By Stephen Perry

 

Since the Silk Roads initiative was spoken about by President Xi a different tone has emerged in the world.

 

The conflict in the Ukraine opened up a schism in the world that had been unfolding for many years.

 

In the world of geo politics the initiatives of the USA since 2002 had been largely contained in actions in Afghanistan and Iraq but then they began to have impacts in Tunisia, Egypt and other countries such as Libya. Syria caught fire and other conflicts continued in Somalia, Sudan and other nations.

 

The American aversion to putting troops abroad since the huge impact of the Vietnam war had been overturned by 9/11 and many fires raged in the wake of reaction to Al Qaeda, other terrorists and other perceived opponents of the established world order.

 

The fight against terrorism became a fight across many borders with huge numbers of casualties. But Ukraine was different. A battle line was drawn again between the traditional power of the USA in Europe and that of Russia in a way not seen since the end of the Soviet Union.

 

At the same time the Obama Asian tilt had serious impacts in Asia which created tensions but no armed conflicts due to the sophisticated nature of national governments, who could see the sheer destruction of economic development that would threaten the global growth. The Asian economy has promoted most of the global growth for many decades and for it to become embroiled in conflict would threaten the global economy and stability.

 

The South China Sea has become a point of tension for the first time since 1995, when a tour of Asia by President Jiang, planned by Qian Qichen, was needed to calm worries.

 

The actions of China in creating Free Trade Areas following the collapse of the Doha round of WTO in Hong Kong in 2005, led to the creation of the ASEAN FTA and the American response of the “Tilt” and TPPA and TTIP. Some see this as an attempt to recreate the Iron Curtain with Russia, China and possibly Iran on the other side.

 

The impact of the financial crisis of 2008 led to a realisation that American capitalism and the Euro zone had failed to regulate the excesses of financial capitalism which almost brought down the Western system. QE has bought time but it may lead to another major global financial crisis.

 

G8 plus 4 was ended and returned to a Western group G7, which some thought had become weaker but may be stronger and more unified. The tension between Germany and the USA continues despite this drawing closer.

 

G20 was created as a supposed successor to G8 but it is a good basis for global thinking and ideas, but probably too big to be the organisation which can manage global developments.

 

Some talked about G2, but the sheer core issues that are at stake there make that a 10 year exploration, and that very exploration limits the power of G2 to manage global challenges without the other agendas taking over.

 

G2 is clearly functioning but as a means of managing challenges and not as a basis for a new world order. Or not yet.

 

Brzezinski caught the bigger issue in 1998 when he wrote a book called the Grand Chessboard. He posited that the world for 2000 years had fought over Eurasia and always battling for power by Eurasian nations. He suggested that the only world power – the USA – now was for the first time, from outside Eurasia.  He made many key suggestions about how the USA could continue to lead the world by managing Eurasia, and suggested that USA relations with China and Germany were key.

 

China’s bubble policy towards its border areas developed in the 1980’s created areas of security and prosperity beyond its borders and signalled a new era in managing borders. But keen observers might have been aware that the opening up of new transport routes and relations to China’s 14 neighbours, and 6 other closely proximate nations, was possibly the experiment with a longer term bigger idea. And so it has proved with the advent of the Silk Roads by land and sea.

 

The Chinese method is known as the scientific path. It means policies will be researched, tested and then developed. So the Silk Roads have been in the planning for several decades. It is part of the context of creating a moderately prosperous nation by 2049 based upon Socialism with Chinese Characteristics. Clearly as China moved 4/500 million peasants off the land to the towns and cities and created a manufacturing global capability and a service industry to match, a new vision of a nations development was emerging, of which the New Normal is a next phase.

 

China’s move to remove a peasant class of over 1 billion and create high yield large scale agriculture was a key part and has succeeded and will be largely complete within 5 or so years. China will transition through a market economy to managed capitalism and then to socialism over the next 35 years. This is a well thought through national strategy whose roots are in the wise analysis of the four modernisations in 1962/3. President Liu , Premier Zhou, Deng Xiaoping, and Chen Yun were the key architects but there were many many others involved in the development of the formula, and maintaining its preparation through the ravages of the Cultural Revolution.

 

So now after the election of President Xi and his colleagues in 2012 the major moves towards a managed market economy were really set going, and of great importance an anti-corruption movement was launched to recover the soul of China and lay out the terms of being a public servant. The Chinese Dream takes this further into civil society and this will increasingly lay the foundations for the ethics and values of the growing private sector and other pillars of China’s developing economy and society.

 

So the world is in some turmoil and experiencing great military challenges and the USA again is a major military active nation. But the formation of BRICS and SCO are a limiting structure on the ambitions of NATO where some harbour ideas of global domination or Eurasian domination.

 

Some in Asia might think that the emerging power of Asia might become a power over Eurasia but the analysis of the history of the world shows that empires do not last because they are , ultimately, based on self-interest.

 

A new concept of the world is clearly needed as globalisation and the fragile global environment and resources require managed development and peace. Globalisation of markets cannot be achieved and maintained at the hand of the gun. Exploitation becomes the rule and reaction is inevitable and resistance of perceived invaders is inevitable.

 

A study of history shows this clearly.

 

So the West is struggling to manage its economic troubles. Both the USA and the EU are in deep battles to hold their economies together as growth stagnates and deficits rise, and unemployment and crises create various forms of social strife.

 

QE is a temporary palliative and no nation has yet come out of it. The EU is a wonderful concept to end 2000 years of murderous conflicts between European nations – 100 million died in the 20th century alone in Europe. But its foundations were poorly thought through when it created the Euro and now it must rebuild and recreate itself in a strong form whilst tensions continue to threaten its existence.

 

The EU, mainly Germany now, and the USA have an uneasy relationship as Snowden showed, and the Ukraine again reflected their tendency to compete as opposed to align.

 

In Asia various tensions are showing as the Asian tilt encourages some nations to challenge the rise of China. Whether these tensions will boil over or pass on as they did in 1995/6 remains to be seen. But Asians are smart enough to know conflict ends everything.

 

The new AIIB bank brings the Silk Roads concepts expressed by President Xi to multinational reality. The Silk Roads is a brilliant variation of the geopolitical thinking of Brzezinski . It takes the huge main land mass of the world – Asia from the Pacific to Europe on the Atlantic through the Middle East and right down the whole of Africa.

 

By taking high speed trains, canals and highways the Silk Roads opens up over $10 trillion of transport, energy and communication contracts and leads to new towns and cities for up to 1 billion people.

 

If ever there was a Keynesian project to enable the world to grow out of recession and crisis, the Silk Roads is just that. AIIB and other financing structures will make all this happen, and , indeed, much is already happening. That was the thinking behind the neighbour bubbles of the late 80’s which have continued today all along China’s borders. The emergence of Yunnan as a key Mekong Delta player in the 1990’s was part of the longer term thinking of the Silk Roads.

 

Some say it is a strategic move by China to avoid the American control of the oceans and the narrow Malacca Straits. To create a new world outside American control. If that were the motivation it should stop now as such ideas never work. But the Silk Roads is to open the great and vast areas of Eastern Europe and Central Asia and to unite and integrate South Asia and South East Asia into a connected world trade market.

 

The binding concept is common prosperity which means that China can lead but must share the benefits across the peoples of Eurasia – this might slow the period of construction if it is to be honestly done , but the alternative is an empire which will have an uncertain, but definite, date of demise attached to it.

 

This new Silk Roads combined with SCO and BRICS will inevitably produce a new system and that is the basis for the title of this essay. The creation of such a new huge area cannot be done using the systems which the West developed for entirely different and organic conditions of development. This is planned development creating a new market economy area of a huge percentage of the world’s land mass.

 

This new huge area can only be developed with a system and currencies and financial structures to meet the needs of the core plan. China and the USA and the EU need to accept the changes that are required and work collaboratively and that will not be easy. It may be that fiat currencies, and other accepted norms of Western economic thinking, may not be what is required for such a huge undertaking. It may be that military power cannot be a key part of this new development.

 

There is a great deal to emerge but a new development like this will require a new system, and that is why I use the phrase taken from Deng Xiaoping – One world Two systems. The concept works in Hong Kong and can work in Eurasia.

 

The benefits to the West  of the development of Eurasia are mouth watering. China and Russia cannot provide the cutting edge technologies often needed and the funding and construction must call on global sourcing. That is going to create the need for shared approaches to structures and policies.

 

The road will not be easy but global cooperation will be important and a useful aspect of this.

 

Many new cities, a whole new area of consumer demand, a vast area for telecom innovation and development. The Chinese have already announced their spare industrial capacity can be exported – up to 30 pc of China’s industrial capacity would be available on that basis.

 

The Silk Roads will transform the world for ever.

 

But they key is to get on with the project and to get Western companies and financial sources invested into this project as quickly as possible. While some of this will be developed from China, the idea of common, or shared, prosperity, means much will be contracted for by national governments acting in association with various regional and global funding sources. There are opportunities for the BRICS New development Bank, the World Bank and the AIB.

 

London can be a part of this huge new development but that will require a new way of doing national trade and investment promotion.

 

We have seen how problems in China can cause big impacts across the world. Now is not the time for unsteadying tilts. Now is the time for steadying the globe.

 

The author is the chairman of 48 Group Club in UK