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A ringside view of history in the making (Guy de Jonquières - The Financial Times )
March 29, 2007 4:31 PM
Copyright The Financial Times
March 28 2007
This is my last Asia column before I have to retire shortly from the
Financial Times, after 39 years. It is an irresistible opportunity to
draw together some lessons and impressions gathered while covering the
region and to explode the odd myth. I shall also hazard a few
predictions.
First, not all east Asia is an economic miracle: today, it is
overwhelmingly a China story. China has generated more than half the
growth in developing Asia, including India, this century. A
surprisingly large number of other countries have performed
disappointingly. Japan, the region’s largest economy, is still re-
emerging from its lost decade. South Korea, the third largest, is
floundering. Taiwan and Thailand are performing well below their
potential.
Second, China has no grand master plan. Its one constant is the
Communist party’s ruthless dedication to keeping its monopoly on power.
In practice, the leadership’s claim to political legitimacy hinges on
its ability to keep living standards rising for as many people as
possible. The pursuit of that goal is essentially pragmatic and based
on trial and error. That is a prudent choice, the political equivalent
of portfolio theory, when, as is so often the case in China, there are
so many unknowns, even to those in power. The biggest of all is where
economics will ultimately drive the country politically.
Two other factors make governing China a tightrope act. One is the
centre’s never-ending struggle to control headstrong local officials,
who have taken all too literally the injunction to enrich their regions
– and themselves. The other is the growing influence of vested
interests that have asserted themselves more strongly under a less
radically reforming leadership. Lobby politics is now at least as
important in shaping policy in Beijing as in Washington, which is why
it is often hard to read.
Third, economics rules Asian diplomacy. In a region riven by mistrust
and age-old hostilities, the interdependence created by trade and
investment – particularly in the form of cross-border production
networks – is the most powerful underpinning of stability. However
great their political differences, Asian countries have not let these
threaten their common pursuit of export-led growth. Given the limited
diplomatic options, one can only hope that economic logic continues to
prevail and that Asia does not suffer the same fate as Norman Angell’s
prediction in 1913 that European countries had become economically too
intertwined ever again to wage war against each other.
Fourth, it will be a long time, if ever, before Asia forms a closely
integrated economic bloc. In addition to mutual suspicions between
nations, rivalry for regional influence between China and Japan – and
probably, in time, India – will make meaningful agreements hard to
achieve. Furthermore, the institutional co-operation that deeper
integration would require is frustrated by Asian governments’ jealous
defence of sovereignty and the weakness of many of their domestic
institutions.
Fifth, the importance of Chinese “soft power” is overrated. Most of
Beijing’s diplomatic overtures around the world are driven first and
foremost by economic need, above all its quest for secure supplies of
energy and raw materials. That it has stolen a march on the US is due
more to Washington’s neglect than to Beijing’s undoubted political
marketing skills.
Truly effective soft power is based on the projection of intrinsically
appealing national ideals, principles and values. However wantonly the
Bush administration has squandered those assets, I suspect most Asians,
given the choice, would still opt for the – tarnished – American dream
over the harsh constraints, relentless materialism and spiritual
poverty of contemporary China.
Sixth, Europe is irrelevant in Asia, except as a market and a producer
of luxury goods. Those in Europe who envisage Asia basing its future
development on the European “model” delude themselves. The only
European models that Asia would like to embrace are to be found on
catwalks.
Seventh, the west should moan less about manufacturing going east.
Manufacturing is what you do if your only alternative is eking a living
from the soil, or what lies beneath it. Automation is making it less of
a job creator, competition is brutal and the really big money lies
elsewhere, in product design, marketing and branding. That is why, from
China to India, companies yearn to graduate beyond mere metal-bashing.
Eighth, denying free expression is wrong economically, as well as
politically. Most Asian governments dream of creating “knowledge”
societies capable of fundamental innovation. However, severe setbacks
such as Korea’s faked human cloning scandal show how far they have to
go. It is telling that almost all Asian-born Nobel scientific laureates
have been honoured for work done in the west.
Genuine innovations are often serendipitous and rudely challenge the
established order. But even in countries where repressive regimes do
not punish such behaviour, hierarchical attitudes and traditions of
deference often breed intellectual conformism. Changing that will take
far more than big research budgets.
In the past 28 months, this column has given me the ultimate
journalistic privilege, a ringside view of history in the making. It
has been stimulating, often surprising, sometimes amusing and always
fun. I have frequently benefited, too, from the wisdom of readers. Some
have become friends. I wish them all, and Asia, well.
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Posted at 4:31 PM