26 March 2014
20080415_2014 Chomtong Elders Festival,

Asia in 2014

In the year 2014, too many Asian countries will experience regional tensions, domestic political frictions and relative economic weakness.

In the year 2014, too many Asian countries will experience regional tensions, domestic political frictions and relative economic weakness.

The cocktail of economic development and emerging middle classes does not mix well with with weak institutions, and immature and authoritarian politics.

By recently declaring an "air defense identification zone" over the East China Sea, China has changed the terms of its engagement with Japan and Korea. Previously, it would launch "calculated overreactions" to any perceived bad behavior by Japan.

This time, Beijing has moved on the offensive, thereby incurring the wrath of not only Japan and Korea. It has also upset the US, with which China previously made a disingenuous case for a non-conflictual great power relationship.

China may have calmed down a little following US Vice President Biden's recent visit to Beijing. But China's offensive posture was confirmed by its threat to expell American journalists, and the recent near collision of their two navies in the East China Sea.

China clearly wants to have a more equal share of the Asia-Pacific power game, especially since it perceives a weakening US. But Beijing does not seem to understand that Washington's friends in the region value their relationship with Uncle Sam. While appreciating trade, investment and aid from China, no-one in the region aspires to Beijing's values or wants to be a Chinese subject.

Chinese citizens don't even trust their own government. Why should neighboring countries trust Beijing?

Even the volatile North Korea is increasingly beyond the influence of China. Beijing now expresses openly its disapproval of Pyongyang's behavior, even at the UN. But Beijing still provides it with great material support, and Pyongyang knows full well that Beijing does not want regime change. This gives North Korea more room for playing political games. But still watch out for a possible collapse of the Kim regime in 2014, as well as high-level defections.

China's bullying plays well to domestic audiences, and can provide a distraction from the growing repression at home. But it unfortunately fuels Japan's extreme right wing which, though small, can have excessive influence. Japan has just approved a new national security strategy and increases military spending as a response to what it sees as a threat from China.

It has also stimulated a China/Japan rivalry for the loyalty of Asian neighbors, especially in Southeast Asia. These ASEAN countries would prefer to avoid such rivalry, but came down on Japan's side in the recent ASEAN/Japan summit. Several have their own troubles with Beijing in the South China Sea.

Japan and Korea, Washington's closest allies in Asia, have every interest in working together. But Korea is now taking a tough line on its troubled history with Japan, and is refusing Tokyo's overtures for a summit.

In all this political quagmire, the US remains Asia's indispensable peace-maker, despite China's quest for greater regional leadership. And as we have just seen in the Philippines, the US remains essential to rapidly and effectively responding to natural disasters. Through its petulant behavior on this occasion, China missed a great opportunity cultivating soft power with its neighbors.

Politics and economics may now be moving in a vicious circle in Asia. Economic interdependence between Asian countries fostered prosperity. But prosperity has fed national assertiveness. And this is now undermining interdependence, as Japan cuts back on investment in China to the benefit of Southeast Asia, and as tourism flows between both countries are adversely affected.

Domestic politics have fractured again in Thailand, as the main factions in this deeply divided society have enormous difficulty living together. Social unrest is likely in Bangladesh and Myanmar. And elections in India, and Indonesia could well see shaky transitions.

Hong Kong's displeasure with mainland interference will likely erupt at least once next year. And Singapore's recent violent incident involving Indian immigrants is yet another reminder of the fragile social balance in this city-state whose immigrants account for one-third of its population.

Most Asian economies are in desperate need of a new wave of reform, especially the region's big economies of China, India, Indonesia and Japan. But implementation will lag behind bold plans, as vested interest line up to protect their turf. We remain yet to be convinced that China's new reform program will ever get off the ground. And China faces great challenges dealing with its immense domestic debt.

Until the recent tragic typhoon, the Philippines, long the sick-man of Asia, had surprisingly been the region's strongest growing economy. But this calamity will cost the country dearly. It is also a harsh reminder that Asia is more vulnerable to natural disasters than any other continent. Even Japan, the region's technological leader, is still recovering from its 2011 triple disaster, especially the effects of the Fukushima nuclear meltdown.

In short, Asia is facing the immense challenges of generating more economic growth at home, managing the domestic politics of increasing societal complexity, and bringing the arts of pragmatism and compromise to its neighborly relations.

And while China would prefer to see only weakness in the US, the world's sole real superpower will benefit from Asia's woes, as Asian capital, elites and students continue to migrate to America. As its economy continues to pick up, and the Fed starts its "taper", the US dollar will go from strength to strength, despite China's lofty ambitions for the renminbi. The greenback is also the only real safe haven in times of global uncertainty.

America's power derives from the whole country, not just Washington. This is different from Chinese Communist Party logic, which still sees a key long-term role for the state-owned sector in its economy, and also sees itself as the center of the world.

All things considered, 2014 will not be an easy year for Asia.


John West
Executive Director
Asian Century Institute
Tags: asia, 2014, asian regional tensions, asian domestic political frictions, asian economy

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