Gideon Rachman, author of “Easternization: Asia’s Rise and America’s Decline From Obama to Trump and Beyond,” speaks at our May Global Salon about the growing power of Eastern nations.
Global Finance: With the election, you must have wanted to rewrite your book three times, things seem to change so fast.
Gideon Rachman: The book was published in the UK last August, so I had a chance to revise the introduction for the American edition after Donald Trump's election. In a way, though, that part is the most out of date, because his policies change at the speed of light. I think the broad analysis is still right. One of Trump's core beliefs is a belief that America has been taken advantage of in world trade. Right now it's a question of whether the "America Firsters" or the globalists will win his ear.
GF: What do you mean by "easternization"?
Rachman: The term changed in my head as I was writing. When I first started, I was thinking more in cultural terms. But I write more in geopolitical and strategic terms. For hundreds of years, the world has looked to the West, Europe and America, for global leadership. But now, with a shift of economic power to Asia, that is changing. You have the rise of China, and another great power is emerging in India. Now the world must pay attention to these regional struggles in the same way that, in another time, people paid attention to relations between England and France. We have to pay attention to what is happening on the Korean peninsula or with Sino-Japanese relations as well as the relations between China and America.
GF: Do corporates understand Asian countries as well as they understand the US?
Rachman: Far less. America is an open society and most people speak English. China is a very closed system, and most people don't understand it—even the Chinese. India is growing, but it is very complex, with regionalism and interest groups and the like. People find they are flying blind, so they make a connection because someone seems to have good connections. But you don't know if that person might fall out of favor, get arrested or something.
GF: What does this mean to smaller economies?
Rachman: There are certainly contested territories today that have never been big global power centers, but in this new emerging order [that is] driven by Asian economic growth, they are no longer above all in the sphere of influence of the West. In Africa, which was colonized by the West, and then decolonized, the biggest source of investment these days is coming from China. You even see that in Latin America, countries like Brazil. Its biggest trading partner is China.
GF: Does China invest FDI differently than Western nations?
Rachman: There are loads of different things you could point to. Chinese companies have a tendency to bring all their labor in from China. People get upset over that. The Chinese also are less tied to Western ideas of good governance. They don't come in with this World Bank list of requirements. Not that the West is immune to issues such as bribery, but the Chinese expect that's the way you do business. The upside is it can open doors for you. The downside is you can get a bad reputation.