If nothing else, the latest report of the United States National Intelligence Council (NIC) makes a prophet of Kishore Mahbubani. His book, The New Asian Hemisphere: The Irresistible Shift of Global Power to the East published at the beginning of the year foreshadowed one of the main conclusions of the NIC report released last week.
Among the assessments of the report, Global Trends 2025: A Transformed World, is that “the unprecedented transfer of wealth roughly from West to East now underway will continue for the foreseeable future.”
This projection coincides with US president-elect Barack Obama’s announcement of an economic team with deep experience of managing international economic crises in the past decade. His string of appointees, including Timothy Geithner as Treasury secretary, may be a strong indication of Obama’s awareness of the changing world - as well as how he intends to govern.
Geithner, appointed just days after the release of the Global Trends reports, worked previously at the International Monetary Fund, and was under secretary of the Treasury for international affairs during the administration of Bill Clinton, where he played a key role in dealing with the Asian financial crisis of 1997-8.
Global Trends is the fourth unclassified report prepared by the NIC in recent years that takes a long-term view of the future. Like previous reports, it was prepared to stimulate strategic thinking about the future by identifying key trends, the factors that drive them, where they seem to be headed, and how they might interact.
Like the old Chinese curse, the not-so-far-distant future looks to be a very interesting time, with both opportunities and perils. And the Asian region is going to be a very big part of it.
Among the report’s “relative certainties” is that “a global multipolar system is emerging with the rise of China, India and others.” Similarly, among the key “uncertainties” are:
- Whether advances toward democracy occur in China and Russia.
- Whether regional fears about a nuclear-armed Iran trigger an arms race and greater militarization.
- Whether the greater Middle East becomes more stable, especially whether Iraq stabilizes, and whether the Arab-Israeli conflict is resolved peacefully.
- Whether Europe and Japan overcome economic and social challenges caused or compounded by demography.
If the report is correct, the world finds itself in the midst of a transition to a place where the political and economic structure will be markedly different. The report finds that the “international system - as constructed following World War II - will be almost unrecognizable by 2025, owing to the rise of emerging powers, a globalizing economy, an historic transfer of relative wealth and economic power from West to East, and the growing influence of non-state actors. By 2025, the international system will be a global multipolar one with gaps in national power continuing to narrow between developed and developing countries.”
And therein lies a danger. The report notes that historically, emerging multipolar systems have been more unstable than bipolar or unipolar ones. While it doesn’t predict the destruction of the international order, like the one that led to World War I, it does not rule out a 19th century-like scenario of arms races, territorial expansion and military rivalries.
Economically, in the future when Asia speaks the world will attentively listen. Growth projections for Brazil, Russia, India and China (the BRIC countries) indicate they will collectively match the original Group of Seven’s share of global gross domestic product (GDP) by 2040-2050.
Asia will also be the region producing the major share of the future middle class. Over the next several decades, the number of people considered to be in the “global middle class” is projected to swell from 440 million to 1.2 billion - or from 7.6% of the world’s population to 16.1%, according to the World Bank. Most of the new entrants will come from China and India.
In a sense, China and India are restoring the positions they held two centuries ago when China produced approximately 30% and India 15% of the world’s wealth.
China is poised to have more impact on the world over the next 20 years than any other country. If current trends persist, by 2025 China will have the world’s second largest economy. Both China and India’s gross national product (GNP) is expected to exceed that of the US in 2035, but they will continue to lag in per capita income for decades.
But it will not be an Adam Smith-type economy. Generally, China, India and Russia are not following the West’s liberal model for self-development, but instead are using a different model, “state capitalism”; the system of economic management that gives a prominent role to the state.
And, if demography is destiny, Asia will also be where the future lies. World population is projected to grow by about 1.2 billion between 2009 and 2025, from 6.8 billion to around 8 billion people. Demographers project that Asia and Africa will account for most of the population growth until 2025, while less than 3% of the growth will occur in the “West.”
The largest increase will occur in India, representing about one-fifth of all growth. India’s population is projected to climb by around 240 million by 2025, reaching approximately 1.45 billion people. From 2009 to 2025, China, is projected to add more than 100 million to its current population of over 1.3 billion.
That is not to say there won’t be problems. Around 2015, the size of China’s working-age population will start to decline. The onset of larger proportions of retirees and relatively fewer workers is being accelerated by decades of policies that have limited childbirth and by a tradition of early retirement. By opting to slow population growth dramatically to dampen growing demand for energy, water and food, China is hastening the aging of its population.
By 2025, a large proportion of China’s population will be retired or entering retirement. About the same time, due to growth in India’s densely populated northern states, its population is projected to overtake China’s.
Asia is also projected to be the region where various conflicts might erupt. The report states that over the next 15-20 years, reactions to the decisions Iran makes about its nuclear program could cause a number of regional states to intensify these efforts and consider actively pursuing nuclear weapons.
On the plus side, the report says, “We see a unified Korea as likely by 2025 - if not as a unitary state, than in some form of North-South confederation.”
In this future world the United States will find itself as just one of a number of important actors on the world stage, albeit still the most powerful military nation. But advances by others states in science and technology, expanded adoption of irregular warfare tactics by both state and non-state actors, and proliferation of long-range precision weapons, and growing use of cyber warfare attacks increasingly will constrict US freedom of action.
This constrained US role raises questions about how effectively new agenda issues will be addressed. Despite the recent rise in anti-Americanism - which the report now thinks is beginning to wane somewhat - the US probably will continue to be seen as a much-needed regional balancer in the Middle East and Asia.
Other countries still expect the United States to play a significant role in using its military power to counter global terrorism or provide leadership on climate change. Yet the future proliferation of influential actors and distrust of vast power mean less room for the US to call the shots without the support of strong partnerships.
Thus Barack Obama and future US presidents will need to be doing a lot of talking with other national leaders in the future.