The Importance of Understanding Asia
Doug Cook OBE, Institute Director, Asia Scotland Institute – The Scotsman
Commentators have long talked about the “Asian century” based on the belief that, demographic and economic trends would result in a shift in the centre of gravity of the global economy to Asia in the 21st century. The reality is that the Asian century has already arrived, and we would do well to better understand this phenomenon.
We must be wary of generalizing about such a large part of the world, with its many differences. But the reality in 2020 is that the Asian economy and trade within Asia is now larger than the rest of the world combined. By 2030 Asia will account for 65% of the worlds middle class and 40% of global consumption.
Supported by world-leading technology and continual innovation, Asia’s increasing consumption and its integration into global trade and capital mean that it is beginning to determine the direction of the future global economy. Its exports to the rest of the world remain key, but their domestic and regional economies are an increasing source of growth. The 3 billion Asian middle class is an important market for the luxury goods sector. Traditionally, their appetite was for foreign luxury goods, but they are beginning to choose domestic overforeign as they become more confident with their own identity and internal market.
Asia is also shaping the adoption of digital technology with 50% of the world’s 2.2 billion internet users. India’s internet subscribers have nearly doubled since 2014 to 560 million and the country has successfully introduced 1.2 billion people on a biometric digital identity programme. Asian countries have been quick to recognise and invest in R&D and digital innovation. China already spends more on R&D than the EU. Such investment and innovation produce successful companies at a faster rate than the West and they are more comfortable in managing the creative destruction process to reinvent themselves.
Clearly Asia has its share of problems, not least the challenge of structural reform, liberalising trade and market access, debt and China’s falling population. Asia is also vulnerable to continuing geopolitical tensions which have the potential to de-rail economic integration and prosperity. But Asia is implementing reforms to boost competitiveness, growth and jobs. They have improved the allocation of credit, dual labour markets, infrastructure and encouraged greater private investment.
Asia is also becoming more integrated as the mutual benefits of cooperation become apparent. APEC, ASEAN and the Shanghai Cooperation successfully promote cooperation as do China’s revived relationships with India, Japan, South Korea and ROK. Unlike the current trend in the West for trade disintegration, trade, investment and tourism are becoming more integrated in Asia. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) revived under Asian leadership demonstrates their commitment to multilateral trade liberalization and common standards and it seems this will be enhanced with the introduction of the Regional Comprehensive Economic Partnership (RCEP) which will greatly assist Asian developing countries access to free trade.
As Asia becomes richer and more integrated, so it also promotes global governance and values multilateral organisations, in stark contrast to diminishing Western influence, given current reducing trade, travel and increasing debt. The emergence of Asia is timely, as climate change, demographic challenges, global inequality and security concerns all demand multilateral solutions. Perhaps the combination of developed and developing countries of Asia can provide the necessary consensus, leadership and momentum to enable global institutions to achieve greater success.
Prior to COVID, the global governance system was being undermined by themes of anti-globalization, notably the ‘America first’ policy. During the pandemic, responses in the West have been largely national and characterised by protectionism and, in some cases racism and xenophobia. The pandemic has reinforced the importance of international cooperation and we should learn from Asia’s relative success in dealing with COVID. Indeed, Asia’s evolution deserve acknowledgement and its growing importance in the world means that all of us outside of Asia have a responsibility to better understand its values, politics, economics, cultures and business environments. Asian people understand us better than we understand them, which places them at an advantage.
Much has been written about the importance of Scottish businesses securing closer linkages with businesses in Asia to deliver long term success. But, in addition to greater commercial awareness of Asia, at an individual level, everyone needs to better understand and appreciate the nature and values of Asia to better appreciate the world in which we live.
Read the original article on The Scotsman here.
The Asia Scotland Institute exists to provide insight, to stimulate and promote the exchange of knowledge on Asia. Working with the world of business, academia and government, supported by a growing network of student ambassadors we aim to stimulate curiosity and foster an environment to promote deeper understanding of this important region. See more on our events at www.asiascot.com. Asia is about to reoccupy the centre of the global economic stage, a place it occupied for most of human history until the 19th century.