A look at how the novel coronavirus will forever impact China’s Belt and Road project and the geopolitics of Asia.
Every story about the coronavirus is also about something else. In the US it’s about our healthcare system, our politics, our elections, and our culture. Additionally, as a global pandemic, it’s about geopolitics and the impact of the virus on all countries, but particularly those in Asia.
In this week’s WhoWhatWhy podcast, noted Asia expert Parag Khanna joins us from Singapore to talk about how this pandemic will impact China and the entire Asian region.
He highlights the parallels between the path of the “Black Death” of the 14th century, which began in China and traveled along the Silk Road of the time, and COVID-19, which is moving in lockstep along what some call the new Silk Road — China’s ambitious attempt to expand its global influence under the rubric of the Belt and Road Initiative.
He explains how China is currently viewed by its neighbors, how the coronavirus will change the region, and how other Asian nations are dealing with it.
According to Khanna, author of The Future Is Asian, mistrust of China and its Belt and Road infrastructure initiative was already growing. The current global pandemic will only add to that. The crisis will force China to accelerate its efforts to bring other nations to the table to co-fund and co-manage its Belt and Road projects.
There is no question, Khanna says, that China will remain a major power. But as a result of these new partnerships, other nations in the region will be gaining more influence.
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|Jeff Schechtman:||Welcome to the WhoWhatWhy podcast. I’m your host, Jeff Schechtman.
You probably remember that after 9/11 many folks said that life would never be the same. David Letterman asked the question if anyone would ever laugh again, and yet we all came back to normal. Today many are asking similar questions about the Coronavirus. Will the world ever recover from the potential deaths, the financial markets, world trade, supply chains, and particularly the impact on Asia? The world’s economic reliance on China, the outsized influence of China as a result of its Belt and Road Infrastructure Initiatives and the nexus with other nations in Asia, relationships that are both symbiotic and competitive.
|Jeff Schechtman:||To try and help us sort through all of this, I am joined by Parag Khanna. Parag Khanna is a leading global strategy advisor and a bestselling author. He is the founder and managing partner of FutureMap, a data and scenario based strategic advisory firm and the author of The Future is Asian: Commerce, Conflict and Culture in the 21st Century. He holds a PhD from the London School of Economics and both a bachelor’s and master’s degree from the School of Foreign Service at Georgetown University. It is my pleasure to welcome Parag Khanna here to the WhoWhatWhy podcast to expand on his recent Wired Magazine article on how the Coronavirus is traveling along the new Silk Road and what it means for the future of the Asian system. Parag Khanna, thanks so much for joining us.|
|Parag Khanna:||Great to be back with you, Jeff.|
|Jeff Schechtman:||Well, it’s great to have you here. One of the earliest things you talk about in this piece is the remarkable parallels between what happened back in the 1300s, a virus that started in Asia, that spread to Italy and other places that really parallels what we’re seeing today.|
|Parag Khanna:||Yes, that’s exactly right, it is truly uncanny. If you change one letter of the province where the plague broke out in Northwestern China, that was Hebei, and you change it to Hubei, that’s where Wuhan is the capital where the current virus broke out. They’re obviously in the same country, the plague spread westward along the Silk Road, it reached Iran and devastated more than half the population of Persia, which at the time was, so it’s called a connate, a protector of the territory of the Mongol empire. It reached Genoa, entered Italy in the year, I think 1341 through the port of Genoa.|
|Parag Khanna:||You have of course today the main clusters of this being similarly China, Iran, Italy, and it’s not necessarily a coincidence, as I point out in the article. Iran and Italy are two of China’s major trade partners along the Belt and Road Initiative, which you mentioned at the outset. There are really these eerie parallels around how travelers and traders have enabled the spread of this virus. Given the long incubation period, it’s very difficult for us to know how many people are genuinely effected and obviously the weaknesses in these countries’ health systems that have been revealed. And by the way, it did spread from Italy back in the 14th century northward and decimated so much of the European population and of course so many Chinese people died as well.|
|Parag Khanna:||It led to a great fracturing or rupturing of the Mongol empire, which is the largest empire, terrestrial empire in human history as opposed to the British maritime empire. Clearly this virus can have geopolitical consequences and ramifications, which I also go into.|
|Jeff Schechtman:||You argue that this also could have serious geopolitical implications for China specifically, for Asia and also for the relationship with the rest of the world. A lot of the trade, a lot of the manufacturing that we take for granted out of China today is already being pushed into other countries.|
|Parag Khanna:||Yes, that’s right, so I want to be clear that this is a trend that has been underway for a long time in the sense that supply chains had been shifting out of China for almost 15 years because of the rise of wages in China, so this is an organic economic process just around price competition and so forth. Then you’ve got the new trade agreements, which have facilitated the shift of supply chain. You also have the rise of those Southeast Asian markets themselves, like Thailand, Vietnam, Indonesia, and American companies want to make things in those countries, not only because they’re cheap, but also because they are growing markets of 100 million, 200 million people. Then you have the trade war in the last couple of years, which has also led to tariffs on Chinese goods, so those countries have become more attractive, and now you add to that the virus.|
|Parag Khanna:||There’s a good five or six reasons in sequence over the last 10 years that have paved the way for more and more global companies, especially American and European companies, to say, “You know what? We’re not done with China, but we’re not going to make everything in China. We will make in China only the things that we sell to Chinese people in China, everything else we’re going to distribute and make it more distributed, diversified, and therefore more resilient.” That’s something I’ve been advocating, especially in my book Connectography, which is about the geography of global supply chains and infrastructure, and I think that’s a lesson that companies are starting to pay very close attention to now.|
|Parag Khanna:||Within Asia, by the way, it’s worth adding, the mistrust of China has been very high for a very long time. Countries are widely suspicious, of Chinese attention and they’re obviously very upset that China hid the evidence around this virus and allowed millions of Chinese people to travel abroad, most of all obviously within Asia itself to these countries over the last couple of months without doing anything about it. This will only heighten and amplify the suspicion that Asia’s neighbors have of China, and that also means that they’re going to fight harder to capture the supply chain, so that they are less dependent on China.|
|Jeff Schechtman:||What does this mean for the ongoing Belt and Road Initiative and those things that are already in the works?|
|Parag Khanna:||Right, I’m very, very glad you raised that as well because, again going back to the Mongol empire and the Silk Road analogy, if the Belt and Road Initiative is the new Silk Road then and you have a fracturing of that authority of China, influence of China, and the slowing of its economy and the mistrust of China, that’s going to mean that more and more countries are going to say, “You know, it’s fine to have one connection to China, one road, one railway to China, but let’s make sure that we build more connections among ourselves so that we’re not dependent on China.” Again, just to be clear, that has been underway for quite some time.|
|Parag Khanna:||Countries have been saying that they don’t want to have all their debt be issued by China, they don’t want to owe all of this money to China, they don’t want all of their investments to come from China and so forth. Much of what’s been happening in terms of trade patterns within Asia, similarly with the Belt and Road, you have countries being a bit skittish about all of this foreign infrastructure built by Chinese workers in their countries and the debt that it entails. I think that there’s going to be, again, this was already underway, a growing sense that other countries want to have more ownership over Belt and Road rather than China owning all of it.|
|Jeff Schechtman:||The other half of that, I suppose is that if China is backed into a corner, if suddenly they become, if not the enemy less than the benefactor that they’ve been, how will they respond to this?|
|Parag Khanna:||Well, that’s a great question as well, there’s action and reaction, it’s a very dynamic sort of process. China had already been in the process of softening its dominant position and saying, “You know what? We shouldn’t own all of Belt and Road because we can’t afford it anyway.” China is actually going into the current account deficit, it has a trade deficit now. It doesn’t want to spend trillions of dollars of its own money to uplift these other countries, meanwhile they’re suspicious of it. China had already been multi-lateralising Belt and Road meaning saying, “You know what? Let’s let others invest, let’s get other companies involved from other countries.” Europe has been pushing very hard and saying, “Hey, we have the best engineering companies in the world and we have the best railways and building and construction, not China, so we should be doing this and we don’t want China stealing all the business.”|
|Parag Khanna:||China has been backing up and saying, “Okay, fine, let’s get you more involved.” What will happen in the next couple of years for sure, is that a combination of all of these things will lead to China, basically having to be forced into that position to do more of that sharing, both of the burden and of the benefits of Belt and Road.|
|Jeff Schechtman:||Will the virus accelerate that process, do you think?|
|Parag Khanna:||Yes, absolutely, again, for all of the reasons we’ve been discussing, it’s the suspicion of China, the sprawling markets that China is suffering, and the desire of countries to have more control over their own international commercial relations. Yes, the virus, again as it, much like it fractured the Mongol empire, one almost has to giggle, it’s so incredibly uncanny, the parallel. I do have a feeling that this will lead to the return, accelerated return of what Asia has almost always been characterized by, especially since the collapse of the Mongol empire, which is what is called multipolarity, multiple powers, China not being number one.|
|Parag Khanna:||This is really the core thesis of my Future is Asian book. I did not call the book The Future is Chinese, I called the book the Future is Asian for a good reason because China has never been number one in the world and it’s never been number one in all of Asia, because Asia, inherently, is so diverse. You have the Indian civilization, Japanese civilization, Russia is actually an Asian power, Persia, I mean Iran, Korea, Australia. India, the United States is still a major military presence, there are many balancing powers to contain China’s rise, so the notion that has taken hold over the last 20 years, that China is inevitably destined to be number one, and the prominent global power on the planet Earth was always a complete myth, it was always wrong.|
|Parag Khanna:||I think that this will just be one more nail in the coffin of that very bad and dangerous idea. It doesn’t mean that China isn’t powerful, I make very clear that China is a superpower. You know, 15 years ago I started saying China is definitively a global superpower. I was even writing about Chinese influence in Latin America and all across Africa, so there’s no question that China is a global power with a very significant influence worldwide. That does not mean that China will be number one in the world and it will not even be number one, necessarily, will not even dominate Asia.|
|Jeff Schechtman:||If it doesn’t dominate Asia, who is the net beneficiary in terms of geopolitical power in Asia from China receding a bit?|
|Parag Khanna:||That’s a great question as well, and it’s sort of a bit of everyone. Again, the global system tends towards equilibrium, a best stable distribution of power around the world. The United States was always going to be a major pillar of that. Nothing has really gotten in the way of America remaining a major global power. We decide as America whether or not we are going to get our house in order and deploy our resources effectively in a way that is amicable to our allies and partners around the world. As long as we do that a little bit better than we’re doing right now, America will still be a major global force.|
|Parag Khanna:||Europe, same thing, Europe continues on the path of consolidation. Brexit is really an anomaly, the rest of Europe is still growing together and finding more ways to integrate their military, integrate their financial markets, integrate their banks. They have to and they’ll get there. Then within Asia you have China, you have the rise of India, you have Southeast Asia, the other Asian powers I mentioned before. So everyone wins a little bit and China starts to win a little bit less, that’s basically what is going on.|
|Jeff Schechtman:||What are the lessons that you think, if any, that China learns from this experience right now?|
|Parag Khanna:||Again, really, really good question, we obviously all wish there was more transparency in China in terms of their learning from experience and their listening to others, so it is a bit of a black box so to speak. But there is this echo chamber imperial effect that happens in lots of countries, even in democracies where leaders only hear what they want to get told, or only get told what they want to hear. And that is obviously problematic, so one hopes that they come out of it. Getting the strong feedback and pushback, again, this has already been happening. I can cite instances from Kazakhstan to Mongolia, to Myanmar, Singapore, Japan, lots of countries push back on China and say, “Sorry you cannot own 100% of our utility grids and power supply, mining assets and railway infrastructure and airports, sorry we have laws, we have sovereignty.”|
|Parag Khanna:||That push-back was under way and China may hopefully start to listen to that push-back. Obviously, you have the huge domestic criticism within China. As much as they suppress and censor voices, we know that much of the population, educated class young people, they are aware that the government mishandled this and all of their propaganda cannot do away with that realization that their common citizen now has. And that makes people angry and the government probably realizes they have to soft-pedal that a bit.|
|Jeff Schechtman:||Will there be any more attempt at transparency as a result of this? I mean also given the history of SARS and Swine Flu and now COVID-19, will there be greater transparency for whatever the next pathogen might be?|
|Parag Khanna:||Well, there’s modifications, adaptations, concessions that are made over time. For example, they’ve said that they’re going to close these live animal markets, so no more live animal trading in these closed halls where viruses spread. As you rightly pointed out, there have been all just in the last 20 years, multiple major outbreaks that have emerged from China. They obviously know that if they don’t close these live markets, they’re going to lose the trust of the global public. So that’s certainly a part of it. I wouldn’t call that transparency, it’s just a change in policy.|
|Parag Khanna:||Real transparency would mean, for example, you let American CDC teams and other international health monitors, World Health Organization deep inside the country, in the same way that we try to inspect the nuclear weapons programs of countries like Iran, you need to have absolutely clear and open and transparent monitoring, if you are genuinely transparent. Is China going to give the world that level of transparency into its public health system? Of course it’s not, it absolutely will not because it’s a matter of pride, it’s a matter of sovereignty, it won’t.|
|Parag Khanna:||Right now, their propaganda machine is out there saying that maybe this virus emerged from an American lab, maybe it was a CIA bio warfare program. This is hardly even government in China that’s suddenly going to say, “You know what? Let’s open our public health system to the whole world to analyze and assess and look, please help us to make ourselves better.” The only concession they’re making is, “Let’s all work together and please provide us lots of surgical masks because we’re running low.” They’re not interested right now in becoming more transparent|
|Jeff Schechtman:||As a parallel question, what can we learn from the way China and other nations in Asia right now are handling this virus from a public health perspective and who’s doing it right and who’s not?|
|Parag Khanna:||That’s a great question. I live in Singapore and you’ve probably seen that, whether it’s the Harvard study or many other, Goodwill Health Organization and experts like Laurie Garrett at the council on foreign relations, they’ve all said, “If the whole world had a public health system like Singapore’s, we would have a small fraction of the outbreaks.” This is the first country that became a poster outside of China because it’s not far from China, you have a huge amount of travel every single day, dozens of flights arriving from Chinese cities. This was the first country outside of China to reach a hundred cases of the virus and zero people have died, and I’m living here right now. I’m speaking to you while looking out the window at a very calm and peaceful landscape of palm trees and so forth.|
|Parag Khanna:||Life continues as normal, not a single Singaporean person who’s died, and let’s bear in mind this is the fastest aging country in the world with the most lopsided aging demographics, just like Japan. This is a small version of Japan, so according to the demographic map of this virus, a hell of a lot of old Singaporeans should be dead right now, and instead the answer is zero. That’s just a fact, this is a place I’ve come to live the last few years and you have to admire the transparency of the system. They published on the front page of the newspaper every day what to do if you feel sick. They made a virus test absolutely free and open so that no one fears that they can’t afford it or that they wouldn’t be able to afford quarantine. Everything is completely free, they had videos made to air on television and everyone will know what to do if you don’t feel well and they encourage people to self quarantine, if you’ve been infected.|
|Parag Khanna:||Just every possible sensible, commonsensical thing you would expect. If you and I as nonpublic health experts were to make a list of the 20 things you would want to do to contain a virus, they’ve done all 20 of those things. Again, they lived through SARS 15 years ago, so they learned the lessons, they embedded the best practices. Again, this is probably the only country that’s getting the credit now for having contained it, but it is a very small country. But it doesn’t mean that larger countries can’t do it. Look at Japan, Japan is a very large country, well over 100 million people, but again, it’s wealthy, it has solidarity, they invest in public health, they trust their government, all of those things therefore are happening at a larger scale in Japan as well.|
|Parag Khanna:||Look, we’re live in this situation right now as you know, it’s not too late hopefully for us to learn from some of these things. You can’t have people who are infected disobeying quarantine and then going out and partying and going to work and so forth because again, two weeks later you will have a big spike in numbers as a result of that one instance, and you’re never going to be able to trace it back to who met whom, when and where. We really should be taking this a lot more seriously the way these smaller countries have done.|
|Jeff Schechtman:||How much of that comes from the attitude of the people in the country in Singapore for example, in terms of the way they approach this and their mindset from the very beginning?|
|Parag Khanna:||Most people in this country alive today remember very vividly the SARS outbreak and how many people died. It was over a hundred people if I’m not mistaken or maybe close to a hundred people, and it was devastating for the economy, the city was shunned as were many Asian countries because it spread so widely across the country, across the region, from China. They said, “We cannot have that happen again” even though they can technically afford it, it’s a rich country, but you don’t want to have that happen again. You have the trust of the people and the understanding of the people because most people in this country remember it vividly, they went through it.|
|Parag Khanna:||It’s hard to think of another analogy. Let’s take in the case of the US where we haven’t had a kind of pandemic in recent years that all of the population would remember, but let’s take the 9/11 terrorist attacks. You realize that there are 80 million millennials in America and a similar number of Gen Z. Young Americans say this is the first year where students entering college and even our youngest recruits into the army were not alive when nine 11 happened, they can’t remember it.|
|Parag Khanna:||Similarly, how you have a psychology of preparedness for a terrorist attack or a major geopolitical disruption on your own soil, it’s such a large number of people really don’t physically remember what happened, so I think that that psychology that you’re referring to and that trust in government really does matter a great deal, whether the situation is a pandemic or whether it’s something like a terrorist attack.|
|Jeff Schechtman:||Does the situation in Singapore, the fact that they have been so successful in literally containing this virus, give encouragement to the rest of the world, that it is possible if the right things are done?|
|Parag Khanna:||Yes, and that’s already where the conversation has shifted in the analytical community, in the media. People are saying, “Hey look, China is claiming the lowest rate of new infections, they’ve taken these draconian sort of measures to quarantine entire cities, so what China has done and Singapore has done are in a way… Look, let’s separate the two, Singapore is a victim of this, whereas China is a cause and a victim, so we can’t treat them in the same conversation. They obviously both have strong governments that can get things done, but from the perspective of China, if you’re not exactly being gloating, obviously given that they caused this whole thing. However, the fact is that once you have a viral outbreak, it doesn’t, there’s no point in playing a blame game, you just want to stop it.|
|Parag Khanna:||Do the steps that China has been able to take in terms of strong measures and the quarantining and mass treatments and that kind of thing, is that what you do need to do when you don’t know how far it’s spread? Yes, you do need to do it. Is China the kind of place that can do that kind of thing? Yes, evidently. Does that bring down the rate of infection? Yes, it does. Should we be doing something similar? Potentially, and that’s what experts are recommending, they’re saying, “You know what, just stop for two weeks, just everyone stay at home for two weeks, have a staycation for two weeks and then we can get a grip on this thing.” In China, you can just say it and that happens. In our country, obviously in the US it’s a lot harder to do that, but we would pay the price for not listening to experts.|
|Jeff Schechtman:||As you look around the rest of Asia, finally, how are other countries handling this, and who are the other ones that you give good grades to and not so good?|
|Parag Khanna:||Well, you’ve got to worry about Korea obviously, huge outbreak there, definitely the largest number of infections and fatalities in Asia, outside of China, so they’re still fighting a pretty awful battle. Again, even though they’re a very modern, developed country, it also has to do with that fact that they are so modern developed, they’re hyper connected, and so people move around in high speed, public transportation and airplanes, it’s a very dense society, 50 million people packed into a space that is, I’m not sure what US state I would compare it to, but a relatively small one, or a mid-sized one. 50 million people, let’s say, packed into smaller than, say Oregon, so that density is an enabler of the spread of the virus.|
|Parag Khanna:||Again, first-world rich country, but I am a bit worried about whether or not they’re going to be able to turn the corner on this. The smaller and poorer countries of Southeast Asia, like Vietnam and Thailand, let’s say, well they’re mid-sized countries, anywhere from 80 to 100 million people, they’re also in trouble because they’ve only belatedly blocked Chinese travelers from coming in. A country like Thailand that has a very large ethnic Chinese population and lots of Chinese travelers coming in, they’re so laissez-faire, they’re so blasé about it, they never even stopped Chinese from coming at all. It could be that millions of people in Thailand have the virus and they don’t seem to know or care, I don’t want to belittle the psychology, but they’ve literally done nothing. The happy go lucky land of smiles as Thailand is known, I’m not so sure that that in the long run is going to lead to… Maybe they think that MSG kind of stuff they have in their food is going to kill it off.|
|Parag Khanna:||This is a joke in poor taste, pardon the pun, but honestly, when you sit here and you live here in Asia and you compare the responses around the region, you look at some of these countries doing nothing. That obviously, you can’t just throw your hands in there and say, “Oh, well.” It’s like literally, “What are you thinking? Get a grip.” You can’t, at a point with the world being so connected, the response, our system is only as strong as the weakest link in the chain, because you have millions of people moving around every single day.|
|Parag Khanna:||We cannot afford to have weak links in the chain, and I appreciate obviously as well as anyone, as someone who works in development, economics and globalization research, I appreciate that there’s very uneven standards of development and I have a lot of sympathy for that as much as literally anyone can. I was born in India so I know what a poor country looks like. However, that means that we have to give even more resources to help these places that are underdeveloped tech shops because you can’t have that many weak links in the chain and expect the chain not to break.|
|Jeff Schechtman:||Parag Khanna, I thank you so much for spending time with us today on the WhoWhatWhy podcast.|
|Parag Khanna:||A pleasure, I look forward to having another conversation in the future.|
|Jeff Schechtman:||Thank you. And thank you for listening and for joining us here on radio WhoWhatWhy. I hope you join us next week for another radio WhoWhatWhy podcast. I’m Jeff Schechtman. If you liked this podcast, please feel free to share and help others find it by rating and reviewing it on iTunes. You can also support this podcast and all the work we do by going to whowhatwhy.org/donate.|
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