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The roar of the Asian economy: If Asia is the future economic engine, who drives the car? (Part 2)

In a two-part series, the Warwick Economics Summit explores how changing consumption, trade and business patterns are set to reshape the global economy, and how the might of the Asian consumer is pulling the centre of economic gravity towards them.

In the second part of the series, we wonder if the political power will shift as well, most notably the tango of values between the United States and China. It might be the case that the economic engine of the world is the East, but the political driver may very well be the West.

Ask any business leader if Asia will be the future of economic power, and they will likely agree. But ask if political power will shift as well, and you’ll get a more interesting answer. In the second part of our series on Asia, the Warwick Economics Summit seek to explore just that: If Asia becomes the world’s economic centre, will China dethrone the United States as the global political leader?

Professor David Lake, an American political scientist at the University of California, San Diego, proposes two paths to achieve power: Domination, or Hierarchy.

“In domination, the more powerful state seeks to govern others through coercion. By threatening and punishing others who do not comply, the dominant state forces them to accede to its rules and other demands,” Lake explains in his 2017 paper.

“Under hierarchy, the more powerful state issues rules that are recognized as legitimate or rightful, and the subordinate state complies out of duty or obligation.”

Most countries, including the US, use varying degrees of domination and hierarchy in different situations. Slapping sanctions on Huawei is an act of domination on China, for instance, and European states following America’s lead is an example of them adhering to a hierarchy.

No relationship is entirely dominant or hierarchic, and as China rises, it will too vary its form of power. Whether China veers more towards domination or hierarchy in its tussle with the West will have a significant impact on its relationship with the entire world.

A crucial factor deterring the rise of China is that the ideological values between China and the West are diametrically in conflict. China’s overt paternalism and authoritarianism is a direct affront to Western values of freedom and democracy, and the biggest concern is that China cannot commit to its own limits to its authority.

For a country to willingly be subordinate to another, it must recognise the rules of the powerful state as rightful in order for them to respect the hierarchy. But many countries in the West do not view China’s rule as fair and in their best interest.

In contrast, when the United States inherited the throne from Britain in the 20th century, most of the western world accepted the hierarchy of American rule as their ideology is similar to Britain. Even as many autocratic countries in Africa or the Middle East rejected it, there is a common belief amongst locals there that Western values of democracy are superior than the regime they are currently under.

This perception poses a major problem for the Chinese. Because of this, many countries in both the developed and developing world view China’s way of governance a step backwards, thus unwilling to bend the knee to the autocratic regime.

But some knee bends easier than others. While many in the West scorn upon China’s method of governance, China’s autocratic rule and anachronistic ideology is welcomed by many developing countries in unstable regions such as East Asia, Africa and the Middle East.

Politically and economically unstable countries such as Nigeria and Ethiopia, where one-quarter of all Chinese investment is at both those countries, welcomes Chinese investment because of its tolerance to autocratic rule and commitment to non-interference of domestic affairs. Compare this to Western investments, which usually comes with a prerequisite of adopting Western values of democracy and free markets, it’s easy to see why local despots flock to the authority of the Chinese.

There are costs involved in being the world leader, such as military cost to project power, aid cost to exert influence, and contribution cost to almost every major trade deal in the world – costs that President Donald Trump seems unwilling to bear. Slashing aid to Central America, multiple threats to pull out of NATO and leaving the Iran deal, for example. And China is positioning itself to fill up that gap, although it seems undecided on the exact approach to tackle the West.

It knows it is not powerful enough to dominate Western powers, yet its hierarchy is constantly challenged by the West. Its best bet right now is to influence America through soft power, say through panda diplomacy or its reach in Hollywood.

In an email interview, Tianlei Huang of the Peterson Institute of International Economics told us that while people are attracted to China mostly due to economic benefits, we are seeing a spillover to the Chinese ideology and its model of governance.

“China is trying hard to win the hearts and minds of the rest of the developing world and building up its soft power. It is still too early to tell if China’s long-term approach to influence expansion through education will eventually bear fruit,” Tianlei said.

“But one thing is clear: China is challenging the once dominating Western values.”

If Beijing could give credible assurance that it can practice self-restraint, and Washington could make room for a new world power, then there might be an outcome where the transition to a new world order – led by Washington and Beijing – is both peaceful and accepted.

That, in itself, is hope enough for everyone to strive for. If not, the two major superpowers in the West and the East seems destined to run into conflict – a conflict that has severe economic consequences for the rest of the world.


Christopher Lim


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