Asia’s role in the future Randy Kluver Institute for Pacific Asia Texas A&M University

Location

The rise of Asia  Since WWII, growth in Asia has been explosive  Asian tigers (Japan, S Korea, Singapore, Taiwan) provided one wave of development ( )  Next wave of “little tigers” has stalled somewhat (Indonesia, Thailand, Malaysia)  Next 20 years, though, will see Asia’s influence grow because of China and India

Current economic trends  China’s liberalization:  opening of economy immediately shifted FDI flows out of the rest of Asia  has enjoyed annual economic growth of 8-12% since about  Gross GDP could conceivably pass that of the US by 2030, most certainly by  India’s Growth  Stagnant for many years, primarily due to inability to break through economic reforms  started growing in recent years, and could also surpass US by 2050.

Are they compatible? China  China accounted for 7 percent of global merchandize exports and 6.1 percent of imports  China’s manufacturing industry is 41 percent of GDP,  Domestic market for goods: $1 trillion  Authoritarian capitalism India  India accounted for less than 1 percent of exports and imports  India’s manufacturing industry is only 16 percent of GDP  Domestic market for goods: $ billion  Democracy, but heavily state influenced economy

Post-war growth spurts  Percent of world GDP (PPP) 00 44 88  12  16 11 33 55 77 99  11  13  15  17  19  21  23  25  Years since turnaround  Germany  China  Japan  South Korea  Taiwan, China

Critical issues:  Struggle for resources  Energy: International Energy Agency warned that demand for oil imports by China and India will almost quadruple by 2030 (2007)

Environmental Degradation Worlds most polluted cities:

Other critical issues  Governance  Different models lead to different results  Losing sight of key priorities because of national pride issues could undermine their potential  Infrastructure (roads, highways, water systems, housing, etc) India’s annual investments in infrastructure between 1998 and 2005 averaged 4% of GDP compared to 8.2% for China

Asia and global power  China is the only Asian country represented on the Security Council  Economic growth translates into various forms of geopolitical power.  Regional groupings have not been as significant as many had hoped (ASEAN, APEC, etc)  Military power is as yet insufficient for anything but border issues.  Asia has been largely unsuccessful in generating significant “soft power” except in limited areas.

© SIPRI Regional military expenditure,  North America  Western Europe  Eastern Europe  Asia  Middle East  Latin America

Shares of world military spending by country 2006

Key challenges China  Potential for conflict: Taiwan  Demographics  Floating population  Aging  migration India  Potential for conflict: Pakistan  Demographics  Quickly emerging middle class  Population is not slowing as rapidly, creating greater demands on resources

How does the West respond?  Retreat, Resist, or Rejoice?  US and Europe have shared fears, but varying policy responses.  US: China policy usually debated in election years.  Businesses and governments often have different reactions, as well.  Overall context of globalization has a bearing on what ultimately happens.