Chapter 1 for Super Continent
1
Eurasian Reconnection and Renaissance
EURASIA, AS WE SHALL SEE, is in the throes of historic transition. Despite its geographic coherence, epitomized by the lack of major physical barriers separating Europe and Asia, together with important cultural contiguities,1 the sprawling continent was long Balkanized into a maze of conflicting jurisdictions. It is now regaining coherence in the post–Cold War world, as China rises and grows closer to Europe in the wake of Soviet collapse, American disengagement, and a quiet logistics technology revolution. Connectivity through massive infrastructure construction is collapsing distance while reconfiguring both Eurasia and world affairs, just as it did a century ago on the American continent.
For more than seven decades the United States has clearly dominated the global political economy, secure in its standing, detached from Old World turbulence, on its own invulnerable Super Continent. Those seven decades, however, are but a tiny fraction of the millennia over which another Super Continent—Eurasia—has dominated world history. Most recently it was the Europeans who held sway, both within that space and globally—from the voyages of discovery and the Industrial Revolution into the twentieth century. Across the bulk of previous recorded history, however, the global fulcrum lay far to the eastern side of that Super Continent—preponderantly within China, and secondarily in India, Persia, and the Levant. Collectively, at the dawn of the sixteenth century, as the voyages of exploration to the New World were beginning, Eurasia generated 89 percent of global gross domestic product (GDP).2 China alone contributed 25 percent of that total, and India 24 percent, due not only to teeming population but also equally to technical prowess.3
It was, after all, Asian nations that invented paper, movable type, and gunpowder, pioneering in mathematics, biology, and geometry amidst their European brethren’s slumber during less enlightened times in the West. North America—in no sense a Super Continent for centuries to come—remained terra incognita to the rest of the world. On the eve of the Industrial Revolution in 1750, Asia’s share of global output remained around 60 percent.4 It was not until after 1870, following the Franco-Prussian War, that Europe and the United States actually generated a larger share of the world’s product than did Asia.
A Historic Transition
Powered by sweeping social changes and a revolution in manufacturing, Europe and North America surged ahead of Asia during the nineteenth and early twentieth centuries.5 By 1950, the United States had passed Western Europe as the largest generator of global product. Meanwhile, Asia’s portion had fallen to only two-thirds of US output,6 despite a population nine times as large.7
In the long eye of history, the American surge was not to last. The US global share peaked in 1950, as indicated in Figure 1.1. Then Europe, Japan, and finally continental Asia began to revive. By the beginning of the twenty-first century, a resurging and increasingly interactive Eurasia had begun to claim, in terms of raw global GDP proportion, the traditional preeminence that it had sustained across the years before Columbus reached the New World, and Vasco da Gama arrived in India, more than five centuries ago.
Eurasia Reconnected
Europe spearheaded the initial Old World revival, aided in its post–World War II restructuring by the Marshall Plan. The parallel catalyst for postwar East Asian economic recovery was Japan, supplemented in the wake of the Vietnam War by Korea itself. In both the Japanese and continental Asian cases (especially South Korea, but China as well), revival was enhanced by the formidable strength of America’s post–World War II economy, and the related expansion of transpacific trade. Eurasian reconnection was not a factor in all this transpacific prosperity.
Following the oil shocks of the 1970s, however, the Persian Gulf surged forward, sustained by its massive oil and gas reserves and growing demand for them from Eurasian continental neighbors to the east. Driving the recent transformation from an Atlantic to a Eurasian-centered global political economy has been an even broader transcontinental dynamic, spearheaded by Chinese growth, Soviet collapse, logistical advances, and European transformation. The People’s Republic of China (PRC) in 1973 accounted for less than 5 percent of global GDP in purchasing power parity (PPP) terms. That share more than tripled to 17 percent in 2015, by which time China had already passed the US as the world’s largest economy. Together with the twenty-eight independent, mostly advanced members of the European Union, as well as China’s Asian neighbors, the collective GDP of the Eurasian continent in 2015 had climbed to almost 70 percent of the global total, as Figure 1.1 suggests.
FIGURE 1.1 The fall (and rise) of Eurasia (1–2015 AD)
SOURCES: For GDP figures between 1 and 2001 AD, see Angus Maddison, The World Economy: Historical Statistics (Paris: OECD, 2003), Table 8b. World GDP, 20 Countries and Regional Totals, 1–2001 AD, https://doi.org/10.1787/9789264104143-en; For 2015 GDP, see World Bank, “GDP, PPP (Constant 2011 International $),” World Development Indicators, accessed July 2, 2018.
NOTES: GDP figures between 1 and 2001 AD are in 1990 international dollars, while 2015 GDP is in 2011 international dollars. ROW indicates “Rest of world.”
Initially Chinese growth, like Japanese and Korean expansion before it, was driven by export dependence on the US market. America continues, of course, to be an important economic partner for Asia today, and a vital security ally for many of its key nations. Yet since the end of the Cold War a new dynamic has quietly arisen—as yet largely unnoticed, but with increasing political-economic momentum. That fateful new development on the global scene, now quietly accelerating world growth and transforming its geopolitics, is the reconnection of Eurasia and the gradual emergence there of a new Super Continent based on Sino-European interaction.
Connectivity and Its Consequences
Connectivity across Eurasia has a provenance of more than two thousand years. Imperial Rome and China’s Han Dynasty, after all, exchanged artifacts before the birth of Christ, with intermittent transcontinental trade continuing for over a millennium thereafter. Yet following the voyage of Vasco da Gama to India, and Columbus to the Caribbean as the fifteenth century was waning, transcontinental interaction abruptly assumed a more abstract and distant cast. An era of European imperialism, Soviet socialism in one country, a generation of war and political chaos, and a variety of autarkic nationalisms, not to mention the Cold War—all complicated transnational relations across Eurasia, rendering the nations at the heart of the continent economically constrained and marginal in the calculus of world affairs.
Following the collapse of the Soviet Union, the reconnection of Eurasia has intensified, and accelerated rapidly since the global financial crisis of 2008. China’s Belt and Road Initiative (BRI) is a belated if substantial part of this. Yet China’s rise itself is but a subplot in a larger and more substantial drama. Logistics and information revolutions as well as the political-economic transformation of Europe, Russia, and Southeast Asia, together with the geo-economic frustrations of India and Iran, are all part of the chronicle. The sum story of reconnection, in short, is much more than the country-specific parts of the whole to which we have so often myopically directed our gaze.
What seems incontestable is that an increasingly reconnected Eurasia is now emerging—aided, but not created, by Xi Jinping’s ambitious BRI. Cargo trains between China and Europe, which only began running in 2011, increased to more than 3,000 during 2017 alone, surpassing the previous six years combined.8 Those trains carried products such as PCs, clothing, and auto parts westward, with whiskey, pharmaceuticals, baby formula, and machinery flowing eastward on the return.9 The volume of maritime cargo, technical contracts, and air flights across the continent are all expanding, together with political-economic coordination mechanisms like the Asia-Europe Meeting (ASEM), the Shanghai Cooperation Organization (SCO), and the 16+1 summit-conference series between Eastern Europe and China. Reconnection, in short, has become the order of the day.
The reconnection of Eurasia is by no means only a matter of cargo freight or even diplomacy. It extends to communications and technology as well, with deepening implications for the global economic and strategic futures. Huawei, now the world’s largest producer of telecommunications equipment, as well as global mobile infrastructure,10 is working closely with TUV SUD, the European Union’s certification authority, on verification technologies for communications products. In April 2018 Huawei became the first company to achieve a CE type examination certificate (TEC) for its 5G products from these European authorities, and is working closely with them on common 5G standards.11 Although deeply interdependent with Europe, Huawei has largely withdrawn from the United States, amid US Department of Justice investigations of its possible role in violating US Iran sanctions.12
How Globalization and Eurasian Reconnection Relate
Many ask how this deepening Eurasian transcontinental interplay differs from a more cosmopolitan globalization, broadly conceded to be sweeping the world since the mid-1970s.13 The answer is threefold:
(1) The historical point of departure is distinctive. Eurasia, despite its venerable Silk Road history of connectivity, has for centuries been much more divided internally politically—not to mention Balkanized into unconnected, overregulated jurisdictions—than core economies elsewhere in the world. Connectivity thus has distinctively momentous geopolitical and geo-economic implications for Eurasia, as opposed to North America or other continents.
(2) The geography is distinctive. China and Europe are more than 30 percent closer overland than via sea routes14—a discrepancy intensified the further one plunges into the interior of these two central constituent parts of Eurasia, as indicated in Map 1.1. Such a pattern prevails on only the largest of continents, with Eurasia naturally representing the most extreme case on earth.
(3) The techno-political context is distinctive. Technological change, and regulatory adjustment with it, is uncommonly rapid today, in sectors of special relevance to Eurasia’s reintegration such as land transport and telecommunications. The Logistics Revolution, accelerated by digitalization and the Internet of Things, is proceeding at warp speed early in the twenty-first century, with greater implications for Eurasia than for other regions due to that Super Continent’s geography and to the pace of its economic advance. Public policy and private effort, especially China’s Belt and Road Initiative (BRI), together with the efforts of firms like COSCO, Huawei, Ericsson, Alibaba, and Deutsche Bahn, are capitalizing on these long-term trends, with BRI and private efforts complementing one another in synergistic fashion.
MAP 1.1 Land vs. sea routes
Eurasia’s Enduring Yet Dynamic Geo-Economic Centrality
On the Eurasian continent, at least, geography thus remains crucial to an understanding of regional political-economic interactions and their broader global significance. The simple size, population profile, and resource configuration of that huge land mass raise the possibility that geography could matter. In the emerging world of the twenty-first century, we argue, long neglected geographical traits—particularly the propinquity of population and natural resources within Eurasia—can assume fateful global geo-economic and geopolitical importance as well.
Lending special future promise to the reconnection of Eurasia are the scale and complementarities innate to the continent itself, as suggested above. Eurasia is by far the world’s largest and most central continent, with well over a third of the Earth’s entire land area.15 Beneath its soil lies nearly two-thirds of the world’s oil and over 80 percent of conventional gas reserves, as shown in Table 1.1. Eurasia’s constituent nations hold almost 85 percent of world foreign exchange reserves, while generating close to 70 percent of global GDP in PPP terms, not to mention nearly half of the world’s manufactured goods.16 They also generate innovative new technology, in sectors ranging from 5G telecommunications to high-speed rail.
TABLE 1.1
Eurasia’s formidable scale in global context
SOURCES: World Bank, “Land Area (sq. km),” “GDP (Current US$),” “GDP, PPP (Constant 2011 International $),” and “Total Reserves (Includes Gold, Current US$),” World Development Indicators, accessed October 22, 2018; and BP, “Oil: Proved Reserves” and “Gas: Proved Reserves,” Statistical Review of World Energy, June 2018.
NOTE: All regions and subregions are geographical, as defined and used by the United Nations Statistical Division.
Demography as a Catalyst
By most political-economic measures, of course—nominal GDP, service trade, and agricultural production, not to mention technology and military spending—the United States still remains preeminent. Both China and the other major nations of Eurasia have multiple problems of their own. Yet the nations of eastern Eurasia, in particular, have at least one powerful advantage in their resurgence toward global political-economic prominence—populations that are both generally industrious and also larger, by orders of magnitude, than anywhere else on earth.17 As indicated in Table 1.2, three of the five most populous nations in the world lie in Eurasia, and six of the top ten. China, to repeat, is both the most populous and the most centrally located state within the populous economic core of the continent. The European Union, were it a nation, would rank third. The Eurasian nations, if considered collectively, would have over ten times the population of the United States.
The countries of eastern Eurasia are, generally speaking, not only populous, but also still on average relatively poor, with the exception of Japan, South Korea, Malaysia, and Singapore. Many, such as China and India, include some fabulously wealthy people, but many more of painfully modest means. As a consequence, the per capita incomes and consumption levels of most East and Central Asian nations remain low by global standards, with far to go before reaching levels of the advanced industrial world. As indicated in Table 1.3, for example, India’s per capita energy consumption remains no more than one-tenth that of the United States, and only a fifth that of the European Union, while its per capita caloric food intake is still only two-thirds that of the United States and three-quarters of the European average.
TABLE 1.2
Top ten most populous countries (2017)
SOURCE: World Bank, “Population, Total” and “Population Growth (Annual %),” World Development Indicators, accessed October 22, 2018.
TABLE 1.3
The looming challenge of rising energy consumption in developing Eurasia
SOURCES: World Bank, “GDP Per Capita (Constant 2010 US$)” “CO2 Emissions (Metric Tons Per Capita)” and “Energy Use (kg of Oil Equivalent Per Capita,” World Development Indicators, accessed October 22, 2018; Food and Agricultural Organization of the United Nations, “Food Supply—Crops Primary Equivalent (kcal/capita/day),” FAOSTAT, updated February 5, 2018.
NOTE: * Country figures expressed as percentage of US levels.
The large populations and low levels of per capita consumption in eastern Eurasia drive a fundamental emerging reality of this emerging Super Continent: Eurasia, as it grows, is fated to loom large, in the aggregate, on the global economic stage, and in the global quest for food and resources. The mathematics of its formidable population size, multiplied by its modest but rising per capita consumption, especially in the east of the continent, clearly drive this simple equation. With energy consumption and GDP levels that are both much lower in nominal terms than those of the United States, it is only a matter of time before China and possibly India will surpass America along both dimensions—in the calculus of nominal GDP as it already has in the scales of purchasing-power parity.
What do these historic economic changes concretely signify for the world in broader terms? If a more interactive Eurasian playing field is emerging, what does that mean for the profile of world affairs? These are the central questions that we confront.
It is important to remember that the question is not developments in any one country alone. Connectivity among nations is increasingly pervasive, synergistic with intranational change, and imparts increased momentum to developments in any one nation. Growth and technological progress in Asia or Europe alone is leveraged by their interaction.
Transformational change, through which technology radically reconfigures geography, is a hallmark of our extraordinary times. Nations are changing within, as middle classes emerge, even as inequalities intensify. Buffeted by deepening economic challenges from both within and without, transnational regions are also assuming new shapes. And these epic transformations at both national and regional levels have fateful implications for the world as a whole.
The Whole Is More than the Sum of the Parts
Few of the epic changes underway in our world today can be understood through one-country analysis—not even the rise of China. It is the interaction among parts of the broader system that often gives concrete developments in any one location their broader importance. Nowhere is this synergistic pattern more pronounced than in Eurasia, which is both massive and unique, as noted above.
To make analytical sense of the political-economic transitions now unfolding in Eurasia, and to grasp their broader implications, this research employs four interrelated concepts, chosen for their heuristic value: (1) geographic location, (2) critical junctures, (3) Crossover Points, and (4) distributive globalism. Together, these tools clarify the incentives and leverage of actors at various decision points; the prospects for system stability or transformation; and the resultant systemic profiles of particular processes of change. Collectively, they give us deeper insights into why Eurasia’s reconnection is steadily progressing, despite challenging implications for the classical liberal order, and what the global implications thereof will ultimately be.
We conceive the utility of the foregoing concepts for our analysis in this volume as follows:
(1) Geographic Location. Determines resource endowments and latent connectivity potential. Contrary to the frequent assertions of globalist commentators, the world is not flat, either in reality or for many geo-economic purposes.
(2) Critical Junctures.18 Describe the character of critical change periods, such as the 2008 global financial crisis, and provide microlevel insights into the timing, sequence, and causality through which political-economic systems and their constituent institutions change in the way that they do.
(3) Crossover Points.19 Describe broad periods of transition, such as the December 1991 collapse of the Soviet Union, in structural terms. Provide macrolevel insights into the nature of systemic transitions.20
(4) Distributive Globalism.21 Describes systems of governance characterized by distributive as opposed to regulatory allocation. Readily generates “win-win” arrangements between benefactors and recipients due to payoff structures involving concentrated benefits and diffuse, widely distributed costs. This concept generates insights into the nature of international order at the macro level, based on incentive structures at the micro level. It also generates predictions for system stability and prospects for transformation.
To succinctly conceptualize the process of systemic transformation, and to help assess its functional significance, we focus first on the notion of Crossover Points. Crossover Points can exist at various levels of social activity, and we identify three of particular significance relative to the ongoing transformation of Eurasia’s role in global affairs today.
China’s Crossover Point
Change in China matters to the continent—not only due to China’s scale and momentum but also due to its geographical positioning. The PRC, at the economic heart of Eurasia, has been growing steadily for more than a generation, and became the second largest economy globally, in nominal terms, during 2010.22 Three years later, in 2013, China became the largest nation globally in PPP terms.23
In no nation of global consequence is the pace of change more rapid or the implications more globally consequential than in China. The PRC, after all, has the largest population on earth and has sustained for over three decades one of the highest long-term economic growth rates in history for a major nation. As a consequence, China’s own domestic consumption patterns—of food, energy, and raw materials—have assumed major significance beyond its borders.
Location, a basic and enduring variable, makes a much greater difference in shaping political-economic outcomes than often appreciated. China would not make nearly so much difference to global affairs if it were in the South Pacific, like Australia or New Zealand. The PRC is instead situated in the heart of populated Eurasia, surrounded by fourteen neighboring countries.24 Across most of recorded history, connectivity among these nearby nations has been poor, despite resource complementarities and industrious labor, with their economies remaining remarkably static as a consequence.
China of course is surrounded by the Himalayas, Gobi Desert, Tibetan plateau, Taklamakan Desert, Tian Shan mountains, Southeast Asian jungles, and the Pacific Ocean. It has historically been isolated from the rest of Eurasia, rather than interconnected. That is why its rising recent connectivity with neighbors, as catalyst for an explosively growing continent, is so important today. The transformation of a huge nation like China, so centrally located, thus naturally has historic continental implications.
For many years, China’s rising economic strength was hidden, until dramatically revealed in the 2008 global financial crisis, when it steadily grew, amid broader recession elsewhere. This underlying Chinese strength did not at first translate into strongly proactive diplomacy or political-military strategy. The Hu Jintao administration largely followed Deng Xiaoping’s dictum of “hiding strength and biding time.”25 This pattern has shifted decisively, however, under President Xi Jinping, especially since the enunciation of the One Belt One Road (OBOR) program in October 2013.26 At last China has moved to consolidate a fractious Eurasia, exercising leadership capacities implicit in its new economic strength and geopolitical centrality.
China’s Crossover Point under President Xi has had three main dimensions: domestic, political-military, and diplomatic. In domestic terms, there has been increasing emphasis on the centrality of the Communist Party in national affairs, and a related allocative preference toward less-developed outlying regions in the West, the Northeast, and the Southwest as well.27 In the political-military sphere, China has continued to expand military spending commensurate with its rapid economic growth. Diplomatically, China has reached out more systematically and strategically under the Belt and Road Initiative to Russia, Europe, Central Asia, Southeast Asia, and the Middle East.
As its economy, global dependence, and defense budget have grown, China has significantly expanded military power-projection capacities, in such areas as cruise missiles, reconnaissance satellites, stealth weaponry, artificial intelligence, and aircraft carriers.28 The PRC has simultaneously restructured the People’s Liberation Army, consolidating seven military regions into five theater commands.29 China has also more assertively reinforced its territorial claims in the South and East China Seas, both by building artificial islands and by strengthening its naval presence.30 Most recently, it has begun reconciliation, based on its rising geo-economic strength, with a variety of Eurasian neighbors, including longstanding US allies such as the Philippines, Korea, Japan, and several NATO nations. The PRC has thus begun to neutralize asymmetrical US influence far from Chinese shores, emerging as a major global rather than simply a regional power. Promoting connectivity has become a major tool for Beijing, complementing its rising hard power with a congenial distributive soft power that also furthers geopolitical objectives.
Eurasia’s Crossover Point
Eurasia in the aggregate is a potential Super Continent, with resources, population, and geographic scale second to none. Yet until the late 1970s, that potential powerhouse was just a static, Balkanized corner of the world, divided among myriad conflicting jurisdictions, with little commerce or even reliable infrastructure connecting the disparate parts. China’s Four Modernizations (1978), the collapse of the Soviet Union (1991), and the 2008 global financial crisis enhanced the potential for a more interactive and interdependent Eurasia across three fateful decades. That prospect, emerging slowly but surely over the past ten years, has been catalyzed since 2013 by the Ukraine crisis between Russia and the West as well as China’s Belt and Road Initiative. Overall, the geo-economic changes within China since 1978 have triggered a broader Eurasian consolidation that can be seen most productively within the context of that Eurasian transformation as a whole.
On the far side of Russia and Central Asia, from the perspective of the Sino-Indian giants, lies the European Union (EU). The EU lies remarkably close in geographic terms, across the expanses of Eurasia, to the major centers of Asia. And a process of “continental drift,” set in motion by post–Cold War Europe’s integration and China’s western development, is bringing industrial centers of the two regions ever closer together, as suggested in Map 1.2. Technological and domestic political-economic changes are imparting this drift with enhanced momentum.
Sino-European economic relations, in particular, have deepened sharply since the 2008 global financial crisis. China’s growth, a common—and complementary—Sino-European focus on manufacturing, a revolution in intermodal logistics that is synergistic with that manufacturing emphasis, improved transcontinental infrastructure, and streamlined border-clearance procedures have all played important roles in deepening this historic linking between the antipodes of Eurasia. Ties between China and the former socialist nations of Eastern Europe (institutionalized through the 16+1 framework established in 2012), as well as those linking China and Southeast Asia, have deepened especially rapidly. Since the Iranian nuclear agreement of 2015 (the Joint Comprehensive Plan of Action, JCPOA), Indian economic ties with Europe have also grown, using as a transit point the Iranian port of Chabahar, only 550 nautical miles across the Arabian Sea from Prime Minister Modi’s own home state of Gujarat. US withdrawal from JCPOA in mid-2018 complicates this Indian initiative and India’s efforts to compete with China in developing ties to Europe.
Changes over the past three decades have also hastened the emergence of a more interactive Eurasia. A “New Europe” has emerged in the east from the former Warsaw Pact, growing rapidly and holding longstanding ties to China, Vietnam, Mongolia, and even North Korea, dating from socialist days. Meanwhile, a powerful central European manufacturing complex has emerged, considerably to the east of its predecessors, with synergistic complementarities to Asian continental economies, especially China. Logistical innovations, such as expedited freight forwarding and border clearance, accelerated by BRI infrastructure support, are also making transcontinental trade and transport ever easier and faster, helping integrated transcontinental production and distribution chains to develop. E-commerce, which actively employs new modes of communication such as business-to-business (B2B) and customer-to-customer (C2C) liaison, is accelerating this integration still further. On the political front, European fragmentation and social problems, including migration, are absorbing local attention and allowing Chinese influence to quietly increase, especially in Eastern Europe.
MAP 1.2 “Continental Drift” brings Europe and Asia closer in the post-Cold War world
Today the Asian Infrastructure Investment Bank, ASEM, the Conference on Interaction and Confidence-Building Measures in Asia (CICA), and the 16+1 cooperation framework, among major international organizations, link Europe and Northeast Asia at the west and east antipodes of the Eurasian continent. Meanwhile, the Shanghai Cooperation Organization (SCO) and the Eurasian Economic Union help integrate transit states into the broader chessboard as well. Over the past decade, transnational road, rail, pipeline, telecommunications, and electric power infrastructure across Eurasia have all expanded to a remarkable degree. The first scheduled Europe-bound freight train from China left Chongqing for Duisburg only in March 2011. Yet by September 2018, over 10,000 trips between Europe and China had been completed. More than one-third of this total occurred during 2017 alone, with over thirty trains per week moving transcontinentally in each direction.31
This deepening and well-used infrastructure, capitalizing on the revolution in intermodal logistics provoked by the digital revolution, is turning Eurasia into an increasingly interactive political-economic playing field. Integrated rail, road, air, and maritime transport, enabled by the digital revolution, is becoming increasingly competitive with maritime variants. This logistical revolution is provoking a rapid proliferation of transcontinental supply chains, with China at their core.
As the pages to come will demonstrate, dual Crossover Points—across Eurasia as a whole and within China more specifically—have latent synergistic potential. A historic consolidation within Eurasia is occurring, driven by developments in both China and its Eurasian partners to the west, from Central Asia all the way to Central Europe. And those dual consolidations create the deepening if distant prospect of a Eurasian Super Continent, potentially provoking a much broader and more consequential global reconfiguration, especially if the United States is oblivious or insensitive in its response.
A Global Crossover Point Impending?
Eurasia is by far the largest continent on earth in geo-economic terms, generating over 60 percent of nominal global GDP, and nearly 70 percent when calculated in PPP. It is home to around 70 percent of the world’s people, and holds the bulk of global foreign-exchange reserves.32 It has Super Continent potential. Yet it still lacks internal connectivity.
The largest nations of Eurasia—China, India, and Russia among them—are neighbors geographically and complementary in economic terms. This triad remains largely unbound, as yet, by infrastructural ties or well-institutionalized multilateral networks.33 This propinquity of the largest continentalist powers has broad geo-economic implications, however, that could well mean greater interdependence and arguably more intense institutional ties, with deepening geopolitical implications, in coming years.
Complementarity begins in the economic realm. Russia, for example, is a major exporter of both energy and arms, and India a sophisticated producer of services, while China is a highly competitive manufacturer. Russia, its competitive problems elsewhere in the world notwithstanding, is a major exporter of energy and arms to both the Asian giants. Despite geopolitical differences, there is powerful logic to the interdependence of this Eurasian triad, and collective geopolitical benefits to cooperation among its members, especially due to their shared centrality on the world’s largest continent.
European experience suggests the frequent importance of smaller powers as catalysts for stable relations among their larger neighbors. Following World War II, for example, the Benelux nations (Belgium, Netherlands, and Luxembourg) played a key role in bringing France and Germany together as the core founding members of the European Economic Community. Belgian statesman Paul-Henri Spaak was chosen as the chairman of the European Coal and Steel Community; the head of the Spaak Committee, which played an influential role in establishment of the European Economic Community; and as the second secretary-general of NATO. He also served as Belgian prime minister and foreign minister, playing a central regional role in those national capacities as well.
Much depends, in short, on the ability of the largest Eurasian powers to collaborate with one another—yet also on the converse intensity of their mutual rivalry and competition. Should those massive nations cohere, their collaboration would accelerate the coming of a global Crossover Point where Asia takes central prominence in world affairs; should they quarrel, that Crossover Point could be delayed or fail entirely to materialize.
Intra-Eurasian geopolitical rivalries, including border conflicts between China and India across the Himalayas, doubtless remain.34 Yet the key nations of Eurasia—preeminently China and the European states—are forging new ties with alternate centers of global affairs, apart from the United States. Most significantly, as we shall see, they are developing fresh relationships with their Eurasian neighbors, renewing historic Silk Road ties that had largely languished since Vasco da Gama’s historic sea voyage from Europe to India over five centuries before.
Particularly important in propelling deepening connectivity and interaction across Eurasia are several middle-power regionalist integrators, with special incentives to pursue continental integration, even in opposition to broader globalization. They are playing similar regional roles to those of the Benelux nations in Europe six decades ago. Small and middle powers such as Erdoǧan’s Turkey, Mirziyoyev’s Uzbekistan, Nazarbayev’s Kazakhstan, and Lukashenko’s Belarus—maneuvering among larger nations like Xi Jinping’s China and Vladimir Putin’s Russia—have all for a variety of reasons actively sought to bring Eurasian neighbors together in subglobal Eurasian continentalist associations, with the smaller powers playing surprisingly important catalytic roles.
Also prominent among these would-be continentalists is Iran, with the eleventh largest population and the second largest energy reserves on the continent. Due to its estrangement from the United States, Iran emphatically rejects US-centric globalism but finds Eurasian continentalism quite congenial, and has actively been seeking membership in the regionalist SCO. Iran manifests the most extreme case of continentalist bias. Yet it is far from the only nation striving to construct a continentalist order that minimizes the influence of the United States. Eurasian continentalism is a convenient vehicle for doing so, as the United States is—quite distinctively among major nations of the world—not a Eurasian nation.
Multilateral regional organizations with potential significance in orienting Eurasian states toward broader collective global roles are beginning to evolve, as they did in Europe half a century ago. ASEM, CICA, and the SCO, for example, founded in 1996, 1999, and 2001 respectively, include a broader selection of Eurasian nations, but none include the United States. The SCO, in particular, has begun to play a substantive role in deepening personal ties among Eurasian leaders and providing a forum for policy coordination, especially since 2017 when India as well as Pakistan joined and Iran became an active observer. A decade ago the SCO was active mainly in the counterterrorism area, but its functions have expanded recently into energy and infrastructure, with BRI as a major catalyst to its effectiveness.35
The large nations of Eurasia, as many have argued, do have “big power” consciousness and divergent geopolitical aims. They exist, however, in a changing continental context, in which their relative influence is shifting, smaller powers are growing more active, and connectivity is sharply rising. The distributive policies of China’s BRI, in particular, accelerate that connectivity process and are especially seductive in doing so, due to an allocative character that concentrates benefits and diffuses costs.
Connectivity and Political Economy: A Theoretical Perspective
To understand how connectivity relates to real-world political economy, both domestic and international, it is crucial first to grasp the grassroots-level incentive structures at work. Our point of departure is the important analytical distinction made by Theodore Lowi among three functional categories of policy decisions—distributive, regulatory, and redistributive.36 The costs and benefits generated in the three types of cases are, as Lowi points out, crucially different. Table 1.4 suggests implications for concrete systems of international order.
TABLE 1.4
Systems of international order
Regulatory and redistributive policies diffuse benefits to broad categories of individuals but concentrate costs. While equitable in many ways due to their broad application to general classes of people and situations, policies in these categories tend to provoke conflict and implementation resistance precisely because costs are so clearly concentrated and benefits are diffuse. Distributive policies, by contrast, have politically congenial traits: they concentrate benefits and diffuse costs. Not surprisingly, distributive policies, often derided as “pork-barrel politics,” have been a mainstay of durable democratic regimes across history, ranging from the New Deal of Franklin D. Roosevelt to the conservative Liberal Democratic Party government of Japan.37
Lowi’s distinctions, centering on the contrasting incentive structures that different policy types create, is relevant to international as well as domestic politics. In the international sphere, “regulatory” systems are rule based, with the universality, fragility, and propensity toward conflict that flows from the incentive structures they generate. By contrast, “distributive” systems tend to be low conflict and politically seductive, precisely because they concentrate benefits and diffuse costs.
Conceptually, these distinctions generate a typology of international system types, based on the structure of costs and benefits generated and the degree of pluralism in the leadership of the international system in question.38 A configuration with distributive characteristics that embodies aspirations to order international affairs in general can be described as “distributive globalism.” China’s Belt and Road Initiative of recent years falls into this category, and the US Marshall Plan of the late 1940s shared some of the same general characteristics.
The foregoing categories are simply abstract types, and do not correspond precisely to any specific systems in the real world. They are, however, evocative. The classic Bretton Woods system of the early post–World War II years was clearly regulatory; China’s BRI of recent years is clearly distributive. This distinction, we suggest, has important consequences for both the normative acceptability and the political acceptability of both types of systems in the broader world.
Distributive Globalism as a Resolution?
In the preceding section we introduced the concept of distributive globalism, or a cosmopolitan orientation toward providing incentives that concentrate divisible benefits and diffuse prospective costs. This pragmatic type of international behavior, epitomized by China’s BRI, promotes connectivity through support for infrastructure enhancements in multiple dimensions. Both in concept and in China’s practice, distributive globalism operates on an ad hoc basis, without general rules and subject solely to mutual national consent, often just ruling-elite consent, in contrast to regulatory systems like the Bretton Woods framework, which have clear and transparent rules.
Patterns of connectivity, such as the presence or absence of roads, railroads, trading regimes, or communication systems, evolve through discrete human decisions. Those decisions necessarily involve the interaction of multiple participants, but come in three contrasting variants with sharply different implications for conflict and cooperation. Distributive policies, as Lowi noted, involve divisible goods, that can be allocated without regard to limited resources and hence can, through almost infinite disaggregation, minimize social conflict. Benefits are concentrated, while costs are widely distributed, and often largely invisible to participants. Distributive policies include the land-grant programs authorized by the 1862 Morrill Act, which generated funds for building of the US transcontinental railway. China’s Belt and Road Initiative arguably often has this distributive, “win-win” character for those directly involved, which could well aid its global reception and consequent prospects for success, unless allocative patterns prove controversial. Since distributive benefits are typically allocated through established authorities, however, their attractiveness to such incumbents is much greater than to the opposition, creating potential complications when there is a change of power, as recently in Malaysia, Sri Lanka, and elsewhere.
One might ask how such a system relates to established theories of international relations, and also how practical it may be as a form of governance—both for Eurasia and possibly the world more generally in future years. Since both distributive regionalism and distributive globalism lack any set of clearly specified rules, other than the consent of the contracting parties, distributive globalism cannot be easily classed as idealistic. In the hands of China, centrally located as it is in the geo-economic heart of a continent like Eurasia that is sorely lacking in connectivity, such policies have clear realist implications. They do have an aspect of “checkbook diplomacy” and can potentially create “debt traps” for recipients, with perverse developmental consequences, as appears to have happened recently in Sri Lanka, Malaysia, Pakistan, and the Maldives.39 The Chinese variant, however, like the US Marshall Plan in earlier years, is far from a unilateral “tributary system,” as we shall see, and is but part of a much broader and more pluralistic process of Eurasian reconnection that builds on history yet far transcends it. If it proves to be fiscally responsible and can cope with potential domestic backlash, especially from disadvantaged opposition groups, distributive globalism, partially in the form of China’s BRI, could ultimately be an effective way to change the modus operandi of international affairs, particularly given the scale of China’s financial reserves. It could also potentially secure a global leadership role for both China and possibly other illiberal powers, while insulating domestic interests in such countries from the turbulence of full domestic liberalization.
In Conclusion
The two and a half centuries since the Industrial Revolution were, in the long eye of world history, an anomalous interlude. They represented a fleeting era of American political-economic dominance, combined with Eastern fragmentation, that could now be entering its twilight years. A clear erosion of economic liberalism, manifest in Brexit and the trade policies of Donald Trump, is one central development. Also important are the dramatic growth and transformation of the Chinese political economy, the rise of a new Eurasian continentalism, and explosively growing “South–South” trade.
These historic changes take place against a backdrop of enduring, embedded geo-economic realities that are all too often ignored. China lies at the geographic heart of the largest and most populous continent on earth, surrounded by dynamic neighbors in East and Southeast Asia. And the PRC has the largest population and the third largest geographical expanse in the world. China borders on fourteen countries and is strategically positioned in relation to many more. It has the largest foreign-exchange reserves on earth. Yet China’s connectivity with the rest of Eurasia—indeed, with the broader world—is historically poor.
Connectivity initiatives at the heart of the BRI could thus, if realized, have a synergistic effect on China’s power and influence. Yet by supplying infrastructure and promoting political-economic stability through distributive policies, they could energize its neighbors and transcontinental partners as well. Infrastructure, ranging from railroads to electric power grids and telecommunications systems, enables mutually beneficial transactions including trade, investment, and cultural exchange. It also opens prospects for deepened Eurasian synergies across the continent, such as the China-inspired 16+1 Forum, even as it intensifies tensions in neglected parts of the continent as well.
Deepening Eurasian interdependence, especially the increased connectivity between major economic centers such as China and Europe, magnifies the systemic impact of classical globalism’s erosion. It also accelerates a fateful transformation of world affairs as a whole that benefits China but involves far more than the rise of China alone. Through distributive globalism Eurasia is thus being reconnected and a Super Continent is arising, normative implications notwithstanding. The dimensions of this development and the global implications, are subjects of the pages to come.
Notes
1. A Near Eastern religion (Christianity) became central to European culture, for example; Genghis Khan’s mother was also a Nestorian. The Zoroastrians of Persia influenced both the Hebrews of Israel and the Parsis of India. Middle Eastern spices enriched cuisine both in Europe and in China.
2. “Eurasia” here includes all of Europe and Asia. See Figure 1.1.
3. See Angus Maddison, The World Economy: Historical Statistics (Paris: OECD, 2003), Table 8b. Share of World GDP, 20 Countries and Regional Totals, 1–2001 AD. https://doi.org/10.1787/9789264104143-en.
4. Ibid.
5. On the social transformation, see Karl Polanyi, The Great Transformation: The Political and Economic Origins of Our Time (New York: Farrar & Rinehart, 1944) and Barrington Moore, Social Origins of Dictatorship and Democracy: Lord and Peasant in the Making of the Modern World (Boston: Beacon, 1966).
6. In 1950, the US shared 27 percent of global output, compared to Asia’s 18 percent. See Maddison, World Economy, Table 8b.
7. The US population was 152.3 million, while that of Asia was 1.38 billion. See Maddison, World Economy, Table 8a: World Population, 20 Countries and Regional Totals, 1–2001 AD.
8. See “Record Number of Freight Trains Link China, Europe,” Xinhua, November 18, 2017, http://www.xinhuanet.com/english/2017-11/18/c_136762654.htm.
9. See Benjamin Kentish, “First Direct Train Service from China to the UK Arrives in London,” Independent, January 18, 2017, https://www.independent.co.uk/news/uk/home-news/first-direct-train-chin…; “First Freight Train Linking UK with China Arrives in Yiwu,” DW, April 29, 2017, http://www.dw.com/en/first-freight-train-linking-uk-with-china-arrives-….
10. According to IHS Markit, Huawei shared 28 percent of the global mobile infrastructure market in 2017, followed by Ericsson (27 percent), Nokia (23 percent), and ZTE (13 percent). See Natalie Bannerman, “Ericsson, Nokia Lost Infrastructure Market Share While Huawei Continues to Grow,” Capacity Media, March 15, 2018, http://www.capacitymedia.com/Article/3794074/News/Ericsson-Nokia-lose-i….
11. See Huawei, “Huawei Obtains the World’s First CE-TEC for 5G Products,” April 16, 2018, http://www.huawei.com/en/press-events/news/2018/4/World-First-CE-TEC-5G….
12. See Karen Freifeld and Eric Auchard, “U.S. Probing Huawei for Possible Iran Sanctions Violations: Sources,” Reuters, April 25, 2018, https://www.reuters.com/article/us-usa-huawei-doj/u-s-probing-huawei-fo….
13. See Niall Ferguson et al., The Shock of the Global: The 1970s in Perspective (Cambridge, MA: Harvard University Press, 2010).
14. The overland shipping distance between Shanghai and Rotterdam, for example, is 10,867 km, while the maritime distance between the two ports is 18,711 km. Also see Map 1.1.
15. The actual figure is around 41 percent. See Table 1.4. On the importance of Eurasia in various geo-economic dimensions, see Zbigniew Brzezinski, The Grand Chessboard: American Primacy and Its Geostrategic Imperatives (New York: Basic Books, 1997), 31.
16. In 2016, China produced 26 percent of the world’s manufacturers, the EU 19 percent, and the US less than 18 percent. See World Bank, “Manufacturing, value added (current US$),” World Development Indicators, accessed October 7, 2018.
17. Population growth, however, is sharply decelerating in China, as well as in Southeast Asia, while modestly decelerating in West Asia, making much of Asia’s advantage ephemeral.
18. A critical juncture is defined here as a historical decision point at which there are alternative paths to the future. Descriptively, crisis, stimulus for change, and intense time pressure are necessary and sufficient. See Kent E. Calder, The New Continentalism: Energy and Twenty-First Century Eurasian Geopolitics (New Haven: Yale University Press, 2012), 53.
19. “Crossover Points” are transition periods to new forms of social activity of broad social relevance.
20. On the determinants of system transition and the notion of a crossover transition point, see A.F.K. Organski, World Politics (New York: Knopf, 1959); Klaus Knorr, Power and Wealth: The Political Economy of International Power (New York: Basic Books, 1973); Robert Gilpin, War and Change in International Relations (Cambridge: Cambridge University Press, 1981); Paul Kennedy, The Rise and Fall of the Great Powers: Economic Change and Military Conflict from 1500 to 2000 (New York: Random House, 1987); and Charles F. Doran, “Explaining Ascendancy and Decline: The Power Cycle Perspective,” International Journal 60, no. 3 (Summer 2005): 685–701.
21. “Distributive globalism” is a variety of globally oriented activity involving distribution of material benefits by multiple state and/or multilateral actors on an ad hoc basis, without an explicit regulatory framework.
22. According to the World Bank, China’s nominal GDP was $6.1 trillion in 2010, higher than Japan’s $5.7 trillion. World Bank, “GDP (current US$),” World Development Indicators, accessed March 13, 2017.
23. World Bank, “GDP, PPP (constant 2011 international $),” World Development Indicators, accessed March 13, 2017.
24. The literal geographic center of Eurasia, of course, lies further to the north and west, in Central Asia or Russia depending on the method of calculation used. As much of the land north and west of China is arid, subject to extreme climatic change, or both, however, China lies at the heart of populated Eurasia, surrounded by the similarly populated and dynamic nations of Southeast Asia, the Indian subcontinent, and the Korean peninsula.
25. Deng Xiaoping’s famous foreign policy slogan says, “Coolly observe, calmly deal with things, hold your position, hide your capacities, bide your time, accomplish things where possible.” See “Less Biding and Hiding,” The Economist, December 2, 2010, https://www.economist.com/node/17601475.
26. Since 2015 this has been known formally as the Belt and Road Initiative. See National Development and Reform Commission, Ministry of Foreign Affairs, and Ministry of Commerce of the People’s Republic of China, “Full Text: Action Plan on the Belt and Road Initiative,” State Council of the People’s Republic of China, March 30, 2015, http://english.gov.cn/archive/publications/2015/03/30/content_281475080….
27. This set of redistributive preferences began under President Jiang Zemin, although it has been greatly expanded and integrated into broader regional strategies much more systematically under President Xi. See Nancy Huang, Joie Ma, and Kyle Sullivan, “Economic Development Policies for Central and Western China,” China Business Review, November 10, 2010, www.chinabusinessreview.com/economic-development-policies-for-central-a…; and “Rich Province, Poor Province,” The Economist, October 1, 2016, https://www.economist.com/news/china/21707964-government-struggling-spr….
28. See, for example, John Markoff and Matthew Rosenberg, “China’s Intelligent Weaponry Gets Smarter,” New York Times, February 3, 2017, https://www.nytimes.com/2017/02/03/technology/artificial-intelligence-c…. Also Ankit Panda, “China’s First Domestically Manufactured Carrier Launches. What’s Next for the PLAN?” The Diplomat, April 27, 2017, https://thediplomat.com/2017/04/chinas-first-domestically-manufactured-…. China’s second aircraft carrier—the first to be produced domestically—was launched in late April 2017 and will be completed by 2020. It is worth noting that the People’s Liberation Army is formally the army of the Chinese Communist Party (CCP), rather than the armed forces of China per se. It is thus inseparably linked to the perpetuation of CCP rule.
29. International Institute for Strategic Studies, The Military Balance, 2017 edition (London: Routledge, 2017), 251–60.
30. See Shen Dingli, Elizabeth Economy, Richard Haass, Joshua Kurzlantzik, Sheila A. Smith, and Simon Tay, “China’s Maritime Disputes,” Council on Foreign Relations, www.cfr.org/asia-and-pacific/chinas-maritime-disputes/p31345#!/?cid=otr….
31. “China-Europe freight trains steam ahead,” Global Times, November 29, 2018, http://www.globaltimes.cn/content/1129613.shtml.
32. World Bank, “Population, Total,” World Development Indicators (2017), accessed October 18, 2018.
33. For details, see Kent E. Calder, The New Continentalism: Energy and Twenty-First-Century Eurasian Geopolitics (New Haven, CT: Yale University Press, 2012), 223–27.
34. For a pessimistic view of these geopolitically tinged conflicts, see Bill Emmott, Rivals: How the Power Struggle Between China, India and Japan Will Shape our Next Decade (Orlando, FL: Harcourt, 2008).
35. See “SCO Member Countries Reap Tangible Benefits from China’s Belt and Road Initiative, Play Bigger Role,” Xinhua, May 9, 2018, http://www.xinhuanet.com/english/2018-05/09/c_137167093.htm.
36. See Theodore J. Lowi, “Review: American Business, Public Policy, Case Studies, and Political Theory,” World Politics 16, no. 4 (July 1964): 677–693+695+697+699+701+703+705+707+711+713+715, http://www.jstor.org/stable/2009452.
37. Kent E. Calder, Crisis and Compensation: Public Policy and Political Stability in Japan, 1949–1986 (Princeton, NJ: Princeton University Press, 1988), 162.
38. The author thanks Yun Han for helping to elucidate this distinction.
39. Kent E. Calder, The Bay of Bengal: Political-Economic Transition and Strategic Implications (Tokyo: Sasakawa Peace Foundation, 2018).