Balakrishnan On Fallout From US-China Rivalry

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00:00This year has been the year of sudden changes, but actually, the gradual changes, the pressure

00:07has been building up for a long time.

00:10The first point I wanted to leave with you is the role of the United States for the last

00:15eight decades actually is historically unprecedented.

00:21The ultimate winner of the Second World War, 40% of global GDP, that was its share of global

00:27GDP, decided instead of conquering and eliminating the vanquish, rebuild Germany, Europe through

00:35the Marshall Plan, Japan, and it set really a rules-based globalization with economic integration

00:46at the core.

00:48And this is highly, highly unusual and unprecedented.

00:52So that's the first point.

00:55It is about the U.S.

00:57The second point is that actually the pressures on the U.S. to give up on this has been building

01:05up for a long time.

01:06And what do I mean?

01:07If you think about it, what the U.S. did for eight decades was to provide, first, the market,

01:14second, technology, third, capital, and rules-based economic integration.

01:24The first beneficiary of that, apart from Europe, was Japan.

01:28And then you had the Asian tigers, Hong Kong, Korea, Singapore, and then the rest of Southeast

01:35Asia.

01:36But the real winner of rules-based free trade has actually been China.

01:44China.

01:45The U.S. is only 249 years.

01:49It has never met a peer competitor with the scale, the ability, and the willingness to

01:56reorder the world in a way that's favorable to it.

02:01But the point is that China, if you look at its per capita GDP, it's still a middle income

02:11country.

02:13And China is not able or willing to replace the U.S. as the underwriter of globalization.

02:19So we are, to quote my Prime Minister, in an interregnum, a state of messy transition from

02:26a world in which there was an underwriter and enforcer.

02:31And that underwriter and enforcer has now decided to become disrupter-in-chief for political

02:37reasons, for domestic political reasons.

02:40Because after eight decades of providing capital, technology, and markets, what the middle class

02:46in America has seen is deindustrialization, rust belts, hopelessness, and middle income

02:53stagnation.

02:55And guess what?

02:58Elections are local.

03:00So it is a completely legitimate question for the American voter to say, wait a minute.

03:06Why should we underwrite in blood and treasure this system, which seems to have profited the

03:11rest of the world, and especially a big peer competitor?

03:17And I think we need to pull back.

03:20So you see my point about gradually and then suddenly.

03:23So we just happen to be witnessing the, you know, it's like an iceberg or an ice, continental

03:31ice shelf falling, but actually the climate warming was predated that.

03:38So my point is what we're witnessing today is not just a change of weather.

03:42It's not the storm that helped delay Mike yesterday.

03:46This is real climate change, geopolitical climate change.

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