What Happened To The Asian Century?            

The prospect of the 21st century becoming an ‘Asian Century” is fading from view. Rather than adapting to an Asian Century, the paramount challenge for the West is now learning to live with illiberal regimes and resisting illiberal forces within its own countries.depositphotos IntroductionIn 2011, the Asian Development Bank set out a vision for an “Asian Century.” By nearly doubling its share of global GDP to 52 percent by 2050, Asia could regain the dominant economic position it held some 300 years ago, before the Industrial Revolution.Similarly, at the launch of her government’s 2012 White Paper on the Asian Century, Australian Prime Minister Julia Gillard declared,

“Whatever this century brings, it will bring Asia’s return to global leadership, Asia’s rise. This is not only unstoppable, it is gathering pace.”

But in less than a decade, those confident visions of an Asian Century seem to have faded from view.Let’s back up first and see how we got here Origins of the Asian Century visionFollowing the end of World War 2, many saw little hope for an economic renaissance in Asia, a continent that had been destroyed and suffered from widespread poverty and overpopulation. This view was epitomized by the 1968 study “Asian Drama: An Inquiry into the Poverty of Nations” by Nobel-prize-winning Swedish economist Gunnar Myrdal.But at the same time, another reality was developing. Against the backdrop of the emerging Cold War, the US decided to transform its former enemy, Japan, into a close ally. Japan would develop rapidly thanks to US support and open markets, strong human capital, an entrepreneurial culture, and government guidance.The year 1964 was pivotal in Japan’s story. Tokyo would host the 1964 Olympic Games. Japan would unveil its first bullet train that year, running from Tokyo to Osaka. In addition, Japan would also join the OECD, the club of advanced democratic nations.Taiwan, South Korea, Singapore, and Hong Kong follow JapanFollowing Mao Zedong’s victory in the Chinese Civil War, the US supported its wartime ally, Chiang Kai-shek, and his Republic of China regime on Taiwan. The island economy would develop rapidly and democratize during the 1980s and 1990s.South Korea emerged as a non-communist country from the 1950-53 Korean War. It developed very strongly from the 1960s, and in 1987, it held its first presidential elections. Korea also joined the OECD in 1996.Under the leadership of Lee Kuan Yew, Singapore would very successfully pursue open market development, and forge very close relations with the West. But as the government retained a firm grip on both the economy and society, it has never become a real democracy.Rise of China and IndiaThe renaissance of China and India seemed to confirm the advent of an Asian Century.Under Deng Xiaoping’s leadership, China began opening its economy in 1978 and developed rapidly. Development was interrupted by the tragic Tiananmen Square incident in 1989. But soon after, it was rebooted, and accelerated following its membership of the World Trade Organisation in 2001.Over the past 40 years, the number of people in China with incomes below US$1.90 per day has fallen by nearly 800 million, accounting for nearly three-quarters of global poverty reduction since 1980. China’s total GDP is already above that of the US in purchasing power parity terms, but somewhat below in market price terms. But its GDP per capita of $13,000 is well below that of the US, at $85,000.India has also made substantial progress following reforms launched in 1991 after a financial crisis. Its population recently overtook that of China as the world’s largest, at 1.4 billion. However, its GDP per capita is less than $3,000. Although its GDP is the fifth biggest in the world, it is only 20 percent of China’s.Disappointment of RussiaRussia is Asia’s largest country in terms of land area and arguably the richest in terms of natural resources endowment. As Asia’s leading economies are resource-poor, this should make it one of the greatest beneficiaries of an Asian Century.Following the end of the Cold War and the breakup of the Soviet Union, Russia experienced great instability during the 1990s under Boris Yeltsin’s leadership. However, Vladimir Putin’s leadership after 2000 brought stability to Russia.However, the Russian economy remains highly dependent on natural gas and oil exports and is otherwise relatively backward. Lack of opportunity and poor governance have provoked a massive brain drain. Military adventurism in Ukraine, Syria, and elsewhere, along with grey zone operations, is having devastating impacts on the Russian economy and society, as well as its relations with other countries. Asian Century DreamSound domestic policies, such as investments in human capital and infrastructure, open markets for trade and investment, and improved governance, have driven Asia’s successful economies.But Asia has also benefited from the US and other Western countries which have provided direct assistance, offered open markets, and welcomed international students.Such “strategic engagement” was based on the hope that these emerging economies would see growing middle-class societies, which would demand open and clean governance and, ultimately, democracy, as in the cases of Korea and Taiwan. The historic success of the US and other Western countries would serve as a beacon.There was also the hope that these emerging economies would partner with the US and the West in tackling global issues like climate change, pandemics, artificial intelligence, and cyber–security and would, more generally, be partners in the rules-based order.But this Asian Century dream was not to be.Shattering of the Asian Century DreamFollowing the end of the Cold War, the US’s “uni-polar moment” of the 1990s did not last long. The notion that the US and other Western countries could serve as a beacon for emerging economies was quickly shattered.The post-9/11 wars in Afghanistan and Iraq brought great discredit to the US as a world leader. The global financial crisis in 2008 also brought great discredit to the US model of freewheeling financial capitalism.The fact that many bankers were saved by bailouts while ordinary citizens suffered undermined US domestic support for open markets. This came on top of yawning inequality and deindustrialization in the US due to globalization and technological change.These perceptions of social injustice ultimately fostered the rise of Donald Trump and his illiberal politics and trade protectionism and undermined the prospects for an Asian Century. Such factors were also behind Brexit, the UK’s decision to leave the European Union. Asia’s dynamic economies lose their lusterMany of Asia’s once-dynamic economies are now struggling to maintain their momentum. Poor demographics have contributed to Japan’s stagnation these past three decades, and Korea and Taiwan are now feeling the effects of aging populations.For its part, China’s economy is also being hit by rapid population aging. China will grow old before it becomes rich in GDP per capita, in contrast to Japan, Korea, and Taiwan. But China’s economy is also being buffeted by Xi Jinping’s tightening the screws on the private sector and a loss of confidence in China by many foreign investors.Countries like India, the Philippines, and Indonesia, with large and energetic youthful populations, are unable to generate enough jobs and thus do not benefit from a demographic dividend.In sum, the period where Asia’s growth drove the world economy may now be fading from view. Illiberal pivot in AsiaDuring the 2000s, there were hopes and signs that China might become more politically open. But this gradually changed with Xi Jinping’s ascension to the leadership. Xi’s regime is characterized by assertiveness on the international front, repression of domestic society, and a shift away from market economics.China’s international assertiveness has not only targeted the US and Europe. Japan, Taiwan, the Philippines, India and Australia, not to mention Hong Kong, have been among China’s targets. Overall, Xi’s policies are driven by ideology and the desire to shore up the regime’s security.In light of China’s illiberal pivot, India has emerged in the eyes of many as the great white knight that will join forces with the West in its competition with China. This is short-sighted, despite India’s own difficult relationship with China. India has and will always go its own way. Strategic autonomy is the essence of India’s DNA. Under Narendra Modi’s leadership, India has taken an illiberal turn with Hindu nationalism and persecution of its Muslim minority. India has long had a close relationship with Russia. And while Western countries have implemented harsh sanctions on Russia, India has taken advantage by becoming one of the biggest buyers of Russian oil.Et tu, Russia?The West invested much time and energy in trying to help the USSR/Russia under the leadership of Mikhail Gorbachev and Boris Yeltsin. But for Vladimir Putin and the KGB establishment, the end of the Cold War and the dissolution of the USSR were big mistakes – Gorbachev was a stooge of the West. Like all illiberal leaders, regime security is sine qua non and the existential motivator for seeking to reverse much of the dissolution of the USSR and to block the former Soviet states from joining Western institutions.In sum, the illiberal pivot in some Asian countries has undermined one of the key planks of the Asian Century dream. Further, the growing partnerships between several Asian “rogue states,” namely, China, Russia, North Korea, and Iran, are a serious cause for concern.Living with illiberalism?The fundamental challenge facing the US and the West today is not how to adapt to an Asian Century. It is how to live in a world with many illiberal regimes and resist the illiberal pressures at home. During the Cold War, it was arguably more simple in that there were very few economic relations between the West and the communist regimes. Non-communist illiberal regimes were aligned with the West in their opposition to communism.But today, we live in a world with liberal and illiberal regimes and many shades of grey in between. One of the greatest worries is the illiberal shift in the US and European countries like Hungary, which is in part fostered by illiberal regimes’ infiltration and influence operations. Moreover, there are very substantial economic relations between liberal and illiberal regimes.Further, both liberal and illiberal regimes have a shared interest in tackling global issues like climate change, pandemics, and cyber-security through a rules-based world order. But many illiberal regimes are contravening key elements of the rules-based order, and trying to bend the rules-based order in an illiberal direction. Responding to illiberalismThere are many issues that the US and the West need to address in responding to illiberalism:

 ConclusionResisting illiberal forces in our own countries is imperative but extremely difficult. Politics and the media are very polarised, and elites in many countries suffer from a lack of trust. But fostering more cohesive and equal societies with a sense of social justice would help. Good and strong leadership would also help. Historically, the US has had excellent leaders like George Washington, Abraham Lincoln, and Franklin D. Roosevelt. But today, such leadership is most regrettably lacking. What is also necessary is an honest and dispassionate recognition that initiatives like Brexit, which were driven by illiberal forces, have been a failure.The US and other Western countries are taking measures to tackle the challenge of living with illiberal regimes. However, it is difficult to see whether these measures are sufficient or form part of an overall coherent strategy.More By This Author:EIA Provides Information On The U.S. Oil Reserves – It Is Looking Pretty GoodApril 30 – Market Close & Major Financial HeadlinesFederal Deficit Spending (Quarterly) and Inflation