Emerging Titans

Some days ago Adam came across this article in the Times, by Bill Emmott, a former editor of the Economist. The article is an extract from a forthcoming book by Emmott. At the Time, Adam was preoccupied with the Tibet issue and the prospect of the FTA. However, he put this to one side as it dealt with something he has long been interested in, that is the relationship between China and India. Indeed, this relationship now, previously between the British and China, has figured significantly in the past histories of Tibet, Nepal, and other Himalayan states. India and China have unresolved territorial disputes and fought a brief war in 1965.

Now the article in question began:-

Tibet is one thing, but India and China tensions spell bigger disaster.India and China are booming and will shape the 21st century, but old tensions between the two could spell disaster for the region.

Followed by this key introductory statement:-

Few of his contemporaries think of George Walker Bush as a visionary American president, unless they are using the term to imply a touch of madness. Yet early in his second term Bush launched a bold initiative to try to establish closer American ties with India, the world’s biggest democracy, in what may eventually be judged by historians as a move of great strategic importance and imagination.

It recognised the fact that while Al-Qaeda and its cohorts pose the biggest short-term and perhaps medium-term challenge to America, in the long term it is the expected shift in the world’s economic and political balance towards Asia that promises to have the greatest significance.

Emmott’s thesis is that prompted by the rise of China, Bush or his advisors (Condolezza Rice?, though her primary expertise was the Soviets):-

Bush, meanwhile, has managed to cast aside 40 years of hostility and suspicion between America and India – and even agreed to start collaborating over nuclear energy – in the hope of strengthening India and its economy. And all for a special reason: the rise of China.

Some forecasters suggest that China could overtake the American economy in size by the late 2020’s and India by 2050, assuming it continues to reform. India is changing:-

These days India is beginning to follow the Chinese model with investment soaring as a share of GDP, with trade booming and with manufacturing expanding faster than services. Its biggest companies, of which the Tata Group is in the lead, are achieving global reach, capabilities and prominence far faster than their Chinese counterparts.

Indian businesses are growing rapidly in the developed world, witness Tata’s acquisition of Jaguar, Land Rover and Corus Steel (once British Steel Corporation), the Ambani Brothers, Mittal in steel also. Their international expansion is helped by the fact that India is a robust, though not perfect democracy and is throwing off the stifling controls once imposed by the ‘licence raj’, giving freer rein to the Indian capacity for trade, innovation and entrepreneurship.

As Emmott notes:-

India, however, needs help in financing the construction of its roads, airports and power plants and it needs help with technology. In fact, it is already being helped by Japan – egged on by America – with its infrastructure financing. And Bush’s civil nuclear deal was aimed at providing the technology that India desperately needs.

Thus:-

Asia is going to get richer and stronger, probably for a long time to come. The reason why Tibet and Tata come into the picture is that the rise of Asia is not just going to pit Asia against the West. It is going to pit Asians against Asians. This is the first time in history when there have been three powerful countries in Asia at the same time: China, India and Japan. That might not matter if they liked each other or were somehow naturally compatible. But they do not and are not. Far from it, in fact.

An array of disputes, historical bitternesses and regional flashpoints weigh down on all three countries. Conflict is not inevitable but nor is it inconceivable. If it were to occur – over Taiwan, say, or the Korean peninsula or Tibet or Pakistan – it would not simply be an intra-Asian affair. The outside world would be drawn in.

The unrest in Tibet has shown just how volatile the are can be.

In 1962 China and India fought a border war that humiliated India and left an enduring legacy of bitterness and suspicion. Both countries are now increasing their military spending and trying to modernise their armed forces.

The border dispute remains unresolved.

Furthermore, China has territorial claims on part of India, and vice versa,:-

China claims an entire Indian state, Arunachal Pradesh, which borders southern Tibet and is roughly the size of Portugal. India claims that China is occupying 15,000 square miles of what is rightfully India – in Aksai Chin, an almost uninhabited plateau high in the Himalayas.

As detailed in the article these issues continue to cause friction between the two emerging titans. India has somewhat reluctantly acknowledge China’s sovereignty over Tibet, but that is about as far as it goes. Emmott goes on:-

On the face of it the two sides have since made progress. A border crossing was opened to trade in 2006 for the first time since the war. That year, however, the Chinese ambassador to Delhi caused outrage by publicly emphasising that China claims the whole of Arunachal Pradesh.

Ten months ago a “confidence-building” visit to China by more than 100 Indian officials had to be cancelled after China acted in a typically provocative way: it refused to grant a visa to a member of the Indian delegation from Arunachal Pradesh on the grounds that he was Chinese and did not need one.

Note the studied provocation by China and how again they are not sensitive to other parties. This may well be the legacy of the Middle Kingdom.

It is conventional to assume that the disputed areas are no longer flashpoints but just irritatingly unfinished business. Which is largely right – provided there is no substantial uprising by Tibetans against being ruled by the Chinese. But that, of course, is exactly what began to occur on March 14, when Tibetans celebrated the anniversary of their 1959 uprising by launching the most violent and destructive riots since that date. Not surprisingly, the Chinese authorities stamped out the protests efficiently and brutally.

It was an embarrassing event to have taken place in the year of the Beijing Olympics, that great celebration of China’s emergence as a modern nation. But it is also a harbinger of trouble to come.

Why? Because a further possible trigger for Tibetan unrest lies ahead: the death of the Dalai Lama, Tenzin Gyatso, or, rather, the choice of his successor. In Tibet the Buddhist monasteries are the closest things to an alternative organising force to the Communist party. The Dalai Lama has not only traditionally been the spiritual leader of Tibetan Buddhism but in practice the political leader, too. He has lived in exile in Dharamsala in India since 1959, but remains the focus of Tibetan identity and memory.

The Dalai Lama is growing old. The question of succession looms larger and throws a shadow far beyond what might be expected:-

…..in 2007 China announced new regulations to govern the reincarnation of all Tibetan clergy: it has said it will have the last word in determining whether someone has been reincarnated. In other words, atheist party officials will govern Tibetan spiritual decisions.

In response, the Dalai Lama said he was considering naming his chosen successor before he dies. But – and this is the second complication – he has also said he will not be reincarnated in land under Chinese control. So if his followers abide by that statement they will not accept any successor who has been found inside China.

The third complication is that traditionally the second ranking lama, the Panchen Lama, has played a central role in choosing the new Dalai Lama. But after the previous Panchen Lama died in China in 1989, two successors were chosen: one by the Dalai Lama’s selection committee; the other by a selection committee imposed by China. The Dalai Lama’s choice was arrested. His whereabouts is unknown but he is thought to be a political prisoner.

If – or when – the Tibetans are faced with a dispute over the successor to their spiritual leader, serious unrest could break out. The likelihood is that China would crack down hard on Tibet, as it always has in the past and as it did this month. But if the unrest were more widespread and substantial than before, and if it coincided with a period when the central Chinese government was weak – in the wake of an economic downturn, perhaps – then it may be hard to regain control.

The article analyses risk and suggests

Two risks could then arise. One, admittedly unlikely, is that in the face of Chinese repression, perhaps involving the wholesale slaughter of Tibetan militants, India might feel obliged to do something: to send aid, agitate for collective international intervention or even to try to create safe havens near Arunachal Pradesh.

The other risk is that either China or India might decide to send a military force into the disputed border areas. That might be a diversionary tactic; it might be opportunism, in India’s case; it might reflect China’s sense of insecurity about Tibet; or it might be a Chinese effort to seize Tawang, an area of Arunachal Pradesh directly associated with Tibet and with Tibetan Buddhism. If any of these events occurred, the stakes would be high.

Key to the thesis is this thought, and one which will have major implications for New Zealand - rendering to Adam’s mind the policy setting of a benign security environment as hopelessly out of touch with reality. This may well in turn explain Helen Clark’s readiness to reach an accommodation with China over the FTA.

Remember: this is part of a greater Asian drama that is going to be a permanent feature of world affairs and arguably the most important single determinant of whether or not those affairs proceed peacefully and prosperously.

Adam’s emphasis.

There are two different images of how Asia might look in 2020: the first could be termed “plausible pessimism” and the second called “credible optimism”.

The plausibly pessimistic view begins with the risk that China will suffer a bruising recession and asset-price collapse, perhaps exacerbated by a recession in the United States. This will lead to public pressure for political reform, posing the biggest challenge to Communist party rule since Tiananmen in 1989. That pressure will again be violently rebuffed and the party will accentuate its nationalist credentials in order to retain its grip on power.

Given the past behaviour of the regime that is an entirely credible response. Further, it is not apparent that in political terms the regime is loosening the reins. though pressure from a growing middle class may cause cracks to appear, which in turn might become fissures.

Such a nationalist move would produce increased tension with Japan, a reduction in cooperation with the United States over North Korea and a spate of mutual truculence between China and India.

In these awkward times the deaths of Kim Jong-il of North Korea and the Dalai Lama could both occur, prompting China to install a new military government in Pyongyang, to reject proposals for unification of the peninsula and to use brutal methods to suppress an uprising by Buddhist monks in Tibet.

What would Japan do? If it became even more worried about North Korea and China, it would revise its constitution to permit expanded military capabilities. Then there is Taiwan, which would be an ever-present worry over an imminent conflict between China, Japan and America. There could even be a short, exploratory exchange of fire over that very issue.

Adam remembers as a boy the regular shelling from the mainland of Formosa. He has noted the sabre rattling that goes on these days.

The warm glow of the 2008 Beijing Olympics would be remembered only through a thick smog of tension.

Now look on the brighter side. The credibly optimistic view is that by 2020 China’s economy could be at least three times larger than it is today; the same could well apply to India as it uses its rising tax revenues to build modern infrastructure and a proper system of primary and secondary education.

Japan, with more market-oriented reforms and a corporate sector galvanised by the prospect of Chinese competition, could experience a productivity surge similar to that enjoyed by the United States during the 1990s, enabling it to become more confident in international affairs.

Emmott thinks that in such a scenario

China, Japan and India would work together to build pan-Asian institutions within which to manage their disputes and differences. When the North Korean regime collapses and the Dalai Lama passes away, their first instinct would be to talk and exchange ideas rather than to act unilaterally.

There are some awfully big ifs and buts to that proposition, including Japan managing to achieve meaningful internal reform as well.

The introduction of the election of Hong Kong’s chief executive by universal suffrage, a step made possible by this harmonious atmosphere, could increase interest in the use of democracy in China itself. The emerging Chinese middle class, irritated by its rising tax burden and lack of political rights, would put pressure on the Communist party through protests and through the media to follow Hong Kong’s example.

The party’s fifth and sixth generations of leaders might decide it was time to make concessions, reasoning that they could repeat the success of Japan’s Liberal Democratic party and maintain power even in a multi-party system. The first elections would be called late in the 21st century’s second decade or early in the third.

Frankly, Adam has his doubts as to whether this will happen, especially given the reactions to Tibet and other issues within China.

He is of the view though that it would be stupid and counter productive for the West to allow China to retreat back into it’s shell.

Therefore, it is essential in his mind that unpalatable though it will be to many the West should do everything possible to engage with China and with India to bind them both evermore closely into the international fabric. Both countries, along with Japan should be encourage to grow their economies and to improve the quality of life for their people.

Adam considers that if we have learnt anything in the West it should be that holding back legitimate aspirations for economic growth is likely to prove violently counter productive. Indeed, many would argue that the punitive aspects of the Versailles Treaty post World War One were major factors in creating the circumstances which led to Hitler attaining power in Germany.

We should avoid boycotts or talks of boycotts of the Olympics.

In New Zealand we have adopted a trade based posture with China and seek to grow that relationship. At the same time we should aggressively pursue an FTA with India. India with a large middle class and extensive international reach is potentially another large market for New Zealand.

To Adam it makes sense to be building our relationships with the 2 powers that will dominate our region, and to some extent do so already.

Adam thinks effort spent on an FTA with India is better than chasing the chimera of an FTA with the USA. At this time we do not appear to be a cab on the US FTA rank. even if McCain is elected President in all likelihood there will be a strongly protectionist Democratic House and Senate.

Further, he thinks our long term security and our economic prospects will be greatly enhanced by having strong relationships with both India and China.

Therefore as Emmott concluded:-

Clearly, whether the pessimistic or optimistic scenario prevails, what is happening in Tibet does not stand in isolation. The stakes in Asia are enormous – for all of us.

That is especially the case for New Zealand which country lives or dies by trade of various types. With the likely decline in long haul European tourism because of environmental concerns the development of trade and services, including tourism with these 2 powers is an economic necessity for this country.

It is little wonder therefore that Emmott suggests George W Bush’s legacy may well be taking the steps to build a closer relationship with India. In this instance Adam believes that NZ would do well to emulate Mr Bush. It is in our interest to do so.

Bill Emmott’s article was extracted from Rivals: How the Power Struggle Between China, India and Japan Will Shape Our Next Decade by Bill Emmott, to be published by Allen Lane on April 3 at £20. Copies can be ordered for £18 including postage from The Sunday Times BooksFirst on 0870 165 8585

Tags: China, FTA, New Zealand, Economic Growth, Tibet, George Bush, Olympics, India, Bill Emmott, National Security, Japan, Taiwan, The Times