Asia in Norwegian foreign policy

Are we already living in the Asian century? If not, when will Asia become the dominating global player in the world’s economy, ecology, politics and security? What does the Asian century mean for Norway? Do we understand the deep complexities, opportunities and challenges implied by Asia’s phenomenal rise? And what do they mean for Norway, for Norwegian stakeholders and for Norwegian foreign policy? 

It is a great pleasure to address a conference that is asking some of the most important questions we can think of today. A conference that engages researchers in seeking answers, as well as identifying new questions and dilemmas. This is a discussion we need to have. About Asia, which is rapidly moving towards the centre of our world. 

And, mind you, Asia is moving to the centre of a world that is more fragmented, polarised and unpredictable than we have seen for a long time, maybe not since the Second World War.

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Asia is home to more than half of the world’s population, and its relative share continues to increase. From 1990 to 2017, China’s share of global GDP increased from 3 % to 25 %. To a large extent, this came at the expense of Europe, which saw its relative share fall from 54 % to 35 % in the same period.

Far more than half of the increase in world economic growth since the financial crisis in 2009 hails from Asia, and more than 40 % from China alone. The number of Asians who left abject poverty behind for far better lives over the last decades is simply astounding.

China is already the world’s largest economy in terms of purchasing power parity, and is likely to overtake the US in terms of GNP some time during the coming decade. India is following suit with an impressive growth rate.

And we should not ignore existing large and dynamic powers such as Japan, or emerging and already major players such as South Korea, Indonesia, the Philippines, Thailand and Malaysia.

The winners of these phenomenal developments are, first and foremost, the people of Asia themselves.

But we, the citizens of the rest of the world, also have important shares in the Asian miracle. Without Asia, and China in particular, the 2009 financial crisis would have hit us much harder. And as Asian growth continues to power our economies, we will also be affected if and when growth in major Asian economies stumbles.

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Allow me to add another perspective. The quality of Asian growth is just as important as its volume. In Norway we have, until recently, tended to see ‘far away third world countries’ in Asia much as the colonial powers saw them. As cheap sources of goods and labour – and in time – as producers of basic industrial products.

Not any longer. Of course, pockets of poverty and conflict persist across the Asian continent. We remain concerned about these. But the main picture is different: more positive and more dynamic, and it is changing rapidly.

Allow me to give some revealing examples. Our national media recently published the story of a senior Norwegian banker who travelled both to Silicon Valley and to high-tech sectors in China in order to learn more about the future of fin-tech (including advanced payment solutions). While there was little to learn in California, the Norwegian banker was greatly impressed by the mindboggling new banking technologies in China’s Pearl River Delta (Shenzhen, Guangzhou, Hong Kong).

Similarly, the popular Norwegian online payment application VIPPS was designed and developed by an Indian technology giant (Tata Consultancy Services) that operates on a global scale.

In a somewhat challenging article in the newspaper Aftenposten last month (25 May), Camilla Tepfers and Håkon Haugli asked whether Europe was approaching the digital sunset. They highlighted the increasing dominance of international technological platform companies, of which 70 % are from the US, 22 % from Asia and only 4 % from Europe. And we must assume that the Asian share is on the rise.

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However, Asia’s eye-catching rise to power masks a range of complexities, contradictions and dilemmas. Afghanistan continues to be plagued by civil war. Several countries face threats from religious polarisation, political violence and terrorism. Conventions and traditions are preventing large stakeholder groups from realising their true potential. The human rights situations in many countries, including China, gives cause for concern. Climate change is challenging hard-won economic and social gains across Asia, not least in the continent’s vibrant coastal areas. Behind the impressive economic growth figures, we find growing inequality, inadequate protection of labour rights, damaging pollution and climate emissions that continue to increase.    

China’s rise, in particular, is also being met with growing scepticism in many quarters. The current US administration is engaged in a fierce trade conflict with China that (as I speak) seems bound to deteriorate further. The US is also imposing tough sanctions on Chinese tech companies. Chinese tech investment in the US fell to almost zero in 2018. European countries are also starting to screen Chinese investments, particularly in sensitive infrastructure sectors.

The background is complex, but the criticism of China relates to extensive use of state subsidies, theft of intellectual property, forced technology transfers and restricted access to Chinese markets for Western companies.

The fear is that, if current tensions between the US and China continue to rise, we are heading towards decoupling and a potentially crippling separation of highly integrated technology sectors in China and the US, with significant negative implications for Europe and the rest of the world.

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The Norwegian Government is following the current global tensions over trade, technology and security with growing concern. A liberal and rules-based political and economic order is essential for Norway. Our national interests suffer when major powers aim to settle their differences beyond the reach of the WTO, the UN and other key multilateral institutions.

What does the phenomenal rise of Asia, as well as the dilemmas and challenges I have just hinted at, mean for Norway, for the way we view our national interests and the values we share with friends and allies around the world?

First of all, the more a small or medium-sized country like ourselves is challenged by external events, the more we must focus on core national interests and the values that form our shared political identity.

Therefore, the narrative about Norway and the Asian century has to be grounded in our tight-knit European reality. Globally, Asia is ascending and Europe descending. But Europe will continue to be by far our most important market, trading partner, research collaborator, and partner in the furthering of our fundamental political values.

Still, roughly speaking, 75 % of our overall economic interface with the world is with Europe. And Europe is also, together with the US, at the core of NATO, our basic security alliance – an alliance that gains in importance the more political turbulence we face globally.

Thus, for Norway, Asia’s rise will remain a matter of degrees, rather than changing the fundamental direction of our economic, political and cultural ties. Besides, as I will return to in a minute, Europe may also prove to be more significant than we have imagined as a partner in facing the challenges of Asia’s rise.

However, important as my brief European detour is for the overall perspective, my intention is not to detract from the huge opportunities that a rising Asia brings to Norway. Growth matters, and today’s growth is Asia (to put it bluntly).

This growth is creating new opportunities for Norwegian companies, both large and small. Already, more than 600 Norwegian-controlled companies are located in Asia. In 2018, the value of our exports of goods to Asia was NOK 72 billion.

Asia is a huge market for sectors that underpin our national economy: shipping, oil and gas, seafood, renewables, and – increasingly – for advanced technology companies. Growth in services, in general, will be greater in Asia than in Europe. In sum, failing to grasp the massive Asian opportunities will be failing to safeguard our fundamental national interests.

Asia is no less important for Norway in political terms. It is difficult to conceive of any major political challenge of the day that does not involve Asian countries in key roles. We work closely with Asian countries in furthering our various global ocean management initiatives, including the High-level Panel for a Sustainable Ocean Economy, which is headed by our own Prime Minister.

India, one of the world’s fastest growing energy markets, has launched a global alliance aiming at rapid and massive deployment of solar energy to fulfil the Paris Climate Agreement. China is spearheading climate emission reductions based on advanced new technologies.

Asian countries are becoming increasingly relevant to our efforts to contribute to peace and reconciliation, not only in the Asian region, but also across other continents.

We work closely with Asean and other regional Asian groupings, and we stand shoulder to shoulder in many instances in supporting the WTO and other global multilateral institutions. The recent launch of our new India strategy is a testimony to the emphasis we put on our relations with the world’s largest democracy – which is also one of the fastest growing economies.

The turnout at this conference here today also reminds me that few – if any – serious Norwegian research organisations are absent from Asia.

We need to understand Asia far better than we do today, and you – our research communities – are essential if we are to succeed in that effort. We need outstanding and well-funded social scientists who focus on Asia. I am therefore very pleased to see the Research Council of Norway’s new focus on ‘a changing Asia’ (Asia i endring).

At the same time, and in line with my introductory perspective, we do not expect an Asian century without controversy, conflict or confrontation. Already, political conflicts within Asia, and between China and the US, are testing our political reflexes and values. A lot of political energy, and ingenuity, will have to be invested in managing our relations with large countries that often differ with us on important political priorities.

An increasingly urgent challenge is how to combine the furthering of our political values with the need to live with and accept – up to a point – the fact that we often deal with countries with very different historical and political traditions and perspectives.

While the impact of promoting Norwegian values in Asia may be limited, we receive interesting feedback from Asian partners about the way we organise our society, which they both respect and admire.

Asian countries show great interest in learning from our experience. This will be a topic during the President of South Korea’s upcoming state visit to Norway. Over the next two weeks, we will receive at least three high-level delegations from Beijing that will look into topics such as the management of our development cooperation, the ways we balance our social welfare policies, and the nature and structure of our tax system. These are important opportunities for us to convey values and knowledge about what makes our society work well.

Before I conclude, let me return to Europe. Increasingly, we see both the EU and European capitals reaching out to us for dialogue on how to manage relations with Asia in general, and with China in particular. This spring we have seen the EU stand together and form a consistent China policy that combines comprehensive cooperation and support for multilateral approaches with clear demands for policy change in areas of high priority to Europe.

Norway supports this balanced approach. While we always base our policies on our national interests, we also take every opportunity to work with European countries and the EU – particularly in managing the complexities and dilemmas of Asia’s rise.

In concluding, let me again congratulate you on putting Asia’s rise and the emergence of the Asian century squarely on the Norwegian research and policy agenda. The opportunities and challenges for Norway are huge. With your help, we stand a better chance of exploiting the opportunities and managing the challenges.

Thank you for your attention.