The Future is Asia

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Thanks to the efforts of economic historian Angus Maddison, there is now a global consensus that Asia was the centre of the global order for a century up until the 1850s with China and India accounting for a large part of the global economy, trade, innovation, science and technology. The outward-looking strategies adopted by the present-day members of Western Europe in the seventh century were instrumental in their economic growth due to the building of empires and extraction of financial surpluses from their colonies.

The empire building reached its peak at around 1850, which was also a period in which India and China succumbed to western colonialism. Then the downfall of Asia began.

The Singaporean academic Kishore Mahubani has termed the economic and political decline of China and India for nearly 200 years as “historical aberrations.” It is estimated that China and India will account for almost 50 percent of global economic production after 2050.

The period between 2025 to 2030 will be crucial when the two Asian giants take up the mantle of the first and third largest global economies leaving the current leader, the US, in second place.

Economic strategist Parag Khanna’s recent book, ‘The Future is Asian’ is an account of how the centre of global economic and political activities is shifting towards Asia. Unlike a plethora of books written on the topic by western authors, Khanna presents an Asian view on the rise of Asia. Khanna, who is regarded as an unabashed Asiaphile, provides a rich historical account of Asia through this book. Extensive interactions between Asia with the rest of the world have made it an essential factor to reckon with across the globe.

Several factors such as focus on education, demographic dividends, and shifting global supply chains support Asian countries willing to take up more global responsibilities. The rise of China- after it began to open up to the rest of the world in the late 1970s- in the global economic and political spheres  has been one of the most critical aspects in the growth of Asia. The author mentions that innovation, which people in the past used to consider as a western phenomenon, has been taking up fast momentum in Asia.

Khanna argues that there is a proper division of roles between the Asian countries, especially in South East and North Asia. Japan has been a leading innovator with Southeast Asia taking up less sophisticated functions and the final assembly of products happening in China.

China contests this simplistic account of the division of labour between the countries in Asia. It plans to leap-frog the industrial value chain, which is precisely a source of tension between China and the US, Japan and the European Union.

Khanna pointedly writes that the “same ingredients of industrial capitalism, internal stability, and search for global markets that propelled Europe’s imperial ascendancy and the rise of US to the superpower status are conversing in Asia.”

The rise of industrial capacity, coupled with abundant liquidity, has been a significant reason why Asian economies have become assertive globally. However, Asia has not been able to invest the capital it has generated in addressing infrastructure bottlenecks. The establishment of the Asia Infrastructure Development Bank (AIIB) is an exception in this respect. The lack of ability of Asian countries to decide on the use of the US dollar accumulated by the central banks in Asia, shows how dependent Asia is on the US
A big question left unanswered by the author is whether and how the current political architecture that underwrites peace in the region will, too, become Asia centric. Former US president Barrack Obama lamented the overreliance of Asia in general and China on the global system created by the US as a ‘free-rider.’ The moot question is how Asia, in general, and China and the US, in particular, will agree to share the burden of up keeping the order in Asia. Equally important will be how the rest of the Asia-Pacific, especially India, Japan, Indonesia and Australia, will accept China’s role after the disengagement of the US in the region. How the ongoing trade disputes and bilateral investment agreements between China and the US are settled is also a prime variable that will influence how the future of Asia will unfold.

Subedi is a political economist.

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