Home / Articles / Asian Century on a Knife-edge

Asian Century on a Knife-edge

Asian Century on a Knife-edge

John West

[Courtesy Asia Century Institute]    http://asiancenturyinstitute.com/index.php?option=com_content&view=article&id=1362:asian-century-on-a-knife-edge&catid=9:economy&Itemid=111

China and other Asian countries will dominate global politics and the world economy in the 21st century. Right? That’s the usual refrain.

Rising Asia

After all, Asia has stunned the world with decades of stellar growth, and by some measures, China has already become the world’s biggest economy. And while China’s economy has slowed sharply, it is still growing at the respectable rate of 6-7%.

The rise of Donald Trump to the presidency of the United States has only accelerated the global shift towards Asia. Trump’s America has relinquished global leadership, notably through its withdrawal from the Paris Climate Agreement, and the Trans Pacific Partnership, along with burgeoning protectionism, while China is positioning itself as a defender of the liberal international order.

Indeed, China is demonstrating remarkable global leadership through initiatives like the Asian Infrastructure Investment Bank, and the Belt and Road Initiative.

Today, China is increasing appearing to be a much safer and steadier global leader as Trump competes with North Korea’s Kim Jong-un in the global hysteria stakes, and the White House and Washington have descended into turmoil, which is paralysing the capacity of the Trump administration to get things done. Washington’s allies in East Asia and even Australia are now questioning the reliability of the US.

Asian Century ‘hype’

But despite all the talk of the advent of an Asian Century, a closer reading of Asia’s economy and politics suggests that there is much “over-hyping” about the rise of Asia, as I argue in my new book, “Asian Century … on a Knife-edge”.

While most Asian countries have achieved stunning economic growth over the past half century or more, the harsh reality is that Asia is suffering from stunted economic development. No major Asian economy has caught up with global leaders like the US and Germany in terms of GDP per capita, and living standards, and there is little likelihood of such catch-up occurring over the foreseeable future.

What Asia does have on its side, however, is size. Countries like China, India and Indonesia, thanks in large part to their enormous populations, have some of the world’s biggest economies. And they have been able to transform economic weight into economic, political and military power, even though their GDP per capita, and their levels of economic, business and technological sophistication are modest. But without further economic, social and political development, these countries will remain fragile superpowers.

The hype about Asia’s dramatic economic rise has only been matched by similar hype about the emergence of Asia’s middle class. And while it is true that Asian lives have improved immeasurably in tandem with economic development, only a small share of Asian citizens could be described as middle class, and the middle class is receding in Japan and Korea along with rising inequality and poverty. Today, half of Asia’s population is stranded between poverty and the middle class, living in a zone of vulnerability and precarity.

Asia faces a raft of challenges in order to realise an Asian Century, seven of which are highlighted in my book.

Seven challenges for an Asian Century

Asia appears a global leader in international trade and investment. But the reality is that countries like China, India and Indonesia are mainly undertaking lower value added activities in global value chains like assembling electronics and automobiles, “cut sew and trim” of clothing, and operating call centres. Much greater efforts are required to get better value out of value chains by opening markets, and strengthening human capital, and technological and innovative capacities.

Many of Asia’s factories and call centres are staffed by poor migrants who have moved to towns and cities in the hope of a better life. But their dreams are all too often shattered as they wind up living in urban slums. In the case of China, most internal migrants are denied access to basic social services, and their children are “left-behind” in traditional villages. And Asia’s most advanced cities like Singapore, Hong Kong, Tokyo and Seoul lag sadly behind the West in the quest to become hubs of innovation and creativity.

Discrimination, prejudice and persecution are rife in Asia, thereby by preventing economies and societies to realise their full potential, as our review shows for the cases of: Asia’s LGBT community; Japanese women; South Asian women who suffer gendercide, forced child marriages and honour killing; Asia’s indigenous peoples like West Papuans, Tibetans and China’s Uighurs; Sri Lanka’s Tamil community; and India’s lower castes.

Most Asian countries face intractable demographic dilemmas. In much of East Asia, fertility has plummeted below replacement rates, populations are ageing, workforces declining, and in Japan the population has begun falling. And yet governments are slow to react. At the same time, in South Asia, Indonesia and the Philippines, a youth bulge is bursting into the workforce, but much of this youth is not well educated and there are not enough jobs on offer. A potential demographic dividend could easily morph into an explosion of social frustration. Connecting these two demographic realities is the potential for mutually beneficial migration, and yet ethnocentric Asia is barely open to migration.

Asia is crying out for democracy and better governance to improve the foundations for stronger economies and decent middle class societies. And yet, according to some measures, there would not be even one mature democracy in Asia. Contrary to the hopes of political scientists, economic development has fostered too few democracies in Asia. Asia’s political landscape is deeply flawed with: oligarchic democracies in Japan and Korea; pro-business soft dictatorships in Hong Kong, Malaysia and Singapore; Chinese client states in Cambodia and Laos; weak and fragile democracies in India, Indonesia, Philippines, Mongolia, Sri Lanka, Bangladesh, and Nepal; military-dominated governments in Thailand, Pakistan, and Myanmar; and staunchly authoritarian states in China, North Korea and Vietnam.

One of the many consequences of these flawed politics is that, as Asia has moved towards the centre of the global economy, it has also moved to centre of the global criminal economy. Asia is a major player in many aspects of economic crime like counterfeiting and piracy, Illegal drug production and trafficking, environmental crimes, human trafficking and smuggling, corruption and money laundering, and cybercrime. And while flawed politics is one of the causes, this criminality is eating away at the integrity of the state, as state actors are very often criminals themselves or are colluding with criminals.

While many factors have underpinned Asia’s renaissance over the past half century or more, the relative peace that the region has enjoyed has been perhaps the most important. But today, the relative stability of postwar Asia, led by the US, is being shaken by the rise of China, as China is now engaged in a bitter power struggle with the US and its Asian allies for the political leadership of Asia. There is much debate about whether this will lead to military conflict between China and the US. In any event, the US seems to be losing its hold over Asia, something which will likely accelerate under the Trump administration. This means that it will become ever more necessary for Asian countries to cooperate better together. But this will be a great challenge in light of the tensions involving China, North Korea, Japan, Taiwan, Hong Kong, South Korea and India.

What next for the Asian Century?

The prospects for Asia overcoming stunted economic and social development, and realising an Asian Century with advanced economies and middle class societies, depends on how Asia responds to the seven challenges identified in this book. Unfortunately, there is too little evidence of Asia’s major countries seizing the moment.

Trump’s America will also shape the contours of a possible Asian Century. Regrettably, we will likely see a deterioration in key factors that have driven Asia development — an open US market, a relatively benign security environment, and a stable global economic system.

Even post-Trump, we should not assume a return to the US as a promoter of open markets and globalisation, and a friend of democratic partners and the liberal international system. America has been struck by a wave of populism, and in particular nationalism (make America great again), nativism (secure our borders), and protectionism (protect American workers), which is unlikely to go away anytime soon.

This is a tragedy for Asia, as China, the US’s competitor, is not a promoter of open markets, good governance, and the international rule of law.

But if Asia continues to muddle through, in some decades time, the region could account for over half the world economy, far outstripping the West in total economic size. In these circumstances, no major Asian economy would have approached world leaders like the US and Germany in terms of GDP per capita, or economic, business and technological sophistication.

Moreover, Asia could remain a democratic desert, with not one full democracy, and with continuing widespread human rights abuses and restrictions on personal freedoms. In other words, Asia would have the world’s greatest economic weight, and be a leading economic and political power, but would remain a pygmy in terms of economic, social and political development. Asia’s main power comes from its enormous population, currently about 55 per cent of the world’s total, compared with only 18 per cent for the West.

Needless to say, the incongruities of such a scenario could generate even greater geopolitical tensions than we see today.

These incongruities would test the capacity of the international community to cooperate on issues like open trade and investment, democracy and human rights, the global environment, protection of intellectual property rights, economic crime, international rule of law, law of the sea, and natural disasters. Why? Because forging consensus and working together requires shared interest and values, and a culture of cooperation and trust.

Beyond these incongruities, there are endless possibilities of economic, social, political and military crises in Asia — mostly due to the likely failure to deal with our seven challenges for an Asian Century.

Economic crisis is stalking several Asian countries, most notably Japan and China with their massive debt problems. And anti-globalisation populism could break one of the most important drivers of Asia’s rapid development, namely open trade and investment. Social crisis could be on the cards for India, Indonesia and the Philippines with their bulging youth populations, if they are unable to find decent jobs. Multi-ethnic countries like India and Indonesia could easily descend into violence as groups suffering from discrimination, prejudice and persecution mobilise themselves against dominant elites. And as natural disasters and environmental problems increasingly hit Asia’s overcrowded and badly planned cities, social crises will also accelerate.

Continued authoritarian politics and social repression in China, North Korea and Vietnam could provoke political crises as citizens demand cleaner government and democratic government. Social unrest is already rampant in China, and North Korea has thousands of regime opponents locked away in secret gulags. The corruption crisis that engulfed the South Korean President Park Geun-hye and Samsung shows how fragile even Asia’s most advanced countries can be.

The future of peace in Asia could be threatened by the great power struggle between China and the US. The US and China are unlikely to engage in a traditional military conflict, although the naval collisions involving the US Navy in 2017 show how easily accidents can occur, and possibly spiral out of control. They seem destined to remain “frenemies”, that is both friends and rivals, with conflicts taking place in the areas of trade, intellectual property, international rule of law, and cyber, rather than on the battlefield.

As China progressively displaces the US as Asia’s hegemon, it will become ever more necessary for Asian countries to cooperate better together. In a region which is bristling with tensions involving China, North Korea, South Korea, Japan, Taiwan, Hong Kong, the South China Sea, ASEAN and India, this will be a great challenge.

And while China’s rise has been shaking Asia, the prospect of India’s economy overtaking China’s in the second half of the 21st century, will require further adjustments by all. By then year 2100, India’s population could at 1.5 billion be some 50% higher than China’s and there is every chance that the Indian economy will continue to outgrow China.

Asian Century … on a Knife-edge

Today, Asia is sitting on a knife edge. The potential of the region to generate good and happy lives for its citizens is enormous. But the requirements of success and the risks of failure are equally enormous. We cannot be sure of “what’s next for the Asian Century”. Indeed, anything could happen, and complacency of Asia’s elites could be the Asian Century’s greatest enemy.

About admin

Check Also

The Aaland Islands Model and Kashmir

Post from the US: Dr. Ghulam Nabi Fai, July 29, 2018 There are some disputes in modern history that one might take lessons from in understanding the wisest course to take in resolving the Kashmiri dispute. The Aaland Islands is a case in point, as are South Tyrol, Trieste, Andorra, and Northern Ireland, each of which was contested by neighboring countries. Finland and Sweden both coveted The Aaland Islands; South Tyrol was in dispute between Austria and Italy; Trieste was divided between Italy and Yugoslavia; Andorra is a small principality. Virtually all of these cases, the country in question was seized or split in two in the course of war between neighboring countries. Understanding the Aaland Islands means seeing its problems in the larger context of Finland, Sweden and their political and social milieu. Finland had been an integral part of the Kingdom of Sweden for six centuries. They had shared a common culture together, Finns spoke Swedish and Swedes spoke Finnish. But the Finns and the Swedes were different. The Swedes were of Germanic origin, of Viking stock, as were the Norwegians and Danes, imposing as they did one of the earliest empires in history on Northern Europe, and dominating other cultures in the region. They were agrarian, settled and lived from what they grew, not from what they found or captured. But despite having a common monarch, Sweden was Sweden and Finland was Finland. Finnish people are often called the white Eskimos. They have a nomadic oriental heritage (by some historians regarded as "the lost tribe of the Mongols). They shared common heritage with other people who had settled around the Baltic Sea, including Estonia and Hungary, known as the Finn-Urgics, whose origins were rooted in the Ural Mountains of Russia in a marriage, literally, by Ghengis Khan, leader of the Mongols, to a young teenage Hun bride. The Ural Mountains had been settled by the Mongols during the rein of Ghengis Khan, occupied then by the Huns, a people who had migrated north from the Middle East, a people said to have originated in one of the Abrahamic tribes. The languages of Sweden, Norway and Denmark are of Indo-European origin. However, they have virtually nothing in common etiologically with the language of the Finns. The Finns were mystical, pantheistic, with shamanistic practices. The Swedes followed the Pope. In 1808, things changed. After six centuries of Swedish rule, Finland was invaded by Russia in a war against Sweden, seeking greater access to the Baltic for greater military and economic strength. Finland's eastern border is shared by Russia. Its western border was primarily the Gulf of Bothnia, gateway by way of the Aaland Islands to the Baltic Sea. A little more than a year later, Russia forced Sweden to secede Finland on September 2, 1809 in the Treaty of Fredrikshamn. Under the Russians, Finland became the autonomous Grand Duchy of Finland, allowing them a certain amount of political power in return for the advantages of access to the sea. The Aaland Islands, occupied by Swedish people, was severed from its ties to family and relatives, and made a part of the duchy. However, such a deal could not have anticipated the overthrow of the Russian monarchy and the Bolshevik revolution in 1917, when Finland declared independence. Under the Swedes, Finland had also enjoyed some autonomy, so her independence with the downfall of the Tsar and major upheaval going on in Russia was a default instinct. That declaration created then a new power struggle and civil war in Finland to fill the vacuum between conservative pro-Finnish "Whites" and a communist faction in the labor movement that was pro-Bolshevik and pro-Russian who were known as "Reds." Aside from such political differences, independence had also been spurred by Russian Tsar Nicolas II's plan for the "Russification" of Finland, which imposed serious cultural, language and religious restrictions on Finnish traditions from 1905 on. Russia's attitude toward the Finns was identical to current Indian attitudes toward Kashmir. The tsar intended to abrogate their autonomous status and incorporated them fully into the Russian state. Finland's resistance led finally to full independence from Russia. But it was not through war. With the Tsar overthrown, the new government already had its hands full, and the Bolsheviks had already announced that any ethnic groups that were not Russian were free to choose their own course through self-determination. Finland chose to do just that. The Aaland Islands had already petitioned the Russians to secede from Finland and join Sweden. The cry for independence in Finland set in motion Swedish aspirations to be among their own, to secede from Finland and join Sweden as they had been little more than a century earlier. By means of a petition and supported by more than 96% of the population, they then petitioned the new government of Finland and proposed seceding from Finland, joining Sweden, to come under Swedish government control. The Swedish government, however, was not uniformly excited by the prospect or concerned about the Aaland Islanders or their interests for reasons having to do with internal politics more than anything else. The ideological struggles taking place in Russia and Finland were causing disarray in execution of policy in Sweden as well. As such their support for the petition was weak, and as a result it was less of a dispute between Sweden and Finland than a dispute between the Aaland Islands and Finland. Britain had submitted the Aaland Islands issue to the League of Nations rather than either Sweden or Finland. Britain believed that international peace was at stake in a matter that was seen by Finland as an internal dispute. (Sounds familiar: “Let me state unequivocally that Jammu and Kashmir is an integral part of India and will always remain so.” Sushma Swaraj, Minister of External Affairs of India. September 26, 2016). The Aaland Islands had been the subject of numerous international disputes over the issue of keeping it demilitarized due to its strategic location in the mouth of the Gulf of Bothnia, the large body of water separating Sweden and Finland. When the League agreed to consider the dispute, Finland immediately declared that the matter was outside the scope of the authority of the League of Nations since it was a matter to be resolved internally by the country itself. Procedurally, the League would then have submitted the matter to the Permanent Court of International Justice for review to determine the legality of Finland's claim over the Aaland Islands, but since the Court was just then in the process of formation, a panel of three jurists, the Aaland Commission of Jurists, having international repute was selected to adjudicate. The Commission consisted of Ferdinand Larnaude, Dean of the Law Faculty of Paris and president of the Commission, Max Huber, a University of Zurich professor of international law, and A. Struycken, a Dutch politician and councilor of the Netherlands’ government. The panel determined that, given the nature of Finland's recent independence from Russia and questions remaining regarding its legal statehood, and the separate struggle of the Aaland Islands in respect to both Russia and Finland, Finland's sovereignty over the Islands was not set in stone and therefore subject to consideration by the League. "The Aaland question is one that extends beyond the sphere of domestic policy," they said. Following the report of the Commission of Jurists on the question of jurisdiction, the Council appointed a second commission, known as the Commission of Rapporteurs, to advise the Council further on the merits of the dispute. Their decision is quite significant in understanding the issue of how and when, in the international community, self-determination is regarded as a legitimate demand. One would think that the autonomy the Aaland Islands had enjoyed under the Grand Duchy of Finland would have been substantial reason alone to have granted them their wish to join Sweden. They needed autonomy under Finland because they wanted to be ruled by Swedes and Swedish laws in a culture of a Swedish making. The overwhelming opinion by a 95 percent majority expressing such a will was another factor that should have been given more weight. The notion that Finland had been a state for a century, to be treated as any other sovereign state, was a useful distortion of fact and legal trickery, clearly challenged by the Commission of Jurists, particularly since sovereign control of both Finland and the Aaland Islands had not been held by Finland but by Russia. The Commission of Rapporteurs obviously ignored the facts and chose to parade the views of tyrants whose positions in power were used to advance a narrow agenda not of the people but of state largesse. State, to them, was land, not people. The people were victims of whatever ambitions and greed provoked the state. Upon receiving the news of the report, Karl Hjalmar Branting, the prime minister of Sweden from 1920 through 1925, read the following declaration: "On behalf of the Swedish Government I have the honour to make the following statement: –" "It is with a feeling of profound disappointment that the Swedish nation will learn of the Resolution of the Council of the League of Nations". "In supporting the cause of the people of the Aaland Islands before Europe and the League of nations, Sweden was not influenced by the desire to increase her territory. She only wished to support noble and just aspirations and to defend the right of an absolutely homogenous island population to reunite itself to its mother-country, from which it had been detached by force, but to which it is still united by the ties of a common origin, a common history, and a common national spirit. This population has declared to the whole world its unanimous wish not to be bound to a country to which it had been joined by force of arms alone. ”The Swedish Government had hoped that an institution, which was established to assist in the realisation of right in international relationships, would have favoured a solution of the Aaland question in conformity with the principle of self-determination, which, although not recognised as a part of international law, has received so wide an application in the formation of the New Europe. It had hoped that the Aalanders would not be refused the rights, which have been recognised in respect of their Slesvig brothers, who belong, as do the Aalanders, to the Scandinavian race. It had hoped that, in the very special case under consideration, in which right appears so evident, and in which the wishes of the population have been expressed with such unusual unanimity, the League of Nations would have filled, at least on this occasion the role of the champion and defender of right, and thus, by its first decision, would have proclaimed the dawn of a new international order. ”To-day, when the decision of the Council has frustrated that hope, the Swedish Government is obliged to express the fear that the Council has grievously shaken the confidence that the peoples, particularly those who, like Sweden, have long been striving to accomplish international law, have had in the League of nations – an institution great task entrusted to it by the Covenant, it is absolute necessary that it should possess that confidence. ”The Swedish Government is not of opinion that the settlement of the Aaland question which is suggested by the Council is likely to confer upon the Baltic area the peace that is desired. Nor yet is it of opinion that a population as homogenous as that of the Aaland Islands, of whose wishes so little account has been taken, can add to the strength of a country to which it is attached against its unanimous desire. ”Sweden is ready loyally to recognise that the decision of the Council has the force given to it by the Covenant. But Sweden will not abandon the hope that the day will come when the idea of justice shall have so permeated the conscience of the peoples, that the claims inspired by such noble motives and a national feeling as deep as that of the population of the Aaland Isles will be triumphally vindicated. Thus it will make its voice heard, and will at last have justice done to it.” The view that power originates, proceeds from, and is vested in government over and above the wishes of the people, whether minority or majority, is deeply flawed. There would be no government without individuals who form compacts with others around them for common defense, for a means of establishing mechanisms and networks for producing and exchanging goods to better livelihood, and for maintaining peace and order. We are not bound to such social contracts by the will of the government we have created. The government serves at the pleasure of those who have created it. Only individuals make contracts, not groups. There is no legal entity called "we" or some collective consciousness that usurps my individual will to be taken over by the state or some private society. My Facebook friends have not committed me to any agenda simply by virtue of being in an association with them, nor has society. Government has no mind of its own, no will of its own, no power of its own. It exists for me solely because I acknowledge it in my affairs and consent to its decrees. It has no intrinsic need for self-preservation over the wishes of the people it serves. It is we who preserve it. Does it make sense to build a computer that takes over our lives, or should the computer serve simply as a tool to be used for a narrow set of needs? As James Madison wrote, "the people are the only legitimate fountain of power, and it is from them that the constitutional charter, under which the several branches of government hold their power, is derived. Federalist No. 49 (February 2, 1788). Sweden's handling of the matter and its decision to abide by the League Covenant left a sour taste in the mouths of the islanders, but to their good credit, Finland has cultivated excellent relations with them since. It exemplifies greatly the point that communal differences need not be barriers to good governance, and that different cultures can live in peace side by side when they are treated equally by the political and administrative processes, as Finland has shown to have done. In South Asia, the conflict here too is primarily between Kashmir and its occupying power. There are three parties to the dispute - India and Pakistan and the people of Kashmir. But Kashmiris are the principal party to the dispute. While Pakistan has supported UN resolutions which call for a plebiscite to be held to determine the wishes of the people. India, of course, will have nothing to do with it. India takes the view that the state is something tangible to be defended for its own sake, which includes land as well as people. State boundaries are merely fictitious and imaginary lines drawn on a map. The real state boundaries include only a coalition of the willing. The Aaland Islands and Kashmir share a common challenge drawn along similar lines, where a culture whose language and traditions differ from those of a particular group of people insists upon maintaining possession of their land and their politics and will not observe the wishes of the people or accede to the territory having a greater affinity for its traditions and which might propose to have a claim as well. There are similarities as well as significant differences between the Aaland Islands and Kashmir dispute. Both issues were taken to the world body, Aaland Islands before the League of Nations and Kashmir dispute before the United Nations. When the League of Nations agreed to consider the Aaland Islands dispute, Finland immediately declared that the matter was outside the scope of the authority of the League since it was a matter to be resolved internally by the country itself. But when Kashmir dispute was brought before the United Nations, both India and Pakistan agreed to give the right of self-determination to the people of Kashmir. Second, the situation in Kashmir prevails in what is recognized - under international law and by the United States - as a disputed territory. According to the international agreements between India and Pakistan, negotiated by the United Nations and endorsed by the Security Council, Kashmir’s status is to be determined by the free vote of its people under U.N. supervision. Third, Kashmir situation represents a Government's repression not of a secessionist or separatist movement but of an uprising against foreign occupation, an occupation that was expected to end under determinations made by the United Nations. The Kashmiris are not and cannot be called separatists because they cannot secede from a country to which they have never acceded to in the first place. Lastly, the most ideal government is that which was envisioned by Abraham Lincoln when he spoke of a "government of the people, by the people, for the people", in his address at the Gettysburg battlefield. Anything else is tyranny.