Date posted: 1/07/2019 10 min read

The future is Asian. But are we?

Where do Australia and New Zealand sit in a new world order based on the Eurasian continent? Ask Dr Parag Khanna.

In Brief

  • Dr Parag Khanna rejects the idea that Australia and New Zealand must choose between the US and China.
  • Competing power centres in different spheres, such as business and defence, can be navigated.
  • Asia is much more than China, and it is on the cusp of a wave of growth centred on South-East Asia and South Asia.

STORY Greg Earl

PHOTO Rebecca Toh

Dr Parag KhannaDr Parag Khanna.

In his latest book, The Future is Asian, Dr Parag Khanna hails China’s Belt and Road Initiative as “the most significant diplomatic project of the 21st century” and predicts an Asianisation of the world order. He also urges the rest of the world to remember that there are many more players in the Asian century than China, and challenges Western countries in the region to rethink their identity.

Khanna has a reputation for cleverly titled books that use graphics to decipher sometimes opaque trends. Think Connectivity: Mapping the Global Network Revolution or Technocracy in America: Rise of the Info-State. So the opening page of The Future is Asian might seem to illustrate a worrying story for Antipodean readers. The book’s map of Asia, spanning from Iran to Timor Leste and to the far north of Russia, omits Australia and New Zealand.

Khanna’s vision of a new global order centred on the Eurasian continent is not common in our corner of the world. Australians and New Zealanders rarely use the term ‘Eurasia’. Sometimes we speak about being a part of East Asia, aligned to where our exports go. More commonly, we identify as being part of the Asia-Pacific, which places the US firmly in the region.

In the past 18 months, government communications have been referring to us as being in the Indo-Pacific, a deliberate shift to be more inclusive of India that conveniently places us closer to the region’s centre.

So Khanna’s vision of a future dominated by close geographic and economic ties between Europe and Asia might unsettle those of us down south.

But despite its jarring choice of map, The Future is Asian details an optimistic vision of our place in the region. Khanna is confident a diplomatically multilateral Asia is emerging that will welcome Australians and New Zealanders (and Russians for that matter) as “white Asians”.

The author and global strategy adviser expanded on this optimistic outlook when he visited Sydney and Melbourne in March 2019, sponsored by PwC. He posted on his website that while he’d long been concerned about Australia’s regional positioning, he now believes the country “has rapidly evolved from strategic schizophrenia to embracing its Asian geography and is thinking deeply about widening its engagement across the region.”

Getting comfortable as ‘white Asians’

Indian-born, Singapore-based and educated in the US and UK, Khanna says the only way to get over the schism is to be both European and Asian. “Be an American ally and a friend of China. Work with Japan and India. Be all of these things. Why identify an exclusive choice?

“What does the data show? Geographically, you are Asian. In trade, you are Asian. Demographically, you are European and Asian. Strategically, you are Western and Asian. You play all sides.

“The challenge is entirely internal and psychological rather than a choice being dictated by, say, China. I see a perfectly proficient geometry [of links to many countries] in Australia to support multi-alignment,” he says.

The Future is Asian joins a rich vein of books that predict Asia (or key countries in it) will return to a central role in world affairs. But some of those volumes have turned out to be exquisitely poorly timed. Ezra Vogel’s Japan as Number One came out in 1979, and the country’s bubble economy collapsed a decade later. The World Bank’s East Asian Miracle was published in 1993, and then came the 1997 Asian financial crisis.

Khanna, the managing partner of geopolitical consultancy FutureMap, comes to the subject with a background as an international relations scholar with a foot in both the liberal and realist camps. His previous books (he’s published six) have focused on the rise of the information state and the way global networks have evolved in modern times.

In his latest release, he argues that if you view the world from the perspective of Asian history, you get a very different picture of how it’s evolved than if you look at it from a Western angle.

Asian history gives less emphasis to powers such as ancient Rome or the modern-day US. So Asians are more relaxed about an ambiguous world of shifting, competing power centres in different spheres – such as business and defence – than those with a Western mindset.

He also argues that the rise of big data and artificial intelligence has changed the nature of democracy, moving it from the classical representation of sharing power to producing and delivering measurable outcomes for the rising middle class.

Khanna makes the point that relying on data analysis to provide good public services is as important as responding to demands from lobbyists and interest groups. He says a new balance is being struck in some Asian countries between representative democracy and technocracy. It’s something Asian people are comfortable with, but Western observers may not be.

On Australians: 

“Just because Russians and Australians hail (mostly) from European races does not mean they cannot be Asian. Even through an ethnic lens, Russians and Aussies should be seen – and see themselves – as white Asians.”
Parag Khanna in The Future is Asian

There is much more to Asia than China

Khanna’s strongest theme is that China should not be regarded as a simple proxy for Asia. He rejects the idea that Asia’s future will be determined by China. He also rejects the thesis that the world is on the inevitable road to a new Cold War between the US and China.

“Positing a new Cold War as the defining paradigm of our age is just rubbish because we don’t live in a unipolar world, we live in a multi-, multi-polar world. When you start with the wrong question which is: ‘US or China – flip a coin – who’s going to lead the world?’, the answer is neither.”

He admits that’s not the prevailing view in the US, and declares with frustration: “You’re not allowed in the room in Washington today unless you acknowledge the extent to which we are in a new Cold War with China. For [the US political establishment] it is the defining paradigm. At no time does anyone stop to consider whether it reflects underlying power dynamics.”

Khanna points out that as China generates only half of Asia’s gross domestic product (GDP) and has one-third of its population, “you are quite literally intentionally, or through benign neglect, ignoring the better part of the Asian story by only focusing on China.”

Asia is on the cusp of a fourth wave of modern growth centred on South-East Asia and South Asia, according to Khanna. The first wave was led by Japan, the second by original Asian tigers Korea and Taiwan, and the third by China. “Asia’s 5 billion people have an even longer – and larger – growth wave ahead than what they have experienced to date,” he writes in The Future is Asian.

Praise for the Belt and Road Initiative

Despite his bid to reweight Asia away from China, Khanna’s book begins with the provocative claim that the Asian-led world order began in May 2017, when attendees from more than 60 countries, representing half the world’s GDP, met in Beijing for the first summit of the Chinese-led Belt and Road Initiative (BRI).

Khanna rates the BRI infrastructure-building project as “the most significant diplomatic project of the 21st century”. That claim is increasingly contested, with observers saying the BRI is under pressure from China’s slow growth at home and pushback by some recipient countries, such as Malaysia.

In the past year, Australia has launched its own response by linking up with the US and Japan on Asian infrastructure, and launching its own Australian Infrastructure Financing Facility for the Pacific.

On infrastructure:

“The Belt and Road Initiative is the most significant diplomatic project of the 21st century, the equivalent of the mid-20th century founding of the United Nations and World Bank plus the Marshall Plan all rolled into one.”
Parag Khanna in The Future is Asian

But Khanna is unswayed. “One area where I do support China is in infrastructure finance, because there has been a market failure providing this public good that billions of people need. China stood up and said this is necessary and the world has got on board with the Belt and Road Initiative. It serves us [the Western powers] right for neglecting that vital public service.”

He believes such pushback shows China was on the right track in reimagining Asia the same way the ancient Greeks did: as a vast continental landmass of trade routes stretching from the Mediterranean to the Pacific.

Where does all this leave modern business? Khanna’s rejection of an inevitable new Cold War also sees him refute another popular idea – that the current globalised world will break into separate regulatory or standards zones led by the US and China, causing a headache for business. He argues that modern technology, and its regulation, leads to diffusion and integration rather than fragmentation.

He reasons that Asia’s multi-polar historical experience and mindset, when applied to business, does not lead to a stand-off between a free market and a highly regulated economy.

Instead, he sees the Asian propensity to use both market and interventionist economic management measures simultaneously, combined with the use of big data, as creating a new way of managing economies. It’s a development from which Western countries could learn.

As Khanna notes, Asians are now involved in the biggest exercise in technology leapfrogging in history. They are acquiring mobile phones before landlines, digital banking before ATMs, cloud computing before desktops and electronic road payments before tollbooths. He cites India’s demonetisation of its currency to crack down on the black (hidden) economy, alongside a massive digitisation of banking and welfare payments, as creating a population that is “data rich before they are financially rich”.

Khanna observes an emerging convergence on managing modern economies. “Asians widely hold the view that markets should be subordinate to overall societal wellbeing, rather than held up as ends in themselves,” he writes.

“The more Western governments bail out and prop up industries such as finance and manufacturing, the more their systems come to resemble Asian-style capitalism in practice, if not in theory.”

Read more:

Why CAs should spend time with our Asian neighbours

Read more