‘The Sun is setting on the American Century.’ ‘The centre of gravity is moving from the West to the East’ So the headlines proclaimed once the National Intelligence Council (NIC) released its report Global Trends 2025: A Transformed World on 21 November. Some have observed that the report does not tell us a great deal of what we don’t know already. Or that it’s much more about what has been happening, rather than what will happen. Most of all, it offers few suggestions as to how the US and China, both playing a crucial role in defining the existing and potential undercurrents outlined in the report, should best navigate these uncharted waters.
Such comments are not totally wrong, but superficial. A navigation map may embody a great deal of known knowns, or even some known unknowns. But that does not make the map less valuable as a tool for planning one’s course. The survey of present and future undercurrents may even indicate how more likely Black Swans (or unknown unknowns) will occur, or where we are a little more likely to see them. What is more, by understanding these undercurrents, both the US and China could charter certain courses which may mutually interact in such a way that at least some of the less pretty variety of Black Swans are not spawned.
Let’s first look into the 121-page report to identify the undercurrents in the horizon. They are roughly as follows:
(a) Weakened militarily and morally in the Middle East and now embroiled financially by the collapse of Wall Street market fundamentalism, hitherto-unchallenged US dominance is clearly on the decline in a world becoming multi-polar. While the EU remains a ‘hobbled giant’ with its many internal squabbles and an inability to act as a single sovereign state, the so-called BRIC countries, the Gulf oil-exporting nations, as well as some other dynamic developing countries, are on the ascent;
(b) The unprecedented industrialization and urbanization of several vast countries at the same time have pitted energy, minerals, water, food and other natural resources in the centre of global, regional, and local competition and rivalry. The concentration of oil and gas in a few relatively less stable countries like Saudi Arabia, Iran, Iraq and Russia are empowering them with new-found confidence and aspirations. In the case of Iran and Russia, it has given rise to increasing national, regional if not global assertiveness. Such dynamics are rendering outcomes less predicable;
(c) The ability of natural resources to keep pace with rising demand, the likelihood of regional or international conflicts to disrupt supply and its transportation through geopolitical choke points such as the Strait of Hormuz and the Strait of Malacca, and, to an increasing number of countries, the clear and present danger of climate change, underline the growing international concern for energy, food, water and climate security;
(d) Struggles for development with bulging young populations in weak or failed states have created an ‘Arc of Instability’ from Sub-Sahara Africa, to the Middle East, the Balkans, the Caucasus, Central and South Asia and certain areas in SE Asia. Climate or economic migration are expected to add to the severity of any chaos;
(e) Increasing diffusion of technology and actors of influence have created a variety of asymmetric risks both military and non-military, including small nuclear weapons, portable precision missiles, chemical, biological and pathogenic weapons, cyber and media warfare, and indiscriminate terrorism. Traditional warfare concepts are no longer effective;
(f) Religious fundamentalism, coupled with growing multi-cultural communities such as Muslims in Western Europe and Arabs in Israel, is compounding rising concerns about ethnic, religious, and ideological identities;
(g) A diversity of non-state actors, including NGO networks, international forums, religious bodies and influential individuals, is exerting increasing influence on issues or topics across national or organizational boundaries;
(h) The rise of emerging economies with their common developmental concerns, their burgeoning intra-regional trade, and their growing investments in other developing countries have resulted in a host of new regional alliances such as the Shanghai Cooperation Organization and ASEAN+3. The former with Russian participation may balance the influence of NATO and the latter may lead to the birth of an Asian Community and the Asian Dollar.
(i) In a world changing beyond recognition, the original Bretton Woods international institutions such as the United Nations, the World Bank and the International Monetary Fund (IMF) are straining to maintain their credibility and relevance. They have remained largely constituted as they were first established at the time of the Second World War. How to embrace and leverage the newly rising emerging powers including China in maintaining international order is becoming a pressing challenge, particularly in the midst of the global financial crisis;
(j) Contrasting with the majority of developing democracies in Sub-Sahara Africa and the adoption of the name of democratic republics in countries like the Congo and North Korea, dramatic economic success in China for three decades begs the question whether state capitalism or the so-called ‘Beijing Consensus’ can be viewed as a successful model at least for countries with different historical, cultural, social and economic background. It also casts doubt on whether there should be a one-size-fits-all development formula, and how effective such formula has proved to be if imposed from the outside regardless of the lack or readiness of local institutions.
Although the NIC report rightly says that these undercurrents pose great uncertainties for which there is ‘no pre-ordained outcome’, it highlights certain significant global developments. They include the aging population profiles of the West, especially Europe and Japan, and soon China; a vast and rapidly growing middle class in the emerging economies; the less dominant role of the US Dollar; the emergence of multiple global financial nodes; the persistence of world poverty; and the growing roles of women, religion and civil society. It also emphasizes the increasing importance of commercialization and globalization of creativity, innovation and technology in raising productivity, an area in which the US still has an overarching competitive lead. This includes disruptive technologies such as ubiquitous computing, bio- gerontechnology, physical and cognitive strength augmentation, robotics, power storage, clean coal and clean water expertise.
The report concludes that by 2025 the demand for US global leadership will remain strong but while the US will still be the world’s leading power, her capacities will shrink. However, it fails to address the vital question on how to lead in this dramatically changed, multi-polar, multi-dimensional, and inter-dependent environment with mutually reinforcing actors and uncertainties. The world is awaiting the Obama new presidency with abated breath, to see how he can translate the audacity of hope into the urgency of now, and the confidence of tomorrow.
China is set to play a key role as stake-holder and actor in almost all of the uncertainties outlined above. But to engage China effectively, it is essential to understand China’s national psyche and what she is positioning herself to be in the coming decades. In this connection, China’s remarkably eventual year of 2008 is highly instructive.
The year started with paralyzing snow-storms across the country, only to be followed by a catastrophic earthquake leaving nearly 90,000 dead and millions homeless. Then there were the humiliating torch relay protests around the world’s key cities, topped up with bloody riots in Tibet. The spectacularly successful Beijing Olympics soon restored a deep sense of national honour and pride, buttressed by China’s first successful spacewalk during her Shenzhou 7 earth orbital mission. The national zeitgeist was captured by the launch of a new Law on the Circular Economy, mandating water and resource conservation and recycling across the board. This was followed by a new land reform liberalizing the transfer of rural land use rights to promote economy of scale and a more vibrant market economy in the countryside. The freedom of foreign press during the Olympics was later extended indefinitely. When the world financial crisis deepened, China was amongst the first to come out with a massive economic stimulus package of US$586 billion (4 trillion yuan) while the provinces are now busy reviving other deferred or delayed projects to the tune of another 10 trillion yuan. China’s coming out party is complete when she raised expectations worldwide by reaffirming her important role in maintaining China’s growth momentum as a stabilizer for the global economy. This chronicle of rising from a baptism of fire reads almost like a microcosm of China’s modern development history.
There remain worries about China’s intentions and lack of transparency in modernizing her military. But China has been publishing her National Defense Reports and of course, no country can be totally transparent in this area. Unlike India, China does not even have a single aircraft carrier. China’s military plans are geared to the defense of her sovereignty and territorial integrity, including Taiwan. It is understandable that with a relatively recent history of foreign occupation and a landmass comparable to the United States, China would want to strengthen her military, including nuclear, long-range missile and anti-satellite deterrence capability. All told, China’s defense expenditure is much lower than Japan, France and the UK, let alone the US, which accounts for the sum total of the rest of the world combined. Likewise, her defense expenditure as a percentage of GDP is much lower than France, UK and Russia, let alone the US. But most of all, with a host of mounting challenges in maintaining growth and stability for a population the size of a fifth of mankind, including still large numbers remaining in poverty and a fast-ageing demographic profile, China needs all the internal and external harmony she can get to continue to build a solid economic foundation for a better-off society. While China is defintely building up her defenses, she simply cannot afford to be aggressive.
Indeed, notwithstanding her increasing clout, China appears reluctant to be a world leader in international relations. Premier Wen Jiabao’s recent speech at the UN categorically stated that ‘China does not seek …to become a leader and will never do so in future.’ Nevertheless, his signals are clear. ‘In the long history of mankind, the destinies of countries have never been so closely linked as they are today. Given the global nature of issues threatening the survival and development of mankind such as climate change, environmental degradation, resources constraints, frequent outbreaks of diseases and natural disasters and the spread of terrorism, and in the face of intertwining challenges of finance, energy and food, no country can expect to stay away from the difficulties or handle the problems all by itself. ….China, as a responsible major developing country, is ready to work with other members of the international community to strengthen cooperation, share opportunities, meet challenges, and contribute to the harmonious and sustainable development of the world’ (Speech on 24 September at the General Debate of the 63rd Session of the UN General Assembly)
Quietly, China is undergoing a Green Revolution. The adoption of hydro, nuclear, coal-seam gas, biomass, wind, solar, terrestrial heat, wave and other renewable energies is being actively encouraged across the provinces, embracing a variety of sectors and innovations. The IEA estimates that China will be investing $200 billion for renewable energy until 2020, when China hopes to achieve 15% of total needs from renewables. China is now on track to rely on hydropower for 28% of her electricity generation by 2015.
On the political front, a published report (in Chinese) in October 2007 by leading academics of the influential Communist Party School outlines suggestions for strengthening the composition and supervisory role of the National People’s Congress (China’s parliament), enhancing the independence of the judiciary, providing more checks and balances within the Party, and promoting greater public accountability of the administration. The content may not do full justice to the boldness of its title ‘Storming the Citadel, a Post-17th Party Congress Research Report on the Reform of China’s Political System’ But it is nevertheless ground-breaking in setting the scene in this sensitive area for further development in China’s political governance.
So there are far more reasons and opportunities for the United States and China to be partners in cooperation rather than rivals in conflict. Indeed, managing a win-win partnership between the two key global players would determine how well both countries and the rest of the world could navigate the uncharted waters highlighted by the NIC’s 2025 Project. President-Elect Obama has already seized the moment by elevating the regular US-China Strategic Dialogue to a higher level, to be headed by Vice President-Elect Joe Biden. It is fair to say that Mr Biden will have his work cut out.
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