East Asia

China has the world’s largest population

and second-largest economy (after the United States, provided the European Union is not counted as a single economic unit).

China was built on Confucian principles. For millennia, it has considered itself a hegemonic power and the center of the world. The country suffered a drastic decline in the 19th and early 20th centuries, when it was humiliated repeatedly by Western powers, especially the British Empire. Its civil war (1927-1950) ended with the Communists under Mao Zedong dominating the country, except for the island of Taiwan. Mao’s regime, which ended when he died in 1976, was responsible for the deaths of an estimated 80 million people.

The Communist Party has remained in power because it realized that China would succeed and prosper only if entrepreneurship, property rights and market rules were allowed. The strategy has worked – the country experienced rapid economic development. However, the state’s grip on Chinese enterprises remains very strong. State intervention in the economy and disrespect for foreign intellectual property rights have caused tensions with other countries and frequent trade disputes.

The one-child policy imposed under Mao has created some daunting challenges for China, including far-reaching economic and social consequences. The issue of how China will support its aging population is a problematic one, and represents a demographic time-bomb even worse than Europe’s.

China has become politically and militarily assertive as it tries to establish its hegemony throughout the Pacific Rim. This strategy manifests itself in excessive territorial claims in the South and East China Seas. Through its Belt and Road Initiative, a continent-wide infrastructure construction program, Beijing is attempting to secure China’s access to markets and resources in Europe and Africa. At the same time, it is trying to strengthen its influence in the countries taking part in the initiative.

Japan began adopting Western-style economic and military systems in the mid-19th century and became the strongest power in the Asia-Pacific region at the beginning of the 20th century. After its defeat in World War II, Japan concentrated on business and surprised the world with its success. The postwar peace treaty set limits on Japan’s military capabilities.

Internally, Japan is now struggling with the problems of an aging population and a high sovereign debt. Due to China’s assertiveness, Japan – a U.S. ally – also finds itself under pressure to strengthen its military capabilities.

The Korean Peninsula is divided into two states that are technically still at war. North Korea has developed nuclear capabilities and has threatened South Korea, Japan and even the U.S. Economically and socially, the North is impoverished because of its principalist socialist system with no property rights or room for market rules, while the South is an economic powerhouse.

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  • Scenarios

Relevance beyond the crisis: The deepening geopolitical divide

If the 2008-2009 financial crisis launched China to superpower status, then the 2020-2021 post-coronavirus period may solidify its position. As the West continues to struggle with the fallout of COVID-19, China is recovering and finding ways to strengthen its clout. The question now will be which countries line up behind China, and which ones decide to oppose it. The pandemic is making that distinction clearer, bringing forward a new geopolitical age.

Dr. Thitinan Pongsudhirak
  • Report
  • Scenarios

Japan and South Korea: Strategic alignments

Japan and South Korea must both balance the United States and China in their geopolitical stance: one guarantees their security, the other holds huge sway over their economies. The two Northeast Asian countries are taking very different approaches to this situation, however. As the great-power competition between the U.S. and China grows, Washington will find a closer, much more reliable partner in one, and in the other, an ally that is inching closer to Beijing.

Walter Lohman
  • Report
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The U.S. and China: The rivalry escalates

The principle of “the Thucydides trap” posits that when one global power is set to supersede another, war is inevitable. While China is gradually catching up with the United States on the world stage, an all-out war is unlikely. It is more probable that the two countries will use every political tool available to keep each other in check. Limited armed clashes could also occur if a crisis escalates sharply.

General Stanislaw Koziej
  • Report
  • Scenarios

Relevance beyond the crisis: The impact on East Asia

The COVID-19 crisis has reduced China’s clout and the economic damage it has done could force Beijing to pull back from many of its overseas commitments. Many states will look to diversify their economies away from dependence on the aspiring regional hegemon. It could provide an opportunity for Japan, which could step into the vacuum as an influential regional power and investment destination for high-tech industries.

Urs Schoettli