2021: less gloom, more boom?
It’s that time of year again. Many political analysts are making predictions about what the New Year heralds. What did I get right about 2020 in my article last year, and will 2021 be better? Scroll below to check out what I glean from a peek into my crystal ball…
2020: What I forecast correctly, as well as my one wrong prediction
Last year, I correctly predicted Chinese political stagnation, with gains for India; Brexit going ahead (it did after strenuous last-minute negotiation for a Deal) and that the wars in the Mid-East would continue to wind down (they have, with the exception of Yemen). The Eurozone has stagnated, as I said it would. My prediction of the emergence of a pan-Asian/Western alliance vs China has also happened. I also said Labour would move a little to the centre in the UK- it has, and Sir Keir Starmer’s performance so far looks impressive compared to his below-par predecessors. Time will tell whether he can defeat Johnson (or likely Rishi Sunak come election 2024).
I wrongly expected Trump to win, although I think Coronavirus was responsible for his defeat and in a normal year he would have squeezed past Biden.
What awaits the world in 2021?
1. The new Cold War with China
The general consensus in the West now is that China is an expansionist autocratic power, with a system of government that is deeply challenging for human rights. The brutalisation of the Uyghurs, the suppression of Tibet and Hong Kong, and a fast emerging threat to Taiwan will be major Chinese threats to the West. However efforts to balance it are also accelerating, with the emergence of the ‘Quad’ of Japan, India, Australia and the US. This grouping of like-minded democracies is now engaging in greater naval co-operation, with France and Britain planning to send their aircraft carriers to join the group from next year. It sets the stage for a potential military confrontation between an alliance of democracies and China. All involved actors will need to tread very carefully, lest a confrontation get out of hand.
2. China-India clash in the Himalayas
The rise of China has been so spectacular over the past three decades that it has overshadowed the impressive growth of the other Asian giant, India. Although Indian economic progress has been more uneven and in spurts, it has nevertheless created a vast new middle class. With manufacturing supply chains moving from China and into India, as tech giants from Apple to Samsung begin assembling their phones, pads and laptops in the aftermath of coronavirus, the Chinese strategic reaction has been violent. There was the Galwan Valley clash which killed 20 Indian soldiers in June 2020, along with an unknown number of Chinese. This was followed by an Indian operation to seize mountain heights in the Kailash range bordering Tibet, which took China by surprise. It is clear that Beijing sees Delhi as a threat, and it now sees military force as the last remaining option to deal with India. How India deals with this threat could decide the fate of the world; the US and Britain have moved to support India, increasing the probability of a clash igniting a major regional or global war.
3. The Biden Presidency and foreign policy
As I said, I had expected Trump to win the election. President Biden’s policies in some areas of foreign policy will change, such as a greater willingness to engage with Iran in the Middle East. A rational, if unpleasant, Iranian regime is unlikely to put its own survival at stake by starting a regional conflagration, and the US is now facing a new threat in the East Asia theatre in China. Biden may roll back some Trump tariffs on Chinese industry, but slowly and only after squeezing concessions from the Chinese. I think restrictions on Chinese investment in the West will certainly increase.
The UK has narrowly avoided a No-Deal Brexit leaving the EU without a trade deal. PM Boris Johnson deserves credit for this. However Brexit means a potential outflow of investment in critical sectors like finance, as well as new rules and non-tariff barriers to trading with the EU. Nonetheless Brexit also heralds new opportunities for trade with economic powers like India and Japan- Johnson’s visit to India for its Republic Day in January 2021 bears watching. The biggest domestic impact of Brexit will be a reinvigorated Irish and Scottish nationalism, which could see the biggest challenge to the political unity of the United Kingdom yet. Will Scotland and Northern Ireland leave the Union? This is the big political question that will play out over the years.
5. Climate change
It is increasingly clear that the world cannot sustain the current level of global warming, polar ice melting and sea levels rising. There is a consensus that the change is man-made. I believe there will be a big emphasis on renewable energy such as solar and wind as a more youthful and environmentally conscious world begins to think about the legacy they leave behind. There will be a focus on climate change at multilateral institutions such as the G20, led by powers such as France (the French created an international solar alliance to set international norms for using solar energy).