Asia is on a roll
Michael Garrett (Executive Vice-president, Nestle) and
Jean-Pierre Lehmann (Professor, IMD (Switzerland))
This is a seminal year in Asia's advance into the 21st century. Seven years after the financial crisis, Asian economies are doing well, there is a renewed sense of confidence and future prospects are encouraging. In fact, things are significantly better than a decade ago, when the "Asian century syndrome" got people who should have known better carried away with their own bombast - remember the "Asian values" discourse? In contrast with the hubris of then, the confidence of today is quiet, cautious and professional.
The early- to mid-1990s Asia miracle story was generally limited to the Northeast and Southeast corners of the continent. India, Pakistan, Bangladesh and Sri Lanka were perceived to be on the periphery. Now, at the dawn of the 21st century, India is, as the pundits would have it, "shining", but so, albeit in a slightly less glittering fashion, are its neighbours, Pakistan, Bangladesh and Sri Lanka. Trade, investment, technology and information flows are occurring at a brisk pace across most of Asia from the Khyber Pass to the Amur River. These economic trends are reflected in policy developments. The Association of Southeast Asian Nations, and China, South Korea and Japan continue to pursue regional economic integration, while discussions on a South Asian free-trade area are breathing new life into an old and often acrimonious relationship. India is also engaged in free-trade agreement negotiations with Asean. And China and India are increasingly getting on rather well. Two-way trade is booming.
Perhaps one of the most stunning features of the current boom is that even lethargic Japan appears to have been infected. Its growth is being entirely driven by its regional neighbourhood locomotives, especially China.
Asia is also a powerful political player in global democracy, as elections in Indonesia, South Korea, Taiwan, Malaysia and India demonstrate. There is one very critical lesson to draw from the Asian experience. In developing their economic and political regimes, and in fashioning their regional integration, they did it their way. Political developments in China will follow a similar path. This is a case of self-propelled, incremental, independent regime change. It is not without hiccups, as Beijing's heavy-handed approach to Hong Kong illustrates. But the trend seems reasonably clear; China is becoming a more pluralistic society.
Of course, Asia is not Utopia. No place is. There are political and geopolitical fault-lines, for example, North Korea. There are institutional weaknesses, especially in the area of finance, and in most countries, in the practice and rule of law. Although poverty has been reduced on an unprecedented scale, inequality has increased.
Still, Asia is on a roll and it is not only having positive effects on the region, it is increasingly also playing a very dynamic role as global locomotive. China is, to cite one example, Brazil's fastest-growing trading partner.
But all this needs to be sustained. Over the next 20 years, Asia needs to create about 750 million jobs. Asia has grown; Asia is growing; Asia must continue to grow. For this to happen, a global growth-enabling environment is essential. Asia today is fuelling much of globalisation, but it is also highly dependent on globalisation.
And here there is cause for alarm and frustration. The only way to ensure a growth-enabling global environment is not only to maintain, but to strengthen, the international multilateral rules-based trading system and to pursue an open trade agenda. When seen from Asia, it is striking how petty and irrelevant appear the squabbles that caused the collapse of the World Trade Organisation ministerial talks at Cancun. But that is the problem. In Geneva, globalisation is not being looked at from a 21st century Asian perspective, but remains trapped in a 20th century Atlantic prism. Perhaps one solution might be to move the WTO from Geneva to Hong Kong.
(Originally appeared in the April 27, 2004 issue of South China Morning Post in Hong Kong, reproduced here with permission.)