The rise of China and the Asian Century - Turning globalisation to our mutual advantage
Post-Brexit UK, with its inherent economic strengths, could be an attractive partner to many Asian Governments, says Crispin Blunt.
The Asian Development Bank predicted that by 2050 Asia could almost double its share of global GDP to 52%, regaining its dominant economic position held 300 years ago before the industrial revolution. An additional 3 billion Asians are likely to be affluent, enjoying living standards similar to those in Europe today. That’s a population of consumption-orientated consumers more twice today’s population of North America and Europe combined.
For all our anxieties in the West about globalisation, if we can adapt and manage the process, everyone can gain from the increase in global prosperity that trade flows, new markets, and billions more wealthy customers can bring. In warding off the siren voices of protectionism, there is a policy job for both Western and Asian leaders to identify areas of mutual interest and to map out a route for accruing the maximum mutual benefit.
Strategically, that starts with recognition of the mutual benefits that flow from good economic governance, based on open markets and free trade, and regional peace and security achieved through working at a multilateral level to uphold a rules-based international order.
British foreign policy in the Asian Century should be guided by this alignment of interests, across our bilateral and multilateral engagement. We should work through the G7, G20 and UN to tackle global challenges such as terrorism, irregular migration, climate change and health threats. We should use our membership of existing and new financial organisations, such as the Asian Infrastructure Investment Bank, to scale up financing for infrastructure and sustainable development. At the WTO and in bilateral agreements, we should support inclusive growth through the liberalisation of markets and regional economic integration.
The challenges for all the countries of the Asia-Pacific are numerous and complex, each posing dangers to economic growth and security. Issues such as falling water resources could lead to internal economic dislocation or international tension or even conflict. Weak institutions and endemic corruption undermine markets. Investment in skills and innovation is needed to create productivity-driven growth to avoid the ‘Middle Income Trap’. The UK has economic, political and security interests in helping Asian governments overcome these challenges.
The UK, playing to its inherent and historic economic strengths with an independent trade policy post-Brexit, will be an attractive partner in many areas.
The UK’s cultural and educational sectors, its financial services, including asset management and insurance services, and its strong science base and aerospace industry are all in a prime position to support Asian economies in their structural transformations to market economies. In an era of mass urbanisation across Asia, the UK has expertise to deliver urban renewal and development, for example, contributing to India’s Smart Cities Mission for over 100 modern cities.
The economic opportunities, however, can only be truly fulfilled if there is a strong commitment to liberalisation of markets.
We are hearing positive remarks about the benefits of free trade from President Xi Jinping who, in his speech to the World Economic Forum in January, made an eloquent case for “an open global economy” and against protectionism, which he likened to “locking oneself in a dark room. While wind and rain may be kept outside, that dark room will also block light and air.”
Unfortunately, however, non-tariff measures against imports, industrial subsidies for state-owned enterprises, and weak intellectual property enforcement are still commonplace across Asia. There are concerns about China’s public procurement restrictions, and discrimination applied to foreign inward investment. So whilst the leadership and rhetoric on the need for supporting open global trade is very welcome, we look to President Xi to ensure that there is genuine reciprocity and equality of opportunity.
The UK has welcomed China’s Belt and Road Initiative, which seeks not only to help meet the infrastructure needs of Asia, Africa and Europe, but also to promote ‘unimpeded trade’, financial co-operation and people to people relations. The pursuit of those aims, provided it is accompanied by reciprocity and mutual give and take, will promote the interdependence of China’s own long-term prosperity and security of China with that of the region and the world.
In forging stronger relations with China, India and the other key countries which will lead the region’s economic growth, notably Japan, South Korea, Indonesia, Thailand and Malaysia, the UK is already well-placed to draw on its extensive networks of embassies, consulate-generals, visa offices, and business councils. However, the scale of the post-Brexit challenge will require a sustained expansion of the capacity and capabilities of both the Foreign & Commonwealth Office and Department for International Trade. This doesn't seem to have been quite grasped by Her Majesty's Treasury yet, but we really are running the risk of being penny wise and pound foolish around the marketing and delivery of Global Britain.
As Asia dominates the global economy, it will be in its own interest that the rest of world also does well economically and politically. China, as the leading power, will share the West’s interest in peace and stability.
With disputes in the South China and East China Seas always looming, it is too early perhaps to conclude how China will manage its emerging global power: will it be in accordance with respect for international law and arbitration? The sentiment expressed by President Xi at the recent Belt and Road Initiative summit at least sounds encouraging, to “create a security environment built and shared by all. We should work to resolve hotspot issues through political means, and promote mediation in the spirit of justice.”
But turning the rhetoric on security, and indeed on free trade, into a plan for global trade, security and stability – with shared benefits for nations large and small, east, west, north and south – will be the real test of China as a benevolent power in this century. In highlighting our common goals and mutual interests, I hope the UK can play its part in supporting and accompanying China and our other partners in the region on this journey.
Crispin Blunt is the Conservative Candidate for Reigate; and was Chairman of the Foreign Affairs Committee from 2015 to the dissolution of parliament in May 2017.
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