A Global Power Shift in the Making

The transfer of power from West to East is gathering pace and soon will dramatically change the context for dealing with international challenges -- as well as the challenges themselves. Many in the West are already aware of Asia's growing strength. This awareness, however, has not yet been translated into preparedness. And therein lies a danger: that Western countries will repeat their past mistakes.

Major shifts of power between states, not to mention regions, occur infrequently and are rarely peaceful. In the early twentieth century, the imperial order and the aspiring states of Germany and Japan failed to adjust to each other. The conflict that resulted devastated large parts of the globe. Today, the transformation of the international system will be even bigger and will require the assimilation of markedly different political and cultural traditions. This time, the populous states of Asia are the aspirants seeking to play a greater role. Like Japan and Germany back then, these rising powers are nationalistic, seek redress of past grievances, and want to claim their place in the sun. Asia's growing economic power is translating into greater political and military power, thus increasing the potential damage of conflicts. Within the region, the flash points for hostilities -- Taiwan, the Korean Peninsula, and divided Kashmir -- have defied peaceful resolution. Any of them could explode into large-scale warfare that would make the current Middle East confrontations seem like police operations. In short, the stakes in Asia are huge and will challenge the West's adaptability.

Today, China is the most obvious power on the rise. But it is not alone: India and other Asian states now boast growth rates that could outstrip those of major Western countries for decades to come. China's economy is growing at more than nine percent annually, India's at eight percent, and the Southeast Asian "tigers" have recovered from the 1997 financial crisis and resumed their march forward. China's economy is expected to be double the size of Germany's by 2010 and to overtake Japan's, currently the world's second largest, by 2020. If India sustains a six percent growth rate for 50 years, as some financial analysts think possible, it will equal or overtake China in that time.

Nevertheless, China's own extraordinary economic rise is likely to continue for several decades -- if, that is, it can manage the tremendous disruptions caused by rapid growth, such as internal migration from rural to urban areas, high levels of unemployment, massive bank debt, and pervasive corruption. At the moment, China is facing a crucial test in its transition to a market economy. It is experiencing increased inflation, real-estate bubbles, and growing shortages of key resources such as oil, water, electricity, and steel. Beijing is tightening the money supply and big-bank lending, while continuing efforts to clean up the fragile banking sector. It is also considering raising the value of its dollar-pegged currency, to lower the cost of imports. If such attempts to cool China's economy -- which is much larger and more decentralized than it was ten years ago, when it last overheated -- do not work, it could crash.

Even if temporary, such a massive bust would have dire consequences. China is now such a large player in the global economy that its health is inextricably linked to that of the system at large. China has become the engine driving the recovery of other Asian economies from the setbacks of the 1990s. Japan, for example, has become the largest beneficiary of China's economic growth, and its leading economic indicators, including consumer spending, have improved as a result. The latest official figures indicate that Japan's real GDP rose at the annual rate of 6.4 percent in the last quarter of 2003, the highest growth of any quarter since 1990. Thanks to China, Japan may finally be emerging from a decade of economic malaise. But that trend might not continue if China crashes.

India also looms large on the radar screen. Despite the halting progress of its economic reforms, India has embarked on a sharp upward trajectory, propelled by its thriving software and business-service industries, which support corporations in the United States and other advanced economies. Regulation remains inefficient, but a quarter-century of partial reforms has allowed a dynamic private sector to emerge. Economic success is also starting to change basic attitudes: after 50 years, many Indians are finally discarding their colonial-era sense of victimization.

Other Southeast Asian states are steadily integrating their economies into a large web through trade and investment treaties. Unlike in the past, however, China -- not Japan or the United States -- is at the hub.

The members of the Association of Southeast Asian Nations (ASEAN), finally, are seriously considering a monetary union. The result could be an enormous trade bloc, which would account for much of Asia's -- and the world's -- economic growth.

THE STRAINS OF SUCCESS

Asia's rise is just beginning, and if the big regional powers can remain stable while improving their policies, rapid growth could continue for decades. Robust success, however, is inevitably accompanied by various stresses.

The first and foremost of these will be relations among the region's major players. For example, China and Japan have never been powerful at the same time: for centuries, China was strong while Japan was impoverished, whereas for most of the last 200 years, Japan has been powerful and China weak. Having both powerful in the same era will be an unprecedented challenge. Meanwhile, India and China have not resolved their 42-year-old border dispute and still distrust each other. Can these three powers now coexist, or will they butt heads over control of the region, access to energy sources, security of sea lanes, and sovereignty over islands in the South China Sea?

Each of the Asian aspirants is involved in explosive territorial conflicts, and each has varying internal stresses: dislocated populations, rigid political systems, ethnic strife, fragile financial institutions, and extensive corruption. As in the past, domestic crises could provoke international confrontations.

Taiwan is the most dangerous example of this risk. It has now been more than 30 years since the United States coupled recognition of one China with a call for a peaceful resolution of the Taiwan question. Although economic and social ties between the island and the mainland have since grown, political relations have soured. Taiwan, under its current president, seems to be creeping toward outright independence, whereas mainland China continues to seek its isolation and to threaten it by positioning some 500 missiles across the Taiwan Strait. The United States, acting on its commitment to Taiwan's security, has provided the island with ever more sophisticated military equipment. Despite U.S. warnings to both sides, if Taiwan oversteps the line between provisional autonomy and independence or if China grows impatient, the region could explode.

Kashmir remains divided between nuclear-armed India and Pakistan. Since 1989, the conflict there has taken 40,000 lives, many in clashes along the Line of Control that separates the two belligerents. India and Pakistan have recently softened their hawkish rhetoric toward each other, but neither side appears ready for a mutually acceptable settlement. Economic or political instabilities within Pakistan could easily ignite the conflict once more.

North Korea is another potential flash point. Several recent rounds of six-party talks held under Chinese auspices have so far failed to persuade Kim Jong Il to scrap his nuclear weapons program in exchange for security guarantees and aid to North Korea's decrepit economy. Instead, the talks have brought recriminations: toward the United States, for offering too little; toward North Korea, for remaining intransigent; and toward China, for applying insufficient pressure on its dependent neighbor. Now recently disclosed evidence suggests that North Korea's nuclear efforts are even more advanced than was previously believed. As Vice President Dick Cheney warned China's leaders during an April trip, time may be running out for a negotiated resolution to the crisis.

SHIFTING PRIORITIES

For more than half a century, the United States has provided stability in the Pacific through its military presence there, its alliances with Japan and South Korea, and its commitment to fostering economic progress. Indeed, in its early days, the Bush administration stressed its intention to strengthen those traditional ties and to treat China more as a strategic competitor than as a prospective partner. Recent events, however -- including the attacks of September 11, 2001 -- have changed the emphasis of U.S. policy. Today, far less is expected of South Korea than in the past, thanks in part to Seoul's new leaders, who represent a younger generation of Koreans enamored of China, disaffected with the United States, and unafraid of the North.

Japan, meanwhile, faced with a rising China, a nuclear-armed North Korea, and increasing tension over Taiwan, is feeling insecure. It has thus signed on to develop a missile defense system with U.S. aid and is considering easing constitutional limits on the development and deployment of its military forces.

Such moves have been unsettling to Japan's neighbors, which would become even more uncomfortable if Japan lost faith in its U.S. security guarantee and opted to build its own nuclear deterrent instead. Even worse, from the American perspective, would be if China and Japan were to seek a strategic alliance between themselves rather than parallel relations with the United States. To forestall this, Washington must avoid, in all its maneuverings with China and the two Koreas, sowing any doubt in Japan about its commitment to the region.

Yet Japan, given its ongoing economic and demographic problems, cannot be the center of any new power arrangement in Asia. Instead, that role will be played by China and, eventually, India. Relations with these two growing giants are thus essential to the future, and engagement must be the order of the day, even though some Bush officials remain convinced that the United States and China will ultimately end up rivals. For them, the strategic reality is one of incompatible vital interests.

Militarily, the United States is hedging its bets with the most extensive realignment of U.S. power in half a century. Part of this realignment is the opening of a second front in Asia. No longer is the United States poised with several large, toehold bases on the Pacific rim of the Asian continent; today, it has made significant moves into the heart of Asia itself, building a network of smaller, jumping-off bases in Central Asia. The ostensible rationale for these bases is the war on terrorism. But Chinese analysts suspect that the unannounced intention behind these new U.S. positions, particularly when coupled with Washington's newly intensified military cooperation with India, is the soft containment of China.

For its part, China is modernizing its military forces, both to improve its ability to win a conflict over Taiwan and to deter U.S. aggression. Chinese military doctrine now focuses on countering U.S. high-tech capabilities -- information networks, stealth aircraft, cruise missiles, and precision-guided bombs.

Suspicious Americans have interpreted larger Chinese military budgets as signs of Beijing's intention to roll back America's presence in East Asia. Washington is thus eager to use India, which appears set to grow in economic and military strength, as a counterbalance to China as well as a strong proponent of democracy in its own right. To step into these roles, India needs to quicken the pace of its economic reforms and avoid the Hindu nationalism espoused by the Bharatiya Janata Party (BJP), which suffered a surprising defeat in recent parliamentary elections. Officials of the victorious Congress Party pledged to continue economic reforms while also addressing the needs of the rural poor who voted them back into office. Bullish in victory, Congress spokespersons said that they would push to increase India's annual growth rate to ten percent from its current eight percent.

Unless Congress follows its secular tradition in governing, it will undercut any utility India might have for the U.S. campaign to counter the influence of radical Islamists. To date, the aberrant religious ideology that opposes all secular government has developed only moderate traction among the large Muslim populations of India and the surrounding states of Central and Southeast Asia. For example, fundamentalist Islamic political parties fared poorly in winter and spring parliamentary elections in Malaysia and Indonesia. In other ways, however, radical Islamists are becoming a serious threat to the region. Weak governments and pervasive corruption there provide fertile ground for back-shop operations: training, recruitment, and equipping of terrorists. Evidence points to a loose network of disparate Southeast Asian terrorist groups that help each other with funds and operations.

Recent public-opinion polls show that sympathy is growing for the anti-American posturing of the radical Islamists, in large part due to U.S. activities in Iraq and U.S. support of the Sharon government in Israel. The full impact of outrage over the mistreatment of Iraqi prisoners is still to be determined. But deep anger is already in place among Muslim communities worldwide over the perceived slighting of Palestinian interests by the Bush administration. A settlement of the Israeli-Palestinian conflict would not end terrorism, and Muslims themselves must lead the ideological battle within Islam. Yet the United States could strengthen the hand of moderates in the Muslim world with a combination of policy changes and effective public diplomacy. The United States must do more than set up radio and television stations to broadcast alternative views of U.S. intentions in the Middle East. It must replenish its diminished public diplomacy resources to recruit more language experts, reopen foreign libraries and cultural centers, and sponsor exchange programs. Given the large number of traditionally tolerant Muslims in Asia, the United States must vigorously assist the creation of attractive alternatives to radical Islamism.

NEEDED CHANGES

To accommodate the great power shift now rapidly occurring in Asia, the United States needs vigorous preparation by its executive branch and Congress. The Bush administration's embrace of engagement with China is an improvement over its initial posture, and the change has been reflected in Washington's efforts to work with Beijing in the battle against terrorism and negotiations with North Korea. The change has also been reflected in the reluctance to settle trade and currency differences by imposing duties. In other ways, however, Washington has yet to shift its approach. On the ground, the United States appears undermanned. Despite a huge increase in the workload, the work force at the U.S. embassy in China numbers approximately 1,000, which is half the employees envisioned for the new embassy in Iraq. Training in Asian languages for U.S. government officials has been increased only marginally. As for the next generation, only several thousand American students are now studying in China, compared to the more than 50,000 Chinese who are now studying in U.S. schools.

Going forward, the United States must provide the leadership to forge regional security arrangements, along the lines of the pending U.S.-Singapore accord to expand cooperation in the fight against terrorism and the proliferation of weapons of mass destruction. It must also champion open economies or risk being left out of future trade arrangements. The United States must also avoid creating a self-fulfilling prophecy of strategic rivalry with China. Such a rivalry may in fact come to pass, and the United States should be prepared for such a turn of events. But it is not inevitable; cooperation could still produce historic advancements.

At the international level, Asia's rising powers must be given more representation in key institutions, starting with the UN Security Council. This important body should reflect the emerging configuration of global power, not just the victors of World War II. The same can be said of other key international bodies. A recent Brookings Institution study observed, "There is a fundamental asymmetry between today's global reality and the existing mechanisms of global governance, with the G-7/8 -- an exclusive club of industrialized countries that primarily represents Western culture -- the prime expression of this anachronism."

Canadian Prime Minister Paul Martin has embraced the idea of elevating to heads-of-state level the meetings of the G-20 group, which is composed of 10 industrialized countries and 10 emerging market economies. This could incorporate into global economic governance those countries with large populations and growing economies.

The credibility and effectiveness of international bodies depends on such changes; only then will they be able to contribute significantly to peace among nations. Although hardly foolproof, restructuring institutions to reflect the distribution of power holds out more hope than letting them fade into irrelevance and returning to unrestrained and unpredictable balance-of-power politics and free-for-all economic competition.