The Asian century is drawing ever closer

This article is taken from World Energy (WE) number 47 – The world to come

On February 3, 2020, when we were still very far from case number one being recorded in Italy (February 21), and even further from the classification of COVID-19 as a pandemic (March 11), I outlined two phenomena in Huffington Post that would subsequently prove significant and probably recurrent. 

On February 3, there was still talk of suspending the celebrations for the Chinese New Year and of a crisis in luxury tourism, but little else. My argument, given the advanced stage of the globalization process, was that any natural event that was beyond the control of humans and affected some of the global value production chains could have caused much wider socioeconomic domino effects than we could imagine, given the dense web of links that exist in our world. The second part of my argument was that these combinations of natural phenomena and economic shocks, in addition to having profound effects, would become more recurrent.

The COVID-19 crisis is part of a well-defined but constantly evolving context; the pandemic will not be a defining element of the 2020s, but rather a pretext to encourage or slow down existing trends. Comparisons with similar events of the past are irrelevant because the context in which we find ourselves today is very different from previous ones. Concepts like the digitalization, virtualization and intergenerational responsibility associated with globalization mean that 2020 is light years away from the SARS period of 2002-2004. A more significant comparison, albeit not supported by evidence, could be drawn with the Black Death of the fourteenth century, 1346-1353, and the start of the Renaissance. In any case, COVID-19 remains a unique natural phenomenon, with economic and social consequences that remain to be analyzed.

The most macroscopic trend, which was already underway before the Coronavirus and which will now accelerate, is the reaffirmation of a multipolar global system with a widespread and multilevel governance. From a historical perspective, the geopolitical experiences of bipolarity and unipolarity are just grains of sand in a large hourglass. For those born in the 2000s, New York is by no means the symbolic “capital” of Planet Earth, nor does Moscow represent its alternative pole. The same would apply to those born from the dawn of time up to the 1930s. 

Likewise, among the organizations that regulate social life, the hegemony of national and hyper-centralist states is experiencing a slow and constant decline which, excluding the century-old experience of totalitarianism, began at least with the French Revolution. States tend to aggregate or coordinate with each other upstream and to give more autonomy to their sub-organizations downstream. Coronavirus will only accelerate this phenomenon.    

Even before the pandemic in 2014, Chinese President Xi Jinping, at a meeting of Asian leaders in Shanghai, said “It is the duty of the Asian people to take charge their own affairs, to solve the problems of Asia and ensure the security of Asia.”  For at least a couple of decades Asia has made great strides in creating an Asian system detached from Western formalism and legalism. There is a more or less hidden trend towards socialization and a meeting of political, business and academic elites, between think tanks, journalists and sports and youth organizations, from across the vast Asia-Pacific area.

Western theoretical abstractions portray Asia as a train with a very powerful Chinese locomotive, at a crossroads between hegemony and anarchy. The reality is that, unlike the West, Asia has extremely deep multipolar and multi-civilization roots and knows how to manage “disorder.” These roots are returning to the surface and today they mix with imported elements from the West: state sovereignty and fluid borders; cultural and religious divisions with multi-ethnic identities; consumerism and materialism with clanship and kinship ties. There will be neither hegemony nor anarchy, but a fluid order of foreigners among foreigners, of big and small, interconnected and widespread communities, aiming to achieve material well-being by creating relationships.

For the past two centuries, Asians have been fed a historical narrative in which animosities with neighbors abounded. Today, however, although stereotypes and mutual suspicions remain—especially between India and Pakistan, China and Japan, Saudi Arabia and Iran—Asians are beginning to rediscover and get to know each other better, to be less foreign to one another or to be all equally foreign, through diplomacy, business, tourism and university exchanges. 

With regional media such as TRT, Al Jazeera or CCTV, young Asians are getting more comfortable in their relationship with their counterparts in the region and especially with their “Asianness.” Korean music and cinema and Indian showbiz are now the global pride of Asia. Over time, perceptions will change, interests will align, policies will change and coordination of the Asian system will become more structured. The most astute and far-sighted Asians interpret their return to the control room of history as a natural destiny, a new, but not unprecedented, cycle in the world order. There is none of the disorder that Westerners complain about. 

This does not mean that Asia is or will be free from conflict. On the contrary  Asia is the stage of some of the greatest geopolitical clashes in the world: the relentless one between Shiites and Sunnis, perpetuated, personally and by proxy, by Iran and Saudi Arabia; the conflict on the Korean peninsula; the territorial and maritime disputes between China and, respectively, India, Japan and Vietnam; the impossible alliances, with regard to Syria, in which Israel and the Arab countries join forces against Russia and Iran; the fragile Lebanon and Iraq; Nagorno-Karabakh, the Kurdish question, Kashmir and many others.

Despite the abundance of conflicts in Asia, in recent decades Asian countries have generally remained stable. Diplomatic or commercial friction should therefore be seen as evidence of how important each member of the Asian system is compared to the others. The main tensions in Asia are not between civilizations but between nation states. Asian civilizations maintained deep relationships of mutual respect and cultural assimilation prior to the Western “divide and conquer.”  For a long time, in fact, the Asian identity has been syncretic, rather than specifically ethnic or national. Today an Asian syncretic identity is being restored and this is the lesson to be learned, for Asians themselves, but above all for Europeans and for the whole world.

To add substance to this socio-political examination, while the Coronavirus shock is reinforcing some of the dynamics that were already growing in the pre-COVID era, intra-Asian trade should also receive a significant boost. The post-COVID world will see an Asia even more central to all issues of global significance.

According to The United Nations Conference on Trade and Development (UNCTAD), in 2018, intra-regional trade in Asia grew to 60 percent of all foreign trade recorded by individual Asian countries. Therefore, when Asian countries turn to the world market, in 60 percent of cases they satisfy their requirement by dealing with an Asian partner. Only in 40 percent of cases, when the goods or services are not available in the national market, do they deal with Europeans, Africans or Americans.

Only one regional bloc, Europe with 68 percent, surpasses Asia in terms of the degree of commercial integration of its system in terms of intra-regional trade. In third place is North America (excluding the Caribbean, including Central America) with 33 percent. In sad fourth place are Africa and Latin America, on equal pegging with 16 percent each. The ranking ends with Oceania at 6.7 percent, although that figure is qualified by the fact that the region can be considered an appendage of the Asian system, with Japan and China among its main trading partners, together with the US.

We can predict that despite COVID-19 Asian economies will grow, as will intra-Asian trade. As a result, the degree of integration of the Asian system will also increase, the key player in the affirmation of a new multipolar world that exists far from the logic of national states.

While it is true that the economic impact of COVID-19 will reduce the growth of Asian economies in 2020, China and the The Association of Southeast Asian Nations (ASEAN) area will remain key players in intra-Asian trade, especially as the rebound in these markets is expected to be vigorous and by 2021 to be driven by the recovery of Chinese demand for goods. Furthermore, manufacturing in China and ASEAN still offers attractive economic conditions, not only for Asian companies, but also for those in the US and Europe that continue to invest in them.

By adapting to the digitalization of trade and logistics and interacting more at regional level, Asian economies can still do better than those around the world. In the current global slowdown a large part of Asia is still expected to record positive growth rates, even in 2020, which, although significantly lower than pre-COVID calculations, will be much higher than those of Western economies.

The International Monetary Fund predicts that China will grow around one percent in 2020 and eight percent in 2021. Vietnam, which is strongly integrated with the Chinese economy and that of ASEAN partners, is a candidate to be the fastest growing economy in Southeast Asia, with an ambitious goal of a five percent increase in GDP even in 2020. It is no coincidence that the Vietnamese market has matured to become one of the main production centers in the world, with easy access to China, but now also to the European Union, following the entry into force, in August, of an important free trade agreement. Vietnam is an excellent example of the world that awaits us: a world with different degrees and levels of integration, far from twentieth-century ideologies, with a decisive role for Asia and the actors of its system.

The opening to international trade, initiated in 1986 with the “Doi Moi” policy, has proved to be fundamental for the Socialist Republic of Vietnam. As had already happened with China, the simultaneous presence of a formally communist government and the adoption of the market ideology have produced positive results, bringing the country onto the global business stage, with the attraction of foreign technology and investments. Two other policies, closely linked and maintained by the Vietnamese establishment, have set the conditions for strengthening foreign direct investments (FDI). On the one hand, efforts have been made to “desaigonize” the country in favor of developing Hanoi. Subsequently, with a process that scholars have identified as “deconcentration,” a decision was made to give spending capacity to the provinces, with transfers made from richer to poorer ones, indicating infrastructure construction as a strategic priority for the development of the country.  And while Vietnam was untying some of the typical knots of the totalitarian state, opening up to the market economy and strengthening its local structures, at the same time, in order to participate in other games being played on the Asian and global stage, it became a member of ASEAN, an organization founded in 1967 to counter the communist bloc, but today another key player in the multipolar and multilevel world.

Not even the most experienced scriptwriters would be able to foresee the future at the moment. In the case of the COVID-19 pandemic, predicting the future is completely impossible, given that the present is still fully underway. One can certainly try to assess whether such a natural event will have the effect of accelerating or slowing down current trends. In this case, the elements that will be most clearly reinvigorated by the Coronavirus are: the possibility that natural phenomena will have repercussions on the global economy; the restoration of a multipolar global order with a multilevel governance; and the centrality of the Asia System, an informal web of relations not necessarily dominated by China. 

Finally, it is worth focusing on the temporal proximity between two major local unforeseen events, with an impact on the lives of almost all the inhabitants of the planet and for a long period: the socio-economic crisis born of the bankruptcy of Lehman Brothers in September 2008, and the socio-economic crisis arising from the Wuhan COVID-19 outbreak in November 2019. This relative closeness of the two events heralds a future world in which we will be facing continuous emergencies while trying to plan and make predictions. But if after COVID-19 we were to face a new global crisis, might we perhaps say that we are entering the Age of the Unexpected?

Director of the Rome office and advisor to the Chairman of Associazione Italia-ASEAN, an organization founded and chaired by Enrico Letta to foster exchanges and reciprocal knowledge between Italy and the countries of Southeast Asia. The main topics of study are geopolitics and geoeconomics, with particular reference to European affairs and relations between Europe and Asia. Bordonaro has previously worked in various capacities at the Italian Ministry of Foreign Affairs (Embassy of Italy in Azerbaijan), the United Nations (Peacekeeping Mission in Mali) and European institutions.