A tectonic shift in balance

IFF China 04 Shaukat Aziz
IFF China 2019
This article is part of The IFF China Report 2019

The globalised nature of the world we live in has had a transformative impact at both a micro and macro level. The ripple effect of globalisation has spread far and wide, opening up markets to an unprecedented extent, creating new opportunities and lifting millions out of extreme poverty. It has helped construct a geo-economic ‘new normal’, which has been steadily transforming global affairs and having a profound impact on our global political map.

We are living in an ever-changing and increasingly complex world, with a new global paradigm that has gradually emerged since the end of the Cold War. The world order we have known for decades is changing and – with the advent of technological advances – this is happening at a greater pace than ever before. The geopolitical tectonic plates are shifting towards a new balance of power.

IFF China 04 Shaukat Aziz
Shaukat Aziz

Thousands of years ago, Asia was the cradle of civilisation itself. It brought vast development to the world through the ancient Silk Route. Throughout history, Asia has continued to make crucial contributions to human progress, and is now at the centre of today’s tectonic shift, as China is expected to become the largest global economy in around a decade.

On top of this, Asia’s demographics, economic strength and increasing importance on the world political stage means it is poised to shape the new technological miracle we see unfolding – and become a driving force for peace and prosperity.


The path of greater collaboration

My experience both in and out of government has taught me that a multipolar world is better than a unipolar one. The existence of new world powers can only be a source of strength for all nations. And yet, where some should see opportunity, they see instead a risk to the status quo. Some countries have expressed concern about the prospect of the so-called ‘Thucydides Trap’ – the theory that when new powers rise, the risk of conflict increases.

Such a narrative is mistaken; perhaps 200 years ago it would have been appropriate, but the world has changed dramatically since then. The globalised nature of our interactions means traditional borders count for less. This has been particularly the case with technology, through the use of which you can have goods delivered from the other side of the world at the push of a button. The path to prosperity does not lie in insularity, but in embracing the opportunities of globalisation. Through this we can ensure competition, increase productivity and provide the incentive to innovate – ultimately making us better off collectively. The old status quo – in which countries constantly competed for influence – is becoming increasingly dated.

Instead, it is time to focus on moving to a new paradigm of interdependence and common interest. This involves working with – not against – each other. And this is not a policy pipe dream; it has already been gaining grass-roots support in most major developed countries.

The 21st century has the potential to see a historic shift away from strategic competition towards a path of greater global collaboration. However, for this to truly become part of our collective DNA, there must be a renewed focus on developing linkages and interdependencies, which can be achieved by encouraging trade, investment and interpersonal contact. This will help shore up a level of trust, which will be invaluable in the event of any future tension. 

Everything I learned in and out of office has led me to believe that connectivity is the true safeguard of peace. We must remember that it is the responsibility of all powers to manage the transitions we face, and ensure they remain peaceful. Peace should always be the imperative – however our domestic priorities may differ. It is through working together, not undermining each other, that we can get ahead.

The Belt and Road Initiative (BRI), unveiled by President Xi Jinping in 2013, has set a new standard for global co-operation, which should be mirrored by countries worldwide. Pakistan has already seen major benefits from the BRI, including billions of dollars being deployed in the country. The BRI has already proved to be a real game-changer for Pakistan – and is further contributing to the strength of the relationship between China and Pakistan.

As witnessed during my years in office, this has always been our strongest and most enduring friendship. It is driven by peace, harmony, mutual respect and commonality of interests. The relationship has never been directed against another power; it is a model of how bilateral relations could and should be.


A creator, not a destroyer

Questions we need to be asking ourselves today are: What does the future of Asia and the world look like? What will be the main drivers of growth? What will the nature of employment look like in an automated world? And how will increasingly sophisticated technology, robotics and artificial intelligence fit into our society?

The revolution being driven by so-called ‘disruptive technology’ should be seen not as a threat, but as an opportunity for progress. Technological advances can usher in development and social mobility on a level that has never been seen before.

Technology can bring many positive attributes to our society, including the following:

  • It brings us closer to having perfect markets, and transforms how we do business.
  • An increasingly interconnected world can break down taboos and cultural barriers, bringing people closer together. It can redress prejudices and provide a better chance of settling conflicts because we will have a greater understanding of people different to ourselves. Our globalised media means something can happen in a far-flung corner of the world and resonate instantly.
  • It can improve the delivery of public services, while encouraging greater transparency and therefore more effective governance.
  • It is knowledge – and empowerment. The phone in my pocket is not just a phone; it is a teacher, a job provider and a private banker. It has helped transform the lives of billions, and can continue to do so.

Much has been said about the disruptive aspects of technology and the negative repercussions it can bring to established industry. Of course, it can lead to job losses, and all governments should be developing strategies to address this.

It is important to perceive these technological shifts as a
creator – not a destroyer – of jobs. The jobs that are disappearing are low-skilled jobs, and we now have the opportunity to forge more interesting, skilled careers.

The technological revolution must be coupled with the provision of the requisite skills training to everybody in society. Our children need to be taught to innovate. While machines can – and will – become more and more sophisticated, they still cannot replicate the human mind, the capacity to invent and to be creative. Rewiring our brains to accept the changes around us and embracing a positive approach – and seeing opportunities, instead of problems – is a vital first step.

If we continue down this path, I believe we will see disruptive technology become a true driver of future global growth. I would argue that new technology makes way for a more democratic form of globalisation. The new opportunities offered by the internet and the new ways of doing business have made it more accessible – and more inclusive – than ever. Anyone can set up and run a business from their personal computer. The way we process and deliver goods is rapidly evolving, and the internet has taken power away from large corporations and put it into the hands of consumers and small businesses.


Harnessing Asia’s tremendous potential

As for the future of Asia, no other region in the world has the equivalent potential in terms of strong demographics, which can be harnessed to create an even more vibrant region. Many countries in Asia have a rapidly rising young population with a high capacity for hard work. This presents opportunities and challenges for policy-makers because job creation, infrastructure development, education provision and civil society structures must keep up to provide for the burgeoning youth population across the region.

In development terms, Asia should see a further move to raise living standards and average wages, as well as a more equitable distribution of growth. Improved quality of life should increasingly reach rural and remote areas, and there should be a focus on making growth sustainable.

Only through continuous reform can we stay ahead of the curve. It is the best way to create the absorptive capacity for growth and ensure a prosperous future for all countries. No country – or organisation – is exempt from the need to adapt and reform. Our technological changes make this more relevant than ever before.

Just as our approach to trade and business will need to adapt, so will our values in this modern world. Governments and civil society have a crucial role to play in nurturing in our youth those values that work in the modern world and help foster peace and tolerance. All faiths must learn to live with each other, and we must encourage mutual understanding to promote interfaith harmony. Otherwise we will see prejudices grow – and tensions rise. At worst, this could increase the threat of radicalisation and extremism. One of the main challenges facing us collectively today is migration: a disastrous fallout from the conflicts raging in the Middle East has been the mass displacement of populations and a global refugee crisis.

First, these issues must be approached with a sense of humanity. Any country that builds walls around itself, limits trade and interaction with the outside world and bans visitors or immigrants from other countries or faiths will pay a price for its isolation.

However, the flow of migrants into any country also requires careful handling; borders need to be controlled to minimise security risks. If moderate leaders cannot do this, the situation can play into the hands of far-right parties and extremist groups.

Regrettably, the major powers are splintering and struggling to co-exist harmoniously. The challenges facing Europe – from the rise of populism in countries such as Hungary and the UK’s decision to leave the European Union, to the persistent challenge of slow economic growth – are creating greater uncertainty. Once again, it is through establishing connectivity and reasons for working together that we can preserve peace – even when political splits are emerging.


Resolutions for the future

Blocking and tackling will get us nowhere in the long run. A renewed focus on dialogue and engagement is needed – and a greater effort to resolve long-standing issues, including the territorial disputes in Kashmir and Palestine. We also need to identify areas of common interest, such as the global issues of preventing climate change, alleviating poverty and protecting human rights.

What might the future hold? How do we address the increasingly complex global challenges we face?

First and foremost, we must have a renewed focus on education. It is the greatest investment we can make today for our youth and our collective future. It is clear the majority of current curricula do not provide young people with the necessary tools to forge their way in the world of tomorrow. The changing job market and the new skills required in the new economy will create the need for a different approach to how we teach our children. Everybody – from the state to non-governmental organisations and businesses – has a role to play. Focusing on education will secure all our futures, even if this means developing a system that does not resemble today’s.

In addition, we must build a new architecture for global trade and co-operation, one that reflects the challenges and needs of the new economy we are moving towards. The foundation of the Asian Infrastructure Investment Bank has been a welcome step forward, and it has already facilitated billions of pounds’ worth of projects under the BRI. In addition to developing new structures, however, the existing Bretton Woods Institutions – the World Bank and the International Monetary Fund – also require change. Rather than preach reform, they must examine their own need for improvement and restructuring, and move with the times.

Crucially, we must focus on generating inclusive, equitable growth. The new technological revolution makes this more attainable than before. If handled correctly, and coupled with prudent policy and regulation, technology can help transform our society into one more fair and more peaceful.

It is important to combine structural economic reforms with social sector improvements, boosting literacy rates and providing opportunities to all citizens to empower them and provide them with a better future. I believe change is the only constant – and it is time to accept this and press on.

To successfully steer us through these times of change, we all have one need in common: strategic, long-term leadership. We must develop a new vision of the world, one that will reshape the global economy to make the most of the opportunities we are presented with and that guides us through the challenges. One that will create progress and growth, which is equitable and fair for all.

There needs to be informed discussion of bigger-picture solutions at the highest levels, and how they can be implemented. We need to ask ourselves questions such as: How can we transform our education system quickly enough to keep up with the pace of change? How will we fill the skills gap that exists today? How will we ensure equitable growth that reaches those in poverty today?


Lack of leadership

Regrettably, we do not live in a time where such lessons of leadership are put into practice across the world. We collectively face a leadership deficit. It is time to recognise that we face common challenges that require careful diplomacy and co-operation. No two countries’ interests will ever fully align, but it is important to find ways of reducing the shortfall of trust between them and creating an environment that can enable peace.

Unless the gaps between the major powers are bridged, the repercussions of this will be felt for decades to come. Only far-sighted leadership can help bridge the gap between the major powers to build a safer, more prosperous world for us all.

To succeed in the world of tomorrow, we need to have open minds. We need to teach ourselves to embrace change. This change can be technological, economic or social – and will be at a pace faster than ever before. Only if you are able to rise to the occasion, keep your mind flexible and stay ahead of the curve will success be yours. 


This article is part of The IFF China Report 2019, which draws mainly on content provided by China-headquartered think tank, the International Finance Forum, and is published in association with Central Banking.

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