- By Clyde Prestowitz
Clyde Prestowitz is the founder and president of the Economic Strategy Institute (ESI), where he has become one of the world's leading writers and strategists on globalization and competitiveness, and an influential advisor to the U.S. and other governments. He has also advised a number of global corporations such as Intel, FormFactor, and Fedex and serves on the advisory board of Indonesia's Center for International and Strategic Studies.
A note from the East Asia Forum in Australia caught my attention over the weekend. It urged the importance of confronting the Asian Century. The notion of Asian dominance of the twenty first century and of concurrent and consequent American decline has recently become a favorite theme of the global commentariat.
In this telling, the combined GDP of all the Asian countries which already totals about 40 percent of the global total will quickly grow to more than 50 percent while the U.S. GDP will decline relatively from about 20 percent of global GDP today to maybe 15 percent in five to ten years. From these statistics it is inferred that a great power shift will occur to which the United States must adjust and to which it will in all likelihood have great difficulty adjusting.
At first glance, the argument appears plausible and even convincing. But when one asks exactly what is meant by Asian GDP or Asian Century, the flaws quickly appear. It is, in fact, nothing more than an agglomeration of numbers. To speak of the Asian Century or the Asian economy is to suggest some degree of unity and commonality among the Asian countries and economies. But this is simply not the case. With China and Japan at close to the point of war over the Senkaku Islands and Japan and South Korea unable to share intelligence information because of disputes over which holds sovereignty over the Takashima Islands and India and China still trying to make peace over disputed territory in the Himalayas, does anyone believe there is unity or commonality among the Asians? This is not to mention the conflicting claims of the Chinese, Taiwanese, Philippines, Vietnam, Malaysia, and Indonesia over the South China Sea.
Combining the economies of India, China, and Japan automatically yields a total GDP that is a large percentage of the global economy — not least because it also equals nearly half of the global population. But it’s a meaningless combination. India, China, and Japan are not now and will not in the future be governed by any overarching authority and are very unlikely even to be allies in a loose sense. Moreover, Japan’s is not a burgeoning economy that suggests the power and glory of an Asian century. Rather, It is in what may very well turn out to be a disastrous decline. Yet to reach a big combined Asian GDP number to justify talk of an Asian Century, Japan must be included despite the fact that it is by no means a rising power.
Or consider the other side of the equation. The United States alone accounts for only about 20 percent of today’s Global GDP calculated at purchasing power parity (PPP). But the combined economies of the United States and the EU now equal about 42-23 percent of global GDP. Add to that the GDPs of Canada, Mexico, and the countries of South America and you get over 50 percent. This is not to speak of Russia or Africa or the Middle East. So just on the numbers, even if the fast growth Asian economies continue their rapid growth (and all of them are now slowing down), if we subtract Japan from the total Asian number, it doesn’t reach 50 percent. Thus, the notion of a dramatic shift from the west to Asia appears a bit exaggerated.
Most of what is going on is journalistic hype. There will be no need to come to terms with an Asian Century. There may well be a need to come to terms with China. It is unlikely that there will be any need to come to terms with India or Japan or Korea or Singapore. This is because the issue is not really a pan- Asian Century or entity or movement of some kind. The issue is much more the nature of the systems behind the economy. The democratic systems of India, Japan, and most of the rest of Asia are not a challenge to any except by example to competing authoritarian systems.
Some argue that there is, in fact, great interdependence among the Asian economies that does, indeed, combine them into a significant united entity. But here too there is less than meets the eye. The great global supply chains of which many of the Asian countries are a part mostly do not end in Asia. Rather they supply primarily the U.S. and EU markets. So any Asian unity that exists depends heavily on the primacy of western consumption.
Does that sound like an Asian Century that must urgently be confronted?