Arts, Asia, Books, China, Economic, Government, Politics, Society, United States

Book Review – Easternisation: War and Peace in the Asian Century

THE EMERGING NEW SUPERPOWERS

easternization

Easternisation: War and Peace in the Asian Century by Gideon Rachman is published by Bodley Head (£20)

Intro: As eyes look East, can Gideon Rachman’s new book predict what will happen next? By the year 2025, some two-thirds of the world’s population will be living in Asia.

THIS summer’s Olympic Games in Rio surprised many when the UK pipped China to second place in the overall medal table. That aside, we should be under no illusions as to who the big players are when it comes to global affairs. The British Government’s decision under prime minister Theresa May to review its plans for the Hinckley Point C nuclear power plant suggests that Mrs May has erred more on the side of caution when it comes to dealing with China than David Cameron and George Osborne. Mrs May’s initial prevarication was met by a warning from the Chinese state news agency that her apparent ‘suspicion towards Chinese investment’ threatened the arrival of the ‘China-UK golden era’ that President Xi Jinping declared on his trip to London last year. On her first trip to China as Prime Minister earlier this month, our American friends would have been watching closely. The U.S. was left frustrated last year when the UK announced it was to join the Asian Infrastructure Investment Bank.

In 2014, the IMF announced that China had become the world’s largest economy in terms of purchasing power. There are, though, many indices by which the United States remains way out in front: mineral wealth, oil and other energy sources, and its geopolitical neighbourhood is far more secure and stable.

At the end of this insightful book which focusses largely on the ‘Asian century’ that lies ahead, Gideon Rachman makes the point that the current position of the West is supported by certain inbuilt advantages, such as its representative institutions and open (albeit increasingly fractious) societies.

The reader is enlightened to the well-grounded assertions that the tectonic plates of global influence is changing. By 2025, some two-thirds of the world’s population will be living in Asia, with 5 per cent in the United States and 7 per cent in Europe. Even the US National Intelligence Council warns that the era of Pax Americana is ‘fast winding down’. Despite Barack Obama’s announcement in 2011 of America’s ‘pivot’ towards Asia, however, such policies are yet to assume a tangible form. Washington’s approaches to Asia remain torn, ranging from ‘primacy’ to ‘offshore balancing’ and from ‘containment’ to ‘accommodation’. Better political fluidity is needed rather than a bumper-sticker approach.

For the UK, the rise of China is likely to trigger a harbinger of dilemmas. Hinkley Point and the collapse of the British steel industry are just the mere tip of an economic revolution that will become far reaching. For example, to what extent will Britain seek to synchronise its approach with the next US administration (especially given its stated position of seeking a bespoke trade deal and strong defensive alliance with Washington)? The irreconcilable should not be overlooked. Instructive in the argument here is the experience of Australia, which also lives under the US security umbrella but is umbilically tied to Asian markets. In July of this year, when an international tribunal at The Hague ruled against China’s territorial claims to sovereignty over most of the South China Sea, Australia joined the U.S. and the Japanese in calling for the Chinese to respect the verdict. Australia has now become a source of major Western irritation for Beijing. Like many other countries, Australia has become increasingly wary of Chinese investment in its energy infrastructure.

Earlier this year in Washington, the Australian prime minister, Malcolm Turnball, gave a speech and expressed concern about the ‘Thucydides Trap’. Named after the classical Greek historian, this notional concept is a creation of the Harvard political scientist Graham Allison. He determined that in 12 of the 16 cases in which a rising power has confronted a status quo power over the last 500 years, war has always prevailed. Former and past iterations of Chinese strategy under Xi’s predecessors, Deng Xiaoping and Hu Jintao, spoke in terms of China’s “peaceful rise”, its amenability to international rules and its apparent willingness to fit in with the existing order. But the period of “hide and bide” may now have passed. Fu Ying, a former Chinese ambassador to the UK, has said that the US-led world order is a suit that no longer fits for China and the emerging Asian markets. Close observers and analysts of Chinese reform even suggest that the People’s Liberation Army (PLA) is exerting a growing influence on decision-making, and that the Communist Party has sought to shore up its legitimacy by riding on the back of nationalist sentiment.

Politically, both Washington and Beijing have very long-term and all-encompassing definitions of what their peripheries and first line of defences are. War games, for example, often scope out a series of alarming scenarios. The Pentagon views Chinese defensive strategy as “anti-access and area denial” and has developed its own “air-sea battle” doctrine in response. And, concurrently, China’s “belt and road” strategy, by which it aims to reconstitute a Silk Road through the Eurasian landmass, can be explained partly by historical fears of Western blockades of Chinese ports or incursions into its territorial waters.

The historical enmities and divisions in Asia are marred with flashpoints that could ignite a larger conflagration on land or sea. There are territorial disputes in the South China Sea over a series of uninhabited islands – those such as the aptly named Fiery Cross and Mischief Reefs – which, according to Beijing, fall within the “nine-dash line” by which China’s territorial waters are defined. There are large numbers of ethnic Chinese in places such as Malaysia and Indonesia for whom Beijing feels some responsibility. Meanwhile, however, Japan, under Prime Minister Shinzo Abe, has assumed a much more offensive posture in response to Chinese claims to the uninhabited Senkaku Islands (as the Japanese call them) in the East China Sea. South Korea has endeavoured to reach an understanding with Beijing but Vietnam has looked to the US for protection as relations with China have soured.

 

In Easternisation, Rachman calls for a rapid improvement in the West’s situational awareness. The book is a welcome rebuttal of the tendency to view Asia through the prism of the markets alone. Although it has become fashionable and customary to speak of the “Pacific century”, the author suggests that an “Indo-Pacific” lens might be a more helpful way of viewing Asian geopolitics from the West. For instance, the development of the relationship between China and India – which share a contested land border and are highly suspicious of each other – is worthy of focus and attention.

India has already emerged as a global powerhouse in its own right. It has a similar size population to China, but a much healthier demographic balance and more established and experienced military.

Whilst still something of a geopolitical outsider, with India having no seat on the UN Security Council, there is gathering consensus that it could become a “swing state” and be harnessed to form part of a newly constituted democratic alliance. For the new superpowers in the East, the learning curve for tilting global powers in its favour might still be steep and perilous, though the West does appear to have tacitly accepted that the certainties of the past are passing. The US “pivot” towards Asia is a clear acknowledgement of this shift.

 

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Britain, Economic, Government, Politics

UK Economy: Growth stagnation following Brexit?

UK ECONOMY

Intro: Whichever way we measure it, economic growth in the UK is not looking particularly good

It would not be unassuming to believe that the UK citizen has become confused or for admitting to bafflement at the array of economic data that has been released regarding the impact of the vote to leave the European Union.

The most recent came at the end of last week from the IHS Markit’s Purchasing Managers’ Index which indicates that Britain’s decision to leave the EU has led to a ‘dramatic deterioration’ in economic activity, not seen since the aftermath of the 2008 financial crisis.

The data shows a fall in both manufacturing and service sectors and is described as the first significant set of data measuring business reaction to the referendum result. The figures displayed in PMI surveys are generally viewed as being reliable and an authoritative indicator of economic predictions.

This outlook came just after the IMF’s World Economic Outlook report slashed its growth forecasts, saying its prediction for the UK in 2017 was now a 1.3 per cent cut, down from the 2.2 per cent.

But there have been contradictory statements. The Bank of England admitted it saw ‘no evidence’ of a sharp economic slowdown and positive employment figures in the UK showed record numbers of people in work.

And perhaps in a desperate attempt to glimpse and portray a silver lining, it was reported that Britain was undergoing a staycation boom, with the tourism industry in particular set to reap the benefits of millions of people now choosing to holiday at home rather than travelling abroad thanks to the weakness of pound sterling.

The first point to consider is that predictions are just that, a prediction or an estimate on the economic outlook. And indicators only say how people think they might act; in these uncertain times such sets of data are more of a gamble than ever.

It is probably much better to concentrate on what has actually happened, although it is still very early to see all the consequences and implications coming through in the data.

In the first half of 2016, figures show that the global economy did better than expected, with stronger than forecasted growth in the Eurozone area and Japan, as well as a partial recovery in commodity prices.

The fall of the pound has already had an effect, making companies in the UK more attractive for takeover by foreign firms. ARM Holdings, one of the UK’s biggest technology companies, based in Cambridge, is to be bought by Japan’s Softbank in a £24 billion deal. Stirling-based Supaglass, the UK’s largest independent glass wool maker, is set to be purchased by one of Russia’s largest roofing and insulation groups in a deal reputedly worth around £8 million.

According to figures compiled by the chief statistician in Scotland, there was no growth in the Scottish economy in the first three months of this year. Overall, however, UK GDP grew by 0.4 per cent over the same period.

The expression ‘swings and roundabouts’ could have been coined to describe the economy. It undoubtedly varies and no-one can be certain of any set of predictions: many factors which will affect the British economy are beyond are control and not affected by Brexit at all.

Notwithstanding, though, any reasonable prudent or objective view would have to conclude that the prospects for UK growth are not looking particularly good either for the short or medium-term.

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Economic, Europe, European Parliament, European Union, Government, Politics, United States

Transatlantic Trade and Investment Partnership is proving controversial…

TTIP

Simmering tensions have surfaced within the European Parliament over the Transatlantic Trade and Investment Partnership.

Simmering tensions have surfaced within the European Parliament over the Transatlantic Trade and Investment Partnership.

Tensions have surfaced in the European Parliament over what could become the world’s biggest trade deal between Europe and the United States.

Jeering, booing and slow clapping were heard in the Strasbourg chamber after the controversial Transatlantic Trade and Investment Partnership (TTIP) was suspended.

Members of the public have also been protesting against the deal, fearing it will hand more power to large corporations at the expense of ordinary citizens.

The Transatlantic Trade and Investment Partnership is a free trade deal between the United States and Europe that has been under negotiation for almost two years. An agreement would see the dawn of the world’s biggest free trade zone, shaping the rules governing a quarter of all global trade.

It aims to cut red tape, making it easier to import and export goods, as well as to invest and set up new businesses abroad. The European Commission predicts that it would boost the size of the EU economy by €120bn and the US economy by €95bn by 2027. Supporters of the deal say these savings would filter back to individuals, who would also benefit from cheaper goods and greater choice.

Critics fear, however, that it will undermine democracy in Europe and the US by favouring the rights of large corporations and preventing governments from regulating in the public interest. The Corporate Europe Observatory, a research and campaign group, claims that 92 per cent of 560 lobby encounters with the commission have come from private sector companies, while just four per cent have come from public interest groups.

Campaigners in Europe think EU regulations on areas such as food safety, employment rights and the environment could be watered down. ‘TTIP is a huge threat to hard-fought-for standards for the quality and safety of our food, the sources of our energy, workers’ rights and our privacy,’ says a Green Party spokesperson. For example, it fears that by harmonising food standards, the UK would be forced to allow chemically washed poultry, livestock treated with growth hormones, and genetically modified crops – which are all allowed in the US. More than two million people have signed an online petition against the deal, describing it as a ‘threat to democracy, the environment, consumers and labour standards’.

Opponents say the guarantee of market access effectively outlaws state monopolies, which could pose a risk to government-run services such as the NHS. Critics have serious concerns about transparency and a clause called the Investor State Dispute Settlement (ISDS), which they claim would allow corporations to sue governments in private. 38 Degrees, an activist group campaigning against the deal, says its details are being ‘worked out in secret’ and will allow big corporations to take governments to court behind closed doors.

EU officials behind the negotiations insist TTIP would uphold current EU standards and leave governments free to run public services as they wish. Negotiators are being ‘as transparent as possible’ and have published fact sheets explaining every chapter of the TTIP, they say. Negotiators also want to tighten up existing ISDS regulation for settling disputes between foreign firms and governments, with public access to hearings. But judging by the ongoing campaigns against TTIP, it appears many don’t entirely trust the EU’s claims.

See also:

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