Is the future
forecasts miss the region's demographic and environmental
MARCH 14, 2019,
Will Asia's billions be made jobless or kept out of the work force
by automation? © Reuters
In a past career as a stock
analyst, I was often asked to make my reports more "actionable" so
that fund managers would feel the need to make trades, ideally
through the bank I was writing for, as frequently as possible.
In reality, dramatic events that warrant
changes to "buy" or "sell" recommendations are not frequent for
normal companies. Analysts tend to play up the significance of
events or data releases and to discover important trends when in
fact there is only white noise.
This phenomenon has nothing to do with
intellectual honesty, or a lack thereof, but it is a well-diagnosed
occupational disease. So what about geopolitical analysts and
strategists? They are also human and under pressure to read tea
leaves to find trends. The more exciting the better.
This context is important to bear in mind in
considering the arguments made in a widely discussed new book, "The
Future is Asian," by Parag Khanna, a Singapore-based geopolitical
In an introductory chapter, entitled "Asia
First," Khanna claims that thanks to the growth of its population,
economy and technological skills, Asia is steadily re-establishing
a pre-eminent role in global affairs. "Asians once again see
themselves as the center of the world -- and its future," he
But is the future really going to be Asian?
Khanna -- and others who share his perspective -- fail to explain
why Asia's billions must inevitably
Indeed, Asia's masses can be seen as a
tremendous burden on the environment and on labor markets. This is
especially true with technological advances in artificial
intelligence and other areas which could kill more jobs than they
Will Asia's billions be made jobless or kept
out of the work force by automation? Are severe shortages of water
and other essentials likely to appear in the region in decades to
come? I see very real risks of regional conflicts and riots due to
competition for water and other resources. These are points that
need to be addressed in a book like Khanna's.
Moreover, for the future to be Asian would
also mean that it is not American. But is U.S. dominance fading in
the 21st century?
Opinions on President Donald Trump
notwithstanding, this would not appear to be so. The U.S. rebounded
from the global financial crisis quicker than other countries
including China and its economy continues to surge
forward. Without a doubt, the U.S. remains the most attractive
destination for the world's young and ambitious, including those
China, on the other hand, panicked in 2008,
launching a massive fiscal and monetary stimulus that generated
severe industrial overcapacity and unrecoverable debts. Today,
China's credit balance is bigger, at current exchange rates, than
that of the U.S. and Europe combined despite its much smaller
For the world's future to be truly Asian, we
would have to first see a very substantial improvement in the
economic performance of this region. That appears some ways
China is backpedaling on much-needed economic
reforms and is struggling with the implications of a quickly aging
work force. Japan is getting too comfortable in the role of an
aging, timid and mature economy. India holds more promise, but its
young population is also a labor market challenge.
The western parts of Asia are not out of the
political woods as wars and sectarian conflicts
remain a major headache. The conflict between India and Pakistan,
which again erupted into violence recently, is a case in point.
Russia is pivoting to Asia but only marginally as its economic and
cultural relations with Asia are still much weaker than its ties
with Europe. Given Russia's preoccupation with Europe and America,
it seems unlikely to contribute much to the economic growth of Asia
in the future.
Khanna and other ultra-optimists are generally
far too bullish especially on the outlook for Asia's economic rise.
Even China's clear slowdown, and the problems that is bringing, are
turned into a positive in their perspectives.
Khanna writes: "China's gradual economic
deceleration is not a cooling of the Asian story. As China
decelerates, others are accelerating." Portraying Southeast Asia as
the new regional growth engine, he adds, "Asia's 5 billion people
have an even longer -- and larger -- growth wave ahead than what
they have experienced to date."
This is too uncritical. For all its progress
since World War II, Asia remains rife with corruption and cronyism.
That undermines any possibility of efficiency or achieving broad
equality. While observers will be used to hearing unalloyed
positive forecasts from Chinese officials, one should expect more
from independent observers.
I am optimistic about the future of Asia, but
my optimism is a form of pragmatism. No one is served by looking at
Asia through rose-colored glasses.
a former economist at the People's Bank of China, is chairman of
payment services company China Smartpay Group and vice chairman of
distressed-debt recovery company Hunan Yongxiong Asset Management