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The Future is Already Here

John Lee

There is almost universal agreement that the centre of power is shifting from the Atlantic to the Pacific Oceans in what is rapidly becoming the ‘Asian Century.’ But although the world was aware of the East Asian miracle and the rise of Southeast Asian economic tigers several decades ago, the shift of power and influence from the West to the East was back then not seen as inevitable, decisive or imminent.

Since then, however, the evidence of a major shift has grown dramatically. In just ten years from now, well over half the world’s population of almost 8 billion people will live in Asia. By 2020, if recent trends continue, three of the five largest economies in the world—China, India and Japan—will be Asian, and there will be more middle class consumers in Asia than there will be in America and Europe combined. Although still lagging North America, Asia will by then also have overtaken Europe in terms of regional defence spending, while six or seven of the top ten largest militaries in the world will be in Asia.

We are also entering new ground. Asia has not seen a strong Japan and China–let alone India–in existence at the same time for two centuries. The last time we saw such dramatic shifts in power, with the rise of Imperial Germany at the end of the 19th century and of the Soviet Union in the middle of the 20th century, the world suffered through two world wars and one Cold War. It’s these echoes of history that prompted US scholar Aaron Friedberg to write a now famous article asking whether Europe’s past would be Asia’s future.1 Indeed, it’s largely apprehension about the ramifications of a changing landscape and the potential ensuing chaos that has prompted Australian Prime Minister Kevin Rudd to propose an Asian Pacific Community institution that will meet to discuss the full ambit of security matters in the region. Implied in almost all speculation about, and proposals for, the region is that existing structures and arrangements, particularly the ‘San Francisco’ or ‘hub and spokes’ model of security relations with the United States at the centre, will become outdated and eventually obsolete.

So what will the geostrategic landscape in Asia look like in 2020? Spare a thought for current policymakers. Although it’s standard practice to rely on extrapolating from linear trends, they’ll have to accept that such analyses will almost certainly be wrong. All we can do, therefore, is try to reduce the number of unpredictable variables. But in doing this it becomes clear that although tremendous shifts in relative power will undoubtedly take place, for a number of reasons unique to Asia, the geostrategic landscape of Asia in 2020 could very well look surprisingly similar to the one that’s currently in place. Not a fashionable view, but perhaps an accurate one.

It’s about China… but not in the way you might think

In 2007, Singapore’s Minister Mentor Lee Kuan Yew caused outrage in China when he argued that while China’s rise caused regional apprehension, Asia remains remarkably unruffled by India’s rise.2

He has a point. The assumption is that China and India will be the new great powers in the Asia-Pacific, alongside established powers—the United States and Japan. The second tier is likely to consist of states such as Indonesia, Vietnam, South Korea and perhaps Australia. Trouble spots remain—North Korea and Myanmar—and there’s still uncertainty over issues such as the future of Indonesia. But if China were taken out of this equation, neither the rise of India nor any of these other issues would cause strategists to ponder whether there’d be a fundamental dismantling of the current security system or the US-backed open, liberal order.

At most, a declining America would perhaps grudgingly take its place as a ‘first amongst equals’ in Asia rather than remain in the position of uncontested dominance that it has held for decades. Washington would be forced to—perhaps gladly—offer a greater constabulary naval role to New Delhi and Tokyo (but would not happily extend the same to Beijing). Jakarta, Hanoi and Seoul might be offered more prominent seats in existing or yet to be built regional institutions. But there’d be no serious or willing challenger to US strategic primacy or the American led liberal order since there is little evidence that it’s in the interest (or part of the disposition) of these states to want that role.

This is the case even for relative newcomer, New Delhi. Its relationships with both Washington and other significant regional capitals (excluding Beijing and Islamabad) range from friendly to excellent. Even now, India conducts high-level naval exercises and military exchanges with the United States, Japan, Indonesia, Singapore and Vietnam. This is important because India, having gained the recognition it craved from the United States following the 2008 US-India nuclear agreement, seems happy to increasingly position itself as an independent but complementary pole to the existing security order in Asia. India has no territorial disputes with other major Asian powers (save China) and is already fully engaged in the whole alphabet soup of regional institutions except APEC.

Moreover, India, which already has the largest middle class in the world, is relying on the private sector to drive future growth. If it continues to grow through 2020 as rapidly as it has since the early 1990s, it is likely that consumption by the Indian middle classes will provide an enormously important export market to Asian manufacturers. Hence, there are few major economic or strategic frictions that might sour New Delhi’s broad standing in Asia or with the United States.

So what about China? If linear projections continue, by 2020 China will be the largest Asian economy and second largest in the world after the United States. Even though Chinese GDP per capita will still be around one fifth that of the United States, the absolute size of China’s population, combined with a state-corporate model that puts enormous resources in the hands of the government (rather than its people), will make China a regional superpower. It will overtake Russia and become the second largest defence spender after the United States, possess Asia’s most formidable navy and have the largest submarine fleet in the world. Its ballistic missile technology and cyber and satellite capabilities, in addition to its military hardware, will probably be advanced enough to cause America to think twice about engaging Beijing in any military exchange so far from home. This in turn could make taking back Taiwan by force very tempting for the Chinese.

Moreover, short of a dramatic reversal of current trends, China will become even more indispensable to the regional economy. It’s already the region’s primary export platform, importing more from the rest of Asia and exporting more to the rest of the world than any other Asian country. Through economic policies and incentives, as well as the fact that it holds $1.4 trillion of convertible dollar assets including $800 billion in US Treasury bonds, China has done a magnificent job of persuading the United States and Asian nations that it is a legitimate and indispensable rising power in the region. It is unthinkable that Asian states will support any economic containment initiative against the Chinese given the latter’s importance to the region’s prosperity. By 2020, China will most likely be the most important trading partner for regional giants such as Japan and India.

Yet, in discerning possible changes and disruptions to the geo-strategic landscape in 2020, the continued rise of China—especially if it remains authoritarian—is by a large measure the most important factor since China will be the only truly ‘revisionist’ great power for several reasons.

First, China will be the only great power in Asia that remains dissatisfied with its land and maritime borders. To its north, new tensions are likely over oil, coal and timber rich Russian territories in its Far East and Siberian land mass. There’s already an estimated 100,000 Chinese illegally settling in these areas. By 2020, it’s likely that over 100 million Chinese will be living in the Chinese territories within several hundred kilometres of the porous Russian border with only 5 to 10 million Russians remaining in the region. Siberia’s fresh water supply would also be tempting, given that China already has severe shortages throughout the country.

Moreover, China will not forego claims to the strategically important Indian territory of Arunachal Pradesh to its south, a territory lying between Bhutan and Myanmar that is roughly twice the size of Switzerland. To its east, the Taiwan issue remains unresolved, while China claims the Senkaku Islands currently controlled by Japan and all of the Spratly Islands, pitting it against other claimants the Philippines, Brunei, Malaysia, Vietnam and Taiwan. More generally, China seriously claims around 80 percent of the South China Sea as its ‘historic waters’, something that has been reiterated periodically by Beijing for several decades.

Second, Chinese revisionism is not only territorial but strategic. While other great and middle powers, including past US adversaries such as Vietnam, see the preservation of the existing US-led hub-and-spokes security model as very much in their interest–and would seek only relatively minor refinements to it based on changing distributions of power–China sees it as a ready-made mechanism for its future strategic containment. Almost 20 years after the Cold War ended, the fact that almost all key states in Asia are moving closer to Washington with respect to security cooperation has not escaped Beijing. Indeed, even though Beijing, which sees itself as the natural and historic leader in Asia and America as a recent imposter, is currently free-riding under the existing security system in order to focus mainly on economic development, it nevertheless works subtly but tirelessly to undermine it.

For example, with still limited success, China has moved quickly to court American security partners experiencing temporary rifts with Washington (for example, as has occurred with the Philippines, Thailand and Japan) and emphasizes a preference for institutions that exclude the United States, such as ASEAN+3. China’s promotion of concepts such as ‘security multilateralism’ and ‘democracy between states’ is also designed to dilute the US-led hierarchical security structure in Asia by entrenching a de facto multi-polar configuration in the conduct of security affairs. In gradually reducing America’s status and role in Asia, China will increasingly attempt to isolate and ‘pick off’ smaller countries and move them into its sphere of influence. Therefore, if China continues to rise, more determined attempts will be made to circumvent, bind, dilute or transcend both American power and influence, and the San Francisco system.

Third, although China has been a tremendous beneficiary of the US-backed open, liberal order based on open sea lanes for commerce, rule of law and equal rights for states as economic actors and participants within this order, there are persistent fears that a dominant China will gradually cease to underwrite such an order. In particular, other regional states fear that a dominant China viewing itself as Asia’s Middle Kingdom is less likely to bind itself to upholding a transparent regional order where disputes are resolved by rule-of-law and pre-agreed processes. This will be especially true if China remains authoritarian, since it will be shaped by a political culture that shows little tolerance for difference and disagreement.

From China’s point of view, there is an enduring suspicion that participants within the US-backed liberal order are expected to eventually become democracies–a serious violation of authoritarian sensibilities. The perhaps plausible conviction that any US-supported institution and engagement policy seeks to ultimately democratize participants is widely held by Chinese leaders and strategists.

The Asia-Pacific in 2020

A decade from now, the Asia-Pacific might be witness to an unusual phenomenon: its most powerful Asian nation will also be one of the loneliest.

True, political and strategic influence is built on the back of economic power. And because its economic rise presents opportunities for other countries, China has made an irresistible and decisive case that it is a legitimate and economically indispensable power in Asia; that preventing China from rising economically is both unfair and self-defeating. But being accepted as a ‘legitimate’ power is one thing. Convincing other states that you ought to be trusted to lead the security order in Asia is quite another. Due to historical distrust and ongoing territorial disputes with all key Asian states, China lacks true allies and partners in Asia. Indeed, the higher China rises, the more wary other states in Asia will become.

If China continues its rise, the discussion in 2020 could well be how best to handle the strategic frustrations of an economically powerful giant meaning that even if the United States declines in relative terms, which is likely, it will for two key reasons still retain strategic primacy in Asia.

First, the United States will still be the largest economy in the world and also the most powerful military actor. Second, other regional first-rate powers such as Japan and India–who both have a wary eye on China–will take up more of the security burden, especially when it comes to naval supervision. In fact, this is already occurring.

In 2020, second-tier powers such as Vietnam, South Korea and Indonesia, meanwhile, will all have a strong interest in restricting the strategic reach and role of China. These countries will consequently use policies of balancing and bandwagoning to preserve America’s strategic primacy rather than reduce it. Indeed, the fact that the United States is not an ‘Asian power’ is to its strategic advantage because as a foreign leader it requires greater levels of acquiescence from Asian partners to retain its presence in the region (for instance, with basing rights). The same could not be said for a dominant Asian power such as China or Japan.

By 2020, China will have the largest economy in Asia. Yet its leverage over other countries in the future is being exaggerated. China will still be a vulnerable stakeholder in the regional and global security and economic order. For example, it will still predominantly rely on energy and resources imports coming through the Indian Ocean and South China Sea, since energy pipelines and infrastructure through Central Asia and into western China will remain inadequate. This means that it remains dependent on open sea lanes and can ill-afford to suffer the unpredictable and punitive consequences of disrupting the current maritime order.

Moreover, China cannot truly dominate economic activity in Asia until its domestic market becomes the epicentre of consumption of the region. By 2020, China’s GDP per capita will still be one fifth that of the United States’ and Japan’s. There are also other factors that will work against a take-off in Chinese consumption. Because of its state-led development model, wealth is concentrated in the hands of the state sector rather than widely distributed to its people. Inequality in China, already the highest in Asia (in terms of the Gini coefficient), will further deteriorate. By 2015, more people will leave the Chinese workforce than enter it and its aging population does not bode well for its long-term economic future. In fact, it is arguable that India, with 50 percent of its population currently under 25-years old, will have the more vibrant and prosperous middle class. China will likely lack the economic weight and resources needed to ‘compel’ or seduce countries to accept a China-led order and reject the US-led one.

There’s also another future scenario that could profoundly imperil and distract China: serious China-Russia tensions and even the possibility of significant strategic Russian cooperation with US and key Asian allies. Russia is presently preoccupied with restoring its influence in parts of Eastern Europe. But it is watching with increased concern China’s unauthorized movements into Siberia and the Far East. Indeed, as China rises and Russia declines, Moscow sees restraining its increasingly dominant neighbour as the longer-term challenge. So far, Russia has done little about Chinese incursions simply because it has entered into a partnership of convenience with China as an immediate counterweight against the West. But Western tensions with Russia may not last. As a consequence, China fears that the longer-term strategic interests of Russia, Japan and the United States are worryingly aligned.

History to Repeat Itself?

A caveat: future speculation depends on assumptions, and we all know that when one makes assumptions, one inevitably makes a fool of oneself. But planning for the future must nevertheless be done.

In 2020, we’ll likely see an economically and militarily powerful, but strategically frustrated China. It will be accommodating and bullying in equal parts–too strong to meekly accept an order not of its own making but still too weak and isolated to substantially rework it. When it comes to issues such as Taiwan, China will be more likely to forcefully move to reclaim the island if the military balance in the Taiwanese Straits tips in its favour, since there’ll be immense pressure on the Communist Party for significant foreign policy achievements. But its ambitions in the South China Sea, and broader designs for leadership, are likely to be frustrated.

Bear in mind that a weak and failing China–which should not be discounted given immense domestic problems that appear to be worsening, including corruption, poor institutions, ineffective governance and unrest–could suffer another historical period of disorder and chaos. If this occurs, it will absorb the attention of its neighbours as they try to limit any fallout, and also deny the broader region important economic opportunities.

But there’s another, unpalatable, scenario that remains conceivable. A combination of factors such as a faster-than-expected US decline, loss of American enthusiasm for committing money and ships to uphold a free and open trade order and an emerging era of US and regional protectionism is conceivable. The dismantling of the US-led security order could follow, leading Asia-Pacific states to hastily reorganize security relations amongst themselves. Under such a scenario, the potential for the Asia-Pacific to repeat some of the tragic lessons of Twentieth century Europe would rise significantly.

1Aaron Friedberg, ‘Will Europe’s Past be Asia’s Future?’, Survival, 42:3, 2000. 2Lee Kuan Yew, ‘India’s Peaceful Rise’, Forbes, 24 December 2007.

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