Easternisation: Asia’s New Domination of the Global Order

TIME: 28th February, 17:30 – 18:30

VENUE: The Henry Jackson Society, 26th Floor, Millbank Tower
21-24 Millbank, London, SW1P 4QP

SPEAKER: Gideon Rachman
Author, Easternisation
Foreign Affairs columnist, Financial Times

CHAIR: Dr John Hemmings, Henry Jackson Society

Gideon Rachman: Perhaps I should explain before I give you the full thesis and why I chose to write this book. As John has explained, before I became an economist I was a foreign correspondent and one of my first postings was to Bangkok in the early 1990s when I was South East Asia correspondent for The Economist. At that time, the stories we were mainly writing were primarily economic; it was a boom time in South East Asia and already an exciting time because you could see that growth patterns pioneered in South East Asia and in places like South Korea and Japan had now spread to China. China was ten years into a boom and India was also beginning to open up. The real question was in that period 1990 to 1991 and 1992 after all the period of triumph for the West with the Berlin Wall falling and so on but it was already seemed to me obvious that the economic growth which we were all writing about was bound to alter global politics and eventually change the balance of power. So, that question is one that I have always been interested by and the reason I wrote the book now is that it seems to me that we have reached that, to use a cliché tipping point, where the economic power of Asia is so large that international politics is changing in quite profound ways. The phrase Easternisation is a play on the word Westernisation and I think that, without wishing to be too melodramatic about it, we may be coming to the end of a period of almost five hundred years in which the world was basically shaped by Western powers. Also that we are now entering a period where that is much more contested and over the twenty first century, the wealth and power of Asian nations will increasingly be something that the rest of the world has to respond to. Why five hundred years? Well I guess that you can trace it back to the great points of exploration by Columbus and Vasco da Gama who discovers the route to India in the late 1400s and from then on you get the spread of European imperialism and by the early twentieth century. I think the historian Ian Morris says that eighty percent of the world’s landmass was either colonised by Europeans or were European offshoot countries like the United States. Even when the European empires die after the Second World War, the period of Western dominance is preserved by the United States and you could argue that even Russia is actually a European power so the European landmass and Atlantic area remains the core of global politics. However because of this economic shift now, the centre gravity of the world economy is now arguably Asia Pacific and there are a number of statistics that can attest to that. So in 2014 the IMF came out with a list of the world’s largest economies and startled a few people anyway by saying that China was now the world’s largest economy at least measured in purchasing power, which is one way of doing it and the other is in real exchange rates. If you took the top four economies in the world according to PPP, they were now China, followed by the US, followed by Japan, followed by India. So, three of the top four were Asian and the US was a Pacific partner. As I say, some people dispute PPP as a method but there are other ways to look at how dominant the Asian area is now in economic terms. China is now the world’s largest manufacturer, it is the world’s largest exporter; I noticed yesterday that it is now Germany’s largest market, not France and not the US but China. Indeed, Germany is by no means unique, it is a big machine tools manufacturer and something like: by 2014, forty two countries in the world had their largest market as China and only about thirty had their largest market as America. This translates into political clout so that you can see for example in quite a nitty gritty way. There is a dispute between China and South Korea because the South Koreans have agreed to host a US missile base which the Chinese don’t want and the Chinese are now able to use their huge economic clout to put pressure on South Korea by shutting out Korean firms from the Chinese market and I think preventing the import of Korean soap operas in to China. So, they have the economic clout now, I mentioned China but obviously it is not just a Chinese story. If you look at that great measure of raw power, arms imports, India is the world’s largest arms importers, actually it switches between the Indians and the Saudi Arabians. There is actually an enormous arms race going on in Asia at the moment fuelled by all the amounts of money that are being generated in those economies. So, I think that this was apparent actually even before Trump started railing against American decline, the economic implications were apparent to many thinking people in Washington. Although it was very hard for a President such as Obama to try to articulate that because he would be instantly labelled as a declinist and indeed his statements like his State of the Union speech in 2012, he says very specifically that America is number one and far ahead of any peer competitor. There are indices such as size of military budget in which America is still far ahead and certainly the average standard of living. If you look behind the scenes, say the National Intelligence Council of the US which brings together all of the intelligence agencies and this is when they weren’t being accused of lying and spreading fake news, in 2012 they produced a report where they wrote that the Pax Americana and the period of American global ascent that began in 1945 is fast winding down. That was an official American intelligence report and that report was slightly controversial because as I say it is unusual for the Americans to be that open about these things. I think that these are quite prophetic words because they were writing in 2012 and that was before the Russian annexation and it was before the complete breakdown of order in the Middle East in Syria and it was before the Chinese real push in the South China Sea with the island building programme. The thing that they could see happening at the beginning of the Obama term was really much more obvious by the end of the Obama term. I think actually that the year 2012 was quite a significant one in geopolitics because it is the year that Xi Jinping, the current First Leader of the Party in China and then the President, it is the year that Vladimir Putin makes it clear that he is returning to the Kremlin for a third term, it is also the year that Shinzo Abe is elected as Prime Minister of Japan just a couple of months after Xi takes power and indeed it is the year that Obama wins his second term. You have suddenly in Asia two strong man leaders in Tokyo and Beijing and a Russian leader that is much more inclined as we know to challenge American hegemony. Let me talk for now about what is mainly going on in Asia because I think that one of the signature foreign policy initiatives of the Obama years was what became known as the pivot to Asia, it was actually a phrase that was associated with Kurt Campbell and Hilary Clinton, who was the Secretary of State. I think that the starting point to the pivot to Asia was this economic analysis. The Obama people looked at the world and said that America was way too committed in the Middle East, which was not by anyone’s view the centre of the world’s economy or the place where likely peer competitors for the US were going to arise and was underweight in Asia where they felt that rising Chinese power, what was going to be a challenge to American power in the Pacific. So Obama announces this policy which is called the pivot and the rebalance and its central idea is very simple and is that America is going to concentrate more of its resources, military resources but also economic resources to thinking about Asia. This is greeted actually with some alarm in Europe where people said “what about us” and “you can’t neglect us” and so the Americans move from this word pivot to rebalance in order to try and reassure the Europeans that actually they hadn’t forgotten about them. The sense that Obama was pulling back from the world was quite pronounced by the end of the second term: that he was reluctant to commit in Syria, that he was reluctant to push back very hard against the Russians in Ukraine and so on and some saw that as part of a generalised pull back but I saw this as part of an effort to rebalance. I think that the Obama team had this central thought that they must not get sucked back in to the old world of the Middle East and of competition in Europe. As far as we can, we have to preserve our resources for the coming struggle which is with China. Indeed and that analysis, to put it in crude terms that China will be trouble, was increasingly indicated by the behaviour of Xi Jinping when he took power in 2012. The famous phrase that Deng Xiaoping had used about hide and bide or that is how it was summarised; hide your light but don’t essentially frighten the west had guided Chinese foreign policy from 1978 onwards. The Chinese had not really sort to disrupt the global system but from about, the Japanese date it from 2010 and some say a little later you see an assertive China and there is a much more confrontational approach to Japan over these disputed islands called the Senkaku by the Japanese and the Diaoyu by the Chinese. There is most obviously a more assertive claim to what they see as their maritime rights to the South China Sea, really it is only in the last year of Obama’s administration that you get this rather dramatic island building process in the South China Sea, where the Chinese convert reefs into Islands and are now increasingly turning Islands into military bases complete with runways and missile silos. Now why should this matter? Even back in, I think it was in 2008 Hilary Clinton had said that there was American national interest in the South China Sea, she had never disputed nor accepted China’s territorial claims. America’s line is that they are neutral on who actually owns these territorial waters and indeed the Chinese were slightly ambiguous about whether they are claiming the entire South China Sea or not. They produced this nine dashed line map which is quite dramatic when you look at it and goes all the way back to Indonesia and up to the coast of Malaysia. I was recently in Beijing and had dinner with a fairly senior Chinese official and I said “as far as you see it, is everything inside the nine dash line yours?” This woman said “we keep that ambiguous.” I don’t know why but she said that “all the recent islands are ours” and that amounts to the same thing. If you then have two hundred mile zones lining each of these reefs that they are building then essentially you do control those borders. The Americans decide to push back against that but there is still a debate, perhaps that will only be settled by future historians about whether Obama pushed back: hard enough, too hard and so on, but they use these freedom of navigation operations to send ships past the islands that gets quite technical about what military challenge they are. There are those, certainly some around Donald Trump, who believe that Obama, as he was always criticised for being, too weak and should have been tougher but whatever it is clear that China has substantially strengthened its position in the South China Sea, to what end we do not really know. Again Chinese friends or contacts of mine will say that American claims that we are going to blockade those seas is absurd and that we would never do it but then people ask why they are fortifying those islands and what the ultimate intention is there. The reason that the South China Sea matters comes back to the economic growth that I mentioned before and so I think that there was a presentation by the Vietnamese Prime Minister, and the Vietnamese actually dispute these waters with the Chinese, who said that thirty of the forty busiest shipping lanes in the world are in the South China Sea because this is really where the core of the world’s manufacturing and trading economy now is. I think Hilary Clinton said, in her article about the pivot to Asia, fifty percent of the world’s merchandise traffic now passes through the South China Sea. Now some people say that it is a bit less than that and some people say that its thirty or forty percent but it is a lot anyway. If you ceded those waters to China or if China were able to control them then you would be really losing a grip over the core of the economy. I think that there is also something more in the guts for the Americans about why they feel that they have got to push back against this. After all America fought the Second World War not just in Europe but in the Pacific and as one Obama administration person put it to me he said “but let me tell you, I used to be in the US Navy and the US Navy is addicted to primacy and if the Chinese try and take those waters we are going to effing challenge them.” That was from the allegedly weak kneed Obama administration and if he Americans feel that strongly about that then I am sure that feeling is reciprocated in Beijing. The Chinese also feel, particularly under Xi Jinping, that the era when they did not want to frighten the West is over and that they are now powerful enough to at least aspire to be the dominant power in their own region. So the question is, are we heading for a clash? Can they handle it? Can they keep this ambiguous for a long time? On the one hand, it is striking that both sides now openly talk about the possibility that they might one day go to war. In fact my book starts with a meeting I was at with Xi Jinping in Beijing where he talks about this theorem of the Harvard political scientist Graham Allison which is called Thucydides Trap and the idea that established and rising powers will eventually go to war. Xi, to be fair to him, he said that it is our responsibility to avoid Thucydides Trap but it later struck me that it was quite remarkable to hear the leader of China discussing openly the idea that his country might end up at war with the United States and again America will probably have similar discussions in Washington. One should not forget that both countries’ militaries are planning for that conflict. The naval plans for the United States and China, of course militaries plan all the time but the one that they are planning for in the Pacific is with each other. The book has the US-China rivalry at its centre but what I try to do, I won’t give you the full rundown, is to give a sense about how all the other powers in Asia are thinking about this because these are not the only two significant economies in the region and these are not the only two countries with entrenched interests. The Chinese-Japanese rivalry is very important but quite dangerous and a tricky one for the United States because of the US-Japan security treaty. At various points the Americans have actually been concerned that Japanese nationalism or assertiveness might drag them into a war with China particularly around the Senkaku Islands disputes in 2012, there was concern in Washington that it was the Japanese that might push it too hard. I think that kind of debate in Washington about how close to get to the Japanese has been resolved, Obama went there and said pretty firmly that we back Japan on this but there is still a question over Japanese nationalism and what exactly Shinzo Abe wants and how the Japanese see themselves handling the rise of China. In that context, Trump’s decision to scrap the Trans Pacific Partnership, this big new trade deal that Japan and the US had been working on with ten other countries, Trump scrapped that in his first day in office. That was a huge blow to Japan because it was regarded firstly as a way of anchoring America in the Pacific and secondly trying to ensure, possibly vainly, that the whole regional economy was no longer going to be centred on China as it currently is. Because Trump scrapped that, the Japanese problem is that they have nowhere to go. They are completely reliant on the American relationship and so Abe’s reaction was to simply try to double down by rushing over to Trump Tower and then playing golf with Trump in Mar-a-Lago and so on and the Japanese are trying to rebuild that relationship but clearly they are very worried by the direction of Donald Trump. We have someone from the Australian embassy so perhaps she can tell us what the Australian’s think, but of course there was that famously bad tempered phone call between Malcom Turnbull. We think of them there as the ultimate bolthole with perfect weather and what are their problems? Well maybe they don’t have problems at the moment but their security has been guaranteed by the fact that the oceans have always been controlled by friendly powers, by the British first and then by the Americans. So, how does the world look in thirty or forty years if actually China controls those waters or is the dominant navy in those waters that lie between Australia and its cultural hinterland in Europe and the United States. The role of India is incredibly interesting, I think India has been an introverted power but it is going to be the second super power of the Asian century if you can call it that and the Indians are beginning to debate what the rise of China means for them and how close they should get to the US and how close should they get to Japan. There are really two schools of thought, there are those in India who now increasingly do think that their future will be defined by strategic rivalry with China and who worry that China is using Pakistan as a way of boxing India in and keeping them occupied, after all India has fought three wars with Pakistan. There are others in India who are actually wary of getting too close to the Americans and who do not want to be drawn in by the Japanese into a kind of soft containment of China. Whichever way India goes, they are going to be critical to the balance of power in that region. South East Asia is very interesting as well, the countries of ASEAN, many of these have traditionally been allies of the United States but I think that China is making some progress at picking of American allies in South East Asia. Most dramatically, recently with the President of the Philippines Duterte who is even more impolitic than Donald Trump. He has said things like America is on the decline and that China is the new dominant power in the region and has gone to Beijing and said as much and that is a very serious development for America. Both because the Philippines is the largest challenger to China’s claims over the South China Sea and also because it is a close ally of the United States and has been a base for American troops. So, that set of issues in Asia increasingly which are not much discussed in cities like this in Europe because it feels like a long way away, I think will increasingly be destined to shape all of our futures. Just as say in the twentieth century, disputes within Europe affected the whole world; the world wars started here but they became world wars. The arguments at the moment within Asia may seem like a regional interest will I think become of global significance in the twenty first century because of the economic importance of these powers. We can already see that with concerns about the nuclear programme in North Korea, the Japan China dispute and how that plays out will be pretty crucial. Above all, how America and China handle their relationship I think is going to be the essential geopolitical question of the twenty first century. Let me just conclude though by saying that I think this theme of Easternisation is one that is shaping not just Asia but the rest of the world. By which I mean that, countries all over the world are beginning to adapt to a new order in which it is not just the West that has the power, diplomatic and economic, in which China above all but Japan and India are becoming more noticeable as global presences. That was most obvious in Africa where the Chinese investment boom has really reshaped the continent. There was a symbolic moment where Obama, I think towards the end of his term, went to speak to the Organisation for African Unity in Addis Ababa. It was a big moment because as he said his father was an African but the building he spoke in and the new OAU headquarters that he spoke at in Addis Ababa had been built by the Chinese, as had the airport. As he drive into the city he would have passed a major industrial estate which was host to a whole slew of Chinese companies which had moved some of their lower cost manufacturing into Africa. In a way Africa is a very good example of this trend that I am talking about. In the nineteenth century it was European colonialists who would shape that continent, in the second half of the twentieth century Cold War battles were fought out in places like Angola and Mozambique between the US and the Russians. Now, China is a very strong presence there but so is India and so is Japan and indeed the Indians are increasingly talking about the possibility of the twenty first century being one in which we talk about the Indian Ocean Rim rather than the Pacific Rim as the centre of the economy because if the development of Africa continues and there is already a large diaspora of Indians in Africa and business ties are flourishing, this could if things go will become a buzzing centre of the twenty first century economy. Even in Europe, I think that you see countries beginning to rethink their political orientations. The most obvious perhaps is Turkey, which is an example of a country which after the collapse of the Ottoman Empire only looked west and that was the only point of Ataturk with the Westernisation of that country. They aspired very recently, and officially they still do, to join the European Union. They even changed the entire alphabet and they secularised and the idea was that they were going to be like Europe. Now, under Erdogan, you can see a President who is much less enamoured to the West and much more hostile and looks increasingly to Moscow and to Beijing as alternative political models. So there is this kind of Easternisation going on there. Even in Latin America and a country like Brazil, its major trading partner is now China because Brazil is a major commodities producer so it to no longer feels bound to the Western hemisphere or America as the closest and most dominant power. There are a couple of qualifications to this picture though, clearly just as there are questions about the stability of the European Union and indeed now the stability of the United States, China has a massive political challenge ahead of it. I think that most importantly, although it was possible and still is possible to talk about the West as a coherent political entity united through institutions such as NATO, there is no coherent East. Indeed Asia is divided and there will be no Asian NATO. The rivalries between the countries that I numerated will exist and are likely to intensify and indeed I think that American strategy, to some extent is about trying to get in those Asian divides and act as a balancer and prevent a coherent Asian challenge to Western power. That said, I think that even China alone represents a significant challenge to US power in the Asia Pacific and because the Asia Pacific is the core of the global economy it is a significant challenge to American global power. Finally, Trump and what does it all mean? It is not clear yet obviously, in this part of the world or any part of the world, but Trump could point in several directions. I think that during the campaign the standard interpretation for what Trump was about was that he is an isolationist and that he had questioned the Japan and South Korea security treaties and suggested that they were bad deals for America. The whole America First slogan suggested that he was a guy who was not interested in playing America’s traditional security role. For that reason when I was in Beijing, I mentioned a meeting about the South China Sea, although the Chinese officials I spoke to would not say officially that they wanted Trump to win, I kind of got that impression because they did not like Hilary Clinton who they associated with the pivot which they thought was an effort to contain China. They quite liked the idea of Trump as this dealmaker who might cut them a deal and maybe give them a sphere of influence in return for a trade deal. However, I think that view of Trump was almost reversed overnight when he took the telephone call from the leader of Taiwan and I think that they decided at that point that he was a dangerous lunatic. The Chinese played it cool and I think that on that narrow issue of Taiwan, but they have always said that they would go to war rather than let Taiwan become independent, the Chinese played it well because as far as one can tell they simply refused to speak to Trump until he reiterated the One China policy which after about a month he did. So, we seem to be back on the status quo with that but I don’t think that you can rule about the possibility of intense US-China rivalry in the Pacific, in fact I think that it is quite likely under Trump for a couple of reasons. Firstly trade, if Trump is even half as protectionist as he says he is going to start imposing tariffs on Chinese goods and that is the major common interest between the US and China, the intense economic cooperation between Chinese and American companies with huge flows of trade. If that turns into a subject of rivalry, then I think that a strategic rivalry is complemented by an economic rivalry and that cannot be helpful for the overall relationship. Taiwan I have mentioned and I think that the South China Sea is likely to intensify as a bone of contention particularly given that Trump yesterday announced a big increase in American military spending, a lot of which is going to go towards the Navy and why would America build up its Navy if not to contest the Pacific. I think that the prediction of the book that international politics is going to be increasingly about the contest for power and influence in the Asia Pacific will be borne out by the Trump years so I will leave it there for now and take some questions. Thanks.

John Hemmings: I will take the Chair’s prerogative of maybe making just a few comments and actually asking the first question and then once that is over I will turn over to the audience. When you do ask questions, if you wouldn’t mind keeping it to about three minutes so everyone has an opportunity to engage. So first of all just some pushback, we had Mike Auslin here in London a few months ago with his book The End of the Asian Century and a lot of the figures he mentions, you mention in your book. I think that you are aware of the demographic challenges and some of the governance issues and corruption that lead to social instability, one of the things that I liked very much about what you said in your book was that the US had a Civil War when it was growing and it still became a superpower so countries can go through these issues as you rightly point out. Having said that, there is this sense that we say Easternisation but it is still a fragmented construct. I mean India and Japan, probably two of the greatest economic powers and India will be surpassing China soon with the greatest population, I’m not sure of its economic power yet, those powers are potential challengers also to what could be this Sino sphere. How does that relate to Easternisation, the broader concept and particularly if they also continue to look towards, maybe not a Western led liberal international order but a newly internationalised international order?

Gideon Rachman: Gosh, well there are so many themes in that question. What I would say is that on the instability question, I think that the demography of China clearly is a challenge and I also think that it is entirely likely that they will have a financial crisis at some point and I am sure when they do you will hear a lot of headlines in America and in the West saying that it is all over. I don’t think it will be and it wasn’t for other Asian countries, South Korea had one in 1998 and so did Indonesia. It can look like society is finally revealed as having feet of clay when that happens but as you pointed out, the story of the West suggests that once countries have a certain momentum behind their industrial revolutions, they can go through a lot of turmoil and come out the other side almost as powerful as before. The American Civil War is a fine example but look at Germany which was destroyed twice in two world wars and by the 1960s was again one of the dominant economic powers in the world. So, I think that China now has a long enough established record of, since 1978, very rapid economic growth. There are all sorts of things that one can point that don’t work in that society but surely the overwhelming story is that something has gone drastically right there. I think even now, let’s say China’s growth slowed really dramatically down, they have an immense accumulated power. The Chinese Navy, I gather, will be larger than the US Navy by 2020 and China Is not aiming to be, yet, to be the dominant global power everywhere as America is. It is aiming to be the dominant power in its region and there I think that they have a pretty good shot at it to be honest because they have a lot of military and economic power and they also have, what you call escalation dominance. It is a horrible piece of jargon but to put it basically that they care more about it than the Americans do I think. They assume, that if it came to it, they would definitely fight about Taiwan but America maybe not, would they really fight about the Senkaku Islands probably not. So I think that there is a lot more rollout of Chinese power to come, I think that the power gap between Japan and China is only going to increase which raises the question of whether the American alliance can balance that out. Indian power, probably in thirty years but whether it will be really attempting to dispute China’s interest in East Asia or whether they will look to South Asia and the Indian Ocean is not yet clear. I think that the Indians are worried about China because they think that China is out to get them, they have a territory dispute and they are worried about Pakistan, Sri Lanka and the whole string of pearls thing. I think the South China Sea, although they might do patrols there, is less of a worry for them. So, to summarise, yes I acknowledge all of these problems but I do not think that it disrupts either the analysis that China is more powerful than it has ever been in the modern era and that for a while its power is only going to increase, or that just in general these are going to be the defining geopolitical questions of the twenty first century more than the Middle East and more than the resurgence of Russia. Now, of course, if World War Three breaks out in the Baltics then I may have to eat those words but for the moment I think that is how it looks like it is going to be.

John Hemmings: I’ll ask one last tiny question and then I am going to turn it over. Being here in London, facing Brexit and looking at a post Brexit British engagement in the world, how would you recommend to our parliamentarians and to our government to go forward in an Easternised world.

Gideon Rachman: I think that so far they have had a fairly one dimensional response and that may be accentuated with Brexit, by which I mean that they have really only seen it as an economic opportunity and clearly it is that. I think that one of the arguments that was made about Brexit was that somehow Britain was being held back from trading with Asia by its membership of the EU; whereas if you look at Germany, they do brilliantly with their trading with China and being in the EU has not seemed to have held them back. It is clearly correct to try and develop those markets and those opportunities but I think that in the rush to declare a new golden age with Xi Jinping’s China, the Brits have perhaps averted their eyes from the rise of strategic tensions in Asia. I’m not sure how all of that will be sustainable because if America moves in to a much more overt rivalry in both trade and strategic terms with the Chinese, they may be less willing to turn a blind eye to the British having a purely commercial relationship or ninety percent commercial relationship. So, we may be put in to some slightly uncomfortable choices; what if when we finally get these two aircraft carriers the Americans ask us for some company on the Pacific that could be a tricky dilemma for us.

John Hemmings: Ok, I’ll open the floor up, this gentleman here.

Question 1: I have two quick questions if I may. My name is Connor and I work for an organisation called Crisis Action an anti-conflict campaign organisation. The first question is around democracy and human rights, so what does an increasingly dominant China mean for not just the discourse around (inaudible) but globally? Trump is worrying enough but what if that becomes a dominant theme? The second one is another word that I haven’t heard you mention much: the United Nations, what does it mean for the multilateral system if power starts to shift away from the West.

Gideon Rachman: On the democracy and Human rights question, I think that it is certainly there in the background. I mentioned how companies in South East Asia, some of them are moving towards China and whether the country is a democracy or not is a fairly good position of where it is going to end up. So, when Burma got rid of the Junta it moved up away from China and a bit more towards the West. The Philippines is still a democracy but they have a sort of Trump plus President who is not very keen on civil rights and he will not take lectures on Human rights from the West or on vigilante justice but he is very keen on China. China’s other friends in region, Cambodia a dictatorship sort of, Thailand as it has had a military coup and moved away from democracy and has resented pressure from the United States over that and so has moved a bit towards China. It is an issue there and I think that there is a concern that if the prestige of the Chinese model continues to grow and if American democracy is regarded with shock and horror around the rest of the world because of Trump’s antics then it is going to be harder to make the case that democracy is the way of the future and the system that you should aspire to. The Chinese have long argued that actually their system is better for economic development and more meritocratic and that school in China is delighted by Trump because it appears to make their argument for them. On the UN, I think that it is fortuitous that China is a member of the UN Security Council because of the 1945 dispensation so they have a stake in that order but it is also true that if you look at the UNSC three of the powers are European: Russia, UK and France and there is the United States and so the legitimacy of the Security Council is beginning to ebb away. Yet, the Chinese will always block the Japanese joining and the Indians will probably also draw a tacit Chinese veto. Isn’t it interesting that they don’t want more Asians on it, they want fewer. I think that the UN will depend less on Asian attitudes and more on American attitudes for now and what Trump does.

John Hemmings: Can I put some together, can we have the gentleman at the back and this gentleman here in the black and white sweater.

Question 2: Neil (inaudible) Centre for European Reform. One question that is related in a sense to the question that you just took is that, you can make the case not just because of Xi Jinping’s Davos speech that the Chinese are more prepared to play within existing frameworks provided that we give them a bigger role in those frameworks. If you are looking at what is the best bet for a declining Europe, shouldn’t we be actually trying to nudge the Chinese to be more globalist rather than trying to get stuck in with the Americans?

Question 3: I’m a student at LSE. I think that the concept of Easternisation is very interesting because it is more than just economic (inaudible), it is more about power. When you talk about Easternisation I wonder what the potential that could be instilled form the East to the West is apart from economic skill. The other question would be, I wonder how you potentially see some problems in the Chinese order.

Gideon Rachman: On allying with China, it is a very live thought in Brussels because of Xi’s speech in Davos. I remember talking to a fairly senior person in the European Commission who was pushing very hard on this idea that Europe should ally with China because they were fairly hostile to Trump but they thought that it was China that was going to be the supporter of at least some aspects of the rules based order. These are important to the Europeans, above all the WTO and it looks like Trump may be looking to circumvent or ignore the Chinese (inaudible). I don’t think that is because the Chinese are liberal internationalists essentially, I think it is because they benefit because they are the world’s largest exporters and so why not support the world’s trading system. I think that is also part of the answer, by all means cooperate with China on areas of common interest such as the WTO and other aspects but don’t fool yourselves into believing that they are your Brussels style internationalists. If they want to ignore international law because they feel that it contradicts one of their core national interests such as the South China Sea then they will do it. So when the Hague Tribunal ruling came down in July and said that China’s claims were, I’m paraphrasing, nonsense; the Chinese just said that we don’t accept that and that this ruling is ridiculous. Their view of the rules based order is that if the rules are convenient then they will support it. A very good point about Westernisation being a cultural and legal phenomenon, indeed when I first started thinking about writing a book on this, I wanted to write more about the cultural stuff until I realised that I didn’t know much about it and I should concentrate on the stuff I know about which is the strategic and geopolitical areas but you are right, Westernisation isn’t an only or primarily economic and power political thing, it is also a cultural thing. First of all, the cultural parts of Westernisation flowed, I think, from the economic and political success of the West in the sense that the West became more attractive to the world because it was associated with economic prosperity and success. Hence, Japanese people ended up wearing western suits and it was the dominant mode if you like. I think that if the economic success of China and India etc. continues then that will, in itself, spark more interest around the world in those cultures and in what they are doing right and people will look for lessons there. I think that the Chinese, in particular, are a little bit reluctant to start saying that there is a model that the rest of the world should follow because they resist that notion when we push it at them to become democratic. They are particular, so they say that this works for China so leave us alone. There is beginning to be a very rough sort of China model which says: prioritise economic development, don’t democratise too quickly, of course human rights do matter but think of human rights as a mass and a development of an entire people rather than concentrating on the individual. That is I think congenial certainly to some African leaders because it allows them to say that we are going to resist pressure from the World Bank and Washington to liberalise politically in ways that don’t suit us because the Chinese say that it is not actually the way to go and you will only have chaos and they look quite successful so we are going to follow that model. I think that is, not an Asian but, certainly a Chinese model which I think has some influence already. As for the Chinese economic model, I think they know as well that it has to go through a transition because the export driven and low wage model is not over but by some measures China’s wage levels are as high as Greece or Portugal, certainly in Southern China. So, they are no longer just a low wage economy but I think that they are moving, I wouldn’t bet against them succeeding in trying new things. There are higher levels of consumption in China and their urbanisation still has a long way to go and that will drive higher levels of consumption and I think that there is big export of Chinese capital and exporting China’s services to build infrastructure across the Asia Pacific region and more Chinese overseas direct investment incidentally I think already is controversial in the way that a great wave of Japanese investment in the 1980s was controversial, this is in a way going to be more controversial because China is not an American ally as Japan was.

John Hemmings: We probably have time for two more or three more but can I ask that you make them quick and if you say I have two questions I will cut you off. Just say that I have one question for him and then afterwards you can come forward and also we can start doing some book signings because I know that some people have lives that they want to return to including our author. So, this gentleman and then sir on the isle there.

Question 4: Thank you for a masterful overview of the situation. The AIIB, some people think that was the final international signal of American decline. Your newspaper, the Financial Times, pointed out that America was doing everything they can to kill it at birth and of course they failed spectacularly and internationally. Leading on then to the One Belt, One Road, it is linked because they have got the money and they see the Pacific as getting possibly a bit uncomfortable so it sounds as if it is part of the same strategy.

Question 5: Ben Rogers from Christian solidarity worldwide, one question with two aspects to it.

Gideon Rachman: Subtle, clever.

Question 5: In recent years we have seen on the one hand increasingly bad and irresponsible behaviour on the part of China abducting people from places outside its own territory and Hong Kong within its territory. Do you think that we will see more of that as China becomes more powerful? On the other hand, in recent days we have seen some more responsible behaviour to North Korea in light of the assassination of Kim Jong Nam and the sanctions on coal and so on; do you see China playing a more constructive and responsible role in regard to North Korea?

Question 6: I was speaking out about a similar situation in Japan in the end of the 1980s with the (inaudible) that came overnight. Is there something in particular that could be similar that could happen with China?

Gideon Rachman: The AIIB, if you are interested in that there are some great documents on that in the book. It was a very interesting moment and of course who stabbed them in the back: the British because we were the country that joined the AIIB first, perfidious Albion, but I think that the Americans now think that they mishandled that and that they shouldn’t have resisted as strongly and that they shouldn’t have let it happen because they were setting up a struggle that they ultimately lost. I think that their initial reaction to try to block it was wrong and what they were trying to say was a little bit hysterical when it happened. Larry Summers is quoted as saying in the book that this is the biggest defeat for American economic diplomacy since Bretton Woods. We don’t know, the mean the AAIB may be a massively important institution but I think that they have only made one loan yet so far so it could be a turning point or possibly not, we just don’t know whether it will be everything that it is cracked up to be. It was certainly a symbolic struggle where think that the Americans chose the wrong grounds to resist Chinese influence because it is a development bank, there are issues of governance and so on. It is something attractive to countries because of the One Belt, One Road thing and people want investment and they want there to be a channel for investment, therefore it makes the Americans look potentially hypocritical and as if they are trying to block China whatever it does rather than just objectionable Chinese behaviour so it was the wrong issue on which to fight. Although I think that it is a very interesting episode, I am not sure that it will necessarily go down as this massive historical turning point. On the abduction thing, of course when you say that what the Chinese are doing is dreadful, extraordinary rendition is what superpowers appear to do and grab people around the world, we don’t know if the Chinese have set up a little island somewhere where they are putting people in to orange jumpsuits. I think that we will see more of it because although I do make the comparison with America, I think if anything China is a state that has less respect for the rule of law and for comeback and it is harder to fight this stuff in court, they will probably not even accept that this stuff has happened. In the Chinese case they tend to appear on television and say that they went voluntarily and that it is all fine. We had another recent abduction in Hong Kong so unless something goes badly wrong for them then I don’t think that they are going to stop doing this. Although it seems to be mainly Chinese citizens or dual nationals at the moment and not foreigners, but I guess as with the Americans when they saw a terror threat then I don’t think that they would hesitate. One of the arguments against the whole American drone strike programme is what happens when the Chinese start to say that we want to start knocking out our enemies all over the world with drone strikes. Since we are sitting here in the UK or US we think oh well and it’s a bit unfortunate if they hit a wedding party or something but we do not feel somehow instinctively that this is an outrage, but I can guarantee you that if missiles start to be launched from a control room in Beijing and wiping people out then people will be really unsettled by it. North Korea, I don’t think that we can tell yet and I don’t think that even the professional Western diplomats who deal with North Korea really know what China’s attitude to it is or how far they are prepared to go because it is very closely held. As you point out, this coal export thing does look like an effort to ratchet up the pressure on the Kim regime. They have already signed up to UN sanctions packages but I think that they are still going to have to calculate what is more dangerous for them: a crazy North Korea trying to make more nuclear weapons and giving the Americans an excuse to put missile defence programmes in South Korea or the collapse of the North Korean regime with all that it might entail on their borders. The Japan parallel I think is an interesting one. I think it is correct in one sense because they may have a financial crisis and they also have the demographic issue of the aging of the population which in retrospect was something that was going to put a brake on Japanese growth and might, in China’s case. The two big differences however which will mean that while the people who said that Japan will be number one were proved wrong, the idea that Japan was going to challenge America’s role was wrong in retrospect but China I think will. The two big differences are: firstly, population because China is 1.2 billion people so you can do the numbers, the size of the Chinese economy if they even approach Western GDP per capita would be enormous and that question of relative poverty, by the time Japan started to level off and stagnate they had already reached Western living standards, China is like a fifth of Western or US GDP per capita so even if they get caught in something like a middle income trap there is still a lot of room for growth in China. So, for that reason I think the idea that China is just the latest scare story and the next Japan is a bit glib.

John Hemmings: I think that we will end it there. Just to say that in about a month we will have at Henry Jackson, the Asia Studies Centre will be launched and we will be doing lots more exciting events like this one today both here and in Parliament. Can we put our hands together and give a really big thank you.


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