ASIA’S ECONOMIC growth can trace its origins to the period after the Second World War. It had been a time of peace, decolonization and economic growth. It started with Japan, and then South Korea and finally with China.
The growth of these economies also boosted growth for those of us here is South-East Asia through investments and expanding supply chains.
This growth was driven could not have existed without the global trade network, which allowed Asia access to technology, energy, capital and markets. Without any of these, I seriously doubt that Asia could have become the economic super power it is today.
Take, for example, exports. Asia would not be where it is today if it without its trade surplus. It has to sell its products abroad and invest in foreign markets to balance its books, and without trade, Asian economies will have to undergo severe contraction, namely China.
And now, we are entering a world where the United States., the single largest consumer market is trying to rebalance away from Ggobalism by reshoring and friend-shoring. What this means is that the U.S. is trying to be more autarkic, at least with regards to the Western Hemisphere. Without global free trade, where does that leave Asia long term?
Ultimately, the answer depends on whether these countries can change how they structure their economies. That will require a rebalancing away from the free trade, investment-focus of the past decades. This will take time, and success is uncertain. East Asia, despite its prominent economic size has an aging population, and an aging population does not consume. Without consumption and without export markets, Asia’s prospects are ambiguous.
Generally, I am bearish on Asia’s economic prospects in a fragmented world, and that will of course affect politics, which in turn drive more economic changes. Peace and Pax Americana gave Asia prosperity. It’s end gives it an uncertain future./PN
