Perceptions of Asias potential as a dominant global economic forceeven the dominant economic force, perhapshave only been reinforced by the events of the second half of last year. While many seasoned observers expected Asian markets to crumble as the subprime contagion spread outward from the United States, those markets continued outperforming after just the briefest of hiccups. There are still serious questions over whether the fortunes of the Asian markets have genuinely decoupled from those of the West, but there is no doubt that they are stronger, more robust and much more self-reliant than ever.
With economic progress comes power. No nation illustrates that more clearly than China. Whatever lingering moral or philosophical concerns Western businesspeople might have had about doing business with China, they have been trampled underfoot in the stampede to get a slice of the China pie. With vast cash reserves at their disposal, the Asian giants have also discovered they can scare critics and opponents into submission, while those who court them are rolling out the red carpet simply to get a chance at doing business with them. The UK government, for example, practically fell over itself in its apparently successful attempt to coax Chinas sovereign wealth fund, CIC, to set up its first overseas office in London.
The sheer financial muscle of funds such as CIC has some in the West worriedquite reasonablythat their economic power gives them political leverage. Their hand-wringing has not gone unnoticed by the chairman of CIC, Lou Jiwei, who made a point of stating while he was in London that his fund would simply not invest in countries that succumbed to any protectionist tendencies. With at least $200 billion at his disposal, his is not a threat to be taken lightly.
With power, though, comes responsibility, and in that area, at least, Asia still has some growing up to do. Social welfare is still being sacrificed on the altar of economic progress, and Asias fast-growing economies have reacted angrily to suggestions that they should forgo some economic growth to reduce the environmental damage they are causing. Sure, it seems unfair, given that the West was able to enjoy its economic explosion unfettered by fears over global warming and environmental pollution. But accepting unfairness is a part of growing up. If this truly is to be the Asian Century, as some observers have already begun calling it, Asias new economic titans will need to wield their newfound power with care.
Until next month,