The Future is Asian: Book Review

The Future is Asian: Commerce, Conflict, and Culture in the 21st Century (2019), Parag Khanna, a thorough analysis of a broadly defined Asia (from the Near East to New Zealand) of five billion people, immense diversity, and unique applications of capitalism and politics (and where democracy is not that important). A key point is different cultures and perspective are critical to analyzing this area and its impact on the rest of the world. I earlier read Joe Studwell's How Asia Works (2013) which focused on the Asian tigers of Japan, South Korea, Taiwan and China (especial interesting because I was earlier stationed in South Korea and visited Japan). Khanna's book is less detailed on the tiger's; instead, taking a broad sweep of the area and a look ahead. Lots of data and analysis, but no story telling. The analysis probably is more objective, but it makes for a tougher read (who doesn't like story telling?). For example, Lee Kwan Yew is central to the Singapore story and a great story telling subject. Khanna tells more of a Wikipedia version, shorter and to the point. "Asia commands most of the world's population and economy, has catapulted into modernity, maintains stability among its key powers, and has leaders who know what they have to do--and are doing it--to prepare their societies for a complex world" (p. 12).

Beginning stats: Asia has 60% of the world's population, 50% of global GDP, and two-thirds of global economic growth; plus Asian countries trade and invest more with one another than with Europe or North America (p. 4). Heterogeneity is another characteristic, including Turkey, China and Australia, Iraq and Japan, Saudi Arabia, Afghanistan and South Korea; failed states like Yemen alongside economic giants like Japan and China. The European Union may be the largest integrated economic system, but the Asian Infrastructure Investment Bank and the Regional Comprehensive Economic Partnership may result in the largest free-trade area. Also of interest are the Asian Development Bank, ASEAN Regional Forum and so on. Gulf petro-states are contracting with many Asian countries. Trade helps maintain lower prices for goods. Khanna points out the current "global disorder" and decline of western influence, in large part because of western policies (failed wars in Asia, for example). Much of eastern Asia is economically stable (consider China, India and Japan) with long-term mandates, although not to the degree of Europe (there is real enmity across countries and regions: India vs. Pakistan, Saudi Arabia and Iran, Israel and Islamist Asia). "Global order is about the distribution of power and how that power is governed" (p. 13).

Interestingly, the US has less trade with Asia than Asia has within itself and Europe--despite massive trade deficits. China in particular is expanding local trade through the Belt and Road Initiative (BRI) to boost commerce across the Old World. Note that each region has unique powers: the US has the leading military power, deep financial markets and large energy production. Europe leads in market size, democratic institutions and living standards. Asia has the biggest population and armies, high savings rates and currency reserves, and substantial economic growth (p. 15). The outsourcing of jobs to Asia eroded the US industrial base and created working class frustrations. "From the Asian viewpoint, the past two decades have been characterized by George W. Bush's incompetence, President Barack Obama's half-heartedness, and President Donald Trump's unpredictability" (p. 18). The US has no plans for addressing Asian threats. China is a relatively closed (and sometimes hostile) market (wanting foreign resources and markets), but other Asian countries are more open to Western goods. Khanna sees China as the eastern anchor of the Eurasian megasystem. The post-World War II US focused on democratic self-determination through multilateral organizations, promoted capitalism and industrialization through global trade. Asia practices neomercantile industrial policy rather than free markets, with government and business colluding, plus technocratic mechanisms (p. 22).

Part I is a history of Asia. Civilization started with the Natufian people, hunter gatherers who started to grind and bake wheat into bread about 15,000 years ago. Agriculture started later in East Asia. The Hittites developed iron smelting. Chinese dynasties expanded the area through alliances and conquest. The Zhou Dynasty used iron, improved hydrology, invented the decimal system and weaving of silk. Sages included Confucius and the development of Daoism. The Qin Dynasty by 221 BC unified the Chinese language, currency, taxes and the census. Buddhism became important to various Asian civilizations, with Indian-Chinese exchanges, including commerce and cross-cultural learning. With Muhammad, Asia conquest and Islam spread across much of Eurasia. Mongol conquest brought death and destruction, but also security to create trade across the Silk Road. In the face of Mongols, China turned inward. Europe took advantage of ship technology and weapons to advance trade across the world. The Japanese conquest of Asia spelled the end of European empires in Asia. After World War II the power vacuum was filled by the US, with a "hub-and-spoke" alliance system for Asian order. Soon to follow were the takeover of China by Mao, the Korean War, and Vietnam. Deng Xiaoping started China on the road to capitalism. Saudi Arabia, Iran, Pakistan, and Afghanistan destabilized the world with alternative strains of Islam. Various countries formed common markets and military unity (Gulf Cooperation Council, Economic Cooperation Organization). The Soviet Union collapsed in 1991, forming new Asian states mainly under old party chiefs; once again, to the benefit of China. Speculative bubble burst in Japan around 1990. Collapse of Asian tiger currencies in 1997. Continued outsourcing of manufacturing to Asia. [Plus many more events on a country-by-country analysis.]

Part II: lessons of Asian history. Tang emperor: The Way has more than one name, more than one sage. Importance of Islam and coexistence with other faiths; 1.6 billion Muslims in Asia, 300 million in Africa. Religions are so dissimilar they can coexist. Asia was inventor of irrigation, bridge building, paper clock making, gun-smithing, navigation. West's capitalism, technology and manpower gave Asia a head start on the modern world. Geopolitical power of nomadic cultures: Huns, Scythians, Parthians, Seljuks, Arabs, and Mongols. Asian civilizations have patterns of mutual respect and learning; but modern boundary dispute such as Kashmir and Palestine.

Part III: Return of Greater Asia. Russia and Turkey bridge Eurasia; now both are moving to Asian systems. Most people in Russia live in Europe zone, but most energy in Siberia and serves Asian market. Russia turned away from Western rules-based order (authoritarian government and commodities-dependent economy), but till has major European ties (but unpredictable oil supplies). "Western anchors" are Australia and Japan, also more involved with Asia. "Localization laws" (initially in China, used by Russia and others) require companies to bring technology into the country. Ataturk's policy was westward, but problems especially with Erdogan, but population is almost 100% Muslim (80% Sunni), with connections to former USSR states. Western Asian states more likely fragmented in sectarian violence and state failure, plus huge refugee populations. In addition to Turkey, Iran and Saudi Arabia anchor the West Asia zone. Jordan is looking for more Asian investors to build its economic base. Israel is the western-oriented, with a Jewish population surrounded by not-so-friendly Muslim states. The West wants Israel to recognize a Palestinian state. More Arab oil flows to Asia, while US priorities shifted to boosting arm sales to Gulf, stabilizing Iraq and containing Iran. Gulf states have gigantic wealth funds in the trillions, more of which is going to Asian investment. Iran important force in region (Shia politics in Iraq, Syria, Hezbollah in Lebanon, and Houthis in Yemen); pus more oil to East Asia. Afghanistan trading partners include China, Iran, and Pakistan. Former Soviet states represent much of Central Asia and becoming part of the Silk Road, partly based on the Belt and Road Initiative. China is a big investor in multiple projects. Note that Kazakhstan (a big energy/power producer) and Mongolia are the largest landlocked countries. China is becoming Pakistan's main patron, which wants access to the Arabian Sea; investments include mining, chemicals and livestock. China is Afghanistan's largest investor (India is number two), which seems more effective than US involvement.

Southeast Asian (members of ASEAN) has 700 million people with lots of Muslims, Christians and Buddhists. Vietnam is the most obvious, but the region includes the rest of the former French Indochina, the Philippines, Indonesia, Malaysia, etc. Although some of these have been US allies, China is a big investor. Singapore is by far the most successful, thanks largely to Lee Kuan Yew. Australia's major trading partners are China and ASEAN, then Japan and South Korea. About 15% of Australia's population is ethnically Asian. Japan was the first Asian tiger and peaked about 1990: Khanna identified Japan's political economy as: "entrenched in a pattern most aptly described as democratic socialism overlaid on corporate feudalism" (p. 132). Japan's big banks became investment holding companies financing Japanese firms into Southeast Asia. A big commercial market developing between China, Japan and India.

"The future Asian geopolitical order will thus be neither American nor Chinese led. Japan, South Korea, India, Russia, Indonesia, Australia, Iran and Saudi Arabia will never collectively come together under a hegemonic umbrella or unite into a single pole of power" (p. 137). "Asia is thus not a set of dominoes but rather a dynamic strategic theater. During the Cold War, Americans failed to grasp that leaders from Iran's Mohammad Mossadegh to Ngo Dinh Diem in Vietnam were first and foremost nationalists pursuing their own cost-benefit analysis calculations; their primary identity was not Western or Communist leaning" (p. 138). Asians: "have been able by and large to separate their political and economic objectives" (p. 139). Infrastructure, trade and finance tie these countries together despite "porous borders and soft sovereignty." Asia consider US as unpredictable and incompetent.

Part IV: Asia-nomics. China watchers: "China will devour the world or it is on the brink of collapse" (p. 147). Third wave of Asian growth: 1st Japan and South Korea, 2nd Greater China, 3rd South and Southeast Asia. Asians buying things in their own currencies at lower prices. Asian societies maintaining high employment, keeping cost of living in check, and promoting basic services [inclusive development index or IDI]. Europe has 30% of global trade because of dense internal markets, Northeast Asia 25%, North America 20%, Southeast Asia 10%. China is laying fiber optics setting up 5G phone operations. Asian powers want economic globalization, not free trade. Chinese state-owned businesses sought stakes in foreign local suppliers in commodities required. Corrupt markets include Vietnam, Thailand, India and Pakistan. Markets versus societal well-being (favored by Asians), plus anti-bank and tech free rein. Chinese investment in US fell by 90% in 2018. China and Malaysia have 2/3 of solar panel market. "Second-mover advantage" for technology such as smart phones, such as India--mobile wallet. [Copying technology quote p. 190.] South Korea leads the world in industrial robotics. Asia leads West in several technologies such as surveillance and power grids. IT industry India's largest employer.

Part V: Asians in the Americas and Americans in Asia. Asia is largest source of new immigrants in US since 2010 (Indians largest group of illegal immigrants); Asians over 50% of Canadian immigrants; students are main flow. 80% of US jobs low-skilled and low-paying.

Part VI: Why Europe Loves Asia but Not (Yet) Asians. European archaeologists in Asia. US as security umbrella, trading partner and promoting human rights. With Trump, Asian looking more stable. Considerable Asian investment in Europe, UK at top (taking advantage of Brexit). Asia's intellectual property theft versus Europe's high-quality goods and strict regulations.

Part VII: The Return of Afroeurasia. Africa has shifted focus to Asia in the 2000's, especially with commodities with Dubai Africa's leading offshore hub. Ethiopia in textiles and pharmaceuticals, plus garment production to Senegal and Rwanda. Big African debts to China with options for repayments (debt restructuring or exchange for equity); upgrading ports, railroads and mines. India also moving in. African agriculture has low productivity but 60% of arable land. Problem of extreme corruption (apparently Europe specializes in bribery). Many using China model: economic reform without political change.

Part VIII: The New Pacific Partnership. Commodity shipments from Latin America to Asia, plus Asian investments. Brazil and Argentina export soy to China. China power conglomerates bought over 20 electricity companies in Brazil, plus investments in ports, mining, etc.

Part IX: Asia's Technocratic Future. Asian democracies include Australia and New Zealand (from Britain), Japan and South Korea, designed by the US after WWII, and Taiwan. India, Indonesia and the Philippines evolving as democracies. Asian countries favor pragmatic government, adaptability and culturally cautious [plus balance between individual freedom and collective duty]. Survey show that people have least trust for politicians and democracies. Best planners for the future are China, India and Singapore. Chinese prefer material stability to democratic instability. Democracy not good if accompanied by corruption and incompetence.

"All societies want a balance of prosperity and livability, openness and protection, effective governance and citizen voice, individualism and cohesion, free choice and social welfare" (p. 285). Asia's leading systems focus on long-term vision and collective benefits rather than short-term hyper individualism and narrow special interests. Technocratic governments built around expert analysis and long-term planning: in the US the Progressive Era and New Deal. Silicon Valley became innovation center through Pentagon support. Most admired government is Singapore, Lee Kuan Yew order first, then law. Now no guns, total public safety, rich and well educated, Lee hailed as "philosopher king" by Time magazine. "Politics is about positions, policy about decisions; democracies produce compromises, technocracies produce solutions; democracy suffices, technocracy optimizes" (p. 289). Singapore as a libertarian nanny state, plus annual audits, voting is mandatory. Being self-correcting is more important than being correct. "Many Asian parliaments have been little more than public-private racketeering operations" (p. 302); historically, India, Indonesia and the Philippines. More focus on leaders with no-nonsense agendas with accountability and less corrupt environment, plus investments in infrastructure, education, jobs and healthcare. "It is the rule of law, not democracy, that most strongly drives economic performance" (p. 309).

Part X: Asia Goes Global: The Fusion of Civilizations. Asian culinary traditions.