The future of Asia Hypotheses for the balance of power between China, India (and the USA)

in 2025

Jean-Marie BOUISSOU Directeur de recherches

Centre d’Etudes et de Recherche Internationales

Sciences Po Paris

•  The « futurology » is a too comfortable business…

•  … nevertheless, it may also provide some legitimate food for thought

Asia has accomplished something unique in the last 50 years

To develop sucessfuly as a whole (almost…) and to give the hope to escape under-development and poverty to about 40% of the humankind

By doing so, to challenge the global supremacy of the West for the first time since more than two centuries

Asia will be the new centre of gravity of the world

•  Population: about 4.2 billions (55% of the world’s population) as against 5.3% for Europe

However, in many countries, the population will be massively greying (China) or decline (Japan, Korea…)

•  Economy : about 40% of the world’s GDP Asia will host the 2nd, 3rd and 4th economic powers of the

world (China, Japan, India) Asia will generate most of the growth of the world’s

economy

•  Integration: Asia will be a free trade area (at least)

Beware of economic predictions !! and remember:

there are 5 different « Asias » 1)  Declining in relative terms

2)  One booming giant 3)  A giant about to boom

4)  Small or middle dynamic powers 5)  Stagnating, secluded, unstable and

sometimes dangerous countries

Asian surge will be led by two rather fragile big powers…

•  Demography : stagnation (China) and greying (China, but also India) + unbalance between men and women (China: 120/100 – India 108/100)

•  Economy: a long way from catching-up with the West in competitiveness, technology, innovation and finance

•  Dependency: for investment, for oil, for food…

•  Potentialy unstable if only because they grow very rapidly

... whose youths are full of optimism and self-confidence…

The globalization is an opportunity: 91% - 87% (Fr 52%)

I have trust in the government of my country: 71% - 71% I have trust in the United Nations: 64% - 80%

I’m satisfied with the age in which I live: 64% - 84% (Fr 47%) I’m satisfied with the situation in my country: 84% - 86%

I believe that the future of my country is bright: 82% - 83% (USA 37%) I believe that my future is bright: 73% - 90% (Fr 53%) I will have a good job in the future: 85% - 92% - My life is in ly own hands: 88% - 90%

Survey: The World’s Youth 2011 Fondation pour l’Innovation Politique

... ready to act and ready to join…

I’m prepared to die for my country: 71% - 76% (

I want to join a political party: 37% - 38% I want to join an association: 60% - 37% I’ts acceptable to break the law to fight injustice: 47% - 71%

I don’t want to pay for the pensions of my elders: 17% - 13%

China’s weaknesses (1) The economy

•  Over-dependency on foreign investment (3/5 of exports – 9/10 of hightech exports)

•  Ocer-dependency on external trade (65% of GDP)

•  Low efficacy (consumes 6 times more resources than the West

and 3 times more than India for the same production) and inefficient use of energy (8 times less efficient than Japan)

•  Inefficient State enterprises still play a large role •  Fragile banking system (bad debt = 30% of the GDP ?)

and a great potential for local financial bubbles

China’s weaknesses (2) The demography

•  « One child policy » (since 1978) •  2025: 20% over 65 + stagnating workforce •  Destabilization of the whole « family-based »

social model •  30-40 millions of young men with no mates (even

in the richest areas: unbalance in Hainan island =135/100)

•  Massive migrations from countryside (2005-2025: 300 millions people)

« China will become old before becoming rich » (?)

China’s weaknesses (3) Food and water resources

•  Water : 7% of the world’s resources for 20% of the population (90% of the underground water reserves are polluted)

•  Food : only 13% of arable soil as against a world’s average of 40% (shrinking and polluted)

Will this lack of resources lead to agressive search abroad

or to a growing ecological consciousness and to advance

into hightech industrial agriculture and depolluting technology ?

China’s weaknesses (4) Deteriorating public services and

social safety net

•  The public education and health systems are deteriorating

•  …while the education is a perequisite for benefiting from the growing economy

•  …and the health condition of the population deteriorates (pollution, AIDS, avian flu, pig flu)

China’s weaknesses (5-1) Discontent and unrest

•  Two « classical » threats for the regime: the countryside (dispossession, corruption, pollution,

abandonment) the urban lumpenproletariat (+300 millions in 2025; very poor

labor conditions, rising prices)

Reported « demonstrations » 8 700 (1993) 32 000 (1999) 84 000 (2005) >100 000 (2010)

Can these categories engineer a regime change ? 

China’s weaknesses (5-2) Discontent and unrest

•  A « modern » threat for the regime: the growing middle-class (supposedly longing for freedom and political power)

Will the old theory « Economic growth leads to democracy »

apply to China ?

China’s weaknesses (5-3) Discontent and unrest

•  A « 21th century » threat for the regime: the alienated over-diplomed, young and poor bachelors confronted to nepotism, corruption, unemployment and sexual frustration

Will China succumb to the « Tunisian syndrome » ?

CHINA : A NEW TYPE OF SUPERPOWER

•  Non-Western [unseen in modern times]

•  Without any democratic tradition •  A former superpower, degraded and burning

with a desire for vengeance [unseen]

•  « Poor » and dependant from the rest of the world, but also a pilar of the world’s economy [unseen]

Is this kind of superpower sustainable in the medium term ?

India’s many weaknesses

•  Lack of competitiveness and few foreign direct investments (10% of China)

•  Bloated bureaucracy •  Paralyzing castes’ system •  Mass education (literacy rate 1/3; 70 000 engineers a

year as against 700 000 in China). But the high education is good

•  Infrastructure (spending : 6% of the GDP as against 20% in China)

•  Inefficient fiscal system

India’s main strenghts (1) Demography

•  Average age of Indian population in 2025: 30.4 years

•  A booming working-age population •  A limited unbalance between men and women

(average 108/100)

« India will become rich before becoming old »

India’s main strenghts (2) Economy

•  Indian economy is less dependent from the foreign investment and exports

•  Indian economy grows 10% by investing 27% of the GDP (as against 10% - 40% in China)

•  The Indian entreprises are more profitable than the Chinese ones (in average)

•  The legal and not-so-corrupt environment provides for a better environment than China for FDI in the long-term

India’s main strenghts (2) The language for a sustainable growth

•  The most important English-speaking community in the world will make India a major provider of modern global services (finance and computers; engineering and R&D; medecine and nursing care; etc.)

•  This development is less polluting and less demanding in natural resources

Will India benefit from being a « late starter » in the globalisation process ?

India’s main strenghts (3-1) Political stability ?

•  An experienced and resilient democracy •  Federalism provides for local democracy •  The underprivilegied are taken care of (to a

degree) by the affirmative action in favour of low castes and by a deeply-rooted political clientelism

•  Democracy is an « international asset » in face of China (witness the acceptance of Indian nuclear power)

India’s main strenghts (3-2) Political stability ?

•  Four threats: the growing divide between the poor and rich

states the brutal discrimination against the (growing)

muslim minority the alienation of the middle-class hostile to the

affirmative action the rise of populist politicians striking the

nationalist chord

Is Asia threathening the equilibrium of the world ? (1) East Asia

•  East Asia: an emerging new big power vs a declining one. According to history: very dangerous (witness: France vs Prussia/Germany)

•  Aggravated by an wavering middle power (S.Korea) + territorial disputes + strident nationalism & deep historical wounds

•  Plus a rogue State...

Is North Korea a threat or a stabilizing factor ?

Is Asia threathening the equilibrium of the world ?

(2) Asia as a whole

•  The coexistence of three big powers in Asia is an unseen phenomenon

•  The simultaneous emergence of two world-scale powers is an exceptional phenomenon in the modern history – and a dangerous one

Will this multiplicity of new powers aggravate of alleviate the tensions ?

Will the economic growth defuse or exacerbate the tensions ?

Will the greying of Japan and China lead to more moderation ?

Is China dangerous ? (1) Not on purpose

•  China is unwilling to provoke a military clash but keeps pushing all over Asia

Building influence in South-East Asia: FTA, ODA and cultural diplomacy + caution in South-China Sea

Countering India: building a base in Burma ? Keeping a multipurpose alliance with Pakistan. Courting Bangladesh, Sri Lanka and Nepal

Humiliating Japan: clash at the Senkoku islets

Is China dangerous ? (2-1) But things might go out of hands…

•  When the historical resentment, nationalism & « structural conflict » between emerging and declining powers combine with territorial dispute and competition for resources (Senkaku)

•  If the Chinese diaspora or migrants are at risk in a neighbouring country

•  If the competition for resources causes too great damages to the neighbouring countries (water : Indochina, India)

Is China dangerous ? (2-2) …especially if…

•  If Taiwan crosses the red line •  If the Chinese regime is destabilized by a burst

of social unrest and political protest (the strategy à la Greek junta – 1974)

Will the USA continue to guarantee the security in Asia in 2025 ?

(1) The means

•  The USA will still have the necessary means •  No other power will be able to « command the

common space » around the world or to disable the USA by a nuclear preventive strike

•  The best that China can do by 2025 is to have the capacity to survive a preemptive strike, to impede the US C4ISR1 (cyber warfare, anti-satellites attacks) and to threaten the US Navy in Asian seas (submarines)

1 Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance

Will the USA continue to guarantee the security in Asia in 2025 ?

(2) The local demand

•  Since 1945, the USA have been « the cap on the bottle » in East Asia (Korea, Taiwan, Japan…)

•  Every country wants to keep the USA in the regional power game – including China (for the time being)

Will the USA continue to guarantee the security in Asia in 2025 ?

(3) The US military strategy

•  Reduce the presence on the ground (Korea, Japan

•  Mass the forces in Guam (3 hours by air, 2-3 days by sea) and move the advanced HQ to Japan for a closer and more active cooperation with the Japanese SDF

Will the USA continue to guarantee the security in Asia in 2025 ? (4) The US diplomatic strategy

•  Build a « democratic quadrangle » with Japan, India and Australia + Singapore (joint security agreements between Japan and Australia – 2007; strategic partnership between Japan and India, 2006; 5-countries military drill « Malabar-2007 »)

•  But don’t expect any formal alliance ! Nobody wants to provoke China…