be an academic authority on either but I have been going backwards and forwards to India for 60 years for a mixture of family business politics and academic work and 30 years to China for similar mixture of reasons and I've just come back from the University of Shenzen with a group of Cambridge alumni. Um I should just point out in passing that one of the University of Shenzen's
um ambitions is to be Cambridge in not too many years. Um but that the question I'm asking um in this book is posed by William Del Rimple in this wonderful book which some of you may have seen which is the only questions are whether it is India, China or the United States which dominate the world by the end of this century. Uh I'm not quite as ambitious. I don't go beyond half a
century but um the same basic question. uh and the book has a somewhat provocative title. Uh and the basis of it is this fairly simple graph. Um it's what I've done here is I've just taken numbers from the IMF which I think we would agree are fairly reputable uh to
plot the shares in the world economy of the uh developed industrial countries basically Europe, America and Japan which is the purple line uh the green line which are emerging and developing economies. uh and red line which is emerging Asia and the yellow line which is the combination of China and India mostly China for the moment uh and the crossover point uh is clear and the
trend is very clear now you may say you know the world just doesn't keep trends
going forever and it may well there may be a reversal it's possible but it's seems unlikely at the moment India's
growing by about 6 or 7% % a year. China officially five maybe a bit less. Um
Indonesia or Southeast Asia about 5%. Uh Africa despite its many problems 3 or
4%. uh and the developed world even the most dynamic country the United States
two 2 and a half% growth and compound interest is a very powerful thing and it
produces an outcome which I would suggest we don't know but I would suggest is going to perpetuate this
trend now just a snapshot of the present uh
this is measuring the economic size of countries basically you just take the
gross national product. But there is a controversy about how you actually
measure the size of countries. And certainly the IMF, the World Bank, the
United Nations and other international bodies would say that if you just take
G&P numbers out of the book, you get very misleading figures because if you
have a $100 and you take it to China, India,
uh many other emerging economies, you get an awful lot more for your money than if you spend $100 in the United
States. And this is put put very simply that's the purchasing power problem. Uh
and it's essentially a problem created by the fact that the United States until at least until the last year had a very
strong currency. So to eliminate that bias the IMF and the World Bank uh look
at GMP in terms of the blue column rather than the black column. And you
see immediately it challenges one of the uh common assumptions that everybody
makes which is the common assumption is that the United States is the biggest economy in the world followed by China.
Uh the European Union about the same size and then you know the UK is about
number eight or nine in this list. But if you look at it in a more realistic
authentic way, which is the blue column, you'll see that China is already the
biggest economy in the world by some distance. This is um provokes quite a
lot of um irritation in the United States if you point this out. But um it it is a fact. Uh and India is number
four. uh and the disproportion between developed and developing economies is
illustrated in relation to Indonesia, Brazil and other countries. Anyway,
that's today. Uh and part of my book is explaining how we got there, why China
and now India are growing so rapidly and becoming economically so dominant. Uh
but it's also about the future. Now I've just taken a you know projections
you say almost meaningless. We don't know what the future holds. Um projections have no inherent truth. Um
but I've just taken the standard projection of the OECD which is the rich
nations club in Paris. Uh and it's the standard model that they use for their
climate modeling. And it may be right or wrong. We we don't know. This is their
anticipation of what the world could well look like in the middle of the century. And it's a
story in which uh China continues to grow relatively speaking relative to the
United States. Um not spectacularly because China is slowing down. It's running out of people amongst other
things. Uh but still um it becomes clearly the dominant economic power of
that time. Um, and it's it's not too stupid when you think about it. I mean, there are four times as many people in
China as the United States. So, if their living standards are half of the US by
that time, it wouldn't be surprising if they had doubled the size of their economy, which is roughly what's showing
here. uh the what what is very provocative and um most of the audiences
I speak to find find it difficult to get their head around and particularly I would say Chinese audiences u is the
idea that India becomes the the second major economic power in the world um and
Indonesia number four we don't think very much about Indonesia but Indonesia is a a big and rapidly growing uh
emerging economy uh Brazil also up there. Uh so that's the a sort of
futuristic world. As I I stress this is just one projection. You can run all
kind of scenarios. Um but but just asked you to hold in your head the idea that
this is the kind of world that we could be heading towards.
Uh now whether it heads in one direction or another will depend on two things
fundamentally. One is how they manage their politics and the other is how they manage their economics in a technical
way. And I've tried and this you may think this is sort of ludicrously ambitious but I've tried to capture the
essential elements of Chinese and Indian politics in one chart. And the simple
point I'm trying to make here is that although they are fundamentally different and we often pose them as
polar opposites, the party state of China versus an authoritarian party
state versus democratic India actually there's an enormous amount of overlap
and that overlap comes from the fact that they are very very large countries
1.4 4 billion people that's 20 times the population of the UK and that imposes
certain imperatives in terms of the nature of governance in in these
countries and I think a better way of describing both of them is in not nations countries in the way we normally
understand but civilization states and what they have in common
um strongman leadership it's the belief that you have to have some apex power, a
source of authority. It's very obvious in uh China. Um the the chairman is
everywhere sort of emperor type figure. Um and India has been trying to create
something a little bit sillier in the in the mode Modi era, but that's a little bit more precarious partly because of
democracy. uh an attempt to create a sort of ideology a set of values beliefs
that that create that unifies these sort of vast countries is difficult idea. I
mean how do you have a common set of ideas in everybody's head that makes them feel they're part of the same
entity? Um and she in China has been trying to do this.
I mean his thought is very difficult to translate into English. It's very gobbledegook some people would say very
difficult but but it at its heart is the idea of chi the China dream that you
know old China the China of the great dynasties the Ming and the Tang and the other is now being reborn. This is the
China dream and the Indian leadership has been trying to create its own
unifying ideology the Hindutva which is reaching back to ancient Hindu
civilization. There's a problem with that because 15% of the population are Muslims and small number of Christians
and there's a big division between the way people in the south and the north look at uh religion.
Uh a key point which is often forgotten is that although we often tend to think of China in particular as very
centralized, it's actually very flexible. uh decision making in China is
highly decentralized, sort of economic decentralized much more than the UK. You
know, a mayor, a provincial uh government or provincial leadership,
party leadership will have much more discretion over big projects, for example, than a a mayor of a British
city. And this has been part of the strength of China since the reform and
opening up which started with Diaoing in 1980. Um and the Indians get their flexibility
from having a federation which absorbs some of the the differences within the
country. Territorial integrity. I mean how do you hold together a country of so
many people which is so varied? I mean there vast numbers of um language
groups. I mean even in modern China about 20% of the population don't speak Mandarin. Uh enormous numbers of ethnic
minorities even bigger divides potentially in India. And so an enormous
emphasis on territorial integrity and and in the west we are very rather
critical of the Chinese approach to Tibet and Shing Jang and the Indians
view of Kashmir but it is all part of this concept. They both have to hold
together these very disperate states and in both cases a fear of kind of
centrifugal forces. the whole thing could fly apart unless it's held together very firmly. Both have become
digital states and this is topical UK. We're talking about ID cards in the UK.
Well, both China and India already operate on a digital identity basis. Um
I I don't want to enter into this British debate, but it seems odd that we we struggle to get our heads around 70
million people having digital identities, but the Indians have 1.4 four billion and you within an andar
framework which is everybody has a digital identity which enables well of
course people to identify them but also they to have access to very limited
welfare services, documents, land rights, things of this kind and of
course China uh has a even more advanced digital system. um both of despite the
fact that we regard one as sort of capitalistic and the other as communist
actually those those phrases mean nothing in in both cases both of them
have what I would call state capitalism they get very annoyed when you use that phrase but they applies to both and what
I mean by that they're 50/50 countries about half of the economy is private half of it's public um and this is you
know the Indian financial system is mostly state owned though of course you have you know present ownership.
Similarly in China the the commanding heights if you like are state directed
but an enormous amount of entrepreneurial activity tens of thousands of private companies ferocious
competition. So you get this fuel mixture of capitalism and communism
um which they call capitalism of course socialism with Chinese characteristics. nice bit of kind of irony.
And lastly, you know, how do you manage gigantic countries? uh how do you sort
of create escape valves because a lot of people are unhappy some of the time and
uh India starts from the the a different point that the the potential anarchy but
which is reigned in um that desense is increasingly curbed sadly in India and
the Chinese have the opposite problem of having a very authoritarian system and how do you allow people to let off steam
and that protest is managed in China. You vast numbers of demonstrations,
strikes, these things happen providing they're not directed directly at the head of government and the party. Um
it's tolerated even encouraged in many parts of China. So they they each have
these challenges and they deal with them in a similar way I would argue and one
of the themes of my book is essentially about what they have in common apart from what they have different and
whether they can survive in their present form till the middle of the century really depends on this. Uh both
countries have a history of horrendous catastrophes.
Um and this is a particular issue within China. Um I don't know how many people in British
schools for example are ever told about the typing rebellion which was one of the great cataclysms of the 19th
century. Um probably 20 30 million people just disappeared. Uh famine war
uh and the uh China Japan war um which they celebrated with this um you may
have remember the parades a few weeks ago. They were trying to remind the world that about um 20 million people
died in the battle against the Japanese. What they don't say, of course, it was the nationalist army rather than the communist army mostly, but it was a
cataclysm. And then we have the two that have occurred since the foundation of the PRC. Um the great leap forward which
may have killed 40 million people, 20, 30, 40, I mean we don't know but vast.
uh and then the cultural revolution which has created within the present generation of Chinese this utter
obsession with order uh order and stability above all uh which is is of
course why even D was the leading kind of economic liberal uh gave his
authority to crushing the Tanaman Square revolt order cannot be compromised and
although Indian history is rather different and many of their cataclysms has occurred under British rule sadly uh
they do have this historic memory of partition uh more recently seek uh and Muslim u
anti-Muslim riots. So lurking at the back of these enormous, rapidly growing,
fundamentally stable countries, you have this worry, you know, what happens if
order breaks down? And so my projections about the future are based on the assumption that they can keep this kind
of thing at bay. But you then have economic challenges.
Um, China has two. I was surprised when I gave my talk in China that they the
authorities were perfectly happy for me to show this and indeed the earlier slides most of them
but China's currently going through a very difficult phase. They've had uh four decades phenomenal 10% economic
growth but it's been slowing in recent years for a combination of reasons. Um,
and this is my slightly satirical way of describing it. Um, in many ways, China
is the ultimate capitalist economy. Ferocious competition. Uh, and what it's
it's had one of the classic problems of capitalist economies. They had a property bubble that's burst. Uh, and
property accounts for over 20% of their economy. all these enormous
endless high-rise flats which have popped up in the last 10 years or so. And they have the problem that I'm sure
you'd love to have in Cambridge of too many houses. Too many houses, falling house prices, and all the effect that
this has had on consumer confidence uh and uh and and what they now called
involution, which is too much competition, driving down prices, creating deflation.
But there's also a what I call a crisis of communism. The state is still very powerful. Um a lot of capitalism is
allocated. A lot of roads to nowhere. Um what I call rule by law, not rule of
law. The rule by law is the formula which she has created to define Chinese
concept of law. Uh and it's somewhat arbitrary. I mean, if you fall foul of
the regime and you're a um one of their, you know, enormous billionaires, um you
know, something happens. It's not quite like in the United States. The party still dominates and uh it has had a
significant effect on confidence. Um I wouldn't exaggerate the extent to which
uh China is cut off from the world. It is theoretically of course they have a very rigid system of censorship but if
you're a an entrepreneur or an academic you just buy a VPN so that there are ways of um getting around the controls
over the flow of data and information but it's uh it is a problem and the question now is you know is China
permanently slowing down or is it this is a temporary period which they will pass with their um experience of
competent But there is one fundamental difference between China and India which is in
terms of their population, their basic demography. Um, China's now reached the
point pretty much the same as Japan, Korea, uh, many Western European
countries that its population is peaked and is now falling. Uh, they
overcompensated through population control and fertility levels are now pretty low. um largely
caused by the the middle classes in the big cities not wanting to have large families, the cost of child care, kind
of familiar sorts of problems. Um so their population is declining and their
labor force is declining which is the black line. Uh and you can see in a few
years time India which has a younger population the birth rates are also falling in India but not so rapidly or
radically. um India will will have what some people call the demographic
dividend more young people coming into the labor market. It's slightly misleading story because the Chinese
will say well we'll deal with this problem by technology an enormous amount of progress in
robotics and artificial intelligence say well actually we don't need all all these people we'll certainly do
manufacturing and and much else through machines so this is not a problem and on
the Indian side the demographic uh dividend is uh been dissipated because
large numbers of people are unemployed uh particularly in rural areas. Very few women in India work. Um they do if
they're very poor and they have to uh and if they're affluent and want to but
there's a large number of women. It actually female participation in India is low than in Saudi Arabia surprising.
So they they don't they're not using their uh labor force effectively. Um but
that potentially is a is a big dividing line. But what does all this translate
to in terms of the sort of big picture of the world? What I started off by
calling geoeconomics. I'm just taking you back to a bit of um
history here. Many of you will be familiar I think with this idea of the fusidities trap. This is um concept that
emerged from an American thinker called Graeme Allison quite widely read in
China now which is the question what happens when uh you have a new
superpower and it displaces the previous one. Um it's you know you go back to
Athens and Sparta you know and the somewhat pessimistic conclusion is that
this situation invariably leads to war and Allison cited I think 17 cases
through history only a handful of which have avoided war the British grace
gracefully gave way to the United States the Portuguese to the Spanish but there weren't many others uh and there was the
cold war which of course didn't become a hot war because we had sophisticated guard rails between the Soviet Union and
the United States. But the susidity strap is a somewhat pessimistic prediction that when you have a rising
superpower i.e. China potentially India colliding with a declining superpower
then you get trouble and you get conflict. But there is a second trap which is less commonly discussed which
is named after a man called Charles Kindleberger American economic historian
uh who explained that that there was a fundamental problem when you no longer
have a hegmonic power setting the rules of the game and and post war many of the
institutions that we've relied on uh the IMF the World Bank the setting up of the
United Nations the World Trade Organization were set up under American leadership
and of course a lot of things we criticize the United States for but
actually they created this uh what you might call the liberal international economic order which has sort of kept
the system going for 70 80 years and Kindleberger raises the question about what happens if you no longer have a
hegmonic power and the problem is that there is nobody then taking any
responsibility what might call the global commons. And the global commons are things we share which can't just be
dealt with by fragmented national governments. uh climate change, uh
international trade law, standard setting, um economic coordination. If
you remember back in 2008 when the world economy was in the danger of complete
collapse after the banking crisis, Gordon Brown got the leading G20
countries together led by the US and China uh and they had a common approach
to keeping the world economy afloat and they did. It's very difficult to see that happening today.
um global health in pandemics. Uh peacekeeping which has largely
disintegrated uh nuclear proliferation which is now becoming highly topical once again with
many countries that never thought of themselves as nuclear powers like Japan, Germany possibly um feeling that they
have no alternative um and humanitarian assistance. And Kindleberger's trap is what happens when
the United States declines, the Chinese are not willing to take on responsibility for many of these things.
What happens? You know, you have a complete failure of uh commonality.
But in the meantime, um we've got a competition. And I've summarized this in
a in a probably too simple a way but uh we now have competition between the two
leading superpowers. India's coming up fast but China clearly dominates
international manufacturing. Um the US still has the global currency which
gives them enormous advantages in terms of flexibility in economic policym
and technology. Um I'll show a chart on that in a moment but sort of roughly par
I would say in advanced technology uh military the US dominates I mean 600
many more bases around the world the Chinese only have two um but China's
growing rapidly in naval capacity and nuclear weapons also um and what I call
soft power most people would look I think to the United States rather than China for ideas, culture, but maybe
that's changing with the present president. And just quickly run through each of those. That gives you the
disproportion that has now arisen in manufacturing. China has more manufacturing capacity than almost all
the developed world put together. Uh certainly roughly twice as big as this
is essentially what MAGA is all about. I mean, this is what Trump has campaigned on for 20 to 30 years. How we do we
restore the United States as a manufacturing superpower because the the
Chinese are already there. This is uh more complex and I I should
say this is entirely subjective. This is these are just my estimates. There's nothing rigorous about this at all. It's
based on my reading of scientific journalism. Essentially, I've just tried to get a a sense of where I think uh we
are in terms of the big head-to-head um technological competition which is
taking place. Uh the big battle in recent years has been the the so-called chip war. Who gets access to the very
low nanometer chips which are used as the basis for all modern advanced computing and artificial intelligence?
And until six months ago, we thought the US was well ahead, mainly because it could rely on the most sophisticated
uh uh factory in the world, which is in Taiwan, as it happens. Uh but the
Chinese have demonstrated in the last few months actually that they can do an enormous amount by improvising and
working around and getting low specification chips but achieving the
same output. And that leaves into the the artificial intelligence big language
models where where there is sort of again head-to-head competition. Um and and again we thought the Americans were
ahead but deep seek and I think there have been three or four deepseek type experiences in the last few months. Um
suggests that that Chinese are probably at most only about six months behind uh
in this area. I haven't mentioned India here but India is actually now the biggest consumer of artificial
intelligence. They're not generating their own big language models but they're not rec they recognize it's
absolutely imperative and so artificial intelligence is flooding the Indian
government system and the private sector. Uh and I attempt a similar
comparison with all the major technological areas. Um it's very clear that in terms of green technology, wind,
uh uh solar power, you know, the Chinese are way way ahead of the basic
fabrication and also the supply chains. Um the Chinese are probably now well
ahead in civil nuclear power. almost all the civil nuclear plants in the world of Chinese that are being built and also in
telecoms where Huawei which we in my view foolishly uh showed the door in the UK is now got
advanced 5G 6G and they dominate standard setting in telecommunications
and quantum which I follow quite closely because my son is a quantum physicist in
California and I get a sense that that this is the next big area of
competition. and they tended to focus on different things and have a different model. The
Americans are, you know, building up their quantum capacity from the grassroots. Lots of different models.
The Chinese have one guy that they identified 30 years ago and they threw
an infinite amount of money at him and told him to develop quantum physics to
as far as he possibly could. And as far as we know, uh, they're up there. Um so
I don't want to talk through that in detail just mention advanced manufacturing which is where the Chinese are now well
ahead in terms of robotics development. It isn't just the technology but this
kind of ecology where they are able to use vast numbers of subcontractors
working in very highly flexible kind of gigtype way which is how uh Chinese
industry and services currently operate. Um but the area where the Americans of
course still have the whip hand in this competition is in currency. Uh and that
matters because the US can run large deficits, finance its budget, including
its defense budget and get other people to buy the debt uh which they issue. Um
and it doesn't matter whether you're talking about reserves or transactions. you know, dollars are always invariably
a counterparty to any international business transaction, but that's
changing. I I did this, you know, this is a few years ago. Uh but since um
Trump came to power, this is accelerating. The number of business dealings conducted in dollars is falling
now quite precipitately. Um it's not moving into RAMI the Chinese
currency because China um has exchange controls uh but basically pe central
banks and businesses are now moving out of dollars into gold um the yen
Norwegian kerno whatever um and the power of the dollar is slipping quite
radically and that in a way is probably one of the key elements in geoeconomic
competition at the moment. Now I think the key turning point in policy I I I
constructed this it's a some of the numbers are a bit approximate but uh this explains why Trump's tariffs
matter. Uh the US used to be a highly protectionist country in the days of the
civil war. You may remember it was fought largely over the south's um use
of slavery uh to operate an economy based on exporting primary commodities
and importing manufacturers mainly from the UK at that time and the north uh
wanted to protect its manufacturing industry. But in the 19th century,
tariffs gradually fell as the US manufacturing became competitive with
the exception of President McKinley who Trump regards as his great hero. Um and
by by the first world war um America had largely got rid of tariffs. We then had
the inter war period when everybody including the UK um resorted to tariff
protection to fight depression. um the Smoot Holy tariffs in the United States. But since the Second World War,
the trend has been getting rid of trade restrictions, tariffs, non-tariffs
until Trump. And that's where we are today. And it it isn't I mean tariffs of
course are just a technical instrument. There lots of different ways of managing trade including export controls. But
there is an underlying philosophy which I've seeded here. Um, and I've quoted um
George Bush senior which is I think the the kind of liberal orthodoxy of the
United States until Trump really. We don't want an America that's close to the world. But now we reject
globalization and every day that passes that message is being reinforced. The
Chinese have gone in exactly the opposite direction. Mi Tong um was entirely focused on
China, had no interest in the outside world except a spasmodic interest in
promoting revolution. But uh she has now adopted as the sort of mantra of China.
We want globalization. We want international trade. And the Chinese now want to dominate or uh set the agenda as
far as they can on international trade and the rules governing international
comments. I mean that's a vastly oversimplified picture of the world and
what's happening but I think a reasonably fair way of capturing current thinking.
Of course uh the size of the country just isn't just about economics. uh
we're all very conscious of climate change and you'll see China now accounts
for about a third of all greenhouse gas emissions. They will point out of course that historically it's nothing like that
the you know the British and others uh burnt lots of uh
stuff in the in the 19th century but but certainly as of now uh China um it is
very much number one and India is becoming number two. it isn't quite there. Both of them burn a lot of coal.
But the the paradox here is that uh these two countries are the main source
of greenhouse gas emissions. They're also the main source of the cure. Right?
Uh I think almost twothirds of all investment in renewables takes place in China. Uh India now accounts for a a
large share as well. So they are both the source of the problem and the source of the solution. uh and I don't know
whether you followed President Xi's announcement during the week on their climate objectives which
environmentalists have denounced as very inadequate. Uh but the mere fact that
the Chinese are setting out their stall as a country that believes in climate change and is taking action on it um
differentiates them very powerfully from the United States and the Chinese and the Indians
will effectively be setting the agenda at future COP meetings on climate.
Um just finally in last few minutes um I've tried to simplify what all this
means in terms of the way the world is actually being governed and uh of course
the traditionally we've had our post-war global institutions um the G20 which
until recently was the concentration of all the major developed and developing
countries decision makers but in recent years we've got this fragment mentation
or the beginning into the G7, the rich world and the so-called bricks which is
a very loosely coordinated uh group of developing countries which
don't have a great deal in common actually some of which are in dispute with each other but nonetheless it has
become the basis of international decision making in some key areas
just uh just one to two to focus on actually One is the so-called Shanghai
group. Uh you may have noticed in the press that she met Modi at a meeting a
few weeks ago and it was the Shanghai group which is essentially Asian
autocracies. It's the country it's uh plus India
and their concern is with fighting terrorism, fighting secessionists.
um um quaza. It's not quite a military alliance, nothing like that, but but it's a talking shop, but it's a signal
of their common interest. Um on the other side, you have this interesting group called the CJTP,
which is a trans-pacific group set up originally by Obama to keep the Chinese
out, but the Americans then walked away from it. Um and the Chinese want to be
members of it. Um and Britain is a member. Britain is an Asian country. You may not have noticed, but we have joined
the this Asia-Pacific group. Um, so that's a sort of crude caricature. I I
when I'd done it, I felt I was oversimplifying it. So I I had a a fresh
a fresh attempt. And although I don't expect you to follow all the little charts, um it it the point I'm trying to
make is that in in place of something that you could have called world government, you now have vast numbers of
complex networks of countries um often centering on trade. Uh for example the
rce which is all the purple dots is a um a kind of European common market in
Southeast Asia. um Meccaur which is growing integration in Latin America um
com essa is a very very basic so rather underdeveloped
integration scheme in Africa but I think the point I'm trying to make is in place
of kind of global rules and global institutions we still have a fair degree
of cooperation but it's breaking down into sort of regional and functional
groups of different kinds And lastly, I devote a chapter in the
book saying, well, if these are the two superpowers of the future, how do they relate to each other? And I think the
the one word which summarizes it, it's frenommies. You know, they have elements of
cooperation but also hostilities. I mean, they have fought wars only four or
four years ago. There were serious military clashes and indeed a few months ago there were um China
not directly but indirectly supported Pakistan through arms supplies in its
recent clash on on the border. Uh so there's a disputed border. Um the
Indians until very recently were looking at a quasi military alliance with the
west. um they're effectively they're competitive and there's a lot of
democracy and and India believes in democracy. I mean it may be compromised in some ways but it is a different value
system but they also have a lot in common you know and as we know they're both they're both by Russian oil and
they refuse to be told not to um they're very they have a common ground in
fighting Islamic fundamentalists whether they're in Kashmir or Xing Jang uh they
want the world reformed in much the same way uh they both have this idea of a
global south that they're part of as opposed to the west. They have a common position on climate. Um, and they both
have a similar sort of economic political model in many ways. So, where does all this lead? Uh, and I'll finish
on this note. Uh, I served my apprenticeship in in business in the
Shovel's scenario planning team. Um and we were taught to think about the future
in a in a disciplined way through uh scenarios which are logical and
plausible. Um they're not predictions but and the first step is to identify
some of the key uncertainties about the future. And I've just tried to summarize them. I'm sure you can think of lots of
others um but I've just put them up there. But I what I wanted to lead to is this which
are three different stories of the future. How this emergence of China and
India, its competition with the United States, um how all of this is going to play out.
You know, it a lot of it depends what happens in the Ukraine war, uh what happens in the competition around
fundamental technologies. Uh but I I sketch out three different stories of
the world and my last chapter is is trying to put flesh on these bones. Um
and the first is the idea that I think was pretty plausible before Trump came back which is that you would get this
global west. You know most of the emerging markets would realize that their interests lie predominantly with
Europe and the United States. um and that uh you get what has been
caricatures as the axis of evil or whatever uh China, Russia, Iran, Afghan,
Venezuela and so on. Um but but this is now be beginning to look very dated.
um many of the leading countries that were leaning to the western world, India
most preeminently, Brazil um are so antagonized by Trump's way of
running things uh that they are moving in a different direction. But the global
west was a I would say the the most plausible way of looking at the future
until very recently. But what's beginning to emerge is this idea of the
bricks which is separate spheres of influence around the emer big emerging
power. Um and the and in a way Trump is sort of validating this view basically
look I'm concerned about the US. I have no interest in what happens in what he rather crudely calls holes in
Africa or whatever. Whereas um the the countries which are there you know
developing their own way of doing things and you know Brazil becoming a major power in its own right, China in East
Asia, India in the subcontinent potentially. Um and this is what's sometimes called a multipolar world.
Plenty of indicators that that concept is valid. Um, the problem with it is is
what I'd earlied as the Kindleberger trap. I mean, who looks after the world? You know, you may be looking after your
region and your sphere of influence, but who looks after the world? Uh, and it's
uh actually quite a worrying scenario. And then you have what's now happening
with Trump, the the collapse of international institutions. Um what I call a vortex where
instability sort of feeds on itself and you get to some disaster. We don't know
what it is. It could be a you know major economic failure, could be a climate disaster, could be you know somebody
starting to use nuclear weapons. all kind of possibilities that if you don't have order uh and you don't have secure
alliances, you know, disaster happens. And it may be, and I want to finish on an optimistic note, it may be that out
of disaster, you you somebody designs a new multilateralism that is more fitted
to uh the new economic geography of the world. Uh but I need to finish on an
optimistic note, but uh those are, you know, three out of my head, right? I
mean you can you can look at the future in lots of different ways but those three seem to be pretty plausible uh
picture of the way the world is evolving. Well, thank you for your attention and I'm very happy to take
questions.
Firstly, thanks. Um, perhaps trying to strike an equally optimistic note, assuming America continues to have
elections, um, do we are we overemphasizing the
durability of Trump? Are we over the durability? like you know actually
does he you know shuffle off in a couple of years time maybe even after the midterms becomes less important and
something more traditionally republic well that's the that's the liberal dream isn't it that
but it's it's not happening uh for two reasons I mean one is that I mean he's
not just a maverick individual I mean he's got an immensely powerful uh emotionally driven support base,
right? It represents a movement, not just one eccentric man. Um, and the
other is, of course, that they're taking over the institutions. You know, the legal profession,
um, you know, big companies allied with the the the oligarchs in the United
States, universities being destroyed or at least undermined. Uh, and the Trump I
mean, it is a revolution that's taking place. In fact, one of the um little
jokes the Chinese have when you talk about this stuff is that um they sort of
smile knowingly and say, "Well, we understand what's happening in Trump's America. We've been there. The cultural
revolution, you know, people running around with little red books, uh putting Duncy's hat on the heads of senior
officials and university vice chancellors, and you know, we've been there. Um it is chaotic but it is a it
is genuinely revolutionary and it is taking over and it could well spread here. We we we we see all the signs. So
uh I I don't I I think the idea that people had and they still seem to have in the American Democratic Party that
all they need to do is to win a few seats in Congress and this will all be reversed. I mean just strikes me as
incredibly naive. I mean we're dealing with something much deeper.
You haven't mentioned much about Australia and New Zealand. Where do you see their Sorry, I I I left my um hearing aids at
home, so I'm asking you to be You haven't said much about Australia and New Zealand. Where do you see their
place in the world this century? Australia and New Zealand. Australia. Yes. Well, you know, Australia is is
becoming important in a kind of Asia-Pacific sense, and it's Australia's quite an
interesting country to watch because, of course, uh, you know, they're very much part of the West culturally and
traditionally, economically, but the Australians have been very canny in
realizing that the Chinese are now the dominant power in Asia. And the Chinese
did bully them. I mean a few years ago um I think the ch the Australian prime
minister had the cheek to ask what was the cause of the COVID pandemic and they
retaliated by putting sanctions on wine exports and iron ore and the Chinese
behaved very badly. Um and it was a warning about you know how badly the Chinese can behave to their neighbors.
But the the Australians realize that they have to do business with China. uh
and they've repaired their relationship, but at the same time they have a
foothold in this so-called Orcus agreement where the British uh the
Americans uh and the Australians work together on kind of submarine development. So, Australia is trying to
keep a foothold in the west partly for security reasons, but economically they
depend totally on China and they have to maintain a good relationship with them. And the New Zealanders have been even
more careful not to avoid seriously antagonizing China. Uh and that is the
perhaps the dominant theme in their foreign policy.
Um earlier you showed a slide of um a sort of multiple network scenario
replacing globalization and I think that's what the multipolar ar multipolar
arrow is about. Um, oh, that's very kind of you. Yes, there it is. There it is.
And I didn't see anywhere the Commonwealth. Yeah. And yet,
and yet during the Brexit debate, um, the Commonwealth seemed to percolate upwards as a better alternative for
Britain. So, I wondered what you felt. What is the position of the Commonwealth in the future?
Well, I I don't want in any way to belittle the Commonwealth. Well, I used to work for Sunonny Ranfell the earlier
stage of my career and had a great and the Commonwealth played a very important
historical role in resolving the issues in South Africa actually. Um but their
current network um has no economic significance whatever.
Uh very few of the Commonwealth countries have any interest in tying their economic future to the UK. Um,
India particularly is, you know, they they turn up at Commonwealth meetings, but they don't attach value to it. So,
you know, I don't want to belittle it. Um, but the the the the talk in the Brexit referendum
about reviving the common was just nostalgia. I mean, it was nothing to do with serious policy.
There's a gentleman just to your right. Thanks so much. Uh we've just heard that
you know there's a big movement in the US that uh may be irreversible or at least going to stay with us for a little
while and we already know the situation with China. What should Britain do? What
should be our place to to weather out the next 20 30 years? Well, my my view
on on this is that we should be hedging our bets um doing what the Australians do
basically and try to maintain good working relations with China and the US.
Uh above all rebuild relations with the European Union but um you know there is
a world beyond that and in the world beyond that you have to have sensible relationships with China. And I do worry
about the paranoia, you know, about Chinese students and Chinese businesses,
which I'm afraid you you encounter in Cambridge as well as other places. Uh, I
had some experience of this when I was in government. I was, as you know, business secretary for five years. And
one of my roles was developing um good relationship with inward investors in
the UK, big inward investors, one of which was Huawei in telecommunications
and Huawei had developed very close relationships
with um with the GCHQ amongst other places and they provided the kit and it
was very very carefully monitored because you know there obviously was a security risk but whenever Whenever I
asked our security people, I said, "Are you happy to be working with the Chinese?" They said, "Yes, we can manage
this." But then what happened? I I left government 2015.
Um, shortly afterwards, the question arose is, do we want the Huawei to be
leading on 5G technology? Um and there was some reservation about
it but Theresa May came up with a compromise which is basically that
Huawei can't participated in the core functions of 5G but we welcome their
role in all the peripheries and so on. Um at that point the Americans stepped
in and says no you can't. Basically we do not want Britain uh to be part of
this um emerging Chinese telecommunications infrastructure. We will not allow you to. Basically they
said we will not supply Britain with key components if you insist in working with
Huawei. And so Huawei uh wasn't just barred from 5G. they've been ripped out
of the system. You know, BT have spent the last two or three years pulling Huawei equipment out their system and as
a result, Britain has gone backwards about three or four years on key telecommunications infrastructure
standards like latency speeds and that struck me as, you know, one of the worst
decisions that we've taken in recent years. Um what defying the Americans would have
led to I don't know but but my my instincts is that we should be uh
working with the Chinese where it's sensible and safe. Um and the classic
area which is coming up is um electric vehicles and it's a difficult one
because Chinese electric vehicles are now far technologically superior and
cheaper than anything we can produce or the Europeans can produce and they want
to um dominate the industry. And I think the answer to that is to say to the
Chinese what we said to the Japanese in the days of Margaret Thatcher, you may remember, uh she encouraged them to set
up the Nissan plant in Sunderland. And so we should say to the Chinese, we're not going to buy your electric vehicles
um for cash as it were, but if you want to put factories here, and if you can
demonstrate a genuine transfer of technology to the UK, uh you're welcome.
Um that debate is is currently going on. Um but I I I I believe we should be
hedging our relationships. The US is becoming wholly unreliable
uh protectionist. Um we're being dominated by their tech companies in a
very unhealthy way. Uh and we we've got to build and also with India. India is
enormously important and less threatening in a way. Um uh but my
approach is to hedge our bets.
You mentioned the the threat to the global commons of declining America.
Um do you think it's possible to preserve and protect them and if so how? Well, it's very difficult. I mean I
don't know any how any you know Cambridge is the center of the Antarctic
project and what's happening in Antarctica is very very alarming. I mean
until very recently it was respected as a global commons. Nobody owned it. Uh
and it was seen as a place for um scientific research and polar
exploration. But what's happened in the last 10 years in China is that in in
Antarctica is that all the powers, the big powers have seized um slices of it. The Russians have
established bases uh what they call scientific bases, but they're clearly not. Uh the Chinese the same. Uh and and
India, I think, as part of Antarctica, even Saudi Arabia, I think, has gone
gone. And um and what they're doing is is is essentially mineral exploration
which is against the rules of Antarctica. Um there's a big row just
broken out about who's who who is protecting the penguins because uh the
penguin population is being hit and apart from the British and a few other
good guys uh nobody's doing their ecological duty. So I mean Antarctica is
a very good example about what happens when uh disciplines over the global commons break down. Um fortunately in
many areas uh there is a lot of effective international cooperation.
Um I and I honestly wouldn't trust the Chinese to take on all of this. I mean
President Xi has a global philosophy. He calls the global development initiative
and the global security initiative. Um but it's it's not about dominating the
world but it's making sure that the world operates according to Chinese interests. So they don't have a kind of
global view either and the Americans are walking away. Um I think I I I think the
Europe actually has a major responsibility in this area and and the kind of middle powers who can see a lot
of bad things happening and really should be working together to to stop it.
Sorry, I think we're out of time. We're out of time. Sorry. But thank you for your attention.
