Innovation and regional connectivity

Ho Kwon Ping, Founder and Executive Chairman of Banyan Tree Holdings, gave an overview of current geopolitical tensions and its impact on ASEAN at the FutureChina Global Forum & Singapore Regional Business Forum in August 2018

In recent weeks real – or fake – news about China-US tensions have taken on a darker, more ominous turn. There are rumblings that an escalating trade war between China and the USA might tip the world including ASEAN, into economic recession. Even more sensational – or sensationalized – are the accusations that the Chinese military plans to use its recently built airfields on disputed islands in the South China Sea as bases to launch attacks on the USA.

The notion that China will be America’s primary strategic competitor in every aspect – technological, geo-political, even militarily – is headlined in every major Western media. Whereas in the past China would have gone to great pains to deny such ambitions, today China is clearly prepared to take on a more assertive, confident, and competitive role.

ASEAN’s own interests and positioning will be uncomfortably situated somewhere in between the two increasingly divergent US vs China worldviews. Indeed, whether there is or can be a single united ASEAN stance is questionable. And therein lay the dilemma and the challenge, if ASEAN is split and divided amidst growing geopolitical tensions.

Most Western views of China have been conditioned by the 20th century world order, which views the world through the lens of a largely American perspective. What is good for the USA is good for the rest of the so-called free world. In large part, America has legitimately won this trust. Not only did it lead the Allies in winning WWII, but in the creation of the subsequent Pax Americana – Latin for American Peace, a polite euphemism for hegemony – the US guaranteed by military might, the sovereignty, security, and stability of countries willing to subscribe to a Pax Americana.

This lasted for some 70-years but may not till the next century. Not only because America’s global leadership is being seriously eroded from within by its own President, but because current Chinese policy has taken a more overtly nationalistic turn.

For the past few decades when its ascendancy was still uncertain, China was content to tone down its assertiveness. Chinese leaders preached more co-existence and co-operation than confrontation and competition. Deng Xiaoping summarised this succinctly with his famous quote:

Observe calmly; secure our position; cope with affairs calmly; hide our capacities and bide our time; be good at maintaining a low profile; and never claim leadership.

Maintaining a low profile and eschewing political leadership whilst hiding its capacities and biding its time, is no longer the Chinese view of its destiny. The current view is that China has bided it’s time for long enough, and now is the time to claim, and for the world to acknowledge, China’s civilizational ambitions. I will return to this theme later.

Bubble Tea

Broadly speaking, there are three basic scenarios for China’s future. The first is what I call the Bubble Tea Scenario. As the name implies, this is an extremist but surprisingly widespread thesis which says the Chinese economic bubble will soon burst. In the late 1980’s a best-seller book titled “Japan as Number One” made unabashedly glowing predictions that Japan would quickly overtake the USA and become the most powerful economy in the world. This became the accepted wisdom until barely a decade later, the Japanese asset bubble burst. Japan is still barely coming out of more than 20 years of asset deflation and economic stagnation.

As with Japan, the Bubble Tea scenario predicts that China’s debt-fuelled growth and massive asset inflation are unsustainable, and some disruptive event, whether a recession-inducing trade war, or a bursting of a housing bubble, will send the Chinese economy crashing down to earth.

This doomsday scenario also predicts that the Chinese Communist Party will be immobilized by factional disputes; the entire Belt and Road Initiative (BRI) will be unmasked as a bald-faced, audacious but ultimately failed attempt to impose a Chinese version of neo-colonialism on its unsuspecting developing world neighbours; and Chinese technology will atrophy because China’s lack of free speech and free thinking will prevent creativity.

This probably seems more like wishful-thinking than a clear-eyed, sober extrapolation of present trends. Predictions of a hard-landing for the Chinese economy have always been proven wrong; there have been sector-wide crises but not a complete systemic breakdown, and the strategic shift from an investment-driven to a consumption-led economy, is continuing to bear fruit.

But if there is one issue which crosses partisan barriers in American politics and the media, it is the almost palpably growing fear of a rising China. The Bubble Tea Scenario is one way of wishing one’s fears away.

Clash of Civlisations

An entirely opposite way is to confront those fears aggressively. This is what I call the The Clash of Civilisations Scenario. Originally put forward by Samuel Huntington in the 1990’s, this thesis argued that in the post-Cold War era, Islamic extremism would be the major threat to Western society. The events of 9/11 made his book famous, but most people forget that, whilst Huntington singled out Islam as the main threat, he named seven other potential civilizational threats, of which China was amongst the top.

This thesis has been championed by influential neo-conservatives and the radical “Alt-Right” pundits such as Trump adviser Steve Bannon and US National Security Adviser Timothy Bolton. They believe that eventually the challenge from China will become a clash to the very end, with only one civilisation left standing. To ensure that it will be the Western world, China’s rise to global power must be stopped at all levels – economic, political, socio-cultural, and technological. Some of our Singaporean intellectuals seem to subscribe to this view.

One ramification of this thesis is the notion that if conflict is inevitable, better that it be sooner, when China is still weaker than when China has attained near parity with the US. After all, China already surpassed Russian military spending twenty years ago, and today is double that of Russia and two-thirds that of the USA. China is expected to reach parity with the US in terms of military spending, within a decade or two.

A possible flashpoint is the South China Sea or more ominously, Taiwanese independence. This is China’s un-crossable red line, and could be the opportunity to make a pre-emptive strike against the dangerous rise of the Yellow Dragon civilisation. This scenario might seem unlikely to many people, but for many “America First”, far-right groups, the USA – China clash is the defining existential threat of this century, not only for American democracy but the entire Western civilisation.

Pax Sinica

Between these two extreme scenarios is what I call the Pax Sinica Scenario. In this scenario China neither collapses and recedes into a shell like Japan, nor enters into a violently definitive, win-lose civilizational clash with the West. Instead, with its relentless build-up of hard and soft power, of economic, political and military might, China gradually displaces the USA in Central, South and East Asia. A global Pax Americana shrinks back to its historically continental spheres of influence and a new Pax Sinica descends over China’s neighbours. American influence in the Western Pacific remains influential but no longer pre-dominant.

To advocates of the current world order where the US is the ultimate global peacekeeper and policeman, Pax Sinica may sound sinister and at best a hidden form of Chinese imperialism. To the Chinese however – and every Chinese person has a keen sense of history — Pax Sinica is a legitimate reversion to its centuries-old, historically validated role – and there have been previous Pax Sinicas during the period of Han China about 2,000 years ago, or Tang China about 1,000 years ago.

These were in fact the golden eras in Chinese history, when China was an open, cosmopolitan and enlightened civilisation exercising more soft than hard power to become the dominant player in Asia.

The point that a newly nationalistic and assertive China wants to make to the world and particularly its neighbours, is a nuanced one. On one hand, Pax Sinica, even from centuries ago, did not have territorial conquest as one of its aspirations. Chinese historians and policy-makers frequently allude to the difference between far-flung Western empires from Roman to British, versus Chinese regional hegemony over millennia.

On the other hand, while it eschews territorial conquest, China wants to be recognized as the primary power in Asia – primus inter pares, or first among equals. After all, just as American interests have always dictated that the Western Hemisphere is within the USA’s sphere of influence and no super-power will be allowed to intervene even if covertly, in this region, then by the same token a Pax Sinica will not allow the USA to claim the role of policeman in China’s backyard, the South China Sea.

For example, China recently signed an agreement with ASEAN to establish a Code of Conduct for the South China Sea, but clearly without US patronage or involvement. Conversely, it has been argued that if the US can act as policeman in the Western pacific, then China should have the equal right to have its navy ensure freedom of navigation along the countries of the Eastern Pacific — Chile, Peru, Colombia, Central America and Mexico, among others.

Opponents of a Pax Sinica point out however, that American pre-dominance in East Asia is at the overt and official invitation of Japan, Taiwan, South Korea and other countries. China will have to convince detractors that its emergence from its own convulsive internal chaos of the Cultural Revolution only a few decades ago, will not relapse and that its status of a global super-power is deserving of the trust and respect of the world.

Its record as a responsible global player in climate change, financial services and other areas such as regional infrastructural investments, is growing rapidly. But in other areas it still has some ways to go, to convince its critics that a Pax Sinica will be at least as benign as Pax Americana, and clearly much better than its oppressive colonial predecessor, Pax Britannica. China will also have to contend with deep-rooted scepticism from Japan and Vietnam, and assure the world community that the One-China policy vis-a-vis Taiwan will be resolved peacefully. These assurances will have to be proven by not just words but also action in coming years.

But whether the world likes it or not; whether it will be total or partial; some kind of Pax Sinica is clearly in the offing. A civilisation as old, as continuous, and as resurgent as China, has a sense of its destiny which is more than just another Asian nation, and certainly not what the West has in mind.

ASEAN will need to navigate within a still vaguely conceived, much less executed Pax Sinica with considerable skill, subtlety, and knowledge of the importance of nuanced signalling and actions. As China’s smaller neighbours for thousands of years, ASEAN has to recognize the reality of being within China’s sphere of influence, but without ever surrendering its sovereignty or subordinating its own vital national interests.

The hard fact that a few members of ASEAN are almost vassal states of China will make this adroit maneuvering even more difficult and will perhaps force ASEAN to not have an united voice at all.

The BRI will be a test of ASEAN attitude towards an emerging Pax Sinica. BRI’s largely Western detractors argue that this is a huge debt-trap where China will lure unsuspecting, developing nations into massive infrastructural projects involving unsustainable debt loads which will turn these countries into well, vassal states. Even its supporters agree that the BRI’s actual roll-out has been less than ideal, with delays, cost-overruns, economically unjustifiable projects, and so on.

Ensuring that BRI will truly be a win-win solution for both China and host nations, will require both support as well as well-meant and constructive criticism from ASEAN leaders and business people.

Speaking truth to power; maintaining a constructive neutrality; and adopting policies which are in both ASEAN’s and China’s core interests, are some principles which ASEAN countries should uphold even as a Pax Sinica emerges over the next century.

If ASEAN and China re-align their centuries-old relations with wisdom gained from past mistakes as well as successes, there is a reasonable chance that the Asian century can be beneficial for all its communities, big or small, and be sustainable for longer than a Chinese or South East Asian dynasty.

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