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Geopolitics in Asia: An Overview

Christine Loh1

I. Introduction – Drivers and Trends

There are numerous key drivers and trends that will impact on Asia’s geopolitics in the coming 15 to 20 years. These include: (1) demographics; (2) natural resources and the environment; (3) science and technology development; (4) the global economy and globalization; (5) national and international governance; and (6) future conflicts. Recent research indicates that no single driver or trend will dominate the global future in 2015. Each factor will have varying impact on different countries, and the various factors are not necessarily mutually reinforcing; in some cases, they will work at cross-purposes.2 Another important aspect resulting from a globalizing world is the speed of change that is sweeping across Asia, and the world. We are already witnessing the rise of new powers in the 21st century that is as dramatic as the rise of Germany in the 19th century and of the United States in the 20th century. The new Asian powers are obviously China and India.3 Their rise economically and militarily4 has inspired many questions about whether China is “more successful” than India, and whether India will end up surpassing China. Most forecasts indicate that by 2020, China’s gross national product (GNP) will exceed that of individual Western economic powers except for the United States. India’s GNP will have overtaken or be on the threshold of overtaking European economies. Because of the sheer size of China’s and India’s populations, projected to be 1.4 billion and 1.3 billion respectively by 2020, their standards of living need not approach Western levels for these countries to become important economic powers.5 Japan (Asia’s current leading economic power), Indonesia (Asia’s 3rd largest country)6 and the other ASEAN countries face interesting challenges squeezed between the two giants.

II. Comparing China and India

The comparison between China and India is in fact not new. It has been going on for at least half a century in contemporary discussion. Central to this discussion is the question of definition of using the words, ‘success’ and ‘failure’, to compare the two countries. They are merely shorthand and value-laden words for expressing a complex set of circumstances and the brevity of the descriptions do not do either country justice. The same may be said of using the same way to compare other countries using these shorthand descriptions.

In using GNP or gross domestic product (GDP) growth as comparison, during the 19th century and early 20th century, China’s economic growth was lower than that of India. Using 1913 as the base at 100, India rose to this level from 55.8 in 1820; China's rise was from 66.2. Between 1913 and 1936, China’s economy grew markedly faster than India’s but between 1936 and 1950, the Chinese economy did poorly owing to war, while the Indian economy kept growing and its GDP index surpassed that of China. After 1952, China again overtook India in GDP terms, but the Great Leap Forward and the Cultural Revolution reversed the rising trend with India’s GDP once again running ahead in the 1960s. In the 1970s, up to the eve of the reform (1979), China once again led India in terms of the GDP but the ratio of China:India GDP indices remained lower than that of 1936.

It should be noted that over the last two centuries, China’s economy in volume terms was in fact much larger than India’s. Nevertheless, the ratio remained the same up until 1980. The lowest point occurred in 1962 after China experienced three years of famine, when China’s GDP was only 139.9% that of India. It was not until after China embarked on its Open Door policy and modernization reform in 1979 that the ratio began continuously to rise and by the 1990s, it tripled that of India. Given China’s much larger population, it needs to be remembered that the advantage in output value per capita terms has in fact been much less.7

Another frequently used method to compare relative success of countries is to compare per capita income over a period of time. Thus, if we compare China and India on this basis from 1990-2004, China has moved to more than double India’s per capita income. On this basis, it may be said that China has been ‘more successful’ than India in raising the level of poverty. Some may say that strong economic performance is a sine qua non of judging success for poor countries because the example set by the fastest growers begs the question of why other countries cannot do better.

Another frequently used comparison is to look at the level of exports and Foreign Direct Investment (FDI) and in both these areas China has done better than India during the same period. For example, in 2002 China attracted US$47 billion in FDI, which was 25% of the total for emerging markets. One interesting theme for further research is the divergent investment practices of the overseas Indians and overseas Chinese communities. The Overseas Chinese have been investing massively in China since the early 1980s, with people living in Hong Kong and Taiwan leading the charge. This is especially true in the manufacturing sector where Hong Kong and Taiwan investments have helped to create China’s export boom. By comparison, overseas Indians invest a lot less in India although this has changed recently. Anecdotal evidence suggests that both communities recognize that corruption is a major problem in both countries. A corruption perception index in 2002 ranked China in 59th and India in 71st positions, respectively,8 and yet, the overseas Chinese appear not to have been deterred while overseas Indians have been much more reticent. Perhaps this curious phenomenon may be explained by the fact of geography with Hong Kong and Taiwan being next door to Mainland China, thereby providing a location advantage for them to expand and still directly manage their manufacturing capacities. Proximity won out over corruption. However, India does much better than China (US$1.5 billion annually between 1995-2003) in terms of remittances from overseas Indians (US$8.8 billion annually).9

In summary, over a long period of time (200 years), China had greater economic development capacity than India, but between 1950 and 1979 it did not perform better. Nevertheless, the foregoing hopefully demonstrated that using a few economic indicators to determine whether a country as a whole is a ‘success’ or ‘failure’ is a simplistic approach. Data can be used to support the relative success of a country’s specific policy – e.g. poverty alleviation – but it is inappropriate to judge the relative ‘success’ or ‘failure’ of an entire nation using these indicators alone. A useful composite measure is the United Nations Human Development Index, where in 2004 China ranked 94 and India ranked 127.10 Having sounded the warning against making simplistic comparison as to where the debate is today on the sustainability of China’s economic lead, analysts are in fact now divided. For example, McKinsey currently favours India doing much better, as does Forecasting International, which thinks India will be Asia’s dominant economic power by 2015. While India has a large national debt, a daunting poverty rate, an inefficient and bureaucratic government and ramshackle infrastructure, it has a stable if messy political system, a solid legal system, and a better financial system than China.

There are other factors at play as well. The first of which is demographic change as an important driver for the future development for any country. Past family planning policy in China (one child policy) has led to skewed demography of a serious male-female imbalance (118 male to 100 female on average)11 , which is feared to lead to social tension with many males unable to raise a family, as well as a rapidly aging population. China’s median age is currently at 32 but will rise to 44 by 2040, making it age faster than any major country in history. India will have a younger population going forward.

Rapid economic growth in both China and India has had a negative impact on natural resources and the state of the natural environment. A highly polluted environment will have longer-term impact on public health, including the impact of children who are more susceptible to pollution.12
China and India’s growing energy needs to fuel economic development are already having an impact on their increasing preoccupation with securing energy sources, which in turn are having an impact on their foreign policies. China’s recent blocking of sanctions against Sudan for the Darfur genocide is an example of how it did not wish to disrupt its relationship with Sudan with whom it had signed a long-term oil supply agreement. Together with other resource hungry nations, China and India will be competing for imported natural resources. Total world energy consumption probably will rise by about 50% in the next two decades compared to a 34% expansion from 1980-2000, with a greater share provided by petroleum. Some of the major oil producing countries in the Middle East, West Africa and Caspian Sea are relatively unstable regions, thus oil supplies disruption is among the key uncertainties over the foreseeable future. Indeed, energy constraints may well be a factor in China’s and India’s economic development. Beyond oil, substantial needs for other natural resources also present serious ecological problems. For example, Indonesia and China signed a formal agreement over two years ago to cooperate in tackling the illegal timber trade. Yet, environmental activists uncovered last month what has been described as the world’s biggest looting and smuggling racket involving huge shipments of logs from Indonesia’s remote Papua to China.13

Globalization is forcing an ever-increasing interconnectedness among people. This is reflected in the expanded flows of information, capital, goods, services, technology and people throughout the world. Globalization may be said to be an overarching ‘mega-trend’ that is shaping all the other major drivers for change. However, there are many players involved in shaping the outcome among state and non-state sectors, including national governments, regional authorities, municipalities, cities, private commercial enterprises and NGOs.

In comparing India and China, the internal politics of the countries are relevant. Both countries have relatively conservative social values. China is a one-party state where the party and government retain a tight grip on any form of perceived dissent (including possible alternative source of authority, even if non-political, such as religious organizations) as well as business and civil society developments. India operates the world’s largest democracy with a thriving independent NGO sector and an independent judicial system. Thousands have been executed in China over the past five years. China has the world's largest system of labour camps, and one of the most comprehensive systems of Internet monitoring and blocking.14 Having introduced market mechanisms in China, Chinese leaders are facing the dilemma of a growing demand for greater individual autonomy, which requires the state to accommodate pluralistic pressures by relaxing political control. It is likely that Beijing will pursue a form of Asian “limited democracy” or “minimal democracy” while tolerating “partial liberty”. This system would likely involve elections at the local level and a consultative mechanism on the national level, with the Chinese Communist Party retaining overall control.15

III. Geopolitical issues

This section focuses on China’s geopolitical strategy to illustrate the new dynamics in the region. China is focusing on what it calls "comprehensive national power", which is a combination of international prestige, diplomacy, economic power, cultural influence and, to a lesser extent, military force. To build this comprehensive national power, China's leaders are now projecting the idea of its "peaceful rise" in world affairs and China is using both formal and informal channels to assert itself on the regional and world stage.16 China is using its economic weight to persuade other nations, especially those in Asia, that it is the natural leader of regional trade by entering into various free trade arrangements.

At the same time, China is using direct aid to court countries such as Myanmar after the United States imposed sanctions in 1997. In the Western Pacific, China is now financing Samoa's government offices and Fiji's sports stadiums. When Thailand, Laos and Cambodia were hit by the Asian financial crisis (1997-1999), China provided interest-free loans and other assistance. China has also loaned Indonesia some US$400 million and Vietnam US$150 million. In recent years, China has entered into regional security initiatives with ASEAN. South Korea recognizes as others do that China must play a positive role to rein in North Korea, which has recently admitted to having nuclear capabilities. China is also more active internationally, such as in the United Nations. China used to abstain from all United Nations resolutions but it is showing a greater interest in multilateralism as the United States is being perceived after September as increasingly ‘unilateral’ in its behaviour. China wants to appear to be a moderate and reasonable power although it cannot present itself as a free, rights-based political system and economy. China’s vision of a world is one where there are several leading powers, where countries rarely intervene in each other’s affairs. This vision appeals to many countries, including India and many other Asian neighbours, who have traditionally resisted what they perceive as US-lecturing on their human rights records.

However, there are areas of conflict as well. China has not dropped its claims over the entire South China Sea. It has acted unilaterally in damming its part of the Mekong River despite protests from Thailand, Laos and Cambodia who also depend on this river for water. Peace across the Taiwan Straits cannot be guaranteed as China has refused to rule out the use of force against what it considers to be a ‘renegade’ province pursuing ‘separatist’ policies. It needs to be noted that the United States and Japan declared on 19 February 2005 their first joint agreement that Taiwan is a mutual security concern, and for Japan to take a greater role in conjunction with American forces both in Asia and beyond. Japan has generally been inclined to sidestep conflict with China. This move, however, is a demonstration of Japan's willingness to confront the rapidly growing might of China. Indeed, in recent years, the two governments have battled over the route of a trans-Siberian pipeline for Russian oil and territorial rights in the Senkaku Islands (as these small islands are known in Japanese) and the Diaoyu Islands (as they are called in Chinese). In this example of Sino-Japanese relations and Big Power politics between the United States and China, all the red buttons (strategic rivalry, territorial conflict, historical animosities, and popular nationalism) are being pressed.

IV. Scenarios for the future

Giving the above, there may be several possible overlapping scenarios developing. These are not forecasts but influencing trends that assist in understanding what may develop.
Asian Consensus scenario reflects strong economic growth in Asia led by China and India over the next 15-20 years resulting in a world that has a less Western flavour and a reordering of global power with greater weighting for China and India.
Pax Americana scenario reflects continuing US predominance despite the rise of other powers, notably China and India, and a more inclusive global order with an expanded United Nations Security Council.
Clash of Faiths scenario reflects the rise of radical religious identity politics that includes fundamentalist Islam and evangelical Christianity that affect current norms and values of the global system.
Cycles of Conflicts scenario reflects small and large conflicts due to territorial, weapons, and resources competition among nations as part of the reorganisation of power.
Millennium Achievement scenario reflects that by 2015-2020, the UN’s Millennium Development Goals are substantially met where global security improves as a result of sustainable development advances.17

V. Concluding remarks

Geopolitics are made up of such large issues that the individual often feels lost as to what he or she can do to pursue a better world. As with any other subject, the first step is to become acquainted with the issues, understand how they relate to our lives and the impact world affairs have on us. Our personal beliefs are based on the values we hold dear. Governments are often infuriating because political leaders often appear to opt for expedient solutions rather than principled ones. What the public wants is principled pragmatism. This is the main reason why people from all around the world have lost trust in politicians, political institutions and political processes. Yet, we all recognize that we cannot do without government and politics. We cannot even do without the United Nations, which many people regard as irrelevant to them in their daily lives. But it is the only functioning multilateral forum the world has and many of the ideals, principles and goals it has articulated are compelling.

As Asia rises economically, we will need to become more aware of the great diversity within our region, as well as the priorities of other regions in order to co-exist. Active collaboration in many areas is essential to guarantee peace, security and development. Despite their new found status, rising powers should be cautious about becoming arrogant and jingoistic, as these can be dangerous qualities that could cause conflict. Moreover, history shows that unbroken development cannot be taken for granted as we have seen many set-backs in the past. Indeed, China and India are facing many new challenges. These include the risks and opportunities in their roles as: new regional powerhouses; being the mother countries of a global diaspora of overseas Chinese and Indians and guardians of large amounts of remittances, foreign exchange and investments; and having the responsibilities of being ever-growing guzzlers of shrinking supplies of fossil fuels. In assessing “success” for a country as a whole, economic advancement is in itself insufficient to represent the totality of human advancement. Sustainability dependence between humans and the Earth and among the peoples of the world is a better guiding principle.

As a small start in 2005, people from around the world may wish to brief themselves on the United Nations Summit, scheduled for September in New York, where reformation of the United Nation’s Security Council and how the Millennium Development Goals can be achieved will be discussed. By taking an active interest in the discussion, it may well provide the initial impetus we all need from time to time to become more engaged global citizens.

NOTES :

1 Dr. Christine Loh is founder and chief executive officer of Civic Exchange, a think-tank in Hong Kong.

2 National Intelligence Council, USA, Global Trend 2015: A Dialogue about the Future with Nongovernment Experts, December 2000.

3 China has 9.56 million sq km, 13% arable land and 1.275 billion people. India has 3.28 million sq km, 54% arable land, and 1 billion people.

4 It is useful to note that while China is spending US$20 billion and India US$13 billion annually on defence, the US is spending US$416 billion.

5 National Intelligence Council, USA, Mapping A Global Future: The 2020 Global Landscape, January 2005. In 2004, with 9.4% growth, China ranked as the 6th largest economic power in the world, had overtaken the US in the consumption of basic agricultural and industrial goods. It is now the world's biggest consumer of grain, meat, coal and steel. Only in oil does the US consume more. China is well ahead of the US in the consumption of goods such as television sets, refrigerators and mobile phones, see Earth Policy Institute, www.earth-policy.org/Updates/Update45.htm, 16 February 2005.

6 Indonesia has 1.9 million sq km, 10% total arable land and 212 million people.

7 From 1978 to 2003, China’s per capita GDP grew at a compound rate of 6.1% a year, or 337% in total. Though impressive, it was not record-breaking. Japan topped 490% from 1950 to 1973; South Korea achieved 7.6% compound growth per annum between 1962 and 1990; and Taiwan achieved 6.3% between 1968 and 1990.

8 Transparency International, Corruption Perception Index 2002, www.transparency.org

9 Ramkishen Rajan, Growing Clout of workers’ remittances, 15 February 2005, www.business-times.asia1.com.sg

10 Indonesia ranked 111 in 2004. See www.hdr.undp.org/reports/global/2004/pdf/hdr04_HDI.pdf.

11 “Pocket World in Figures 2003”, 2003 Edition, The Economist, p. 124.

12 For a useful summary on China’s environment, see China Human Development Report 2002: Making Green Development A Choice (Stockholm Environment Institute and United Nations Development Programme, Oxford University Press, 2002).

13 Tomi Soetjipto, Activists detail Indonesia illegal logging to China, Reuters, 17 February 2005.

14 Human Rights in China, an NGO headquartered in New York, provides useful reports on human rights in China www.hrichina.org; China Labour Bulletin, an NGO based in Hong Kong, provides excellent information on labour rights issues www.china-labour.org.hk.

15 Wu Guoguang, “From Partial Liberty to Minimal Democracy”, Contemporary Chinese Thought (Summer 2003), Vol. 34. No 4, ME Sharpe, 2003; and Christine Loh, “Political Reform and Civil Society: Hong Kong’s Role within Greater China”, www.civic-exchange.org/publications/2004/ 2511.pdf, 25 November 2004.

16 Informal diplomacy includes setting up the Bo’ao Forum to rival the World Economic Forum at Davos.

17 UN Millennium Project, “Investing in Development: A Practical Plan to Achieve the Millennium Development Goals”, United Nations Development Programme, January 2005

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