Eastern rising

By Chandran Nair


This opinion appeared first in the April 2007 issue of The Parliamentary Monitor. It was submitted on invitation.

It subsequently appeared in the South China Morning Post on 30 April 2007, under the headline, Strength in unity.

While it is the duty of Western politicians to treat Asia as an equal partner, it is Asia's challenge to learn how to rely on itself, writes Chandran Nair in a special policy focus in The Parliamentary Monitor.

Asia is on the verge of great change. A report prepared for the Asian Development Bank looking to redefine its role forecasts a dramatically transformed Asia that by 2020 “will have conquered widespread absolute poverty in most countries, with more than 90% of its people living in ‘middle-income’ countries ... Its share of global GDP will approach 45%, and its share of world trade, 35%”

While it is the duty of Western politicians to treat Asia as an equal partner,it is Asia’s challenge to learn how to rely on itself, writes Chandran Nair

The bank believes enough in the evidence of poverty’s end to re-invent itself. The report states the bank’s traditional role of transferring capital from developed to poor nations will become redundant. The time could therefore not be more apt for the West to re-examine how it approaches development in Asia – and importantly for Asians to change the way they think about themselves, their home, how they wish to be perceived, and their future.

Far from being overnight phenomena, improvements in Asia build on rapid and extraordinary growth from the ashes of the 1997 financial crisis. New wealth is one of several opportunities that this rise creates but whose possibilities within Asia are yet to be understood by Asians or others.

In the past decade, businesses and investors within the region have built “excess pools of capital”, the Financial Times reports, and central banks accumulated about US$3,000 billion in foreign reserves. Asia has a significant and growing number of US-dollar millionaires – Japan leads with 825,000, China has 300,000, and India 83,000 – who reportedly hold US$6,000 billion.

The new rich need to understand they can invest in development in Asia: its immediate impact will be significant, and benefits long term; inaction needs to change. It is closely tied to a learned “beggar response” developed during the post-colonial era, in which the West provides opportunity and has the solutions for economic growth and social progress. Asia needs new confidence to shed this redundant, arguably corrupting, notion.

Asia can turn its own capital to opportunities within its own boundaries. Key are its strong diversity, in the different development levels, in its mix of cultures, and in all the possibilities to learn from each other to build better futures. There is very little that the West can offer China on energy efficiency that it cannot learn or obtain from Japan; similarly in transport and IT. Even in development economics Asians can help each other.

With a little imagination governments can direct investment where it can work at achieving an urgently needed rural-urban balance. Asia has some of the most wretched rural people scratching an existence, and the most crowded and polluted cities: how much more infrastructure strain and environmental distress can they take from rural refugees?

How many billions of people living in or near mega-cities can be made to for ever churn out goods – and CO2 – for the globalised economy in the factories of the world? A strong agricultural sector that creates jobs and spreads prosperity in the rural areas while feeding a growing population must be the opportunity for new Asian economic models.

Asia must learn to stand on its own, and when it does the premise for so much development aid immediately becomes redundant; it already is outdated, as is the notion of western “intervention”. Very few of Asia’s cities need western capital to provide infrastructure, but interaction between western and Asian interests can be as among equals, exploring opportunities in technology and knowledge transfer or co-operation and through global capital flows. This is a message that western politicians should hear, but more important is that politicians and civil society in Asia understand it, and Asian business leaders operationalise it.

For this to work, several things must happen. Asians need to help themselves by: resolving historical grievances within the region using regional intermediaries. China is already taking a leading role with North Korea; Wen Jiabao, China’s Prime Minister, and his Japan counterpart Shinzo Abe are also beginning a promising thaw, working on their troubled shared history. The capacity of Asian states must be strengthened through building strong institutions, especially in key areas of governance, security, environment and resource management, and social services such as health care. Population pressures alone demand that Asia, with the most children out of school, makes it a priority to invest heavily in primary and secondary education: here is one, critical development area in which the new rich can make a difference.

Asia must have bold ideas, and make them work. One, the common currency, could work not just for Asia’s good but join the euro as a positive alternative to the dollar.

Asia should unleash its huge reserves – but its central banks are hamstrung: money that can be put to good use is locked up in a cycle that ultimately props up US consumption, adding to the woes of the US and the world.

Yet, beyond the symbolism there are realities. And there are very real challenges in making changes. Asia’s immediate future may look promising on the pages of the ADB’s report, but it still is the world’s most populous region: its proportion of absolute poor might have fallen in 2006 to 29%, but that still amounts to more than half a billion people. Many in “middle-income” economies, where the annual per capita income is US$900, will still be struggling on a little over US$2 a day.