Parag Khanna: "The Future is Asian"

Redefining "Asia": Parag Khanna asserts the only geographically correct definition of Asia encompasses the Eurasian supercontinent, stretching from the Mediterranean and Red Sea (including Lebanon, Israel, and Saudi Arabia) to the Pacific, noting that Western political and economic focus has artificially narrowed the region to East Asia and the Pacific Rim.

The Narrative of "Asianization": The primary global trend is identified not as the singular rise of China, but as the collective resurgence of Asia, described as "Asianization," where Asian economies are re-integrating after centuries of fragmentation.

• Historical Phases of Resurgence:
  • Stage 1: Japan's post-WWII industrialization propelled it to the world's second-largest economy within two decades.
  • Stage 2: The "Asian Tiger" economies (South Korea, Taiwan, Singapore) replicated the Japanese model.
  • Stage 3: China's rise over the last 40 years was facilitated by Japan and the Tigers, which became China's most loyal investors and distributors across all Chinese provinces.
• Current State: For the first time in modern history, Asian nations trade more with each other than with the rest of the world, marking the re-establishment of Asia as an integrated "system."

Historical Context of Convergence:

• The "Return" of Asia: Economic data indicates that for most of recorded history, Asian economies were larger than Western ones; the "great divergence" caused by the Industrial Revolution was a historical blip of roughly 200 years that is now reversing via convergence.
• System Reintegration: Unlike Europe, which became a system early on, Asia was fragmented by 500 years of colonialism and Cold War rivalries; the last 30 years (post-1991) have been dedicated to rebuilding a unified economic system akin to the ancient Silk Roads.

Belt and Road Initiative (BRI):

• Significance: May 2017, the BRI summit, is predicted to be retrospectively viewed as the start of an Asian-led world order, though the physical infrastructure projects (pipelines through Kazakhstan, railways across Mongolia/Russia) began de facto in 1991.
• Strategic Motivations:
  • Defensive Geopolitics: The initiative addresses the "Malacca Trap," a narrow choke point between Singapore and Indonesia that controls 90% of Asia's oil/gas imports and manufactured exports; the BRI seeks to diversify routes via overland Silk Roads.
  • Economic Necessity: It addresses a 70-year market failure in infrastructure finance for developing nations, capitalizing on China's excess capacity in steel and capital.
• Financial Dynamics:
  • Debt Concentration: Smaller nations like Laos and Tajikistan now hold 75% of their outstanding debt with China, a significant increase from previous levels, though these countries previously lacked access to affordable global capital markets.
  • Multilateralization: The Asian Infrastructure Investment Bank (AIIB) has evolved from a perceived rival to the World Bank into a partner, with the World Bank, ADB, and EBRD collaborating with AIIB to fund a projected $3–4 trillion infrastructure gap in Asia over the next decade.

US-China Trade and Industrial Policy:

• Industrial Policy Reality: Khanna argues that industrial policy is a historical standard for superpowers (e.g., Britain, the US under Alexander Hamilton) and that China is effectively executing the "Made in China 2025" strategy, which is already too entrenched to be stopped by tariffs.
• Supply Chain Shifts:
  • Domestic Substitution: The import share of components for Chinese exports has dropped from 65% to below 20%, indicating successful domestic supply chain independence.
  • Strategic Backfire: US export controls (e.g., on ZTE) forced China to accelerate its self-sufficiency, leading Chinese manufacturers to pivot to Japanese, South Korean, and Taiwanese suppliers rather than relying on US firms.
• Critique of US Strategy:
  • Missed Leverage: The US failed to demand reciprocity during China's initial investment in the US market and chose not to join the TPP, missing an opportunity to pressure China on standards.
  • Regional Consequences: By not joining the TPP, the US inadvertently allowed China to drive the Regional Comprehensive Economic Partnership (RCEP), integrating Asia closer without Western-mandated constraints on industrial policy.

Geopolitical Stability and the "Thucydides Trap":

• Rejection of Inevitable Conflict: Khanna disputes Graham Allison's "Thucydides Trap" and the "World War I" analogy, arguing they are Eurocentric templates that fail to capture Asian history and norms.
• Asian Heterogeneity: Unlike Europe's dense, culturally similar borders, Asia is highly heterogeneous; no power has successfully conquered or assimilated the entire region (except the historically short-lived Mongol Empire), making hegemonic conquest impractical.
• Absence of Rigid Alliances: Asian powers generally avoid rigid alliance systems, preferring "frenemy" relationships where nations maintain ties with all potential adversaries to preserve stability.
• Stability Mechanism: As Asian powers like India rise and nuclear deterrence expands (e.g., Russia), closer parity in power is viewed as reducing, rather than increasing, the likelihood of military conflict.