kong was under the British rule as an overseas territory (effectively a colony), but then returned under the mainland China jurisdiction. Under the Deng’s “one country, two systems” arrangement, it has considerable autonomy, and Hongkongers (Mandarin: 香港人) enjoy comparatively more civic rights.

The controversial bill was finally withdrawn in September 2019. Under the slogan ‘too little too late’, the demonstrations continued, growing even larger. Protesters now demand full democracy and an independent inquiry into police actions.

Lately, clashes between police and activists have turned worryingly violent; police firing rubber bullets and occasionally even live rounds, while protesters counter-attacking officers by throwing stones and petrol bombs.

Generational and Class struggle is back?

What still remains rather underreported are social and generational dimensions of the protests. Hence, it indeed feels to comment on some distorting interpretations and oversimplified views.

As an illustration, one can take reporting such as James A. Dorn’s columns (eg. “If protesters want to protect Hong Kong’s way of life, they must win the war of ideas”). This author is cited as a China specialist. Essentially, he is a senior fellow of the Cato Institute, a conservative think tank similar to The Heritage Foundation, which often declares Hong Kong the “world’s freest economy”, even though Hong Kong’s working class endures horrid living conditions here.

Authors like him allude to a “war of ideas” and do criticise socialism with Chinese characteristics, even though China has made tremendous economic progress and enjoyed political stability. One wonders why such views and opinions about Hong Kong or China should be considered or adopted.

China has not dictated how the US or other Western countries should run their economies or political systems, nor has it solicited advice from these free market theoreticians or think tanks. China has lifted at least half a billion people out of poverty, helping to alleviate poverty globally.

Another country which has done exceptionally well and which has not subscribed to neoliberal dogma but retains strong state control of the economy and political freedom is Singapore.

Hong Kong’s main problem is that the sacrosanct free market has become a political excuse for government non-interference, allowing tycoons and big businesses to freely game the system, gorge themselves on Hong Kong’s resources and create large wealth disparities that have contributed to our current social and political instability.

This neither alleviated the suffering of Hong Kong’s working class nor solved the housing problem. Rather it has allowed tycoons to profit. The city needs tax reform so that government revenue does not rely on land sales.

The policy of non-intervention has led to tycoons and big businesses privatising necessities like housing, health care, education and, through the Mandatory Provident Fund, retirement savings. This benefits the private sector at the expense of the public.

Driven by an unrestrained greed, someone wishing to monetise, gambles with our future. Simply, compare the Gini for Hong Kong of 1997 and of today, and see yourself.

Massive social costs to enrich few – Parasites among us

Nowhere in the world is housing as unaffordable and nowhere has it made property developers as wealthy. Allowing markets to set prices only reinforces the housing crisis, as does letting local and foreign investors buy up property despite the housing shortage. Another absurdity is calling for more free competition to break up the property cartel.

As professor Anis H. Bajrektarevic observed and compared: “… it seems that the narrative by which the ‘freedom’ obsessed and spoiled capitalist youth is fighting the big egalitarian communist apparatus is overly simplified and is, thus, short in capturing the truth… It is [what is happening last months in Hong Kong] closer to an outcry of excluded and pauperised youth – quite similar to the one on the streets of Europe, whose protests faded away years ago … [Well] educated but disfranchised youth that feels the generational warfare replaced the social welfare… The Hongkongers are not fighting against the egalitarian ideas or system. Quite to contrary, they are bitterly opposing social inequality and endemic generational exclusions. The very tomorrow of European society might be – prudently or violently – decided on the streets of Hong Kong.”

A low-tax regime mostly benefits the landlord class and big business. Hong Kong residents actually pay among the highest taxes in the world in the form of high rents and housing prices, yet they have scant social safety nets. A wealth tax and more progressive taxes should be imposed to generate government revenue, instead of relying on land sales.

Hong Kong needs the opposite of the free-market dogma, so we can have more humane living conditions and social stability. Or as a former Vice-chancellor of the Hong Kong University wonderfully captured: “Neither violence, nor Beijing, can fix City’s housing shortage and lack of a social safety net.”

Many Hongkongers have lost out due to economic changes, and many have deep-seated distrust of mainland China. The Hong Kong government must first address their social exclusions and financial insecurities, enhancing all-generational debate before it can work on fostering a sense of Chinese identity.

 From our partner International Affairs

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China struggles to fend off allegations of debt trap diplomacy

Dr. James M. Dorsey

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Desperate for cash, Tajikistan is about to sell yet another vital asset to China at a time that countries like Sri Lanka and the Maldives are demanding renegotiation of debt settlements that either forced them to surrender control of critical infrastructure or left them with unsustainable repayments.

The pending Chinese acquisition of  a stake in Tajikistan’s aluminium smelter, coupled with earlier tax concessions to Chinese companies that would substantially reduce the trickle down effect of investments for the troubled Tajik economy, suggest that China has yet to fully take account  of frequent criticism of its commercial approach to Belt and Road-related projects.

The Washington-based Center for Global Development warned last year that “23 of 68 countries benefiting from Belt and Road (BRI) investments were “significantly or highly vulnerable to debt distress.”

The centre said eight countries — Tajikistan, the Maldives, Pakistan, Djibouti, Kyrgyzstan, Laos, Mongolia, and Montenegro — were particularly at risk.

“There is…concern that debt problems will create an unfavourable degree of dependency on China as a creditor. Increasing debt, and China’s role in managing bilateral debt problems, has already exacerbated internal and bilateral tensions in some BRI countries,” the report said.

Progress on the construction of a road in Afghanistan’s Wakhan Corridor, a narrow strip in the east of the country that touches the Chinese border and separates Tajikistan from Pakistan and Pakistan-controlled Kashmir, may explain China’s seeming insensitivity to the concerns of beneficiaries of the People’s Republic’s largesse.

The road would link the corridor to Central Asia in the north and Pakistan’s Chinese-built Arabian Sea port of Gwadar in the south, a crown jewel in China’s infrastructure- and energy driven Belt and Road initiative.

To be sure, the road has local rather than geopolitical significance for workers building the road and the region’s shepherds as documented by anthropologists Tobias Marschall and Till Mostowlansky.

The road creates temporary employment for labourers. For shepherds, it facilitates access to mountain pastures.

For China, the stakes are geopolitical and economic.

The road would not only facilitate commerce with Central Asia as well as traffic from Gwadar but also construction of shorter pipelines as well as a fibre optic cable.

Perhaps more importantly, it would together with a military base in Tajikistan and Chinese cross border operations in the corridor itself, facilitate the movement of troops in China’s gradual projection of military power beyond its borders, particularly in regions adjacent to its troubled north-western province of Xinjiang.

The road’s potential military significance raises questions about the sustainability of a presumed division of labour between Russia and China under which Russia shoulders responsibility for security in Central Asia while China concentrates on economic development.

Ironically, if the examples of Sri Lanka, the Maldives, Pakistan and Malaysia coupled with anti-Chinese sentiment in Central Asia, fuelled in part by the brutal crackdown on Turkic Muslims in Xinjiang, are anything to go by, China’s approach to Belt and Road-related development could turn out to be a threat to its broader geopolitical ambitions and regional security policy.

Sri Lanka recently demanded that China return control of Hambantota port.

Sri Lanka became the poster child of allegations that China was pursuing debt trap diplomacy when it two years ago surrendered to China control of the port as part of a deal to reduce the country’s debt payments.

China lent Sri Lanka US$5 billion between 2010 and 2015 for infrastructure projects that included development of Hambantota at interest rates of up to 6.3 percent.

By comparison, World Bank and Asian Development Bank rates on soft loans range from 0.25 to three percent.

“The perfect circumstance is a return to the norm. We pay back the loan in due course in the way that we had originally agreed without any disturbance at all,” said newly appointed Sri Lankan prime minister Ajith Nivard Cabraal.

Similarly, the foreign ministry of the Maldives said earlier this month that it was seeking to restructure its Chinese debt.

“Borrowings by the previous government were unreasonable and put us in difficulty. But we can solve this mess through diplomatic means,” said foreign minister Abdulla Shahid.

Last month, former president Abdulla Yameen was jailed for five years and fined US$5 million for corruption during his term that ended late last year. Mr. Shahid’s government has accused China of land grabs during Mr. Yameen’s reign.

In a rare success, Malaysia earlier this year negotiated a one third reduction in the cost of a US$15.7 billion Belt and Road-related rail project.  In a further concession, China agreed that 70 percent of the workforce would be Malaysian and that Malaysian contractors would get 40% of the civil works.

China has repeatedly been accused of employing Chinese rather than local labour for Chinese-funded projects along the Belt and Road and importing materials from China rather than sourcing them locally.

The government of Pakistani prime minister Imran Khan has been less successful than its Malaysian counterpart.

It recently bowed to Chinese pressure to revive hundreds of projects initially suspended after it came to office in 2018.

The appointment of a retired lieutenant general as head of a new authority overseeing the China Pakistan Economic Corridor (CPEC) that groups Belt and Road-related projects reflected China’s wariness towards messy Pakistani politics and preference for dealing with the country’s military.

With Sri Lanka as the anti-thesis, analysts suggest that China is determined to make Pakistan a success story.

“The big battle at the moment is about CPEC’s reputation, and Beijing cares about salvaging that. They need to show BRI has been a success, that it hasn’t put Pakistan’s economy in trouble and that there isn’t a backlash. If they can’t do it in a context like this, it suggests that there is something flawed in the model,” said Pakistan and China scholar Andrew Small.

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Standing up to China: Czech mayor sets a high bar

Dr. James M. Dorsey

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A Czech mayor’s refusal to endorse Beijing’s One China policy potentially sets a high bar as Western powers grapple with how to respond to allegations of excessive use of violence by police against Hong Kong protesters and the implications of leaked documents detailing a brutal crackdown in China’s north-western province of Xinjiang.

Prague mayor Zdenek Hrib rejected a sister city agreement between the Czech capital and Beijing in late October because it included a clause endorsing the One China policy, which implicitly recognizes China’s sovereignty over Taiwan, as well as Hong Kong and Tibet.

Mr. Hrib argued that the agreement was a cultural arrangement and not designed to address foreign policy issues that were the prerogative of the national government.

The mayor’s stance has since taken on added significance against the backdrop of US President Donald J. Trump’s signing of legislation that allows for the sanctioning of Hong Kong officials, embarrassing Communist party leaks that document repression in Xinjiang, the election of a new Sri Lankan government that intends to adopt a tougher policy towards China, and simmering anti-Chinese sentiment in Central Asia and beyond.

Mr. Hrib’s rejection was in fact a reflection of anti-Chinese sentiment in the Czech Republic as well as opposition to the pro-China policy adopted by Czech president Milos Zeman.

To be sure, Mr. Hrib, a 38-year old medical doctor who interned in Taiwan, was shouldering little political or economic risk given Czech public anger at China’s failure to fulfil promises of significant investment in the country.

On the contrary, Mr. Hrib, since becoming mayor in mid-2018, appears to have made it his pastime to put Mr. Zeman on the spot by poking a finger at China.

Mr. Hrib visited Taiwan in the first six months of his mayorship, flew the Tibetan flag over Prague’s city hall, and rejected a request by the Chinese ambassador at a meeting with foreign diplomats to send Taiwanese representatives out of the room.

Beijing’s cancellation of a tour of China by the Prague Philharmonic Orchestra in response to Mr. Hrib’s provocations forced Mr. Zeman to describe the Chinese retaliation as “excessive” and his  foreign minister, Tomas Petricek, to declare that “diplomacy is not conducted with threats.”

Perhaps more importantly, M. Hrib was taking a stand based on principles and values rather than interests. In doing so, he was challenging the new normal of world leaders flagrantly ignoring international law to operate on the principle of might is right.

“Our conscience is not for sale,” said Michaela Krausova, a leading member of the governing Pirate Party of the Prague city council. Ms. Krausova and Mr. Hrib’s party was founded to shake up Czech politics with its insistence on the safeguarding of civil liberties and political accountability and transparency.

While couched in terms of principle, Mr. Hrib’s stand strokes with newly installed Sri Lankan president Gotabaya Rajapaksa’s intention to wrest back control from China of the island’s strategic Hambantota port that serves key shipping lanes between Europe and Asia.

Hambantota became a symbol of what some critics have charged is Chinese debt trap diplomacy after Sri Lanka was forced to hand over the port to China in 2017 on a 99-year lease because the government was unable to repay loans taken to build it.

“I believe that the Sri Lankan government must have control of all strategically important projects like Hambantota. The next generation will curse our generation for giving away precious assets otherwise,” Mr. Rajapaksa said.

Fears of a debt trap coupled with the crackdown on Turkic Muslims in Xinjiang, which targets not only Uighurs, but also groups that trace their roots to Central Asian countries, have fuelled anti-Chinese sentiment in Kyrgyzstan, Tajikistan and Kazakhstan.

“Given that China is likely to continue to expand its presence, further irritating local publics, the temptation of opposition groups to exploit such anger will only grow. If that happens…the anti-Chinese demonstrations that have taken place to date will be only the prelude to a situation that could easily spiral out of control, ethnicizing politics in these countries still further,” said Central Asia scholar Paul Goble.

Beyond Xinjiang, anti-Chinese sentiment in Central Asia is fuelled by some of the same drivers that inform Czech attitudes towards China.

The shared drivers include unfulfilled promises, idle incomplete Chinese-funded infrastructure projects, widespread corruption associated with Chinese funding, and the influx of Chinese labour and materials at the expense of the local work force and manufacturers.

Beyond Xinjiang, Central Asians worry about potential debt traps. The Washington-based Center for Global Development listed last year two Central Asian nations, Kyrgyzstan and Tajikistan, as risking China-related “debt distress.”

Warned China and Central Asia scholar Ayjaz Wani: “Chinese principles in Central Asia are hegemonic. China has always interacted with Central Asian states without regarding their cultural identities, but according to its own vested interests… However, the ongoing anti-China sentiments may be coming to a tipping point.

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