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How America is making China great again (Includes first-hand account)

“Connectivity is the foundation of a new global order,” he maintains. And it’s because of the connections that are uniting more people across the world that Globalism is in no danger of being reversed. On the contrary, despite outbursts of populism and isolationism, globalism is alive and well. To prove his point, Khanna uses maps – but not the kinds of maps that countless generations of schoolchildren have studied in geography classes.

We’re used to political maps, Khanna said in a recent talk sponsored by the Foreign Policy Association in Manhattan, but these maps show a world divided by borders. “Borders are a kind of friction – they’re an organizing principle,” he says. Sometimes they’re a fiction, too, more effective in some places like the U.S. and Canada and less so in others like Afghanistan and Pakistan. Borders aren’t static, either; just take a look at a map of pre-1960 Africa. So Khanna has drawn up a set of new maps to represent “a functional geography.” These maps vividly depict the multitude of connections that link people together (or leave them behind): fiber optic cables, roads, airports and pipelines, on the one hand, and the flow of goods, labor and capital (intellectual as well as financial) on the other. He describes his cartographic project in his 2016 book “Connectography: Mapping the Future of Global Civilization: Six Maps that will make you rethink the world.”

Connectivity is the principal characteristic of what Khanna calls the supply chain world, which he traces to 1989, the year that saw the fall of the Berlin Wall and the creation of the World Wide Web. This was the year, he says, that marked the beginning of “an era of total globalization,” and there’s no going back. We’re experiencing a ‘systems change’ – Khanna suffers from the pundit’s weakness for coining terms – that we see only once every several hundred years.
Inevitably, there are winners and losers in the new supply chain economy. If a country doesn’t want to participate in it or throws up obstacles to trade, the supply chain will simply find a way to bypass it just as new neuronal connections can form in the brain and bypass an injured area. This is exactly what happened with the controversial Transpacific Partnership or TPP. The trade pact negotiated under President Obama was widely derided by both the left and the right during the 2016 election campaign in the U.S., coming in for sharp criticism by Clinton, Sanders and Trump. (Trump formally withdrew from TPP upon taking office.) But the defection of the United States didn’t torpedo the pact; China was happy to take its place – and no wonder since it’s likely to be the principle beneficiary of the trade deal. China has also put its weight behind a new international bank to rival the World Bank whose president has traditionally been an American. It’s called the Asian Infrastructure Investment Bank (AIIP). The U.S. urged reliable allies like the U.K., Germany and France to shun the new bank – to no avail. The AIIB now has over fifty members with another twenty countries lining up to get in.

If there’s any one factor that’s driving the new economy, it’s urbanization. Over fifty percent of the world’s population lives in a city. One of the maps Khanna and his team developed shows just how vital the world’s megacities are to their nations’ economies. “The map tells us that the world economy is much more structured according to the gravity of these 40 or 50 megacities than the world’s 200 sovereign nations,” Khanna told The Washington Post. Johannesburg, for instance, represents 35-40 percent of South Africa’s GNP because so many multinational countries are concentrated there. We see the same phenomenon in cities like Lagos, Sao Paulo, Jakarta, Moscow and Istanbul, each of which plays an outsized role in their national economies. The preeminence of megacities may be in peril, though, as he readily acknowledges, because so many of them are in coastal regions vulnerable to flooding due to climate change.
The ‘big story’ of the next 25 years, Khanna says, is going to be Eurasia — a new strategic functional zone which will be dominated by China in its role as “the anchor for the world’s supply chain.” That’s one of the major reasons why China backed TPP and why so many countries on the Pacific Rim were eager to sign the trade pact despite U.S. opposition.
When he travels in Asia, Khanna keeps hearing the same question from officials: What can China build for us? As China subsidizes and builds infrastructure projects on four continents, often on very generous terms, it is exercising a different kind of power, which Khanna calls ‘extended sovereignty.’ But countries are jealous of their sovereignty. Tensions over physical assets and their value are inevitable. Myanmar recently cancelled a huge hydroelectric dam project funded by China because most of the electricity it was projected to generate would flow to China. There were also concerns that the dam would damage Myanmar’s environment. But the cancellation comes at a big price – an $800 million shortfall that a poor country like Myanmar can ill afford.

Despite the tensions, superpower hegemony is finished, Khanna says. The old model in which one (or sometimes two) countries could call the shots – the British Empire in the 19th Century, the United States after the end of World War II – no longer works. Power will be distributed more thoroughly and equally. “The U.S. makes foreign policy with military-industrial power,” he says, but in the future, power isn’t going to derive from the number of tanks and missiles a country can mobilize, but in how well it can implement policies that foster trade and a robust economy – in other words, how well it can connect.
At present, the U.S. and Europe are the world’s largest trading partners, accounting for about $1.1 trillion annually. But that situation is about to change. Trade between Europe and China is set to grow exponentially. Over the next couple of decades, Khanna believes trade in Eurasia will be worth $2 to $3 trillion while trade between the U.S. and Europe will remain pretty much as it is today.

Khanna sees a world with more reciprocity and less conflict. Sources of legitimacy are becoming more international and less concentrated in a single country, even one bristling with arms. The World Trade Organization is more powerful than the UN Security Council, he says, because it has coercive power: it can impose steep fines on violators of trade agreements.
That doesn’t necessarily mean that the U.S. and China are fated to become bitter rivals. If we pay attention to the headlines we’d think that a clash is imminent between the U.S. and China over Taiwan and territorial rights in the South China Sea. The reality, he asserts, is quite different. The economies of the U.S. and China are too entwined for the two to go to war with each other. Only last year, he points out, the U.S. began to sell oil to China for the first time, making the possibility of conflict even more unlikely. Khanna – a glass half-full guy – even discounts the likelihood of an outbreak of war on the Korean peninsula. “In 20 or 25 years, North Korea won’t exist. It will be absorbed economically and politically by South Korea or China.” It will be a turbulent transition, he admits, but in the end, “North Korea will go out with a whimper, not a bang.”

Increasing connectivity isn’t cost-free, of course. Some countries and some sectors of the economy will do better than others. Outsourcing is an old and no longer especially relevant story. Manufacturing jobs in the U.S. are threatened less by cheap labor in China or Vietnam than by automation.

Whatever its cause, though, globalization has left many people behind, creating increasing inequality and spurring the rise of populism. But populist governments seldom last for very long, Khanna says, because they can’t solve the problem either. In his opinion, the solution is to retrain workers and provide them with the skills they need for jobs in the new economy. That’s what Germany and South Kora have done. The U.S., on the other hand, has failed to make a similar commitment. Bringing back factory jobs and resurrecting the mining industry, as the Trump administration advocates, are nonstarters.
“Our politics are not in synch with new reality,” Khanna observes. “The learning process will not proceed at the same pace around the world.” But he finds some solace in the generation coming up. Millennials around the world are increasingly identifying with same values, he notes. One of those values is a right to connectivity. Millennials are making that an ethical priority. It’s clear that Khanna shares the sentiment.

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