As the world turns…

The phrase “the Pacific Century” is now something of a trope, while the probability of a recurrence of the so-called Thucydides Trap in the context of rivalry between the US and the PRC causes furrowed brows and debate amongst geo-political scholars and military analysts.

This is not surprising given the re-emergence of economic power across Asia. The two-century dominance of the European and North American economic and political systems tends to cause many to overlook (assuming they are aware), that such domination is something of an aberration in the period since the fall of the Roman Empire (which, even then, was part of a multi-polar world.) At the end of the Seventeenth Century, Europeans were the ones admiring the influence and cultures of Asian powers (Asia constituting some two thirds of GDP and three-quarters of its population) such as the Middle Kingdom Chinese Empire and the Mughal one of India; and as late as 1820, Asian economies constituted an estimated 60% of global GDP at Purchasing Power Parity (PPP). Jared Diamond’s now iconic book “Guns, Germs and Steel” chronicles what changed the “natural order”.

The United States and the EU may still constitute the world’s largest economic blocs, but their dominance is beginning to fade. They may still be rich and militarily powerful (in the case of the US), yet Asia now has more than half of the world’s population and the majority of its largest conurbations.

Of course, statistics and trends can be manipulated by selective use and interpretation of data, but the rate of economic growth within Asia is such that, in relative terms and at UNCTAD-defined PPP levels, The Financial Times (FT) estimates that the size of Asia’s collective economies will surpass those of the Rest of the World within the next year or so. Even at market value (as the FT also points out) Asian economies account for 38% of global output (up from 26% in the early 2000s). The PRC alone, at PPP, now probably has a larger economy than that of the US.

Such projections can be disrupted or even reversed. However, given the trends, one should not ignore the contingency that eventually Asian economies will again become dominant economically. That does not mean that all of them will, or even wish to project power beyond their borders, with the obvious exception of the PRC. India probably wishes too, but is a good example of scale in terms of economic potential and population failing to equate to global influence.

Naturally, in a world of Make America Great Again and the desire of some within the EU for “Ever Greater Union”, there are those who would deny current reality and future possibility. While such intellectual avoidance may be comforting for those who hold such views, ultimately it is likely to prove counter-productive, because it prevents consideration of how to adapt to, or even challenge, reverse or guide outcomes.

At Awbury, we are both realists and pragmatists. We thrive by thinking strategically, while being tactically flexible, recognizing that denial and wishful thinking are simply foolish. Our world is constantly changing, and is a mixture of volatility, probabilities and certainties.

And we are very certain that the trends and potential changes described above will continue to present opportunities, as those affected try to manage changes in risk.

The Awbury Team


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