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(August, 31 2018) Asia at risk of being its own worst enemy - Thitinan Pongsudhirak

The broad unravelling of the post-war liberal international system is no longer a matter of dispute. Its manifestations over the past decade from the disintegration of the Middle East as we knew it and the de-integration of the European Union with "Brexit" and anti-migration sentiment to the United States' unilateral turn against openness and liberal values so fundamental to its rise all testify to a murky and portentous international environment. Similarly, the global trading system no longer works like it used to as multilateral trade liberalisation has given way to plurilateral and bilateral free-trade agreements.

Driven by new technologies, global finance has become virtually impossible to regulate effectively to ensure systemic order, stability and fairness, as widening inequalities persist. The international system was never smooth and uniformly peaceful and stable, but it has not been as unruly, unwieldy and confrontational for as far as most of us can recall. In the Cold War past, there were big and small wars based on ideological conflict and fought through proxy battles but they were eventually resolved. One side won, and it all ended at one point.

The current tensions and turmoil that are evident around us now carry a sense of a beginning of a lasting disorder and malaise that can lead to open conflict. No winner appears in sight but a wider conflict seems inevitable. The ongoing trade war between the US and China falls in this category. It is a war of economic statecraft, a policy to change an adversary's behaviour by coercive means. Wars of economic statecraft, including both trade protectionism and monetary manipulation, often led to wider conflicts on the battlefields in the past. We are nowhere near that dire prospect but are closer to it now than we could have anticipated just several years ago. It should behove us to navigate and find ways to pull back before the brink presents itself.

What is still disputed is whether the rules-based international order can be saved with some modifications and adjustments to reflect new realities of global power or whether it needs to be completely re-imagined, refashioned and replaced. This ultimate dilemma will take years to address and unfold.

For Asia -- broadly Southeast Asia, South Asia and Northeast Asia -- what is taking place in the wider world poses risks and opportunities. Asia has become a curious nexus of prosperity and insecurity. On the one hand, its hitherto economic development and growth prospects going forward are impressive. No region has been lifted out of poverty into conspicuous prosperity more than Asia. Yet, on the other hand, Asia has become the locus of geopolitical tensions and conflict, underpinned by historical enmities and rivalries.

We can see these rivalries besetting relations between China on the one hand and the US, Japan and India on the other. In the South China Sea, the rivalry pits China against Asean claimant states, particularly the Philippines, overshadowed by US-China competition for influence. In the East China Sea, it is the old enmity between China and Japan. In South Asia, China and India are front and centre as geopolitical competitors who went to war against each other in 1962.

China, in other words, is Asia's game changer. Its inexorable rise is hard to handle for all, perhaps including China itself. What China is doing in Asia, with its expansionist drive around its perimeters of land and sea from artificial islands in the South China Sea to dam construction on the Mekong region to the Doklam plateau in Bhutan and corridor into Pakistan, might be its own version of "manifest destiny", the sense it is entitled to return to its imperial glory it had up to just a couple of centuries ago.

Such a self-entitled greatness can be seen in China's grand strategy of re-imposing its historical domains through its Belt and Road Initiative, backed by its Asian Infrastructure Investment Bank. The Belt and Road map retraces China's historical reach over the Asian landmass through Central Asia to European capitals and from the South China Sea to the Horn of Africa. Its new global reach is beyond the old Silk Road. China is now omni-directional. Its global footprint is expanding in places where it has never been, from the South Pacific to the depths of the African continent.

While China's rise has led to more insecurity in Asia, the flipside is Asia's prosperity. China is now the centre and main locomotive of Asia's economic development. Every economy in Asia needs China more than ever.

Take Thailand, for example. In 1997, according to Direction of Trade Statistics database, Thai exports to the US accounted for 19.4% and to China around 3%. In 2017, the US as Thailand's export destination declined to 11.2%, whereas China's market represented 12.4%.

For the Philippines, the picture is even starker. In 1997, Philippine exports to the US were 34.9% and to China just 1% of the total. Two decades later, the US as the Philippines' export destination fell to 14.6% while China has risen to 11%. The story is the same across the board. China is now the main export market for the rest of Asia, as the EU and US markets account for less and less.

The corollary of this trend is that Asia's economies are increasingly integrated. Intra-Asian investment, trade, tourism, and labour flows have never been so enmeshed and entwined. And China leads the way.

The Trump administration's trade war with China is partly designed to constrain China's economic dominance and shift some global supply chains back to the US through what a senior White House official calls "disintermediation" of American investments in China. Because the Trump team will go on the offensive on bilateral trade, the trade war is likely to worsen unless Beijing makes major concessions. But doing so would risk a loss of prestige and interests and may only lead to further concessions. Beijing is thus unlikely to budge too far.

The prospects for Asia as a whole are therefore alarming. This region has been fulfilling its immense potential for development and prosperity but it has had a hard time maintaining regional peace. Unless Asia can promote more security among its constituent parts, this vast and phenomenal region risks becoming its own worst enemy.