We must be wary of generalising about such a large part of the world, but the reality 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 per cent of the worlds middle class and 40 per cent of global consumption.
Supported by world-leading technology and innovation, Asia’s increasing consumption and its integration into global trade are now driving the future global economy. Its exports to the rest of the world remain key, but their domestic and regional economies, along with the three billion middle class are an increasing source of growth. Traditionally, their appetite was for foreign luxury goods, but they are beginning to choose domestic over foreign as they become more confident with their own internal market.
Asia is also shaping the adoption of digital technology with 50 per cent 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 innovation. China already spends more on R&D than the EU. Such investment produces successful companies, comfortable with ‘creative destruction’, faster than the West.
Clearly Asia has its share of problems: the need for structural reform; liberalising trade and market access; debt; and China’s falling population. Geopolitical tensions also have the potential to de-rail economic integration and prosperity. But Asia is implementing reforms to boost competitiveness, growth and jobs, with improved credit allocation, infrastructure and private investment.
Asia is also becoming more integrated. APEC and ASEAN successfully promote cooperation, as do China’s revived relationships with India, Japan, South Korea and ROK. Integration of trade, investment and tourism in Asia contrasts with the current trend for disintegration in the West. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) revived under Asian leadership demonstrates their commitment to multilateral trade liberalisation and common standards and this will be enhanced with the introduction of the Regional Comprehensive Economic Partnership (RCEP), assisting Asian developing countries access to free trade.
As Asia becomes richer and more integrated, so it also promotes multilateral organisations and global governance, in contrast to diminishing Western influence, given current reducing trade, travel and increasing debt. Perhaps the combination of developed and developing countries of Asia can provide the necessary leadership and consensus to tackle the global challenges of climate, demography, inequality and security.
Prior to Covid, the global governance system was being undermined by anti-globalisation, notably the “America first” policy. During the pandemic, Western responses have been largely national and characterised by protectionism, and in some cases, racism and xenophobia. We should learn from Asia’s international cooperation and relative success in dealing with Covid and acknowledge its growing importance in the world. We all have a responsibility to understand Asian values, politics, economics, cultures and businesses to better appreciate the world in which we live. Asian people understand us better than we understand them, which places them at an advantage.
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 we aim to stimulate curiosity and promote deeper understanding of this important region. 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.
Doug Cook OBE, Institute Director, Asia Scotland Institute. See more at www.asiascot.com