Asian challenges abound ahead

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EI SUN OH

EI SUN OH

LAST week I shared my perspective on how world events might unfold in 2017, and was at best only cautiously optimistic about the prospects of economic development, while being decidedly pessimistic about the further spread of terrorism. If we look back on Asia, the continued economic doldrums plaguing the United States and Europe since the financial crisis of 2007 and the relative economic dynamism exhibited by Asia seemed to give hope of Asia’s rise and assumption of at least regional if not worldwide leadership. But to better appreciate Asia’s prospects, we should perhaps take a closer look at its current situation.

For one, the colorful economic development of East Asia has to a large extent overshadowed other parts of Asia, where livelihoods are being eked out on bumpy roads. India, with its huge population size projected to surpass China, could and should further lift up its economic performance. Its neighbor and foe, Pakistan, seems to teeter gingerly between modernization and extremization. Many resource-rich Middle Eastern countries still prefer their own conservative lifestyles. Others are embroiled in civil war (Syria), infested with warlords (Afghanistan) or at least posing serious security threats (Iraq), all hindering massive foreign investments.

And the aforementioned economic sluggishness and terrorist expansionism continue to haunt the otherwise dynamic Asia too. Economically, many East Asian countries no doubt have to shoulder the heavy burden of being the bright spots in world economic development. But how much longer they can continue to play this difficult role remains to be seen, as Asia will be hard pressed to be unaffected by the global economic slowdown. In fact, in this globalized world and with East Asian economies’ openness to the world market, such positive scenario is unlikely to be sustainable. Asian economies have shown signs of tiredness. The Chinese economy has slowed down to a “new normal” state. Japan’s Abenomics can perhaps yield better results if institutional reforms could be more expeditiously carried out, in addition to fiscal stimulation and monetary easing.

And even if the Asian economy is performing reasonably well, concerns over how much of it consists of so-called “bubbles” persist. Skyrocketing real-estate prices in many Asian economies are perhaps not the ideal indicators of economic growth. Avid speculation in the stock markets, coupled with proactive interventions by national authorities, are also not ideal methods for promoting long-term “real” growth. And we pay a very steep price for Asia’s high-speed growth. Large-scale environmental pollution and food safety issues emerge periodically, begging for more sustainable and systemic solutions.


And then there is the worldwide trend toward more frequent acts of terrorism, which affect Asia too. Social inequity often leads to the more abstract hatred of the “other” and the pursuit of more “idealistic” goals, so as to assuage a mind devoid of hope. Such a mindset for extremism and radicalization does not necessarily involve nationalism or even religion, and some even cut across national and cultural boundaries. As social media connect the furthest corners of the globe, the spread of these extremist views is very much facilitated. Some self-radicalized elements even travel far to join the fights in the Middle East and become local recruiters if they survive and return. Others carry out “lone wolf” acts of random terrorism domestically. These alarming developments necessitate international cooperation to nip extremism in the bud.

The demographic trends in Asia are also worrying. Asian populations are, more than at any other time, getting older and younger at the same time. In more developed Asian countries, the improvements in livelihood lead also to reluctance to have more children. Such populations thus become progressively older as time goes on. Conversely, in some of the least developed Asian countries, population size has essentially exploded, with the large number of young people exceeding the number of jobs that the local economy could reasonably sustain, burdening both families and governments with the task of providing welfare. In both of these population growth models, some shrinking age groups have to provide for other expanding age groups, raising questions of inter-generational equity. More infrastructure for the old as well as for the young will have to be constructed in the coming years.

Moreover, social harmony is also affected when the jarring gap between the very rich and the very poor stares many Asian societies mercilessly. The GDP growth rate and Gini coefficient (measurement of wealth gap) grow almost in tandem in some instances. Although individual countries may appear to be “wealthy” overall, the wealth is not distributed equitably in these societies, with many of their citizens still struggling on the verge of poverty, while social elites control the levers of money and power. The working masses have to suffer from low wages and high prices. The traditional urban-rural divide in quality of living is now visible even within cities. It would appear that the only thing stopping many societies from breaking into riots appears to be underemployment, where people are relegated to working at jobs which are beneath their skill levels, so as to at least earn some income.

In view of the above, it would appear that Asia has its share of challenges. But turning challenges into opportunities is no strange job for the average Asian, and we must rise up to tackle and transform these challenges into new avenues for peace and stability.

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1 Comment

  1. MARIANO PATALINJUG on

    Yonkers, New York
    11 January 2016

    What this highly interesting and enlightening Commentary, “Asian challenges abound ahead,” By El Sun Oh, in the Manila Times of 11 January misses,is what the financial economic and political effects or repercussions will be of the earth-shaking policies and programs a President Donald Trump and a Republican Congress , as foreshadowed by what a presidential candidate Trump articulated on the campaign trail.

    I am characterizing those likely policies and programs as “earth-shaking” and I am not engaging in hyperbole.

    Trump has vowed to gut NAFTA, trade the US trade agreement with Canada and Mexico, two of the US’s biggest trading partners.

    Neurotically averse to GLOBALIZATION, he has vowed to take the United States out of the WORLD TRADE ORGANIZATION.

    He has threatened to impose a 45% tariff on all exports to the US, targeting China in particular whose trade with the US at around $600 billion annually is the biggest.

    If he succeeds in these, quickly the US will be engaged in a horrendous TRADE WAR with the world, with countries trading with the US constrained to retaliate and impose heavy tariff likewise on all their imports from the United States.

    But that will not be the end of an economic death spiral for all nations engaged in such a Trade War. Simultaneously to raising tariff barriers, nations will almost automatically also resort to the devaluation of their currencies in a desperate effort at self-defense.

    Within as early as the second year, the whole world will very likely sink into another GREAT DEPRESSION, perhaps worse than the Great Depression of the Thirties.

    MARIANO PATALINJUG
    patalinjugmar@gmail.com