Asian Giants get Little Attention

This Website is Best Viewed Using Firefox

FRED EDWARDS - September 27th 2006.

A Hamas government in Palestine. A summer war in Lebanon. An emerging civil war in Iraq. An assertive Iran intent on developing nuclear weapons. A resurgent Taliban making life miserable for NATO forces in Afghanistan. An outbreak of violence over comments by the Pope about Islam and violence.

We seem more obsessed than ever with the Middle East, Islamic fundamentalism, terrorism and weapons of mass destruction.

Wasn't this supposed to be the Pacific century?

Yet, with the exception of business stories and periodic special reports about the "rise of China" and more recently "the rise of India," the transformation of the Far East and South Asia remains only on the fringes of the consciousness of many people.

This is no doubt because the emergence of the new Asian giants has so far been largely peaceful, unlike the violent clamour in the arc of territory from the eastern Mediterranean to the Hindu Kush.

The advent of China's annual national day on Sunday, Oct. 1, is a time to take stock of how Asia is changing and ask again whether events there, rather than movements arising out of the strife-ridden Middle East, are more likely to shape this young century.

In China, economic growth since the reform process began in 1978 has averaged 9.5 per cent a year. Measured on a purchasing power parity basis, China already is the world's second largest economy with a gross domestic product of $8.86 trillion (U.S.). Beijing expects the economy to double in size between 2000 and 2010, and double again by 2020.

Growth has been driven by exports, the trade surplus reaching $160.8 billion (U.S.) last year. And the composition of China's exports has begun to change from simple manufactured goods like textiles and toys to consumer electronics, computers and cars. This qualitative transformation means the Chinese economy will be even more competitive in the future.

Economic success has enabled China to modernize its military without bankrupting the treasury, a problem that plagued the old Soviet Union.

Despite repeated double-digit increases in defence spending, China's military expenditures, according to CIA estimates, accounted for just 4.5 per cent of GDP last year.

China's economic and military power already have influence outside the People's Republic. It is no coincidence that Taiwan's independence movement has deflated in recent years as many Taiwanese now depend on jobs or investments in China. South Korea and U.S. allies in Southeast Asia also are being attracted by China's soft power, just as Canada 60 years ago gravitated toward the United States and away from Britain.

In India, economic growth in the past five years has averaged 7.5 per cent per year. India is now the world's fourth largest economy and soon will surpass Japan as the third largest.

Unlike China, India's economic strategy has focused more on its domestic market than exports. According to Morgan Stanley economist Stephen Roach, this may mean India actually will enjoy more balanced and stable growth than China's export-oriented economy.

India also is well positioned to exploit its already strong position in providing outsourced white-collar services and software development. Gurcharan Das, a former CEO of Procter & Gamble India and author of India Unbound, notes in a recent Foreign Affairs article that software and business-process outsourcing exports are expected to reach $35 billion by 2008.

India, like China a nuclear power, also has a formidable military and has long experience as an active regional power. Its only significant rival is Pakistan, which has nuclear weapons but otherwise is a fractious and often unstable country. India's influence and reach will be enhanced by its newly minted alliance with the United States.

Besides economic and military power and growing diplomatic clout, China and India are demographic giants, home to more than a third of the world's population. In contrast, the Arab and Muslim Middle East remains divided into multiple small and mid-size nations, with no single dominant champion.

Iran, a nation that aspires to that role, is unlikely to succeed given its Persian ethnicity and Shiite faith. Indeed, Iran's bid for power alarms major Sunni countries such as Saudi Arabia and Egypt, compounding the region's divisions. The sectarian bloodletting in Iraq is a symptom of this emerging conflict.

The Middle East provides plenty of news. Every day on the better television stations you can see a "talking head" expressing deep concern about some distressing event in Israel, Palestine, Iran, Afghanistan or the Arab world. And it is true that events in that part of the globe are tragic and alarming.

It also is true that China and India face their own serious challenges.

But ask yourself what region is more likely to have an influence on your future: the splintered, violence-plagued Middle East or prosperous, outward-looking China and India?

I'm betting on the Asian giants.