The Asia Century

September 25, 2023

Two Asian experts provided interesting observations about the evolving world order, and the risks that lie ahead, at last week’s Global Business Forum in Banff Alberta. Both agreed that geopolitics will be dominated by the contest between the United States and China for economic supremacy, but they disagreed about China’s prospects. Vikas Swarup, a former diplomat and author of “Slumdog Millionaire” among other books, believes the world will divide into three groupings: Democracies led by America, Europe, and Australia; Eurasia’s illiberal regimes; and the Global South. The other expert, Kishore Mahbubani, a Singapore-based diplomat and author, believes the 21^st Century will belong to Asia. “It’s a return to the normal state of affairs,” he said. “For 1,800 out of the last 2,000 years, the two largest economies in the world were China and India. What we’re seeing today is the return to what’s been the historical norm for centuries.”

Asia outpaced most all others in growth rates between 2008 and 2022

“The China growth story is not over,” said Mahbubani. “It is going to continue and three factors will drive its growth over the next 20 to 30 years. One is momentum: Sit in a speeding car and even if you apply the brakes it takes time for the car to slow down. China has had incredible momentum over 40 years. It’s economy has quadrupled in 40 years and, conceivably, it will double in 20 years and, when it does, it will be the largest economy in the world.”

But competition between China and the United States will accelerate, he believes, because whenever a number one emerging power (China) is about to overtake the existing number one power (US), the bigger party will always try to push down its competitor. “This is only natural. But another reason behind this competition is that America is divided and it’s conceivable that Trump may become President again. There are divisions and unhappiness in the US and the Democrats and Republicans are at war. But the only thing they agree on is that it’s `Time to Stop China’,” he added. “Another emotional factor that will drive the contest is the fear of the `Yellow Peril’. This is politically incorrect to talk about, but is a reality. In the 1890s, the US Congress passed an act called the Chinese Racial Exclusion Act. This is why I predict that the US-China rivalry will accelerate.”

He believes, however, that the rest of Asia as well as India, will outpace China’s and provide opportunities for America and the West. The ASEAN (Association of Southeast Asian Nations) already has a GDP nearly as large as India’s with a population of 647 million people, he said. It is already America’s fourth-largest trading partner, collectively, and includes Brunei Darussalam, Burma (Myanmar), Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand, and Vietnam. Mahbubani said that “Vietnam will become the next Japan, as will Indonesia, and the ASEAN region is the most successful in the world already. It adds more to global economic growth than Europe. In 2000, Japan was the second largest economy in the world and was eight times’ bigger than ASEAN. Today, Japan is only 1.5 times’ bigger and in ten years ASEAN will be bigger than Japan.”

ASEAN’s 10 members are diverse and comprised of Christians, Buddhists, Muslims, and Communists. They are a cohesive organization and have initiated talks with many countries to form trade ties: Australia, Canada, Chile, Japan, Mexico, New Zealand, and Peru. They pitched a more comprehensive trade scheme a few years ago with the US, but Trump suddenly withdrew. However, in future the ASEAN nation-states will become more of a trade priority for the West.

ASEAN, Association of Southeast Asian Nations

China still looms over Asia, but Swarup believes that it is on the wane and has “run its course” because its President Xi Jinping made himself President “for life”, ending the checks-and-balances that have tempered Beijing policies. This has led to mistakes and unforced errors. For instance, Xi’s sabre rattling over Taiwan has generated enormous international hostility toward China, and his heavy-handed COVID lockdowns have damaged its economy and supply chain reputation. Further, China’s population has peaked, youth unemployment soars, and Chinese labor rates are now higher than Mexico’s. Atop it all is the damage caused to its middle class by governments that helped create a real estate bubble.

Russia’s war and China’s bellicosity have harmed both. Europe arms itself, as does Japan which will soon have the world’s third largest defense budget. “Japan will return once more to geopolitics,” he said. (And Asia’s other powerhouse, South Korea, also gears up militarily and has joined the Ukrainian coalition by supplying enormous amounts of weaponry and ammunition to fend off the Russians.)

Swarup believes that “America is not declining. It’s retreating from the role of being the world’s policeman after failed wars,” he said. “It’s become a global influencer through alliances.” Ironically, Russia’s aggression has benefitted its enemies. The Ukrainian invasion was a major mistake, but a “windfall” for President Joe Biden because it re-energized NATO and Europe and will marginalize Russia. “Europe has benefitted because the invasion upended everything and awakened the continent to forge more cohesive geopolitical and Euro policies, invest in its defense, and reduce dependency on Russia.”

Mahbubani and Swarup

Swarup predicts that China’s “friendship” with Russia will end and was only a “temporary marriage of convenience” for each side. “The current close relationship is not natural. It won’t last. If I’m a long-term strategic planner for Russia, I realize that the biggest threat will come from China, not Europe. The fundamental challenge is that it shares the world’s longest border with China. Russians worry about China.”

Each described a future that will include a number of ad hoc and transecting alliances. Overall, both are optimistic. “The 21^st Century will be the best century for human development,” said Mahbubani. “And even though East Asia, because of the US-China contest will be shaken up a bit, there will be no wars.” This is because, he posited, the alliance backing Ukraine deters Russia effectively and averts any Chinese plans to attack Taiwan.