Tuesday, November 30 2021 | ASIA TODAY INTERNATIONAL - Reporting the Business that Matters in Asia
Power Plays rule
ASIA is on a high. But will tomorrow’s industries create enough jobs – or the taxes needed to support an ageing population? And will political risk impact investment?
THE NUMBERS tell the story.
In 1983, when Asia Today International first published, China accounted for 1.2 per cent of world trade, with exports worth US$1.838 billion. Ten years later it contributed 2.5 per cent of world trade (its exports then worth US$3.698 billion), a decade on, 5.9 per cent (US$7,380 billion) and by 2016, 14.2 per cent (US$1.5985 trillion).
China’s percentage of world trade actually dropped, to 13.15 per cent, in 2016 (the latest figures available), although its total exports of goods and services in that year increased to US$2 trillion.
Economically, the whole of Asia has been on the move. Comparing total exports of goods and services in 1983 and in 2016 (in constant 2010 US$) the World Bank offers some startling numbers:
Sth. Korea 25.2 billion (1983);
US$710 billion (2016);
Japan US$243 billion; US$645 billion;
Singapore US$35.5 billion; US$585 billion;
Hong Kong US$38.6 billion; US$550 billion;
India US$19.8 billion; US$501 billion;
Thailand US$13.8 billion; US$275.3 billion
Malaysia US$27.7 billion; 240.7 billion;
Indonesia 34.6 billion; 216.2 billion;
Philippines US$15 billion; US$98.4 billion.
Thirty-five years on – half a lifetime – the most successful of the Asian tiger economies have long left behind their low-cost manufacturing ghettos and are actively moving into INDUSTRY 4.0 – the fourth industrial revolution, encompassing robotics, AI, fintech, smart cities and alternative energy, the engines of tomorrow.
China essentially has already created its own Silicon Valley in the Pearl River Delta, and many expect the next global breakthrough in new-age technology to come from there.
On the outside lane is India, embracing game-changing economic reforms under a strong Prime Minister determined to drag his people out of poverty and to embrace international investors to bring the nation to superpower rank.
India faces major challenges in infrastructure, energy, education and its traditional caste system, but its people have long been recognised for their natural IT and software engineering skills (something Japan’s tech leaders spotted more than three decades ago).
That alone stands India in good stead for a lead role in tomorrow’s world.
The other side of the coin, though, is jobs. Countries with young populations, like Indonesia, India and the Philippines, need to create more of them. Others with ageing populations need both jobs and taxes to support their elderly.
Will new jobs come out of INDUSTRY 4.0? Disruption wrought by new technology has already decimated many jobs in the developed world.
ALONG WITH economic progress in Asia has come a new factor for both investors and traders – political risk.
Geo-politics now plays an increasing role in Asia-Pacific, home to four nuclear players – China, India, Pakistan and North Korea. Japan is preparing to re-arm.
Japan identifies multiple threats to its security – from North Korea, China (the Senkaku Islands), Russia (the Kuril islands), and possible withdrawal of the United States from the region.
The situation in Pyongyang offers immediate threats to regional security, with those dependent on the U.S. security umbrella secretly unsure of longer-term U.S. intentions in Asia-Pacific.
Tensions between India and Pakistan have hardly improved, and a more aggressive China has been shaking a military fist at India over historically-disputed territory in Kashmir.
China has managed to split ASEAN over its South China Sea policy. Observers believe only four Asian countries – India, Japan, Vietnam and Indonesia – will in future be prepared to confront China longer-term on territorial issues.
A significant chapter in the South China Sea saga is currently being played out in Vietnam.
As our correspondent Ron Corben points out (page 27), Vietnam has been pressing ahead with what is known as the Blue Whale gas project in Vietnamese waters disputed by China. Blue Whale is said to have reserves of 150 billion cu m of gas and is forecast to contribute US$20 billion to Vietnam over its life. Hanoi has the final decision to proceed on hold to avoid triggering conflict with China. A second project is also under threat.
Corben says China has agreed to hold consultations – not negotiations – with ASEAN over the South China Sea as Singapore prepares to become Chair of ASEAN. Singapore has come under vitriolic attack from Chinese State media because of its support for The Hague ruling rejecting China’s claims to sovereignty over sections of the South China Sea.
Maturity, mutual respect and compromise will be essential for all players in tomorrow’s Asia.
*Barry Pearton is Publisher of ATI Magazine.