Andrew Staples Transcript: June 22, 2025

Kevin Johnson, NPF (00:00:00):

We’re going to kick off the conference with a great keynote speaker. I want to start by saying there are a number of words that can describe what’s happening now. Unprecedented, historic, tumultuous, baffling. They describe the international trade landscape in the last five and a half months, but we’re indeed fortunate to have Andrew Staples with us to launch this conference and help us navigate this ever changing reality. Or is it a car wreck? I’m not sure. But Dr. Staples is the founder and principal of GeoPoll Asia, a boutique advisory service operating at the intersection of geopolitics, business and strategy. Andrew established Geo Poll Asia in 2024 following a career spanning three decades in Asia. He is an expert at connecting the dots between geopolitics and economics, something that we all need to be able to do these days. Andrew was previously the editorial director and head of Policy and Insights at The Economist Impact. He led a team of researchers and analysts and editors across Asia. He was formerly the Global Editorial Director of the Economist Corporate Network, the Economist Intelligence Units Briefing and Advisory Service designed to help senior business leaders understand and navigate the complex business environments. So please join me in welcoming Andrew Staples.

Andrew Staples/GeoPol Asia (00:01:48):

Thank you, Kevin. Is this okay? Not too loud. Fantastic. Okay. Thank you very much for the kind invitation to join you today. It’s a real pleasure to do so. And thank you also to the Heinrich Foundation for hosting. I’m actually a member of the advisory board at the Heinrich Foundation, so it’s a great pleasure to be able to contribute to the work that they do here today. Is that on Scott? I can speak quite loudly anyway without this, so if it does go well, I’ll just take it off. But listen, I’m here just to share some thoughts. I think some big picture thoughts at the outset of your session here over the next two, three days. All of the things that Chew Way was just talking about, and Kevin was referencing to I touch on at some degree, but the other speakers that you’ve got over the next couple of days are going to go into much more sort of depth and detail.

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So just imagine that I’m providing the canvas or mapping out the sort of canvas around geopolitics and that you’ll go into in a bit more fine detail with others a little bit later on over the next couple of days. I’ve got a load of slides, I might go over them. It depends how much time we’ve got, but I do want to leave a bit of time for some sort of discussion and q and a as we get towards the end. Just a very brief resume up there. I’ve been in the region on and off. In fact, I first came out to Asia in 1988. I’m from the UK originally. I came out with a backpack to Hong Kong, anybody from Hong Kong, okay. I stayed in chunking mansions for about three months. It’s a dreadful flop house, but I stayed in Madam Y’s guest house for three months.

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It’s fantastic. My first introduction to Asia, I come from the southwest of England. Bath is my hometown, a very nice small town, and then you end up in the heart of Hong Kong, the noise and activity and everything like that. And I got completely fell in love with this part of the world. I then spent about 15 years on and off in Japan and nearly 10 years here in Singapore. I had an academic career really looking at business and economics in Asia, but my PhD was all around Japanese foreign direct investment in Asia. Looking at the context of regionalism and so on, I was very interested in the idea of understanding why firms go overseas, why they engage in foreign direct investment, particularly Japanese firms and not just from the sort of business side of that. What pushes a company overseas? What sort of competitive advantages do they have that allow them to operate overseas, for example?

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But the political aspects of it as well. Just to give you a very quick example, I studied the auto sector. So if you think about Japanese auto sector, FDI in Thailand, it’s been massive over decades, employs hundreds of thousands of people. The supply chain is very, very deep and that gives Japan a certain sort of political influence in Thailand as well. Some of this being challenged at the moment by China, we’ll come back to that a little bit later on. So anyway, foreign direct investment, but really a sort of political economy approach to that. So states, non-state actors, IE, multinationals, how they all sort of interact in foreign direct investment. And of course trade is well, because the point of going overseas is you’re making stuff for the domestic market, but you are exporting out as well. So trade FDI really two sides of the same coin in 2013 about I joined The Economist.

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So I came out of an academic career where I was researching and lecturing at business schools and graduate schools and all the rest of it to join the economist intelligence unit to work much more closely with C-suite of multinationals, largely European, north American headquartered firms, some Japanese, some Australian and so on in Tokyo and then here in Southeast Asia. And then during COVID, I had the great opportunity to join the Heinrich Foundation actually as their director of research and outreach shows that here for just under a year as the center got up to speed. My office was just few there and view every morning was just absolutely fantastic. So I’ve been knowledgeable of the Heinrich Foundation of Work. They do for a number of years, rejoined the Economist to head up their research led thought leadership and engagement part of the business for a number of years until last year.

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And I came out and set up my own advisory around geopolitics. Again, working with C-suite boards of multinationals, helping them to understand and navigate what’s going on in the world to the best that I possibly can. Okay, so that’s me. Let me just have a look at our agenda today. So really sort of three areas, and I’m going to spend quite a bit of time on this first one, on this sort of context, providing that sort of shared understanding from my perspective, it might be quite different from yours or somebody else’s, but this is very much my perspective of some of the issues that Chewing Way was just talking about those assumptions that have underpinned globalization and what’s changed and what might be coming down the pipe that we all need to be dealing with. So this idea of what’s next for globalization, what does that look like in the years and decades going forward from here?

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And what does this sort of idea of this emerging new world order, what does that look like? What does all of this mean for trade, foreign, direct investment, international relations and so on. And then I want to bring the focus into here on the Indo-Pacific a little bit to think about how these contours of the emerging new world order, of how new globalization might emerge, how they touch down in this part of the world. And then finally, just a sort of a bit of a look ahead. Okay, so let’s jump in with all of this and if you, I’ve just got to put these terms of reference up here so we’ve got a common understanding if you want to think about globalization, well there it is. You’ve got container ships going back and forth through the straits. You’ve got Changi Airport people flying in from all over the world.

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You’ve got the financial sector here and just a bit hazy today. But if you looked a bit further out, you’ll see Indonesia, which economically might be sort of 30, 40 years behind Singapore and different models of economic development that we see over here and Malaysia just next door as well. But globalization, I really take to mean that deepening integration of the global economy through trade and investment flows of money, of goods, of capital, sorry, of people increasingly of data and so on. So you can think of it as the veins of the global economy, things moving around. And we’ve all benefited from this for many decades. Geopolitics you’ve been hearing a lot of recently, and one of the reasons you’ve been hearing a lot about geopolitics is because we are in this period of flux. I think for many years, if you particularly go back to the 1990s, early two thousands, you didn’t really need to worry so much about geopolitics, particularly as it retained to trade and foreign direct investment.

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Now you do. It’s really come to the sort of front of mind of thinking is at the top of the agenda. And again, I’m not sure how familiar people are with the term geoeconomics, but again, the geo aspect of that, the geography aspect of it, but the economic tools that are increasingly being used in the global political economy, you could be thinking about tariffs, we would be a great example. Import restrictions, export restrictions, and so on and so on, using economic tools to achieve political aims. And there’s a final sort of term up there, power, which I think is central to understanding what or trying to get an understanding of what’s going on. I’m a student of international political economy, how states interact, the role of non-state actors within that as well. But the central question for international political economy is power. Who has it and what are they going to do with it?

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And I think if you keep some of these ideas in your thinking as we go through, see how they or pose yourself some questions. Who has power here? What are they trying to do? What are they trying to achieve? What are the geo-economic tools that countries are increasingly resorting to? And what does that mean to businesses as they try to navigate this increasingly politicized and complex environment. Anyway, just some terms of reference for you. So I’m just going to put this up and go through a few slides on this sort of point, globalization in a specific historical context. And you could go all the way back to the end of the second World War 1945 general agreement on tariff and trades, Bretton Woods institutions and so on. But really, I’m going to focus a bit more on the sort of 1990s onwards, the end of the Cold War, the collapse of the Soviet Union up until quite recently.

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But anyway, let’s have a look at some of these economic, political geopolitical assumptions that have underpinned been the foundations of globalization during that period. We just mentioned this one, this idea of we’ve had the second World War, massive global congregation touched every sort of corner of the world. And out of that we see that the United States emerges as the world’s strongest economy. The baton sort of passed over from the United Kingdom, which has essentially gone bankrupt after two world wars as massive debt to the United States and so on. Empire starts to get dismantled and all the rest of it, end of the second world war, right the way up to the collapse of the Soviet Union that the Bretton Woods or the hotel where the Bretton Woods institutions were sort of hashed out and they’ve really underpinned a lot of the world. I mentioned global agreement on terrorists of trade, but you could be thinking about ultimately that turned into the W-T-O-I-M-F World Bank, all of these Western led institutions that have been fundamental to globalization.

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And then you come right up to 1989, you can tell it’s 1989 by the really bad sort of hairdos and clothes that the Germans are wearing there. But anyway, this is everything that was going on around the collapse of the Soviet Union and that sort of period from 1945, the Cold War at some places very hot, not least in Vietnam, Cuban, our crisis and all the rest of it. But anyway, that Cold War period right up until the end of 89, sort of 90, the Soviet Union collapses. A lot of the issues we’ve got today in Eastern Europe with Russia, with Ukraine, the Baltic states and so on, directly go back to the end of the Soviet Union. But that’s as an aside. And we get into this period that we’ve had the Cold War, we’ve had these competing models for social organization, western market democracies and liberalism and all the rest of it and state directed economies, control economies and so on, exemplified by the Soviet Union that didn’t work the West one.

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And you get this idea that we’ve come to the end of history, this is how we should be organizing. Everybody else wants to become an open market liberal economy. And in that period, of course we’ve seen in this part of the world, the East Asian Miracle Japan rebuilds after the second World War under the nuclear umbrella of the United States focuses on economic development. We see that rapid economic growth all the way through to sixties into the seventies. That then comes to a bit of a screeching halt around 1990. But anyway, and then South Korea, Taiwan, Southeast Asia, and then in more recent years, China and of course India now the biggest, fastest growing large economy in the world. One point what 3 billion people growing at six, 7% has overtaken. China has the sort of CRA there as well. But in this period, all of these assumptions there, comparative advantage as we were hearing on, I joined the Economist, if I dunno if you know, the Economist Group was established in 1843 primarily to argue for free trade.

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That was the founding principle of the economist group. And they’ve been doing that for the past 180 years or so. But free trade, you make this thing, we trade it, we ship it around the world, whatever it is, makes sense, everybody benefits. This goes all the way back to classic economics and so on. We see a big push on liberalization and particularly around trade tariffs. The trade come down and down and down through things like the WTO, the negotiation of multilateral ransom, bilaterals and all the rest of it. And as come down, trade dramatically increases and the world as a whole gets more and more prosperous, not least in this part of the world. So opening up your economy, if you want to trade in this system, you need to open up your economy. You need to let foreign firms come in and sell and buy and set up factories or whatever.

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And we all get a bit more closely interlinked through these activities. All of this creates a lot of rationale for global supply chains and we’ve seen this. A great book, if you haven’t read it strongly recommend it. Chip Wars by Chris Miller In there, there’s a few sort of chapters that document the globalization of tech supply chains from America, Texas instruments, I think the first sort of big American tech firm to move into Hong Kong cheaper labor, splitting out that value chain of how you make something, putting a bit here, putting a bit there and linking it all together through cargo and freight and airplanes and all the rest of it because it makes sense. Let’s put all of the semiconductors over here, but let’s put screwing things together over here because of the economics of it. So efficiency, globally efficient supply chains over resilience. And we come back to it a bit later on.

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It’s the other way around. Now we’re talking about resilience over efficiency or why is that? But anyway, we’re talking about this period, particularly in the eighties and nineties in terms of the regulatory framework. GAT becomes WTO. We have countries around the world sitting down together hammering out the next deal, how they’re going to reduce barriers to trade, increase access to their markets and so on. Everything focused on this sort of multilateral approach. We all come together, we all join a club, we all agree together to lower our barriers. I being very simplistic here, but essentially we all benefit from that. And one of the other sort of assumptions we get there that you see a lot of this in the writing that we’ve sort of gone out of the world wars, we’ve had the Cold War, we’re into this period now, where would we go to war? We’re all trading and invested in each other. So peace actually comes from economic interdependence.

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And yes, I mentioned this already, Francis Fama, the end of history in the last man published in I think early 1990s. But essentially saying this model of multilateralism of Western led liberalization, market economies and so on has one out. Go back and read it. Some of it’s a bit dated now, but he’s still very active at writing. I strongly recommend your research to him. But anyway, this was the period of a US led global order in the sort of period that globalization, trump’s nationalization nationalism I should say as well. So that was then, right? And particularly thinking about that 1990 period up until let’s say maybe 2008 global financial crisis where things start to sort of not fall apart but become questioned and challenged and we see alternative models being promoted and so on, which I think really sort of marks the start of this emerging new world order.

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So I’m saying here that these assumptions are breaking down and why is that? It seems to have worked very well. The economies have got richer, people have trade. We can buy stuff from all over the world, whatever it is, it’s worked. So why not continue with it? Why is it breaking down? I think a number of things here, inequality, populism, discontent with how the global economy has been set up, people feeling that they haven’t benefited from this as well. Climate change, another major issue to deal with. But this picture here, this isn’t recent, this is from I think 1999 in Seattle when the WTO were meeting, there were big riots on the street, people pushing back saying WTO equals big business. It’s killing us, it’s killing the economy. You get this sort of backlash growing against that US led multilateralism and so on. You can see on here, W-T-O-I-M-F, NAFTA World Bank.

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No, we don’t want it. So as a very famous book at this time, globalization and its discontent as well. So sort of growing, everything’s not quite right. And if you were to go into the former northern industrial towns of the UK where they used to do coal mining, ship building, steel manufacturing and so on, all of those jobs were gone. Many of those economies and societies were decimated, still are high unemployment, very bad health outcome, low education and all the rest of it. And those jobs at that time, many of them would’ve been disappearing to places like Asia, shipbuilding, Japan, South Korea, China for example. And this breeds a bit of anger, a bit of discontent, people feeling that they’re not invested, they’re not benefiting from globalization. We’ve also seen a rise in alternative ways of organizing your society, your economy. Not that just sort of one size fits all, which never was.

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But anyway, market democratic liberal economies that worked very, very well. Everybody has their own sort of interpretation of that. So Japan is a capitalist society, but quite different to the United States. And the United States is very different to say Germany or France or Singapore or whatever it might be, but they’re still all within the same sort of ballpark. But then you start getting models that have been developed outside of that. I’m thinking particularly places like China for example, but all throughout this period, and up until now we’ve just had another G seven in Canada or G six and a bit as Trump left very early. But anyway, look at the flags of those countries that essentially the most important economies, the ones that are sort of setting the rules of the road, determining how the global is organized. One, so that’s the G seven. But more recently we’ve seen the rise of the so-called global south bricks economies, that massive growth of the Chinese economy from the 1980s onwards, but particularly from 2001 when it joined the WTO, really turbocharged Chinese growth there.

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We’ll come back to that in a moment because it’s front and center in thinking about the tariff regime and make America first policy and so on and how that’s informed by that experience. But you’ve got others there. Russia, what happened to Russia throughout the 1990s into the early two thousands, you’ve got the rise of India now and other global south economies. So actually these economies are saying, well, hold on a minute. We’re actually quite big and important. We’re growing as well. We’ve got bigger populations, we’re contributing more to global growth and so on. We want to actually have a say in how the world is run, not just you guys at the G seven and so on. So these are some of the dynamics that are shaping the world at the moment. Just have a look at this. This is the bricks. And really the question here is who gets to set the rules of the road?

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When I mean that how we trade, how money is moved around, the regulatory regime has your data governed and digital trade and all the rest of it. Who gets to set the rules of the road? Who has power to influence? All of that is increasingly essential question. So the BS bricks have been going a bit overplayed I would say at the moment. But if you look into the future, and if you look at the sort of projected growth of non G seven economies, then you can certainly see that this is in the post. We would assume all things being equal, China continues to grow, it will moderate. Maybe next year it’ll be 4% growth or whatever. But that’s the world’s second biggest economy growing at 4%. India, six, 7% should be easily achieving that in coming years as well. And already mentioned that’s the world’s largest economy in terms of population.

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All of this compounded over these years mean that the non G seven countries will become more economically important. We’ll have more weight than the G seven in coming years. So of course this creates a push for greater representation. We want to do things this way, not your way. Why should we have to follow these rules? Why should we have the European Union telling us all about labor conditions and so on in this part of the world? So all of these questions come into closer scrutiny. We’ve also had growing us China tensions, and this is not necessarily anything new. Remember successive Democrat and Republican presidents were promoting China. China’s going to grow, it’s going to become more like us, it’s going to become more open. Let’s help grow and support. It worked well with Japan and South Korea and all the rest of it. It can work with China as well until it’s the growing recognition that actually that’s not the trajectory that China’s going to take, that they’re going to be taking their own own course.

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And just to sort talk through that picture there, I dunno if you recall, but that was Obama’s last trip to China where there was a big sort of diplomatic thing about the stair didn’t come up to the door of the plane and he had to come out the backside of Air Force one, which was seen as a sort of calculated snub to Obama. So that’s back then. And then we get this sort of idea that the west has got their assumptions about China wrong. It’s not going to become more like us. It’s not going to become a liberal market democracy. In fact, particularly dating back to when Xi Jinping takes control, taking a hard swerve to the left, doubling down on a sort of a hard state, a Leninist sort of state there, coupled with the capitalist model access to markets and all the rest of it.

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You have the bizarre spectacle in 2016 of Xi Jinping in Davos talking to the world’s great and good about how China is going to be underpinning the WTO. China is the stable partner for everybody in the world. Exactly the same type of speech that we hear at the moment as well. And 2016 is the year that Britain voted to come out the European Union Brexit. And it’s also the year that President Trump was elected for the first time as well. So there seems to be this sort of divergence, those cheerleaders of globalization of western style globalization. The UK and America seem to be turning inwards or seem to be turning their back a little bit on their role in terms of supporting, maintaining the global order that we’ve had for all of those years. And other actors are coming in. And then this is a picture at the whatever meeting that was, that was G 20 in Osaka in 2019, the splits between China and the United States getting more and more pronounced, the relationship really going into the deep freeze.

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And essentially was it last month we saw pretty much a sort of embargo on trade between the US and China, military tension, security tensions, battles around technology for influence, all this type of stuff, this relationship between the US and China, really fundamental to understanding the global political economy. I’ve also talked a little bit about populism and so on, but this has given rise to more nationalism and a nationalist backlash. You see some of the standard bearers there. There’s Putin, there’s Mr. Trump in the middle, there’s Nigel Farra, Nigel Ferra reform party, which used to be the Brexit party by some measures is now the second most important political party in the uk could become a king maker in the next election, which is way off. But anyway, it gives you an idea. Marie Lapin not far behind them as well. Again, globalization hasn’t worked. It’s global elites who are enriching themselves.

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We are not benefiting. And if I’m an nationalist leader, I can pick up the playbook and say, oh yes, it’s not your fault, it’s somebody else’s fought. Vote for me, give me power and everything will be fine. I’ll put tariffs over here. I’ll kick the foreigners act of our country or whatever it might be. Quite a harder, nasty edge to some of this nationalism that we’ve seen around the world. And then of course we’ve just come into the second Trump presidency and from the sort of get go, I mean talking about how long this has felt, it’s what, five months? It does feel much longer because the pace, the cadence of activities is just unrelenting. Literally every morning you’re waking up, you’re having a look on your phone, opening your laptop, and something else has happened. Tars still have gone from 25 to 50% or Iran has been bombed with bunker busters and whatever it might be.

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What is it tomorrow? What is it the next day? And so on. So things have really sort of got to this boiling point, which is why geopolitics, geoeconomics have come right to the front again. And we get this idea that taking together, we are looking at the emergence, the birthing of a new world order. The old one hasn’t fallen apart quite yet, but it’s looking a bit Roy. Some things aren’t working very well. The United Nations Security Council is a bit of a joke. It can’t function. The WTO is not functioning, things are not working. Something new needs to come in its place. And who’s going to be shaping that? Who’s got the power to push all of that through? So this is where we are, just some examples from economist covers over the last couple of years, and that’s foreign affairs from earlier on this year as well.

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If we’re thinking that there is some kind of new world order emerging, what is it going to look like? What are the contours or features of this new world order? What does that mean for globalization? And again, if you look at all of those measures of globalization, foreign direct investment flows, you’d be thinking about trade well before the global financial crisis. Global trade would generally grow at twice the rate of global GDP. That relationship has completely broken down. Again, things like tariffs, of course not helping there. So what does the new phase of globalization look like? So let’s give some little bit of thought to that and I’m going to break it down into six different areas. Geopolitically transitioning to a multipolar ward I think have canner next day or so coming into team. He’s really, really good on this. So you’re in for a treat listening to him about this transition to a multipolar world.

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But again, what does that look like rather than the US or the G seven holding all the power setting the rules of the road. It’s China, it’s India, it’s a global south, the European Union. Anyway, it’s much more dispersed, A multipolar world, not the unipolar world. That’s underpinned globalization before. Are we moving into a new Cold War era? Well, there’s some sort of yes, some reasons you could say yeah, it does look like a bit more security tensions, all the rest of it, but it’s not as clear cut. The Soviet Union was simply not part of western economic models. It was insignificant. China is deeply embedded into the global trading system. It’s impossible for us to think about the global economy without China, for example. And then some people also more pessimistically say actually we are in a bit of a pre-war period. If anybody sort of studies international relations, you’ll see that all of the studies, when one system gives way to another one, invariably there’s going to be some kinetic energy around all of that.

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Where might that be? Well, we’re actually already seeing it, aren’t we? We’re seeing some of this in Europe, the Middle East. There’s a big arc. India. Pakistan just had a crack at each other a couple of weeks ago. And as we come onto a little bit later on, no shortage of geopolitical flashpoints in this part of the world as well. So there’s a sort of cloud hanging over us. This could easily tip into something very nasty. Geoeconomics, as I’ve mentioned, has really sort of come to the fore again. And what do we mean by geoeconomics? A real focus on economic security. And you see this time and again in executive orders for example, stressing that the trade regime, an inward investment regime for the United States is fundamentally about economic security. So in practice, that means that this massive over-reliance on China for rare earths and so on is unacceptable.

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That’s an unacceptable dependence. It’s something that the United States really wants to deal with. We’ll come back to that a little bit later on, but it might also be thinking about shipping or where your supply chains are, who builds your technology, all the rest of it. So geo-economic security right at the heart of this new world order, an economic coercion, the tools that you are going to use to achieve your geo-economic aims. For example, tariffs for example, we could be thinking about 2010. China was a very early user of putting a hold on exports of rare earth at that time to Japan because there was a political spat over a territorial dispute in the Senkaku Islands. So that’s sort of seen as one of the first modern or reuses of economic coercion. You could also be thinking, staying with China again, Australia’s experience during COVID when the Australian government said we need to have an international inquiry into the origins of COVID China.

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Didn’t like that. But some import restrictions on things like lobsters and wine and all the rest of it. Economic tools to achieve political aims. Another sort of aspect of Geoeconomics is new industrial policy. IE, the government is taking a bigger share within the economy. We are going to put money here, so we build up our semiconductor industry because we can’t be reliant on these. Global supply chains, for example, would be a really good case study of new industrial policy. European Union does it as well. In fact, I did a short paper for the Heinrich Foundation earlier this year looking at Japan’s new industrial policy, looking at tsm MCs, new manufacturing facilities in Kumamoto as one part of it. And Japan itself has another sort of program to build up his own semiconductors there as well. Again, reducing dependence on global supply chains, building it domestically under the umbrella of achieving economic security.

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Some other aspects, the retreat of democracy, I’ll come back to that a little bit later on. I used to do a little bit of work on the democracy index from the economist intelligence unit. And for about the past 10 years, you’ve seen the number of countries that are opening up becoming more democratic, stricter or better, more robust institutions, so on. That’s on the decline for the last 10 years or so. The rise of autocratic regimes shutting down of the free press here or there or whatever it might be. But politically, again, one of those assumptions of the 1990s, two thousands, you open up democracy, strong institutions, all of that being challenge, authoritarian and hybrid regimes are on the rise and they don’t share the idea that yes, you should open up your economy and let foreign players come in or you should allow them to buy this part of your economy.

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Look at pond still acquiring America still recently. That’s sort of caught up in all of this. And the erosion of rules and norms, the sort of quick resorts to military use is quite concerning and worrying as well. Or you could be thinking about Mr. Putin sort of rat in the cage and saying, we are going to use tactical nuclear weapons if this happens. This is our red drives now that wouldn’t have happened before. So erosion of rules and norms. Another feature of this security, no surprise, heightened tensions around the world, go all the way from the Baltics through the Middle East, through the Indian subcontinent, through Southeast Asia up until the North Pole as well. There’s a lot going on. There’s a lot of opportunity for mischief. Nuclear proliferation is a big concern and worry. Why is America attacking Iran at the moment? Partly because of this issue around nuclear proliferation.

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Orran getting a bomb, but it’s also related to the US presence here in Asia. Peter Seth, the secretary of defense was here three weeks ago for the Shangri La dialogues saying how on the front foot America is here within the region, shoring up its alliances with Japan, South Korea, Philippines, it parks, nuclear power stations, sorry, aircraft carriers down at Changi Naval Base for example. But then two weeks later, the Pentagon announced that they were reviewing the orca arrangement whereby the United States, the UK and Australia all work together to provide nuclear power advanced submarines for Australia. That’s seen as really worrying. And if you were Japan and you saw America say, you know what? We’re out of Asia, we are moving back to Hawaii, then you would pretty quickly have a debate around getting nuclear weapons. 60, 70% of the Korean population in a foreign affairs essay earlier this year in a poll there were suggesting that they support South Korea getting nuclear weapons.

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They don’t believe that the United States have their back and then think if you’re in Taiwan or in the Philippines or elsewhere. So nuclear proliferation in this part of the world is a really big worry. And the risk of proxy wars, yes, we’re seeing them, plenty of them sparking up all over the place. This is not good economic. What’s this mean for economy, fragmented globalization, those smooth moving supply chains just in time, those fantastic documentaries where you could see how an iPhone is built and everything comes together. If you’ve ever visited a factory, I went to the BMW factory in the UK where they make the mini. It’s amazing. You go on the production line, there’s a part where this line comes in from outside. It’s the wiring harness or the wires and stuff that go in a car. Each car is different, each wiring harness is different.

(00:37:38):

It comes from Hungary, it comes all the way over Europe or used to, that was before Brexit and then joins up with the car if that specific point in time. And I asked the production manager what happens when it gets wrong? And he said, well, we charge them about $10,000 a minute for every time that the production line is stopped. So it doesn’t go wrong. And that’s globalization, that’s efficient. Supply chains, these things are increasingly less efficient and more focused around resilience, having multiple suppliers rather than just one that’s really good at it, for example. So fragmented globalization, competing economic blocks for moving away from that multilateral system where everybody sort of invested and looks to benefit to what can my country get or what can my block get with this and how can they come together and compete? That’s something that we’ll see more of regionalism as a term I think you’ll hear more and more of as well.

(00:38:34):

And all of this puts a dampener on global growth this year. Most forecasters have downgraded their outlook for global GDP because of trade friction, because of fragmented globalization, because of tariffs, because of tensions, because of the politicization of business, the bifurcation of technology, all these things. But a dampener on global growth, which means that there are hundreds of millions of people around the world who will remain in poverty because they’re not going to benefit from access to the global economy at the type of pace that they have done before. They won’t be lifted out of poverty, they won’t have the money to spend on healthcare and education and so on. And when you see the massive increase in defense spendings taking place around the world, that’s an economic choice. You can spend it here or you can spend it there. So less money available for things like infrastructure and providing the capability to promote digital trade because it’s going on tanks or warships or whatever.

(00:39:36):

So anyway, slower growth technology. I think I mentioned a couple of phrases there, techno nationalism, we’ll come back to in a moment. Bifurcation, parallel worlds. We’re seeing this emerge starting off with where we were with globalization. Moving on to where we are heading and just to summarize all of that for you, this top level really going back to 1945, but more importantly 1990 onward and just sort of summarizing some of that and what I think from 2008 onwards from that global financial crisis and then we had the pandemic as well, and Mr. Putin’s invasion of Ukraine and so on and so forth. We’re in this sort of new period here. Alright, I’ll share all these slides with you as well. So please don’t fill Anita to scribble it down. Let’s move on then. So I’ve got about 10 minutes I think just to sort of go from that global context to the regional dynamics.

(00:40:33):

How is this emerging new world order, these new contours of globalization, how are they touching down here in this part of world? Because let’s be clear, Asia is the part of the world that’s benefited most from globalization. I already mentioned Japan’s economic miracle as it were termed, but everybody else that’s followed that and that’s happening now with India as well. Premised on access to markets overseas, particularly that export orientated model that we’ve seen deliver such success in places like Vietnam. Very, very strong growth. A lot of that premised on making stuff to sell to the United States, to Europe, factory jobs, low skilled, semi-skilled, higher skilled, white collar service jobs. All of these emerge through access to trade and investment. So let’s focus on Indo-Pacific and go through some of these things like geopolitics and geoeconomics and see they touch down here. Just to sort of have that map in mind about who the sort of key actors are within the region.

(00:41:40):

This is from the FES German think tank based in Bangkok. I think it is a really nice map that they’ve got there. Looking at who the key actors are and some of the sort of key issues. You’ve got this blue line here. These are the so-called first and second island chain. America is front and center in the first island chain in terms of, and it sees itself as they’re supporting the regional political economy, openness, free trade, and all the restaurant seen from Beijing. On the other hand, this is seen as a barrier, something that’s constricting Chinese growth and they want to break it. They want to push Americans out of the first island chain, hopefully back to the second island chain, which is Guam and so on. So that’s one of the sort of key security issues that we’ve got in Asia. If you look at these red lines, that’s looking at how China has linked itself into the global economy.

(00:42:32):

You’d be familiar with the Belt and road initiative and the digital belt and road and all the rest of it. So building out the infrastructure and if you look at the trading relations of vast majority of countries around the world now China has become the biggest trading partner. Links with the global south are much stronger than we’ve got with the United States, for example. And you’ve got this big sort of Eurasian landmass with Russia in there. We know all about Russia at the moment and that relationship with China. Where does India sit within all of this really interesting case study to look at? India’s big enough to do what it wants. It’s buying record levels of oil from Russia, which is sanctioned by a big part of the world, refining it and selling it to Europe and so on. But at the same times it’s very, very friendly with the United States.

(00:43:21):

Modi and Trump seem to get on quite well. European Union is looking to negotiate an FDA with India and so on. It can do that because it’s independent and it’s big enough, strong enough and growing at a fast enough rate to be able to take its own independent course. Everybody else to greater or lesser degrees has to sort of work out where they’re going. Real issue here in Singapore, you hear it all the time, don’t make us choose. Don’t make us choose between China, our big brother, our major trading partner and all the rest of it and the United States, our other big brother as well. And this has been going on for years of course. But I think the space for some of those political actors to say, no, we are going to be in the middle. We won’t have to choose. I think that’s diminishing on a daily basis and particularly when you look at issues around trade and technology and security as well.

(00:44:14):

Let’s have a look at some other flashpoint sense keeping with security. Just talking about India, Pakistan, which flared up recently, but India, China border disputes there that sometimes flare up and come down Myanmar of course, awful bloody civil war going on their resort, an asan member state. But then as you get into this part of the world, the South China Sea, Taiwan, and of course the North Korean peninsula as well. No shortage of flashpoints in this part of the world to tip us from tensions into something a little bit nastier. And just to bring it a bit more focus here, this is a sort of map of the South China Sea, the so-called nine dash line. I’d be really keeping my eye on what’s going on here with the Philippines as well because that’s really quite brutal and nasty. People getting hurt and injured. Someone will get killed at some point if it continues like this and the Philippines has a security arrangement with the United States, which would they honor that or not?

(00:45:12):

Who knows? That’s one of the big sort of questions. But that actually I think is more of a flashpoint than Taiwan. Taiwan is a known point. We know what China wants to do. They’ve rehearsed embargoes around the island and so on. What would happen in that situation? And then this sort of emerging area as well. This is looking at the North Pole and related to global warming as these sea roots become viable, who’s going to have control over this area? Who’s going to be setting the rules of the road? Russia has been making a big play there. China describes itself as a near Arctic power. So they want to have a role within all of this as well because this cuts down container shipping times into Europe and vice versa.

(00:45:58):

I’m going to give about five minutes Kevin, if that’s okay. Just to quickly go through some of these. I think I’ll skip over the political and come on to Geoeconomics and trade. Some of, you’d be familiar with this chart, it’s quite a famous one and there’s some issues with it. But essentially what you’re looking at here is China and US trade, or sorry, the US versus China. So who was the biggest partner for each country and where you see the blue countries, their biggest trading partner was the United States is 2020, right? And there’s China there with a few trading partners in Africa and the Middle East. And then jump forward to 2024. The map has gone red. That massive juggernaut of the manufacturing based Chinese economy has just blown competition out of the water continues on a daily basis around the world as well. This is something that gets a lot of people worried, not just President Trump but in this part of the world, in Japan, in the European Union and so on.

(00:46:54):

I think what distinguishes what the type of policies that we’re seeing from America at the moment is that rather than trying to work them out with partners and have a united front and work for the multilateral system and so on, it’s much more we are going to take the action that we want to take because it’s all about America first and economic security. Other people can get in line if they want, but we are going to do what we want that see is best. Let’s just skip over the manufacturing one, just have a look at the trade deficit. This is really crucial and you’ll be going into much more depth and detail over the next couple of days on all of that. But just look at this trade in goods, this massive deficit that America has with the rest of the world. And this is what animates and focuses Mr. Trump, he wants to reduce this trade deficit.

(00:47:42):

He wants America to be making more stuff at home. So he’s telling everybody to come back to America, invest in America, build new production facilities and so on. What he often overlooks is this trade surplus in services. And this makes sense, doesn’t it? America’s a service-based economy. Think about finance, think about Netflix or Google or JP Morgan or whatever. We’re all beating services right at the top that are high value added knowledge intensive parts of the economy. Surely you would really want to be doubling down on building na out and be less worried about this. However, that’s a domestic sort of political issue that Mr. Trump has focused on why it’s so important to this part of the world. So these are the top 10 deficit countries, the countries where the United States is buying more than it sell and six or seven of them are here in Asia.

(00:48:39):

Of course China right at the top there. But you’ve got all the other economies including Japan, Taiwan, South Korea, unsurprisingly, these are all the countries that have been facing the full blast of the tariff regime that we saw announced on April 2nd. And just think about how important all of that is to their economies. This is looking at how, looking at the right hand chart, how important is US demand to Asian economies? And right at the top there we’ve got Vietnam. And this chart is suggesting that just under 14% of GDP is in some way dependent on trade with the United States. So it’s really, really material to Vietnam’s continued economic growth and wellbeing that they sought out whatever the trading relationship is going to be with the United States. Because if they’re slammed with a 46, I think it is percent tariff rate on anything that’s made there and goes to America, that’s going to significantly retard their growth.

(00:49:42):

It’s going to mean that companies will move out and they’ll try to relocate somewhere else. So you’ll hear a lot about supply chains moving around the world and so on. But you go all the way down, Singapore’s is a bit of an outlier because trade is so important. So it’s a trading hub, but for those places that make stuff that’s premised on the multilateral system going overseas, they’re really, really exposed. The chart on the left is looking at the severity of the tariff regime. So where you’ve got that dark red there, that’s over 40%. Now is it going to happen? We don’t know. And this is one of the problems, the big word around the world today is uncertainty. We simply do not know what the outcome of this tariff so-called negotiations are going to be. Is it 10% for pretty much everybody? Is it 30% for steel or is it 70%?

(00:50:32):

And the reason you really focus on that because the multinationals, the people with those supply chains and so on are collectively holding their breath and waiting for some clarity. They’re not going to make that new investment in that chemical plant in Indonesia or that distribution center in Malaysia until they get a better understanding of what the tariff regime is. So you hear this all the time, people holding back on their CapEx, their capital expenditure and other budgets and global economy slows down. And then finally, just a quick thought on technology as well, because technology is right at the heart of all these tensions. It’s right at the heart of the new economy, of digital economies. Who has ownership of these next generation technologies is going to, is perhaps the crucial question. Who’s going to have dominance? Who’s going to set the rules of the road for AI and so on.

(00:51:28):

So the foundation has been doing a lot of work on this. There’s a lot of great papers that you can find online, not least Alex Capri’s book called Techno Nationalism, which the foundation supported, which looks into these very difficult issues where a semiconductor is going to be built, who has access to them and so on. We can also be thinking about things like China made in 2025, China’s official policy to really become the leader in all of these advanced areas and as other policies and programs that they have as well. A few years ago we were talking a lot about Huawei and 5G. Big concerns in places like the States and other countries around the world that Huawei is actually too close to the Chinese military too close to the Chinese state, that they’re somehow going to be listening in on your communications or you don’t want Hui Tech in your telecommunications system.

(00:52:24):

So very politicized there. Now it’s much more around AI who’s going to be building your AI tech stack and is it going to be based on Nvidia chips and the cutting edge ones that America only wants a very small number of countries to have access to or is it going to be Chinese? So again, bifurcation companies, countries will have to make decisions on which one they’re going for, which will have consequences as well. Okay, I’m just very quickly going to say don’t worry too much because all of that can be a bit heavy and you could go screaming, oh my god, the world’s falling apart and trade is going to fall off a cliff and all the rest of it. So there’s munches scream, but I am from the UK so I would say keep calm and carry on. And this is why it’s so important to really get to grips with these issues, to be researching them, to be asking experts to be thinking about it because what happens from here on in is going to be crucial to how the global economy unfolds.

(00:53:25):

Just a couple of more positive areas for us to think about. Global trade continues and let’s have a look at some of the big trading agreements that we’ve got in this part of the world. The C-P-T-P-P, hopefully everybody’s familiar with that one. This is a big valuable trading agreement. The United Kingdom as just voted to join, just ratified joining and other countries are lining up to join it as well. That’s really good because these countries are basically saying, look, with all of this mess going on, we still value a rules-based order. We still want to come together. We still want to find ways of trading and reducing barriers to trade. Another one in this region is arsep as well. This one here is a different membership and this is some modeling that BCG did on future trade patent in that emerging new world order. How is trade going?

(00:54:18):

Where’s it going to be based? Who’s going to be trading with who and so on. So they did some really interesting work looking out to 2034 thinking about how those trade corridors might emerge and the sort of thick of the line there, the deeper that relationship might be. And now just a caveat, the latest time they ran this was just before liberation day on April the second. So it’d be interesting to see how that’s impact there. But you could see for example, this big growth between Ian and China and there’s a pros and cons to that, but also Ian, the US and some other parts of the world as well. And actually you could say opportunity to grow with the European Union, with the Gulf and with Japan and South Korea. If you look at it over here, that big red line there is trade between China and the United States directly is falling off a cliff.

(00:55:10):

And that’s not going to come back anytime soon, but it will go somewhere else. So if you’re in a supply chain company or in logistics manufacturing or shipping and ports, well okay, this is going to happen. So how do we get positioned for all of that as well? And then that idea that United States becomes a bit of a fortress, which I think we’re seeing. Okay, I’m going to wrap up. I’ll leave that there for you. But emerging new world order is a new set of rules and assumptions that are sort of coming out that are informing it. It’s still unclear. It will take some time to sort of work itself out and there’s a range of alternatives, global war to everything sort of settles down and we get on a path to economic development, everything in between. But the crucial thing is we are moving into a new environment where those assumptions and norms and values are changing and therefore are reshaping our global political economy. And this is just some sort of advice I generally put up for people in this area about how to keep up to date, how to be thinking about geopolitics, particularly engaging in scenario thinking and building those scenarios and then working through what does it mean for us? What does it mean for this country, for the sector and so on. And building that sort of geopolitical muscle that will help you understand. Okay, sorry I’ve gone on a bit too far there, but I’m going to stop pass over again.

Kevin Johnson, NPF (00:56:38):

The last thing I wanted to do is shut down. Andrew. As you know, he is a founder of information and information that you can use. So I want to open up to questions and I want you to identify yourself and your news organization and we have about 10 minutes to throw some rapid fire questions at Andrew. Who’s up?

Tuan Viet Duc Tran/Tech in Asia (00:57:00):

Andrew? I’m Duc from Vietnam. I work Tech in Asia. We focus on technology and startup ecosystem in Asia. And my questions either the current national nationalism policy of the U.S., we will persist regardless of the party or if the Democrat regain the White House in the next three years, the US will return to the globalization and all the current trend, the new order, and even the Democrat, they will follow

(00:57:42):

According

(00:57:42):

To you.

Andrew Staples/GeoPol Asia (00:57:43):

So the best person to pose that question to is Steve Okun, who I think is speaking tomorrow morning. He’s deeply imbued in the American political system and he will be able to answer it in far more depth and detail than I can. Just some top level thoughts from a non-American observer of all of this. Will things persist? I think so. If you look at some of the policies that Mr. Trump has put in place. There’s support from Democrats and elsewhere around this. And I’m not just thinking about China, where there’s very clear sort of bipartisan support to the idea that we need to push back against China. The United States needs to decouple from China. But some specific policies you might’ve heard around this sort of noise around charging Chinese built ships, what is it? A million dollars or something like that, to dock in American ports and so on.

(00:58:36):

And essentially fining people for using Chinese made ships to ship their goods into America and so on. That again, has some bipartisan support within it. And let’s not forget that Biden didn’t take America into the transpacific partnership. Hillary Clinton in the campaign trail, this is back in 2016, said that she wouldn’t sign the agreement either. So there’s pretty much for the last 10 years been bipartisan agreement that they’re not. America is not going to sign a big free trade agreement like that as well. Now for all the other deeper political things about midterms. And so Steve Oaken is your guide tomorrow.

Franc Han Shih/Thai Public Broadcasting Service (00:59:27):

Hello, Andrew. Franc from Thai Public Broadcasting Service. My question is, do you think in coming years regionalization will finally surpass globalization? As in of course we see tariff really expedite the decoupling of connection between Asia, Thailand and the United States too. And right now, of course, Thailand’s government, they really want to seek FTAs with EU and other nations in the region. And that inter trade also targeted to be boosted in the region in SM two. So do you think finally regionalization will be more important than globalized?

Andrew Staples/GeoPol Asia (01:00:08):

It is a really great question. The title of my PhD was Responses to Regionalism. So I’m very interested in regionalization as a process. So splitting up your value chain across Yan, for example, and regionalism as a more sort of top down political process. So building an European Union or whatever. Part of that research, and this is going way back appreciated, but it’s relevant. So go back to the 98 Asian financial crisis, which ripped through this part of the world and particularly Thailand was very badly hit, as was Indonesia and others as well. There was a recognition that we as yian, we need to accelerate the integration of our markets. The as Yan free trade agreement. So that was always sort of out there and yes, we’re working towards it and we’ll all get together and shake our hands in a nice Batik shirt and all the rest of it.

(01:01:06):

But it was taking ages and ages and ages because of that crisis. It accelerated the application, the implementation of the AAN free trade agreement. Fantastic. Okay, crisis causes action. But then you jump forward to today, go and speak to business people about the challenges of moving products goods, not even talking about services around asean. Supposedly in this free trade agreement, Thailand wants this label. Vietnam wants that label. Malaysia has this safety standard and Indonesia has this one and so on and so on. Actually these actors breaks on regional economic integration, intra regional trade. So trade within among Yan economies has been stuck I think around 20 something 2% for a number of years. Why isn’t that deepening? And there is a massive opportunity now, and we’ve heard it, the recent Yan summits for Yan to come together to look at those barriers to trade the non tariff barriers and so on and clean house.

(01:02:12):

So just taking as yian a case study, I think there is opportunity there on the hand, if you look at the sort of nationalist and protectionist policies that we see across the region, I’m particularly thinking about Indonesia at the moment then it seems highly unlikely that we’ll see anything meaningful come from that. You look at other parts of the world that the whole sort of security situation means that the European Union has absolutely had a bucket of water in the face and it’s had to wake up to how its regional market. The European market is set up, comes into really clear focus on defense spending. Everybody now is looking to increase their defense spending. Canada, I spoke for the Canadians here in Singapore two weeks after Mr. Trump got elected, they had their annual conference here and I spoke to business leaders and the sense of anger in the room was white hot at how they’ve been treated by their friendly neighbor to the south.

(01:03:12):

I mean all this nonsense about 51st state and so on, just incredibly rude. And Canada is now really doubling down on its Indo-Pacific strategy. It wants to reduce dependency on the United States and find new markets and opportunities for investment in this part of the world. So at the regional level, at the country level companies as well. The big mantra is control what, you can’t control all of this, but you can control where you are in your digital transformation journey and this, that and the other. Do all of that. These are some positives I think coming out of the negative crisis that we’ve seen. Just to final point on regionalism. So I’m reading 1984 again, I read it every few years. George Orwell’s 1984, which is all about three consistently competing blocks. East Asia, Eurasia, Oceania. That’s a sort of nightmarish vision of the future. But I think a much more benign one is where you get like-minded groups, bodies of countries like the European Union, like Y and individual countries saying, we actually, we are like-minded in the sense that we’ve benefited from an open, transparent, liberal trading economy. And we want to continue that. We want to go deeper around digital trade for example. So regardless of all of this noise, we are going to talk, we going to come to some agreements and we will see much more sort of inter-regional linkages there. I think European Union, of course GCC, I think is a very interesting one to keep your mind on as Yan. And then more broadly thinking about things like C-P-T-P-P as sort of blocks for that to happen.

Kevin Johnson, NPF (01:05:09):

I’d love to entertain some more questions, but the clock is our enemy here.

Andrew Staples/GeoPol Asia (01:05:13):

Apologies for that.

Kevin Johnson, NPF (01:05:14):

I hate to shut down the conversation, but I think Andrew is going to join us for dinner later. So if you don’t mind getting pelted with questions there while you eat. But we will have to close for questions so we can move on for the evening. But first of all, join me in thanking Andrew.

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