Asia-Pacific from the apex of the triangle

Colin James to the Association of Pacific Rim Universities Auckland University, 1 July 2010

The territory that is now New Zealand was in 1840 a Pacific place, peopled by autonomous, self-governing tribes (iwi) and subtribes (hapu) who came from the Polynesian Pacific around 800 years ago. In 1840 it was incorporated into the British Empire by the Treaty of Waitangi signed by most iwi and for the next century and a quarter New Zealand was Europe’s most distant outpost — an outpost in the Pacific. Since the mid-1970s, and particularly since the mid-1980s, a distinct European-descended culture and custom has evolved with deepening roots, which increasingly reflects and incorporates elements of Maori tradition, language, motifs and culture and custom. Te reo — the Maori language — has equal official status with English. New Zealand calls itself bicultural, a nation of two principal cultures: Aotearoa-New Zealand. This is in part a factor of the demographic resurgence of Maori (now 15 per cent of the population), in part a response to a new assertiveness from Maori leaders and in part a factor of the fashionable doctrine of indigenous rights, given weight through legislation and court decisions and anchored in the Treaty of Waitangi. In addition, there has been a new migration over the past 40 years from the Polynesian Pacific (now 7 per cent).

As a result, New Zealand is now not just in the Pacific but increasingly of the Pacific. It is a Pacific nation, with European and Polynesian heritages.

By contrast, Australia looks out on to the Pacific when it is not looking north or north-east; New Zealand looks on the world from the Pacific. The Pacific Australia looks out on to is Melanesian, foreign and unstable; the Pacific New Zealand looks out from is Polynesian, a friend and relative and generally stable.

Outsiders see Australia and New Zealand as geographically proximate and sharing a common British colonisation. And we are close: over the past 30 years our two economies have become enmeshed through the world’s deepest economic treaty; we cooperate in some peacekeeping activities, especially in the Melanesian Pacific, and in international forums; we have close administrative, regulatory and even political cooperation and New Zealand ministers routinely sit on the Australian councils of federal and state ministers, which meet on occasions in New Zealand; large numbers of New Zealand families have relatives who have moved to Australia (in all around half a million Australians are New Zealand-born, which amounts to a large exodus from our 4.4 million population).

But our two countries are very different in geology, climate and flora and fauna and in indigenous heritage. We are as distant as Singapore from Hong Kong. Australia’s north is close to south-east Asia: Australians fret about refugees reaching its shores by sea; none reach New Zealand directly. Australia sees threat in addition to opportunity in south-east and east Asia; it maintains a close military alliance with the United States. New Zealand sees opportunity and little threat; it asserts an independent foreign policy, that is, a foreign policy that is independent of great powers, based in part on its refusal to have nuclear-armed and nuclear-powered warships in its territory which broke up the tripartite alliance with Australia and the United States in 1985. This independence was a deciding factor in not joining the United States’ invasion of Iraq, as Australia automatically did. It was also a factor in China choosing New Zealand as its first, and so far only, free trade partner among “developed” economies.

Nevertheless, New Zealand is not non-aligned culturally. In majority ethnic identity, in core values and in combining liberal democracy with open capitalism, it shares much with Europe and North America. This an inescapable influence on its perception of and reaction to geopolitics and geoeconomics.

But New Zealand is also inescapably perched on the periphery of Asia. Trade in goods and services is increasingly with east Asia. Of the top 10 trading partners, seven are in east Asia and New Zealand has free trade agreements with China, Brunei-Chile-Singapore (the P4), Malaysia, Thailand and ASEAN as whole (with Australia) and is seeking free trade agreements with Korea, India, Japan and, through broadening the P4, Vietnam. (There is increasing trade with South America but not in the same league as Asia.) Chinese and Indian investment is starting to flow. Along with economic interaction, which includes large numbers of Asian students, has come migration. Ethnic Asians were 3 per cent of the population in the 1991 census and 9 per cent in the 2006 census; they now are estimated at 10 per cent and projected to be 14 per cent by 2025 and, a report this week forecast, 15 per cent of the workforce.

This Asianisation of New Zealand makes it a distinct vantage point from which to view the global economic readjustment that is restoring to China (and east Asia as a whole) and India their weight in production, trade and international forums and the global political and military readjustment that is following. As this changed world order takes shape, New Zealand may in time find it has swapped being an outpost of Europe to being an outpost of Asia: that is where the demographic, economic and political evidence points.

An Indian commentator, at a Seriously Asia conference in Wellington in 2003, saw New Zealand as one point of a triangle, with China and India at the other points. This metaphor can be adjusted to position New Zealand as the point of a triangle which has China and the United States — Asia and the Americas — as the other points.

If this sounds preposterously grand for a country of 4.4 million people, consider climate change. If we assume the International Panel on Climate Change’s dire projections are right (and I set aside for the moment the fact that the sun is in an unusually low-sunspot phase which has a cooling effect), New Zealand will be much less damaged than almost every other country. Abundant water, food and energy, combined with distance, space and safety, will make this place increasingly desirable over the next 90 years, significantly so within the next 20 years. Even without climate change these qualities are likely to make New Zealand desirable.

Desirable places are often objects of competition. There is in that a threat of takeover, as in 1840. There is also the potential for this micro-organism among nation-states to build a role in international affairs bigger than its current puny population, miniscule muscle and edge-of-the-galaxy geography suggest.

How does the world look over the next 20 years from this corner of the triangle? Here’s a personal perspective of some aspects.

I start with water: water is getting short in many places, notably in north China and in India. With water scarcity come constraints on industrial production and food shortages. Hence the scramble by some Asian countries to secure land in Africa. Add competition for minerals and fuel which are critical ingredients in rising prosperity. New technologies and better management hold the prospect of relieving these constraints and global population is projected to flatten. But on the way to this cleaner, more rational prosperity, water, food and resources shortages have the potential to cause famine, internal unrest and interstate conflict. Amidst this New Zealand has, and will continue to have, abundant water.

Another potential source of conflict is the reconstitution of the Chinese empire, the mandarin state predicated on central control and uniformity and selfcentred. Its purpose, for now, is peace and prosperity, the first a condition of the second and generally beneficial, as we saw during the great financial crisis. But rising empires often at some point run up against limits and the resultant friction can precipitate conflict (Germany between 1870 and 1945 is an example). China’s turbulent social change and huge inequalities, the 2020s demographic timebomb its one-child policy has manufactured, its serious water shortages, its voracious need for minerals, fuels and food, the instabilities in north Asia (Korea to be unified, Taiwan to be reabsorbed and Japan’s stalled economy), coupled with the difficult adjustment coming in the United States as it loses its unipolar dominance are all potential flashpoints.

A third potential source of conflict is the United States adjustment. Declining states — even if the decline is relative, not absolute — find the adjustment painful. Even if the United States turns inward, as it might well do (and might need to do for a time, to repair its economic fabric), it would be unlikely to give China, or any expanding power, a free hand.

New Zealand’s aim will be to avoid involvement in any such conflicts. But that may be tricky. The danger is that we will find ourselves having to take sides.

I have started with conflict because, while conflict is not good for large states, it is worse for small states, which have very little or no capacity to influence the outcome and whose safest course is to find a way to stay under the radar. That applies whether the conflict is conventional war or through mutually damaging economic instruments or — as I expect increasingly to be a major element of conflict — waged through cyberspace, disabling banking and administrative systems. New Zealand suffered heavily in the 1930s Depression and lost a disproportionate number of young men in serving alliances in the two great European wars, which I like to think of as the last great tribal wars of that continent. (Yugoslavia’s tribal disintegration was a late echo).

Because it is small, New Zealand argues for and hopes for rules-based stability, overseen by strong multilateral institutions respected by great powers.

The obverse of stronger international rules is that they intrude on nation-state sovereignty. This facet of globalisation is of special importance to small countries. New Zealand, as a highly globalised economy and society is keenly aware of that.

Globalisation is usually thought of in terms of finance, capital and production. More important is the globalisation of people and ideas.

New Zealand is keenly aware of the globalisation of people. We exchange nearly 2 per cent of our population every year. That is a lot of human capital in and out. We are refashioning our newly bicultural society as also a multicultural one, with all the potential for cross-fertilisation and social tension such diversity brings.

Some of this human traffic reflects the trade in ideas. In the past 30 years two large ideas, neoliberal economics and indigenous rights, have heavily influenced New Zealand’s public policy. Indigenous rights shaped our bicultural model. Neoliberal economics gave us a flexible and resilient economy but also one of the world’s highest country debts and household indebtedness and greatly increased inequalities of wealth, income and individual prospects. In both cases New Zealand applied the imported ideas imaginatively and innovatively. In the case of indigenous rights policymakers had to invent much of what has been done because there was no international model for what has been done here and now others are looking for ideas here. For all the flaws in the thinking and in the policy, New Zealand is a sort of centre of excellence in the topic, in ideas and in practice. When China, Japan and the states of North and South America are ready to accord respect to their first nations and indigenous ethnic minorities, New Zealand may have some pertinent advice.

The challenge and opportunity for a small society and economy at the tip of the triangle is to tap into and be part of the excellence in other new ideas.

I start with China. Most of the focus on China’s rise is on its economy. But in due course the more invasive impact is likely to be in ideas: new science and technology and ways of organising the economy, society and politics. To most New Zealanders, heirs to the Enlightenment, some at least of these ideas will be alien.

There are some who think capitalism and the rise of the middle class will lead China to liberal democracy. But that is not certain. In an article in Prospect on 26 May, Joshua Kurlantzick wrote of “bitter divisions between the middle classes and the poor” in “much of the developing world” as still relatively new middle classes corner power for themselves. This, of course, may be a passing phase but it also might be a new way. Here in New Zealand there might be a microcosm in the role of a rising professional middle class of Maori in the governance of their iwi while disproportionately large numbers of Maori form a disadvantaged underclass. Put this alongside the greater role of the state in economic management in China and other “emerging” economies. To foot it in the international economy, North Atlantic countries and their apostles may need to rethink their own theories of economic management.

New science and technology is at least as important. Both China and India — not to overlook middling Korea and tiny Singapore — have been generating institutions capable of that new thinking. My guess is that they will succeed, given their focus and determination (at least in the east Asian countries).

The good news in that is that China’s leaders know that to match “western” levels of material prosperity in a world of constrained resources will require lots of new science. The challenge for the likes of New Zealand is to adapt to ideas coming from unfamiliar foundations. For 500 years the inhabitants of the North Atlantic countries have generated the new ideas in science and social and political organisation. Most New Zealanders are kin to them. Only a minority of New Zealanders are kin to Asians. We have much to learn and our education system has yet to that learning seriously.

I suspect this has a wider application. Universities, too, have been founded on North Atlantic lines. But in 20 years will Asian universities still abide by the ideals, processes, protocols and cultures developed in Europe and the United States? Will the scientific method be adjusted?

And what will it entail for what Richard Florida called the “creative class”? Here in New Zealand we are pondering a derivative thesis developed by Philip McCann, now of Groningen University, that postulates that non-routine, knowledge-intensive work is mostly done in a relatively small number of centres where such people concentrate and that in and around those centres, incomes are typically higher. This is the opposite of the presumption that the world is flat: it is flat only for routine, less knowledge-intensive activities.

Big countries can contemplate developing and maintaining such centres. For a small country at the bottom of the world, distant at its end of the triangle, the prospects are clouded. We are going to have be very inventive, not just in new science but in ways of exploiting it and taking it scale, as Sir Peter Gluckman, the Prime Minister’s chief science adviser from whom you hear this evening, insists we must do.

Even at our far end of the triangle we produce some world-leading science, particularly in geology and aspects of bioscience, nanoscience and IT. And if New Zealand attracts large numbers of Chinese, Indians and other Asians, that might just link us into the high-income centres.

The cultural shift implied in that scenario is big. But we have been through two big cultural shifts already: from Polynesian to British from 1840 and to a bicultural society from 1980. Making a third big shift over, say, the next 30 years, is probably less daunting for this microdot at the apex of the triangle than it would be for bigger, longer-settled societies, not least the Chinas, Indias and Europes, let alone that not-very-old place, the United States. From here, we can watch the tectonic shift in geopolitics and the global economy that is now well under way, if not with equanimity, then at least with a unique perspective that connects us both to the previously dominant and the rising elements of the emerging world order.