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Parag Khanna on the Global Power that is Asia

by Mable-Ann Chang

October 28, 2019

Parag Khanna

Parag Khanna, founder and managing partner of FutureMap, explains the importance of understanding geopolitics and multipolarity in Asia

Parag Khanna is an Indian-American specialist in international relations and the founder and managing partner of data and scenario based strategic advisory firm FutureMap.  Khanna is the author of several bestselling books, with his latest being The Future is Asian: Commerce, Conflict & Culture in the 21st Century.

With a Ph.D from the London School of Economics, Khanna was previously an adviser to former US President Barack Obama as well as the US National Intelligence Council’s Global Trends 2030 program. He has also served in Iraq and Afghanistan as a senior geopolitical adviser to the United States special operations forces.

With Asia’s rise to global prominence, many have questions as to what the future of this multi-cultural continent that links 5 billion people through trade, finance, infrastructure and diplomatic networks will look like.

In this interview, Khanna paints a clearer picture of Asia’s future and discusses how the continent, which encompasses far more than just China, has come into its own and how the world cannot afford to keep getting Asia wrong.

In your latest book you suggest that the 21st century belongs to Asia. Why is that?

Quite frankly I could have called the book “the present is Asian”, as I think it’s a statement that is not that far off base. In terms of global demographics, more than 50% of the world’s population lives in Asia and when you look at the world economy in terms of purchasing power parity, a report from Standard Chartered says that in 2020, 50% of global GDP (gross domestic product) will be in Asia. So again, it is already an Asian world if we look at the economic growth rate, infrastructure investment and a wide range of other metrics. Part of my argument in the book is that our psychology is lagging behind the facts.

Over the past 30 years, Asia has consolidated and reawakened to itself during the post-Cold War process of trade integration by exploring complementarities and building interdependence, drawing other countries into it that would have been at the periphery of Asia for some time. But now what we’re seeing is that Asia is pushing outward considerably, with Japan and China as leading players in the story as well as India picking up its role as well. This all forms part of the Asianization of the world.

What is your view on the rising US-China rivalry?

There are two answers to this question. The first is that the future world order does not boil down to only the US-China dynamic, which is one of the great fallacies of contemporary international relations thinking. Geopolitics is a much deeper discipline in which you really look at the diffusion of power economically, militarily and institutionally.

The second is that Asia is multipolar and is much more than just China. There are 3 billion people in Asia who are not Chinese. Japan is also a polar power in Asia, as are India, Russia and Australia. That is the correct foundational landscape through which to view the US-China relationship. So, is the relationship extremely important? Yes. Is it perhaps the most important bilateral relationship in the world? Again yes. But is it the sum total of all geopolitics in which the fate of human geopolitical order rests? No, it’s not, because irrespective of what happens in the US-China dynamic, the world will remain multipolar.

When it comes to economics, which is really the foundation of geopolitical power anyway, not only are we in a multipolar landscape, but China’s dependency on the US is much lower than is portrayed in Western media. As I explain in my most recent book, from the Chinese point of view, its own neighbors are its most important trading partners. Asia is China’s most important trading partner by far, with China’s second most important trading partner being Europe. The US is actually the third most important for China from a trade standpoint. It’s the most unpredictable of the three, which gives it a certain centrality in our discourse. It is not undeserved as it’s obviously very important, but China is going to be able to substitute its dependence on the US much more rapidly than the reverse.

Besides China, what other countries do you see playing significant roles in the Asian powerhouse?

It is important to view the Asian story not as one of competitive national blocks, but what I call mutually reinforcing waves. The first wave was Japan, the second was the tiger economies, the third wave was China, and the fourth wave is South and Southeast Asia.

As China’s rise began 40 years ago, Japan and the tiger economies were the largest investors in China. Now you have the faster growth rates of India and Southeast Asia and there you can see that the largest investors are Japan, China, Singapore and Hong Kong. These waves have reinforced each other and it has been a very positive story. So that helps to answer the question about who the other pillars are. The truth is that they’re much more deeply interconnected to each other than most people appreciate. And as I mentioned before, to me geopolitically, the hierarchy would be China, Japan, India and ASEAN. In some ways ASEAN is actually more important than India.  So, whether it’s economic or geopolitical, you find that again, there are four or five significant pillars.

How do you see the Asian system interacting or coexisting with the US and Europe in the future?

I think the Asian system as a whole is first and foremost consumed with the priority of the Asian system itself and making sure that it is doing well. Asians are managing relations with each other economically and geopolitically and that’s a full-time job. Based on economic and diplomatic dynamics, Asian relations are actually more important to Asians than relations with the rest of the world.

Then in terms of relations with the rest of the world, again, I think Europe is central in all of this because if you look the European Union’s efforts to have Free Trade Agreements with ASEAN, Japan, India and other countries, those are all moving forward now. And of course many European countries have joined the Belt and Road Initiative, so the real diplomatic action in the world today is either within Asia or across Eurasia, where the US has been distancing itself in some ways by not joining the Trans-Pacific Partnership Agreement and by launching this trade war, which will effectively lead to it cutting itself off from European trade.

What is your take on the soft power element of China’s project to build infrastructure and expand links across a range of different countries—through the Belt and Road Initiative—and its chances of success in the long run?

I never use the term soft power as I don’t think such a thing exists. I think that there is cultural appeal, but the meaning of the term soft power is that cultural appeal converts into an ability to compel decisions. There’s not a single instance in history of that actually working, so I think the term is bunk. Just because there are branding exercises associated with the Belt and Road, we shouldn’t put the cart before the horse. The fundamental question is whether countries are mutually served by growing infrastructural connectivity or not. When they are, they do it, when they’re not, they resist it, and no amount of soft power can paper over that.

I think that the focus should actually be on public good, because what China has done is something much more important than soft power. What China has done is to remind the world that infrastructure is a global public good and that security and environmental stewardship are not the only global public goods.

China has, rightly, validly claimed that the deficit and infrastructure finance has been a great global market failure of the past 70 years and that someone needs to address it. A lot more resources are needed, and it has to be done in a much more multilaterally coordinated way. Even though the Belt and Road is more of a collection of bilateral relationships, it is gradually taking on more multilateral characteristics. The next phase of the Belt and Road, I think, is going to continue to demonstrate the realization and the appreciation that we need to have a coordinated approach to global infrastructure finance.

What is your opinion on the critics who argue that the Belt and Road Initiative is a debt trap and geopolitical ploy?

I think they are just generalizations, and I don’t like generalizations when it applies to something that we could actually give much more specific answers to. There is no basis to support the argument. For example, the Sri Lankans are out there defending themselves against the notion that they’re in a debt trap and reminded everyone that the reason they’d come to an agreement with China in the first place is to actually generate revenue to pay off their other creditors.

The actual econometric research on it shows very clearly that most countries that have a high outstanding debt to China actually had a high outstanding debt to China before they joined the Belt and Road. And the reason is because heavily-indebted poor countries—whether they’re in Africa or Central Asia—almost always had only one creditor. The notion that China is to blame for countries having high debt is facile. There are absolutely countries that are in very significant and painful debt traps to China, there’s no question about it. But those problems are far deeper than China and infrastructure finance. We have to be clear about causality, about sequencing and about priorities, to help these countries. Even if China is the problem, China is actually the only solution at the moment and there’s no way around that fact.

The United States has said that it will be presenting an Indo-Pacific geostrategic concept as an alternative to the BRI. How do you think it will compare?

This is something that I describe as the infrastructure arms race and I am hoping to see complementarities come out of it. If you go back, there were no Asia connectivity initiatives coming out of the European Union. There were no connectivity corridors co-sponsored by India and Japan. All of these initiatives are a response to China’s Belt and Road. They clearly came after it— there’s no question that they were formulated as a response. China got there first, China put it on the agenda, and I think that’s extremely important to recognize.

A lot of what China is doing is modeled on the Asian Development Bank, which deserves a great deal of respect, as it does predate what China is doing and is an important template for the initiative. I think that these geopolitically-inflected initiatives will compete against each other to finance projects, with the outcome being greater connectivity, therefore making them complimentary initiatives.

How do you see China’s relationship with the European Union as its second largest trading group developing in light of the various changes that are taking place now?

I’m positive about this relationship. My book is as much about Eurasia as East Asia and I see a lot of potential there. I think that the volume of trade across the region is likely to double within the next decade. I also think that Europe will find ways to practice investment screening and other sorts of things that are reminiscent of what the US is doing, over national security and protecting critical industrial sectors. But on the other hand, they’ll also be aggressive in hoping to rebalance the dominance of Chinese Belt and Road projects.

What are some geopolitical trends that we can expect to see over the next decade?

I think that the Belt and Road is the biggest geopolitical story in the world. Military conflict is something that has happened intermittently and quite frankly, rarely. Whereas the real stuff of geopolitics is actually happening 95% of the time when it comes to the Belt and Road, so it’s significant.

I hope that we’ll see a stronger technocratic, diplomatic effort to solve outstanding intra-Asian disputes. I would like to see a peaceful resolution over the South China Sea and over the Senkaku [Diaoyu] Islands. If you look at Asian problems, they could potentially be solved just as easily as they were created. I’m hoping to see more of an approach that’s not just about conflict management but also conflict resolution, as well as Asian countries gaining the diplomatic confidence to solve their own problems.

Another trend to take note of is the one of migration. A story that has not been told enough is just how strongly there has been an increase in acceleration of intra-Asian migration, which has been extremely beneficial for all parties involved. You have countries in Southern Asia that are young and populous and therefore labor rich, while there are labor shortages in countries like China, Japan, South Korea and Thailand. If we can actually work to bridge some demographic mismatches, it would be very good for Asia as a whole.

 

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