"The first question I ask myself when something doesn't seem to be beautiful is why do I think it's not beautiful. And very shortly you discover that there is no reason." - John Cage

Figures.

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Shifting Patterns of Global Power (Part 2)
Chris Patten
30th October 2008
Hosted by: Lee Kuan Yew School of Public Policy, NUS

Thirdly, clearly, Asia is going to be a major player in shaping the 21st century.

Again, the tendency is for Europe and the US to talk about the rise of Asia like it is a new phenomenon, but if you look at Angus Madison, whio I regard as the greatest Economic Historian, until 1820 and the Industrial Revolution India and China accounted for more than 50% of the world's GDP (India 16-17%, China 33%).

China was the largest economy in the world in 18 of the last 20 centuries, and will be again this century (but not in per capita gdp - there is doubt it will become first division here).

India and China are reemerging, not emerging.

There is no need to tell this story in detail in Singapore unlike Europe and America with 'gee whiz' statistics. Let me share 2 very simple anecdotes about China.

1) My first sighting of China was as a young MP. In 1979 I went to Hong Kong to visit "our territories" - a euphemism for Hong Kong.

I was taken to a police post in the New Territories, Lo Wu, and shown China of the millennia, the sleepy fishing village of Shenzhen, with slow moving barges, duck ponds and a few peasants on Flying Pigeon bikes.

This was 10 years after the Cultural Revolution which destroyed the education of an entire generation.

Today, it is Adam Smith out of Hieronymus Bosch.

Now there are 743 Chinese students in Oxford. 42% of our math undergraduates/postgraduates are Chinese. I sometimes tell British audiences "and we worry about competition from Polish plumbers".

China is undergoing a transformation. It is the workshop of the world and more besides. India has escaped what Indians themselves called "the Hindu rate of growth", partly because of Manmohan Singh, whom I am proud to say is an Oxford alumnus, due to the exchange rate crisis of the early 90s.

India is more successful than China in producing global brands and MNCs but exports 1/7 of the marketable goods of China. India is good in IT, pharmaceuticals and back office operations - it has elbowed its way into the BRICs (I have my doubts about Russia).

There is extraordinary success in both, but I am reluctant sometimes to accept graphs showing lines continuing exponentially into the future.

One of my favourite pictures in my book shows the Archduke and his wife in 1914 setting out in Sarejevo. One person says "Stop. The car's going to take the wrong turn. There's a mad young Serbian student out there waiting to shoot you".

Only 20 years ago, 6/10 of the largest banks in world were Japanese. 20 years ago Sumitomo bought large chunk of Goldman Sachs.

China and India face problems. China with social equity, especially the divide between rural and urban areas; China's rural mortality is on par with the Congo, but urban mortality is on par with Mexico.

Also with environmental degradation. 16/20 of the most polluted cities in the world are in China.

There is an existential question - how China is sometime going to bring its political structures into line with its economic and social ones. This topic has been opened up once or twice bravely by Wen Jiabao, for example about melamine and accountability in governance.

India has different problems. They are not existential, but there are serious problems of infrastructure. For example the labour market - Indians talk about a demographic boon, with faster population growth, and a younger population than China. But if there are no jobs it'll become a demographic time bomb, if the Communists and friends prevent labour market reform - since unlike in China they still believe in Communism.

There are also social issues, like the Naxalite insurgency in a large number of Indian states.

An overall back of envelope summation: in many respects the party state in China is too strong and the party state in India is too weak.

Nonetheless they will play a major role. And unless the transatlantic community recognises this, they cannot tackle a single problem successfully.

Fourth is the agency shaping our affairs called globalisation.

There is a relationship between population and economic/trade growth. The impacts of globalisation increase as technology quickens and augments it. From 1500-1820 there was a 1% growth in world trade per year. Since then it's been 3.5%.

There was a surge in globalisation from the late 19th century to just before the First World War due to a few factors. The Midwest was opened in America, exemplified by the building of Chicago. There was a successful British championing of free trade, and technology affected productivity: the telegraph, steam ship and railway engine.

In the last few years there has been a similar outburst of globalisation.

China and India are now in the world economy. 2.5 billion people are in the global marketplace. There has been trade liberalisation and the dismantling of trade barriers. China's average tariffs were about 41% when I was in Hong Kong. Now after WTO ascension they are 5-6%. We have seen the effect of the dismantling of trade barriers and technology on productivity: air travel, containerisation, the Internet and IT in general.

Both periods of globalisation lifted people out of poverty with a deflationary boom. One reason America can cope with social inequality, and the flat average earnings of the last few years is that Chinese goods have been falling in price. In the last 10 yrs the price of clothes, textiles and shoes have fallen by 30% in the US. Walmart, for a few years after 2000, was a larger trade partner with China than Russia or Australia.

The agents of globalisation also allowed perils to nation states to move around the world more rapidly and on a larger scale. Globalisation has not destroyed the nation state, but it has demonstrated its porous frontiers. Nation states must cooperate to deal with challenges.

The 9/11 hijackers used credit cards to fund their operations. Money was laundered through opened-up banking systems. Containerisation has let all sorts of goods, including counterfeit goods, slaves and drugs to be moved using commercial airlines and transport. The drugs business is worth $300 billion on the streets.

There has been a spread of disease, like SARS. We were lucky in retrospect that the infected SARS patients landed in Toronto rather than Durban or Lagos, where the infection wouldn't have been picked up so fast and would have spread like wildfire.

There has been a dark side of globalisation. The small arms trade, terrorism, nuclear proliferation. We need greater cooperation between nation states, like we are seeing now with the response to the financial meltdown.

The nation state has not been destroyed but we need to look at 'soveregnty' in different ways. We must recognise that nation states can only deliver what citizens expect by working more effectively together. [Something] provoked into doing so by the first Bush administration's unilateralism.

I have 2 other points.

The international community must find a way to deal with failed or failing states which use sovereignty to oppress their own citizens like Zimbabwe or Burma, or states which can't use sovereignty to protect their own citizens like the Congo - 5 million have now died in fighting over the last few years over pillaged resources.

Or states which trade their sovereignty to launder money, or states like Tuvalu which sell their international telephone code for phone sex operators. Or states which support terrorist organisations; till 2001 I thought Afghanistan was less a state that supported a terrorist organisation than a terrorist organisation with a state.

We must find way globally through the UN to cope with failed/failing states. We cannot ghettoise them. Global challenges polluting regional environments are incubated there.

Finally, the biggest threat facing all of us. Climate change and global warming. We're going to need extraordinarily skilled diplomacy to resolve this problem. It demands that developed economies recognise their historic responsibility but also that emerging economies recognise the need to start to address issues alongside developed economies.

It is a huge task to agree to a deal on climate change. Without understanding between China and the US there will be no successful followup to Kyoto.

In an ideal world, President Obama would deal with the problems of Palestine and Israel in the way suggested by Prime Minister Olmert when leaving office, so he can concentrate more on America's relationship with Asia which has been badly ignored over the last few years.

I have been accused in my book of being too pessimistic or optimistic (even panglossian). My view is simple. To set out problems we face in stark detail, taking account of historical roots doesnt mean we're staggering toward an earthwreck. We can solve them. To say we can doesn't suggest a wacky excess of optimism. We've got through worse problems and difficulties in the past.

But we need bold political leadership. It entails, above all, treating the average man/woman as better than the average and appealing to our better judgments than our baser motives. So let's hope we find political leaders in America and Europe and Asia who can do that.

Then I can write my next book about my relationship with my grandchildren.

(Continued in next and last post, with the Q&A)