Today, Asia matters again in world affairs, as it did in history before the Vasco da Gama era. We are in a globalized world where economics and politics can no longer be separated, and Asia’s economic rise is a global geopolitical phenomenon.
Asia’s share in world GDP has risen phenomenally in the last three decades. It used the peace since the Vietnam War in Asia outside the Middle East to accumulate military and economic power. Asia’s rise is also an unintended consequence of globalization. In the nineties, the West abandoned the Keynesian welfare state for a globalization of capital that moved manufacturing to Asia, fragmented the old industrial working class in Europe and America, and changed their social structure and politics. Terrorism and migration too were globalized and the lines between internal and external issues have been blurred.
Shares of global GDP :
1980 2016
Advanced Countries 64% 42%
USA 25% 24%
Europe 30% 16%
China 2.3% 17.8%
India 3% 7.24%
1960 2019
USA 40% 24%
China 4% 16%
Between 2000-2011, India and China pulled 232 million people out of poverty, with India accounting for 140 million. By 2014, India and China together accounted for about half of Asia’s total GDP. Since 2014 in PPP GDP terms, they are the world’s largest and third-largest economies.
Today the centre of gravity, and the sources of growth in the global economy are in Asia and North America. However, Asia has gained power as the world itself has become more disorderly. We are in a world adrift, a world without order. This is not a multipolar world, nor are we in a new Cold War, nor is there any type of rule-based world order, liberal or otherwise.
Until recently I used to call it a world between orders. But that assumed we were heading to a new order. It is hard to see a new order emerging now. The balance of power today, unlike that after WWII, does not support the creation of a new world order. There is no single overwhelmingly preponderant power. Besides, the sole superpower (the USA) and regional or middle powers (like China, Russia, Japan, India, France and Germany) are all unhappy with their present situation. They are each revisionist, wanting to change the international situation in their favour. So, a world adrift is a better way to describe today’s situation.
What characterizes our world adrift?
The era of the ‘West’ as a geopolitical unit is over. The West remains the most powerful and influential actor in the international system. But the West is fighting within itself about the order in Europe, its home. The so-called ‘Western liberal rules-based order’ died, not at the hands of its opponents, but of its creators. The same Europe that is bemoaning the US abandonment of its allies and Ukraine contributed to the decline of the Western order and its norms by standing with the US in supporting Israel’s wars in Gaza and Lebanon and the slaughter of Palestinians, against the wishes of most of the world. Gaza and Ukraine further diminished the international order that the West created and led after WWII. Trump’s diplomacy, if you can call it that, further eliminates the legitimacy that once gave Western power authority.
Multilateralism as we knew it is dead. It is now each one for themselves. Great power rivalry is unmitigated by the pretence of norms or institutions. Unilateral military interventions have become the new normal in the last few decades; think of Afghanistan, Iraq, Serbia, Georgia, Syria, Lebanon, Palestine, the South China Sea, the Himalayas, Yemen, Ukraine, Congo, Iran, Armenia, Venezuela, and elsewhere. The list is long and growing. Don’t look to the international system for solutions to transnational or bilateral problems. The WTO is a good example of institutional decay and slow death in the multilateral system. There has not been a binding international agreement on an issue of any real consequence for over a decade and a half.
The US is reworking the purposes of her power. She is undergoing a cultural revolution of her own. Transnational issues now do not interest the most powerful actor in the international system. The examples are legion. On climate and energy policy, for instance, it is ‘drill baby drill’. The multilateral trading system based on MFN has been felled by unilateral US tariffs. Nor is there any attempt to disguise disdain for the Global South.
Europe’s geopolitical significance has declined. The end of the Cold War enabled the US to dispense with old allies in favour of new clients more fit for new purposes.
All in all, power has shifted to Asia. During the Cold War, NATO and the Warsaw Pact accounted for over 80% of world military power and GDP. Today China and the US together account for less than half of world GDP and military power. It is now an orderless world. Economically the world is multipolar, with three integrated economic blocs: USMCA in North America, the EU in Europe, and RCEP centred on China in Asia. India is the only major economy outside these preferential arrangements. Militarily it is a unipolar world, for there still is only one superpower, the USA, that can project military power around the globe where it wants, when it wants, though it is increasingly challenged in regions by local powers. And politically this is a thoroughly confused and disorderly world.
This is not to say that we are in a Hobbesian world of all against all. The powers do respect certain rules of the road, as it were, when they are in their interest. Freedom of navigation on the high seas, for instance, has by and large been respected, even in disputed waters like the South China Sea. Otherwise, we would be in a perpetual state of great power war. What has kept the peace in Asia outside the Middle East since the Vietnam War are the balance of power and the balance of terror. Their interest in self-preservation has kept the great powers from direct war among themselves for over seven decades. And that prospect has actually diminished with Trump in power, though other levels of violence have and will increase.
And most important for us in India, Asia is being remade by the rise of China and US actions. Asian geopolitics have been redrawn as Asia gains agency.
China’s trajectory has become critical to international developments. China’s gain of power is impressive. As Rush Doshi points out: ‘China’s strategy is working. Since China joined the WTO, the US share of global manufacturing fell by roughly half while China’s share quintupled from 6% to 30%. Beijing can leverage this incredible manufacturing dominance to gain advantage and innovate. And it accounts for half of all industrial robot installations worldwide, 60% of global EV production, 75% of global battery production, and 90% of solar panel, rare earth, and antibiotic production. In the military domain, the PRC has two hundred times more shipbuilding capacity than the US and is leading in new technologies like hyper-sonics. As Beijing’s economy slows and its population ages, it is pouring money into industry and exports to fund growth and to reduce reliance on its dwindling supply of cheap labor.’ Xi Jinping is betting that technology and domestic Chinese consumption will enable continuing Chinese growth and keep the CCP in power. And now he sees Trump’s policies working to make China great again.
At the same time, China’s agency is limited by her integration into the Western-led global capitalist economy and dependence on the world, and by the changes in China’s own polity and society brought about by her rapid rise. Today China obtains 25% of her food from abroad; needs access to commodities and raw materials to keep her economy going; imports six times the IPs she exports; and needs access to foreign markets to keep her export-led economy growing. For the first time in her history China is powerful and dependent on others. And she is still learning how to cope with this situation.
Domestically, China is entering a period of major adjustment: economic, social and political, like the miracle East Asian economies (Japan, Korea, Taiwan) after 30-40-year growth spurt.
A redrawing of regional balances is underway throughout Asia. In West Asia, Iran’s influence has been cut back in Syria and Lebanon by Israeli military interventions abetted by the US, and that influence is now confined to Iraq and Yemen. Iran’s proxies have been defanged. Shifts are also underway in South Asia, Central Asia, SEA and Northeast Asia. What happens in South Asia depends greatly on India’s choices. Improved US-Russia-China relations: It is hard to say how far this improvement will go as none of them trust each other. The most likely outcome is probably an uneasy but calmer great power relationship. The possibility of war among the great powers is lessened, hence reducing hedging opportunities for others, particularly the Global South.
China appears to be the greatest beneficiary of Trump’s policies. China seems to believe so, judging by its recent behaviour, and is confident that it can weather any US-created bilateral storm while making hay in the rest of the world. Trump is driving US allies in Europe, SEA, and NEA to turn to China. And he is weakening China’s greatest adversary, the USA. So, expect a more assertive, even arrogant China and harder negotiating positions from a China that sees the world and geopolitics trending in its favour.
Opportunity for middle powers: The space opened up by this new situation is used by middle powers. Each is trying its luck to achieve longstanding goals. We see this in Ukraine, Gaza, Lebanon, DR Congo, the Himalayas, South China Sea, Nagorno-Karabakh, Sudan, Yemen, and elsewhere. The uptick in small local wars is no accident.
Now that Ukraine, after Afghanistan and others, has made it clear that US promises of support cannot be relied upon, we will likely see the accelerated unravelling of the nonproliferation regime. Most likely a turn to building their own nuclear capability by those who relied on US extended deterrence such as South Korea, Germany and (if Korea, then) Japan, all of whom are latent NWS, a screwdriver turn or just months away from a nuclear weapon. Even Poland has started a discussion on whether it needs nuclear weapons. Taiwan and Ukraine will be tempted but have constraints. Iran has shown remarkable restraint so far, which might not survive Trump 2.0.
The other logical consequence of Trump’s turn inward and rough treatment of clients and allies is that Europe too will repair her relationship with China and come to an accommodation with Russia. This may not happen overnight but makes logical sense for a Europe seeking strategic autonomy and needing time to build its own defences and would be helped by the economic complementarity between the three—Russia, China and Europe, especially for Germany.
The world economy may slow further, but the USD as a store of value will likely remain, though payments could be increasingly routed to other currencies. China is already setting up systems for digital payments to be routed through the yuan and Chinese-promoted platforms and institutions.
A neighbourhood in crisis is a chance to do something better. China’s growing influence in the subcontinent, a moribund SAARC, and the serious internal economic and political issues in each of our neighbouring countries could be turned into an opportunity. We might build out our extended neighbourhood: Japan, Far East, SEA and work with it. But we can’t walk on one leg and must be willing to engage both economically and politically in SEA and the subcontinent. Initiatives in our periphery could use the polycrisis to integrate the subcontinent and Indian Ocean region; not by building fences but by proactive cross-border policies. Sadly, our current domestic politics gets in the way of policy initiatives.
The Global South is seeking alternatives. Over 40 countries want to join BRICS, despite its lack of visible achievement so far. This only shows how strongly they seek alternatives. The impoverishment and marginalization of much of the global south leads it to seek a third way. The financial equivalent of vaccine apartheid after COVID is the manner in which the international community has dealt with developing country debt. The IMF estimates that over 53 developing countries are at risk of facing a serious debt crisis. Four of us in South Asia are already in talks or agreements with the IMF to fund adjustment packages and to deal with debt.
Europe, Japan, ROK: As for the changes in Asian security that Trump’s retreat from external commitments will provoke, US partners are likely to pursue more networked security cooperation and regional integration in this more fragmented and disordered world. These steps would be useful no matter who is in the White House, for, as I have said, I do not see the so-called Trump effect as just a passing phenomenon.
Middle East: Here too countries seek alternatives and options and to restore the balance that has been so tilted in favour of Israel and the West recently.
In conclusion, we should engage with the world, but smartly. Instead, we have seen a closing of the Indian mind and a lack of engagement over the last decade: We have abstained or stayed mum on every important international issue recently (the Russian invasion of Ukraine, the slaughter in Gaza, the bombing of Iran, the raid on Venezuela, etc.); we walked away from regional integration in South Asia (SAARC) and Southeast Asia (RCEP); we have raised tariffs for eight years running; we have little or no communication with our neighbours and even less understanding or studies of them; and existing strategic dialogues with China, the USA, etc., are languishing.
The present disorder does not mean that we should bide our time and wait. For the time to come we must seize opportunities, concentrate on building our own capacity, and create outcomes that promote Indian interests. Outcomes, not posturing, status or stature, should be the goal and we should work with whoever is available. Self-strengthening is the real key.
Shivshankar Menon is currently Visiting Professor, Ashoka University, India, and Chair of the Ashoka Centre for China Studies. He was previously National Security Advisor to the Prime Minister of India, January 2010-May 2014; Foreign Secretary of India, October 2006-July 2009; and has served as the Indian Ambassador or High Commissioner to China, Pakistan, Sri Lanka and Israel.