Ever since Japan began to be viewed as an economic juggernaut in the 1970s, the world has anticipated the “Asian Century.” Predictions of America and Europe’s inevitable decline and Asia’s inexorable rise have been staples of books, newspaper and magazine articles, and news shows for decades. In a tectonic shift in global power similar to the one that took place in the early 20th century, we are told, the countries of the Indo-Pacific will begin to dominate global economics, politics and security.
Such claims seem merely to reflect reality. Over three billion people live in the great geographic arc from India to Japan, and one in every three persons on our planet is either Chinese or Indian. The formerly war-ravaged and impoverished countries of the Indo-Pacific now export forty percent of the goods bought by consumers around the world.
Meanwhile, more Asians than ever in history are benefitting from economic growth and political stability. The region has not seen a real war since the Sino-Vietnamese clash of 1979. Since the mid-1980s, democracy has spread to Taiwan, South Korea, the Philippines, Mongolia, Indonesia and elsewhere. Hundreds of millions of Chinese, Indians, Vietnamese and others have been lifted out of poverty. Lifes throughout the region have increased, and the standard of living in Asia’s major cities now rivals (sometimes exceeds) that of the West. Scientists and scholars from Asian countries play leading roles in research institutes, laboratories and universities around the globe. Some of the world’s most advanced industrial factories are in countries like Japan, South Korea and Taiwan.
Perhaps because much of Asia has been peaceful for a few decades, many outside the region—and inside it as well—seem to take for granted that it will always be so.
Perhaps the main reason for that is an economic one. Most global consumers can hardly imagine a world without Asia as its workshop. China and Japan are two of the world’s three largest economies, and the majority of clothing, textiles and consumer electronics are produced in Asia.
The story of global economic activity for the past two decades largely has been the story of China, taking over from Japan and the Four Asian Tigers as the driver of economic growth in Asia. In the space of one generation, China has become the largest or second-largest trading partner of 78 countries around the globe, including the United States, Japan and South Korea.
According to the International Monetary Fund, China is central to the entire world economic structure, as its imports help prop up the economies of major players such as Germany, smaller ones like Australia, and fledgling countries in Africa.
China is just one example of how hundreds of millions of Asians have been pulled out of deep poverty. As late as 1990, just before Deng Xiaoping made his famous push to revitalise economic reform, per capita GDP in China was just $340. Ten years later, it had almost tripled, to $945, and in 2014, the World Bank estimated it to be $7,590, more than a sixfold increase in twenty years.
Like its more developed neighbours, China has rapidly become a technologically sophisticated society. China had nearly one billion mobile phone users in 2011, with millions signing up every month. Sina Weibo, the world's biggest social networking site, attracts a large percentage of China’s nearly 600 million internet users.
What most of the cheerleaders for Asia miss is the other side of the story. Despite enormous progress, growth and modernisation, Asia still struggles with enormous problems. Because so many of those weaknesses have been ignored, they now threaten the region’s future. From economics through domestic politics and security, solving the challenges facing Asia will demand the full attention of policymakers, thinkers, business leaders and citizens.
The world is just beginning to wake up to the fact that Asia’s economic miracle is at risk. After decades of hearing about double-digit economic growth in Japan and China, and impressive growth in the Four Tigers, the pace of GDP growth has slowed dramatically. Japan’s generation-long stagnation is perhaps the best known example, but when China’s stock market crashed in the summer of 2015, many observers for the first time appeared to recognise that the problems in the region were widespread and endemic.
Among the suspect assumptions that have driven hype over the Asia Century are that China’s economy will continue to grow for decades, that India is poised to take its place if it should falter, and that Southeast Asia remains just steps away from explosive economic performance.
In reality, from Japan to India, the nations of Asia struggle to maintain growth, balance their economies and fight slowdowns. In most of these countries, the days of high-flying growth are long over, while for others, they never began. It is past time for the rest of the world to pay attention to the threats to Asia’s economic health. Uneven development, asset bubbles, malinvestment, labour issues and state control over markets are just some of the features of economic risk in the Asia-Pacific. And because Asian economies are increasingly interlinked, problems in one country spill over to others. Even if Asia’s economies manage to muddle through, the world must ask what will happen to global trade and investment if growth in Asia simply cools off.
There is little doubt that the world must prepare for a China whose growth has dramatically slowed if not stagnated, and for mature economies like Japan to never recapture their former economic vibrancy. As for the developing states, the risk is that they will never attain the growth needed to ensure the modernisation of their societies.
Most of Asia’s developed countries, including Japan, South Korea, Taiwan and Singapore, are facing or will soon face unprecedented demographic drops. China’s one-child policy and horrendous environmental pollution will also bring a population decline in the world’s most populous nation, at a time when the country is not yet rich enough to deal with the resulting dislocation. On the other hand, India has a growing surfeit of young people and needs to improve educational standards, expand its urban and rural infrastructure, and find them all jobs. Much of Southeast Asia is in the same situation as India. Demographics will put enormous pressure on Asia’s domestic political and economic systems; understanding this is a must for understanding risk in the region.
Another enormous area of risk is Asia’s unfinished political revolutions, in both democracies and autocracies. How political leaders respond to economic and social challenges will ensure domestic tranquility or produce civil unrest. An Asia whose political systems fail to provide stability, legitimacy and growth is an Asia that will become increasingly troubled. The region’s history is full of examples of domestic failure leading to wider dislocation.
The gains of democracy continue to be put at risk by corruption, cliques, protest, cynicism and fear of instability. The spread of democracy, which has succeeded so well in recent decades, may be reaching a limit—how temporary is impossible to say. Even mature democracies, like Japan, face a crisis of political confidence, and a “political arthritis” that leaves vital problems unsolved.
Democracies are afflicted by malaise, cynicism and anger at the growing gulf between the haves and the have-nots. In Japan, where life remains comfortable and envied by most other Asian nations, voter participation rates in elections continue to drop, as many young people turn away from politics, convinced that the country will never pull out of its economic stagnation. South Korea is in the midst of a political crisis, as President Park Geun-hye was impeached for a bribery and influence-peddling scandal, after millions of South Koreans demonstrated in the streets against her. The Thai military continues to hold power after overthrowing the elected government, while in Malaysia, Prime Minister Najib is under fire for a billion-dollar financial scandal. Democrats around Asia are pessimistic about the future, helping stir populism and broader discontent.
Autocracies are in similar straits. In China, the Communist Party has become ever more isolated from the citizenry and is seen as corrupt, inefficient and often brutal. President Xi Jinping has cracked down on civil society, arresting lawyers and pressuring non-governmental organisations, even as he has gathered more power into his own hands.
Fearful of its lack of legitimacy, the Chinese government remains unshakably committed to preventing any geographic area from splitting from the country at large. This dynamic drives the government’s repressive policies towards Hong Kong, Taiwan, Tibet and Xinjiang, and is rooted in the knowledge that these regions would readily sever ties with Beijing if they could. A China riven by fission among its parts is the central leadership’s greatest fear. Fears about the future of Chinese stability are growing, in part due to uncertainty over Xi Jinping’s future plans. Nor is it far-fetched to conclude that China’s increasing belligerence over territorial disputes comes from a desire to shift attention away from increasing government control at home.
But if Asia’s domestic political systems are under strain, its diplomatic relations are at just as much risk. Few observers think about war in Asia. After all, the Indo-Pacific has not seen a region-wide total war since 1945. After Hiroshima and Nagasaki, the last major clash between Asian nations was the 1962 Sino-Indian War, and there has been no extended conflict between Asian nations since the 1979 Sino-Vietnamese border war. Given the growing trade and wealth in the region, a casual visitor to Asia could be excused for assuming that Indo-Pacific nations are too busy getting rich to waste time on territorial disputes and military confrontations. In fact, modernisation and economic growth have led to a new era of insecurity and a growing threat of armed conflict.
More than any other region, the Asia-Pacific remains fettered by centuries of history. Its largest and most powerful nations, China, Japan and India, were also its major imperial powers through millennia of history. Today, these giants have no formal allies among their neighbours, and few close partnerships. Because of this, Asia lacks longstanding, tested, respected political mechanisms for cooperation between states. This is a problem for a region with both major security tensions and a need for continued economic integration. Given the stakes, all countries in the region should be striving to create and maintain a political community that contributes to both growth and political stability. Yet such an achievement is far off on the horizon.
Despite facing many of the same problems, there is little that links Asia’s nations together. Beyond a rudimentary sense of “Asian-ness,” there remains no effective regional political community. There is no NATO, no EU in Asia that can try to solve common problems in a joint manner, or work to address bilateral issues in a broader framework. This lack of regional unity is a largely underappreciated risk factor.
The danger of a lack of political community is that there are no mechanisms for mitigating such deep antipathy, certainly between major players such as India and China or Japan and Korea. A nation like China is all too ready to threaten economic or political action in response to their antagonists. The various nations have few working relationships that can help defuse crises. Nor is there a core of powerful liberal nations committed to playing an honest broker’s role or trying to set regional norms. How well can Asia weather another regional economic crisis like the one in 1997, or a major border dispute?
The immediate cause of rising insecurity is simple: as China has grown stronger, it has become more assertive, even coercive. Beijing has embraced the role of a revisionist power, seeking to define new regional rules of behaviour and confronting those neighbors with which it has disagreements. Japan and Taiwan, along with many countries in Southeast Asia, fear a rising China, as does India, though to a lesser degree. That fear, fueled by numerous unresolved territorial disputes in the East and South China Seas and by growing concern over maintaining vital trade routes and control of natural resources, is causing an arms race in Asia. The region’s waters have become the scene of regular paramilitary confrontations: From the divided Korean peninsula to the Taiwan Strait, and from the Kurile Islands in the north to the Spratleys and Paracels in the South China Sea, coast guards, paramilitary forces, maritime patrols and air forces jockey for position, sometimes leading to the ramming of ships and the sinking of fishing vessels.
The Indo-Pacific contains its own ‘great game’ between great and small powers. Some of this competition is simply for greater influence, but some is for concrete gain such as wresting away territory or gaining de facto client states. At the highest level, that between China and its neighbours, it is for determining the basic structure of the region and the rules and norms that guide it. It is a contest in which no one, not even China, feels assured of its own strength. Asia’s simmering military competition, stand-offs, mini-confrontations and saber rattling have until recently been ignored in good-news discussions of the Indo-Pacific.
The rapid transformation of Asia's security environment threatens to undo the work of decades. China’s rise is upsetting the political and military equilibrium and causing other nations to build their own military power. In addition, an increasingly nuclear capable North Korea has moved from bizarre annoyance to deadly threat, while numerous territorial disputes between countries both large and small are helping fuel the arms race. Even without an ongoing war, the region now spends more than Europe on military budgets, paying out $287 billion in 2013 for weaponry.
The “Asian century” thus may not turn out to be an era when Asia imposes a peaceful order on the world, when freedom continues to expand, or where the region remains the engine of global economic growth. What it imposes may instead be conflict and instability. The nations of the Indo-Pacific and the world must prepare for the possibility of economic stagnation, social and political unrest, even armed conflict. The emergence of those would mark the end of the Asian century.
This article was originally published in 'Raisina Files: Debating the world in the Asian Century'
Early examples of this include Herman Kahn, The Emerging Japanese Superstate: Challenge and Response (New York: Prentice Hall, 1970) and Ezra Vogel, Japan as Number One: Lessons for America (New York: Harper, 1979).
For a complete list of China’s most populous cities, see “China 2010 Census Data Release,” China Data Center, University of Michigan, September 29, 2011, http://chinadatacenter.org/Announcement/AnnouncementContent.aspx?id=470.
“Top 20 Countries with the Highest Number of Internet Users,” Internet Word Stats – Usage and Population Statistics, http://www.internetworldstats.com/top20.htm.
Kenneth Rapoza, “China’s Weibos vs US’s Twitter: And the Winner IS?” Forbes, May 17, 2011, http://www.forbes.com/sites/kenrapoza/2011/05/17/chinas-weibos-vs-uss-twitter-and-the-winner-is/. See also: “Sina Reports First Quarter 2011 Financial Results,” Sina Corporation, May 11, 2011, http://phx.corporate-ir.net/phoenix.zhtml?c=121288&p=irol-newsArticle&ID=1562873&highlight.
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