By: Bernard Stanford

This interview with Dr. Michael Auslin was conducted before his lecture for the Buckley Program on his recent book, The End of the Asian Century: War, Stagnation, and the Risks to the World’s Most Dynamic Region on Monday, March 6th. This transcript has been condensed and lightly edited for clarity.

Dr. Auslin is a resident scholar and the Director of Japan Studies at the American Enterprise Institute, a think tank that studies American public policy and defends the principles of individual liberty, private enterprise, and limited government. He has taught as a professor at Yale University, Kobe University, and Tokyo University. His work has appeared in The New York Times, Forbes, The Wall Street Journal, National Review, The New York Post, and other publications.

 

Bernard: Thank you for being here, Dr. Auslin. Your book is, The End of the Asian Century, and my first question is, why is the notion of the “Asian century” important in the first place?

Dr. Auslin: Oh, that’s a good question. We’ve often taken for granted for twenty or thirty years that with the rise first of Japan and then China, we would see an inexorable shift of power from West to East. America’s day as the dominant economy or even the dominant political force on the planet would be eclipsed by China. We made these presumptions–Japan, then China, and if not China than India–partly out of fears of where our society was going. But what’s important is that these presumptions influenced policy. We did things that showed we bought into this concept of Asia as the coming dominant area of the world.

Bernard: Asia has half the world’s population; do you think we can talk about Asia as one entity? Does Asia’s varied political landscape mean that a shift to Asia is a shift to a multipolar world?

Dr. Auslin: It’s clearly becoming a more multipolar world, but within that world, the United States is remaining dominant. We may choose not to exercise that dominance, but we certainly are far more of an effective force in the world than any other country, including any of the European countries. The West may be losing some of its significance relative to Asia, potentially, but I don’t think the United States is. In fact, what I think you see is that the United States is becoming more important in a world in which there are major leadership gaps, and opportunist actors like Russia and China trying to take advantage of them.

Bernard: You argue against the extreme case that Chinese dominance of the world is right around the corner, but even today, the IMF is still projecting 6.5% GDP growth for China this year, and if that continues, we will keep seeing a shifting of economic power towards China. So do you think that this isn’t as important as people think, or do you think that the Chinese economic trend will be in some way arrested?

Dr. Auslin: I think we do have to question even those numbers. Are Chinese data accurate? Are Western numbers ultimately based on Chinese data? Even Chinese officials themselves have admitted that there is substantial fraudulent reporting in their system. That’s one reason they’ve moved away from specific growth targets and now talk about ranges of half a percent or more. There are plenty of economists who believe that real growth is much lower, in the range of 2-3%. Finally, GDP is by definition a gross figure and the topline number doesn’t tell you that much about what goes on inside an economy

The question we haven’t asked is: how do we understand what a weakening China means? Is that stagnation? Is stagnation for China 0% growth, 1% growth? We have to ask different questions than we were talking about how strong China will get. Now we need to ask, ‘What does a weakening or moderating China mean?’ That doesn’t mean it will collapse, or not be important. But it will not be the economic center of the world.

Bernard: I was reading that you think that China might engage in more foreign adventurism to make up for a weakening economy, with one potential hotspot being Taiwan. Yet cross-strait tensions have never been better: in 2008, direct flights began between Taiwan and the mainland, and in 2015 there was the first meeting of KMT and CCP leaders since 1946. Do you think Taiwan will still be a major issue going forward, or is it on a glide path to normalcy?

Dr. Auslin: The previous eight years under Ma Ying-jeou went a long way towards reducing tension, and you had the ECFA, the Economic Cooperation Framework Agreement, and things you mentioned that brought the two closer together. But as long as Taiwan is neither fully absorbed into the mainland nor fully independent, it will remain a major issue in Chinese foreign and domestic policy, and in China-US relations. There’s always an inherent fear on the part of the Chinese Communist Party whenever there’s a DPP government, about how far they might go. A growing percentage of Taiwanese want independence or think of themselves as Taiwanese in contradistinction to Chinese. So this is not an issue that’s going away. At some point, the rhetoric will catch up with reality, that Taiwan is, for all intents and purposes, an independent country. And I’m sure Trump’s phone call with President Tsai didn’t help ease China at all.

Bernard: Something else you talk about is the relative lack of international institutions in East Asia. Do you think such institutions will arise to fill this need? And do you think the United States can play a significant role in making that happen?

Dr. Auslin: I think we have a role we can play, not to just enforce and impose, but to encourage, help, and give advice, especially to liberal partners who want to create multilateral organizations that can set norms for the region, discuss common issues, and find solutions to them. Issues like human trafficking, climate change, territorial disputes, and so on would all be on the agenda. Why organizations haven’t arisen so far is a very interesting question. I think it gets to the fact that the region’s largest countries (China, Japan, and India) still aren’t trusted by their neighbors, and they’re all former colonial masters, one way or another, of smaller countries in Asia. Their size makes it hard for smaller countries to believe that they can get a fair deal bilaterally. The fact that this region collectively spends more on defense than any other part of the globe shows the level of distrust and fear that they feel, and that’s all money that is diverted from other purposes. It’s not money that is put to people’s livelihoods.

It’s also true that Asian nations have wildly varying political systems, which always makes it harder to find common ground; just look at the UN compared to NATO and the EU, where all the members are democracies, which lets them establish something more coherent. If you look at ASEAN, they’ve basically had to work at the absolute lowest common denominator, because not much in outlook unites the countries involved.

Bernard: How much do you think that illiberal political systems are holding Asia back? We often talk about how illiberal systems negatively affect nations, but at the same time, the growth and development that propelled the United States to the forefront of the world stage took place at a time when the American political system was illiberal by modern standards.

Dr. Auslin: That’s a good question. I don’t know if you can say that it’s holding Asia back, so much as it’s holding some parts of Asia back. You have other parts–Japan, South Korea, Taiwan– that are fully democratic and have become indelible parts of the global system. On the other hand, so has China, despite being illiberal in many ways. Proving the counterfactual that if all of Asia were liberal, then you would see higher growth rates and greater global inegration is not something we can know for sure.

It is certainly true that misallocation, cronyism, corruption, and the like certainly hold Asia back. It’s not even a liberal versus illiberal problem, it’s largely a region-wide problem at the developmental level, and it certainly something that, I think, has accumulated to the point that the golden era of Asia’s growth is over. It doesn’t mean there won’t be growth. But 10% growth is not going to be happening anymore. It’s not happening in China, it hasn’t happened in Japan for a quarter-century. India is a slightly different story. We may see 7-8% growth there, but in the Indian context of high population growth and developmental needs, that’s just barely enough to keep things moving forward.

Bernard: There are lots of different opinions on the One Belt, One Road project. Do you think that it will help bring countries together, or might it be indicative of the government trying to give business to construction SOEs as a kind of stimulus?

Dr. Auslin: A lot of times when China makes these announcements, they’re really just for political effect. Clearly, China sees linking its Central Asian and land-based neighbors with its maritime connections as interesting, but will it actually amount to anything? I don’t know, and the more the Chinese economy slows down, I’d say the less likely you’ll see that amount of resources being poured into it.

 

Bernard Stanford is a senior in Jonathan Edwards College.