Asia in transformation

Economic power is shifting from West to East. China and India not only withstood the global economic crisis that began in 2008, but have actually continued growing. And the 10-member Association of Southeast Asian Nations (Asean) will rise to global prominence as it forms a common market by 2015. 

Asia is being remade and thrust into international focus by historic political, economic and technological trends. 

The first is a geo-political shift that is part of the world’s cyclical evolution process and occurs every generation. The US rose in the aftermath of the Second World War, and when the Soviet Union collapsed in 1991, it found itself the sole superpower. Now, once-regional powers like China and India are rising on the international stage.

Today, in the rest of the world, the US sees wars in Iraq and Afghanistan, Iran’s nuclear threat, military conflict and social turmoil in the Middle East and in Africa. And among its old allies in Europe, debt crises and recessions that threaten to spread globally. So the US has returned to Asia, a region of stability and economic growth. Starting right after they took office, President Barack Obama, Secretary of State Hillary Clinton and many other senior US officials have frequently visited China, Indonesia, even once-shunned Myanmar.

The US is not the only one seeking to contain growing Chinese influence in Asia. That is a prime aim of India’s Look East policy. So Asean is being courted from three directions by powerful giants: China, the US and India. 

This strategic jockeying coincides with the second big trend: Asia’s rise as an economic power. Countries like China, Singapore, Japan, even Thailand, have successfully used industrialisation and exports to accumulate capital and foreign exchange reserves. As developed countries face high public debts and fiscal deficits, Asian countries not only remain relatively healthy but also enjoy rising growth potential with their young populations, expanding middle classes and urbanisation. 

Emboldened by its economic success, China is trying to transform its currency into a world currency and using its huge reserves to build up its military might. China has propelled its economy by means of a strong government, elite-driven centralised planning and some market mechanisms. It is replacing the former Soviet Union in a bi-polar world, and the US, which had not been challenged for 20 years, now faces this major challenge to its “New World Order” idealism. 

Finally, there is Asia’s transformation by the information technology revolution.  

Whereas the households and industries of the past two centuries were built on fossil fuels, the new economy is being built on electronic data and its promise of higher productivity. The largest corporations in the US include firms like Apple, Google and Facebook, that make money from data gathering and sharing in a knowledge-based economy. 

Asia is catching up to the West in the agricultural revolution and in industrialisation. What about this third wave, information technology? There’s no doubt that Asians want to participate. Indonesia has the second largest number of social media network users in the world after the US. India, the Philippines and Thailand are among the top seven. 

Some countries like Singapore and South Korea have successfully harnessed the power of the new technology. China has managed the Internet aggressively, for example in banning Facebook and replacing it with its own social media networks. But while such censorship cannot be condoned, other countries like Indonesia and Thailand have not managed the technology revolution to their advantage well. Many other Asian countries – Laos, North Korea, Myanmar – are even further behind.

 In conclusion, most Asian nations are moving up the income ladder as European nations slip into prolonged recession. China, Japan, South Korea and Singapore are leading the pack, followed by four Asean countries – Thailand, Malaysia, Indonesia and Vietnam. At the same time, countries like Laos, North Korea and Myanmar that already have problems with the industrialisation stage will struggle to catch up with the global technological revolution and will suffer even wider disparity with their neighbours.

Many of the above issues will be discussed among the stakeholders at the Sasin Bangkok Forum on July 8 and 9 at the Plaza Anthenee Hotel (see more details at www.SasinBangkokForum.org ).

 

Pongsak Hoontrakul is a senior research fellow at Sasin Graduate Institute of Business Administration, Chulalongkorn University (www.Sasin.edu and www.Pongsak.Hoontrakul.com). This article reflects his personal opinions, not those of Sasin or Chulalongkorn.