The global centre of gravity shifting to Asia

“Danny Quah of the London School of Economics has calculated the world’s economic centre of gravity and reckons that, thanks to Asia’s rise, over the 70 years from 1980 to 2050 it will move eastwards from the mid-Atlantic all the way to somewhere between India and China. By 2015, the halfway point on this great journey, it will have reached the city of Bandar-e Mahshahr, in Iran, on the north-eastern tip of the Persian Gulf .”

 Danny Quah’s calculation of the world’s economic centre of gravity has been included in The Economist’s eye-catching statistical landmarks of 2015

Many see the rush to join the Asian Infrastructure Investment Bank as the beginning of a new international financial order and the decline of US dollar hegemony.

BRITAIN’S recent decision to join the Asian Infrastructure Investment Bank (AIIB) as a founder member has led to a kind of stampede by other allies of the United States in Europe such as Germany, France and Italy to follow suit.

So did two other important Asia-Pacific allies, Australia and South Korea. The only other major US ally in Asia which did not was Japan.

What is striking is that these allies went against the express wishes of the US which apparently saw the AIIB as a potential challenge to the domination of the international financial architecture by the US-controlled World Bank and the International Monetary Fund.

Particularly stunning is the British decision. According to senior fellow at the Department of Politics and International Studies at Britain’s Cambridge University Martin Jacques, in this year’s Boao Forum, this is the first time since Breton Woods in the 1940s, except for one occasion when Britain refused a US request to send troops to Vietnam, that Britain had ever said no to the US so publicly!

Jacques exaggerates somewhat as he should have begun with 1956 as the year when Britain abandoned an independent foreign policy, as a result of its misbegotten adventure in Suez, and became a faithful junior partner to the US.

Still, it is no less remarkable, even beginning with 1956, for it took about six decades before a clear British nay to the US came about.

Many saw the rush to join the AIIB as signifying the beginning of a new international financial order and the decline of US dollar hegemony, with China deemed to be the new or most influential nation.

Some, however, saw Chinese weakness rather than strength in this spectacle.

London’s Financial Times argued that resorting to a multi-lateral institution to exercise influence suggests weakness as China will be less able to get its own way, not to mention possible badgering from non-governmental organisations in future deliberations of the AIIB, than if it could do so by bilateral means.

It remains to be seen if a new financial order will eventuate. I will however make a few points about this development.

One is that it has shown in a dramatic way the global reach of Chinese economic strength, especially in the financial arena.

While it is true that China is already an economic force in other parts of the globe such as in the continents of Africa and South America, not to mention Asia and Australia, this is probably the first time that a major European nation has made an economic decision with obvious political implications favourable to the Chinese.

Someone defined a superpower as a nation or state that can project dominating power and influence in the globe, sometimes in one region or more, and that has the potential to attain global hegemony.

In this respect we can consider China an economic superpower.

Of relevance to our understanding of Chinese strength is the reason behind the British decision.

Britain in the past year or two has evinced a more positive attitude towards China.

According to an analysis in the Internet magazine, Counterpunch, the recent British economic recovery has been mainly based on financial flows to property and infrastructural projects in London and the south of England, and the prosperity of the City of London.

And the city of London is what keeps Britain from becoming a third-tier economy.

This is so important that David Cameron and the Conservatives could conceive of Britain leaving the European Union if the EU were to mess with the running of the City by imposing regulations.

A lot of the money recently has come from China and Britain is very keen to be involved in the offshore trading of the Chinese renminbi. Thus, there is every prospect of Britain getting more action from a China, with foreign reserves of around US$4tril (RM14.68tril), looking for more ways to use the renminbi.

Joining the AIIB in such a fashion, not only brings with it the prospect of possibly getting a leg up in future AIIB projects, but also gains Chinese goodwill. But it is important not to exaggerate Chinese strength. It is a superpower only in the economic arena, and not in other spheres such as the military and political.

Militarily, the US far exceeds China in the amount of money spent and in technological sophistication. Politically, what China can at present offer cannot match the global impact of values associated with the US such as democracy and human rights.

Even in the economic sphere, the Chinese Gross Domestic Product is only equal in size to the US in purchasing power terms, and not in dollar terms where the US GDP is more than one and the half times that of China.

In per capita terms, US GDP is at least four times more. And the US is still far more advanced in the sophistication of its financial market and industrial structures.

The significance of this AIIB development is not a demonstration of raw Chinese economic power.

It is unlikely to do away with the WB or the IMF.

It is really another symptom, this time in Europe and in the financial arena, of the global centre of gravity shifting to Asia.

By Dr. Lee Poh Ping

> Dr Lee Poh Ping is a Senior Research Fellow at the Institute of China Studies in the University of Malaya. The views expressed here are entirely the writer’s own.


Related posts

The AIIB groundswell; Asian development to the fore

Washington's Lobbying Efforts Against China's 'World Bank' Fail As Italy, France Welcomed Aboard. The cheese really does... 

Enter the Chinese Century: China is now the world's No.1 Largest Economic Power..

It was more contentious precisely because it was more momentous: the new numbers showed that China would become the world's largest economy far sooner than anyone had expected—it was on track to do so before the end of .... When the other G-20 nations agree that it is time that the leadership of international economic organizations be determined on the basis of merit, not nationality, the U.S. insists that the old order is good enough—that the World Bank, ..

Sino-Japanese thaw checklists

China and Japan are both keen to alleviate tensions, but some actions need to be taken for this to happen.

AT the recent Asean Foreign Ministers meeting in Myanmar, Chinese Foreign Minister Wang Yi met on the sidelines with Japanese Foreign Minister Fumio Kishida. Even though it was brief, it marked the first time since bilateral tensions began that top officials of both countries have met each other.

Does this signal the beginning of a reconciliation between the two Asian giants? Not likely.

There are four major reasons, which are deep seated and multifaceted, militating against a genuine reconciliation. The first is the territorial dispute over the Senkaku/Diaoyu islands where conflicting claims based on history are unlikely to be resolved as neither side seems willing to budge.

Japan claims that the Senkaku/Diaoyu islands were terra nullis (unoccupied) when seized by them along with Taiwan in the Sino-Japanese War of 1894, while the Chinese on their part insisted that there was evidence of Chinese settlement before the war.

The stakes have been heightened with talk of the presence of oil and gas reserves around the islands.

The second is also about history, not so much as a basis for territorial claim but of contrasting interpretations by both sides of the Japanese war record in Asia.

Many Japanese believe that their colonising attempts in East Asia were in the spirit of the times, no more illegitimate than western colonisation of Asia.

Why should so much be made of their colonisation and not that of the West? Also, some Japanese have even gone into denial mode, denying the existence of Japanese atrocities or if undeniable, downplaying the magnitude.

One such case is over the Nanjing Massacre. Some have denied its existence while others dispute the figures as given by the Chinese of 300,000 dead, arguing that the number is much smaller.

The Chinese give short shrift to the “no different from the West” argument as the Chinese were the colonised or semi-colonised victims.

Moreover, many Chinese also contend that even if the figures for the massacre were smaller (widely accepted figures range from 40,000 to 200,000), it is still a massacre.

A complicating aspect is that many Japanese, including their government, have conceded some wrongdoing and have apologised but the Chinese refuse to accept.

The Chinese refusal, these Japanese believe, suggests the Chinese want to use this to hold Japan to some kind of ransom whereas the Chinese do not believe the Japanese apologies are sincere.

And the third, a complex one, is the identification of enmity with the other with a powerful nationalist stream in either China or Japan. In the Chinese case, modern Chinese nationalism has roots in the anti-Japanese war.

It is contended by some that the Chinese communists find it useful to bolster their nationalist credentials by taking an anti-Japanese stance. And by the same token, the Japanese conservatives may find it useful to utilise anti-China sentiments among the Japanese to promote their agenda.

Anti-Japanese or anti-Chinese sentiments have their political uses.

And fourth, Japan is increasingly spooked by the rise of China, not because of the much played-up heavy increase in military expenditure. It is hard to see how China can be a greater threat to Japan, which has United States protection, in a few years time with increased military spending than now.

Rather, Japan fears being relegated to an inferior partner in bilateral relations they had dominated for more than a hundred years, and even more by being rendered irrelevant in Asia by this China rise.

Japan increasingly cannot abide sits irrelevance (witness Prime Minister Shinzo Abe going abroad and insisting in English, “Japan matters!”).

Many Japanese, not least Abe, believe Japan can only matter if China is checked.

Yet it is not in the interest of both for the tensions to continue as it would affect economic relations. Take for example bilateral trade.

It has deteriorated. In 2011, bilateral total trade amounted to about US$345bil (RM1.09 trillion). It went down to about US$333bil (RM1.06 trillion) in 2012 and further to US$312bil (RM992bil) in 2013.

There may be other factors contributing to the drop but bilateral tensions cannot be discounted as a reason. And more important, there is always the danger that conflicts could break out arising from accidental ship or airplane collisions, which might even lead to war with all its horrendous consequences.

I believe both sides are keen to alleviate tensions or achieve a thaw, even if genuine reconciliation is a long way off. Some action however needs to be taken in two areas for this to happen.

One, the Abe government should refrain from practising some of the more offensive aspects of his nationalism, the chief of which is not to visit the Yasukuni Shrine.

There has been an example in the past where a Prime Minister, Yasuhiro Nakasone, stopped his Yasukuni visit because of what he said were diplomatic reasons. Abe could use a similar reason.

The Chinese could reciprocate by toning down their campaign of condemning Japanese war iniquities and their lack of contrition. This could improve the atmosphere

Second, as suggested by Kevin Rudd and Joseph Nye in a Washington Post piece, steps should be taken to return the Senkakus/Diaoyu islands dispute to the agreement by Chou Enlai and Kakuei Tanaka in 1972 to leave the dispute to be solved by subsequent generations. (Some Japanese deny there was such an agreement.)

Rudd and Nye continued that the disputed islands and the surrounding areas be turned into a maritime ecological preserve where there will be no human habitation or usage for military purposes.

Where possible, joint exploration between both countries should be encouraged.

It is not necessary to state that such a thaw can only come about from politically courageous acts by both leaders. If such is forthcoming, than there is hope for a genuine rapprochement in the future.

 Commented by Dr Lee Poh Ping The Star/Asia News Network
> Dr Lee Poh Ping is a Senior Research Fellow at the Institute of China Studies in the University of Malaya. The views expressed here are entirely the writer’s own.

Related posts:

Japan reopens China's wounds: Sea of Change in Pacific Policy; Japan Wars and Postsdam Declaration still relevant.

Dr Lee Poh Ping is a Senior Research Fellow at the Institute of China Studies in the University of Malaya. The views expressed here are entirely the writer's own. http://english.cntv.cn/program/dialogue/20130726/100500.shtml

An utterly unrepentant Japan opening up past wounds derail peace diplomacy

An utterly unrepentant Japan opening up past wounds derail peace diplomacy. Whatever declarations Japanese leaders may make about the aims of their visits to the Yasukuni Shrine being only to honour their war dead, the ...

 Japan, reverting to its history's infamy .

The ghosts of Japan's imperial past have returned to haunt the nation, its government, and the other countries in this region. IF anyone still .... 6.An utterly unrepentant Japan opening up past wounds derail peace diplomacy 7.

DR LEE POH PING - CURRICULUM VITAE
PERSONAL DETAIL
Name		Dr. Lee Poh Ping
Designation		Senior Research Fellow
Department		Institute of China Studies
Faculty		Deputy Vice Chancellor(Research & Innovation)
E-mail Address		pohpinglee@um.edu.my
ResearcherID Link		http://www.researcherid.com/rid/B-8839-2010
Address(Office)		Institute of China Studies, Deputy Vice Chancellor(Research & Innovation) Building, University of Malaya, 50603 Kuala Lumpur, MALAYSIA

ACADEMIC QUALIFICATION (Qualification), (Institution).

PhD(Government) (1974), CORNELL UNIVERSITY, ITHACA

BA (History) (1967), UNIVERSITY OF MALAYA (UM)

RECENT SELECTED PUBLICATIONS (Publication).

Article In Academic Journals

2012

Fan Pik Wah & Lee Poh Ping.2012.Writing an Alternative View of History through Fiction: the Novels of Xiao Hei. Foreign Literature Studies 34 5) 142-149. (ISI/SCOPUS Cited Publication)

AREAS OF RESEARCH (Project title), (Role), (From)-(Until), (Source), (Level).

THE CHINA MODEL: IMPLICATIONS OF THE CONTEMPORARY RISE OF CHINA, Co-Investigator, 2013-2015, HIR

Mencatat Isu-isu Sensitif Selepas Kemerdekaan Malaysia: Kajian Novel Xiao Hei, Co-Investigator, 2012-2013, Geran Penyelidikan Universiti Malaya (UMRG), National