Caixin
Jun 21, 2018 12:27 PM
OPINION

Opinion: Rise of China, East Asia to Reshape World in 21st Century

Nobody doubts that we are in the midst of the most significant change in the world order since the end of the Cold War. For an ever larger part of the world, the Pax Americana, which had been in place since the end of World War II, is a thing of the past. The American withdrawal is not a temporary event but a major geopolitical expression of a long-term trend. Equally, the rise of China to the status of a world power is an event that will shape the whole 21st century.

Looking back over the past two centuries, we are indeed aware that fundamental changes in power equations can easily lead to conflict or even to major wars. Both world wars had their origin in new powers claiming their place at the head table — Germany in World War I and World War II, and Japan in World War II. When the Berlin Wall fell, the Warsaw Pact disintegrated and the Soviet Union broke up, it was notable that these monumental events did not trigger a global conflagration.

The current far-reaching re-arrangement of power in the world has, up till now, progressed without major conflicts. We may indeed witness another peaceful transition. However, nobody should take such a positive outcome for granted. It is better to be cautious and carefully reflect on the potential for disruption so that timely measures can be taken to avoid conflict.

Overtly or covertly economic issues have always played a major role in the struggle for power among nation states. The Soviet empire eventually collapsed because it could not keep up with the economic success and prosperity that was achieved by the industrialized West. Today the United States, without any doubt, possess the strongest military in the world. This state of affairs will continue for the foreseeable future. However, two major pillars of the American success story, economic supremacy and social cohesion, are being shaken to the core.

On the other hand, there is the rise of China. The most remarkable aspect in this monumental development is that for the first time in recent history, we are not dealing with a newcomer on the global stage. For a large part of its remarkable history, China has been a world power, a center of high culture, learning and technological progress. What is happening currently is simply the return of China to its old strength and pre-eminent position it had lost during the painful 19th and 20th centuries.

Human history, both on the macro level of states and peoples and on the micro level of families, is an uninterrupted process of rise and decline, of fortune and misfortune. For whatever reasons, there are always losers and winners. In a general climate of optimism, it is easy to absorb the losers. If prospects for the future look good, it is obviously much easier to contain dissatisfaction than when you have to prepare for hard times.

The easiest way to shirk responsibility is to find a scapegoat. Economic issues are complex and, therefore, there is the temptation to simplify, to distort and to revert to age-old prejudices. Currently, we witness this in the rise of nationalism and populism in a number of countries.

Irresponsible politicians misuse public trust by describing trade and international economic cooperation as a zero-sum game. If one country accumulates a trade surplus, this is automatically seen as the loss of another country. It is very difficult to explain that the economy is not static, that on the contrary, through efficiency and innovation it can grow and increase the benefits to all participants. Since ancient times, trade has been one of the most useful tools to increase prosperity. Again and again, it has been proved that protectionism and high tariffs lead to stagnation and impoverishment.

The most recent case to prove the benefit of international trade has been the rise of China. Never before have so many people emerged from poverty and backwardness as has been the case in China during the past 40 years. Of course, the export industry has played an important role. China has become the “manufacturer of the world.” But this has been to the benefit of consumers not only in China but around the globe and particularly in the United States and Europe. Consumers have been able to purchase goods at reasonable prices, and it is largely due to Chinese manufacturers that in spite of increased consumption and more purchasing power, the Western economies have not been plagued by inflation.

Looking at the international media, one might be tempted to be pessimistic. However, in reality we are living in one of best times in mankind’s history. What can be bad if hundreds of millions of people have emerged from poverty, not only in China, but also in India and in Southeast Asia? Asia’s population is not only huge, it not only offers gigantic new markets in every field, from services to consumer products. Equally important is the fact that hundreds of millions of Asian households share the ambitions and aspirations of their contemporaries in the West. This augurs well for a further strengthening of international cooperation, primarily in Asia but also beyond.

We recall the Asian crisis of 1997-98 when a number of East Asian nations were under a massive attack by foreign speculators. While mistakes were made by the countries concerned, the interventions of the International Monetary Fund (IMF) aggravated the situation. At that time, the idea of an “Asian IMF” came up but was quickly dismissed by the then-powerful Western nations. Today the situation is much improved, mainly because of the establishment of the Asian Infrastructure Investment Bank (AIIB), which has been strongly promoted by China.

Without any doubt, the global power struggle will see other attempts at disrupting the rise of Asia. It is therefore important that the major Asian powers intensify the continental and regional economic integration. Already, the intra-Asian trade and investment flows have increased massively, and the dependence of Asian economies on exports to North America and Europe has decreased noticeably. In the interest of a truly multipolar world, this is a very healthy development. There may be a lot of disruption caused by the United States, undertaken for the purpose of “making America great again.” There is nothing wrong with that as it is the natural duty of the American government to look after the interests of the United States. Equally, we see a large scope for the rise of Asia under the heading of “making Asia great again.” The recognition that more than ever, geopolitics is a prime driver of economic growth and that regional stability is the foremost pillar of Asia’s newly found strength is a good point of departure for creating a truly new global order.

Urs Schoettli is a consultant on Asian affairs and a former Far East correspondent of the Swiss newspaper Neue Zürcher Zeitung.

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