Sustaining Asia's development miracle

WANG JUN/FOR CHINA DAILY

Region should firmly oppose the disruptive behavior of external forces to preserve the peace and stability that has been the foundation for its success

Amid a sluggish global economy that has been battered by the COVID-19 pandemic, Asia has demonstrated its strong resilience. In 2020, Asia's economy contracted 0.8 percent, compared with the 3.4 percent contraction of the US economy and 6.5 percent of the eurozone economy. In 2021, Asia rebounded strongly -- the region's GDP increased by 6.9 percent, outstripping the rest of the world. This year, Asia has maintained its growth momentum thanks to recovering domestic demand and growing exports. However, affected by the Ukraine crisis, Asia's GDP will expand by about 4.6 percent this year, according to the Asian Development Bank.

In fact, Asia has created an economic miracle of "high growth rates "and "moderate fluctuations" over the past more than half a century. From 1960 to 2018, Asian economies recorded an annual per capita GDP growth rate of 4.7 percent, far higher than the world average of 1.9 percent and 2.2 percent average for the members of the Organization for Economic Cooperation and Development. Despite being hit hard by the 1997-98 Asian financial crisis, Asian economies stayed resilient during the 2008 global financial crisis and the COVID-19 pandemic. Today, the Regional Comprehensive Economic Partnership, which is composed mainly of Asian countries, represents 33 percent of the world's GDP. This has been possible because of some distinctive Asian experiences. However, these good experiences are now facing some headwinds and challenges, which deserve vigilance.

Asia has taken advantage of an open external environment to promote the liberalization of trade and investment. Until the first decade of the 21st century, developed economies in the West had been pursuing open trade and investment policies, providing a favorable external environment for Asia. In the 1960s, Asian economies began to embrace an export-oriented growth model and to introduce investment and technologies from Western countries to support their manufacturing industry. With Western countries increasingly outsourcing their manufacturing business to Asian enterprises, the region has realized industrial upgrading, gradually moved up the global value chain, and formed advantages of multiple industrial clusters.

Asia has also been promoting equal and inclusive economic integration. Riding the tide of globalization, Asian economies have actively built various platforms to promote regional cooperation and facilitate trade and investment, with the Association of Southeast Asian Nations having the biggest influence. Having drawn lessons from the Asian financial crisis and the global financial crisis, Asian countries have made remarkable progress in regional financial and currency collaboration. The Cumulative Rules of Origin under the framework of the Regional Comprehensive Economic Partnership, which took effect this year, have substantially boosted intraregional trade. Mutual benefit, non-interference in each other's domestic affairs, and seeking consensus through consultation are three features of regional cooperation in Asia. Some Western scholars once claimed that the Asian way was inefficient, but facts have proven that the Asian way enjoys lasting and robust vitality.

In recent years, the strategic competition that the United States has launched against China and the deglobalization trend have posed new challenges for Asia's development. Trying to shift domestic contradictions overseas, US politicians have been fanning the flames of tension in the Asia-Pacific region, and resorted to trade protectionism to contain China's rise, under the banner of strategic competition with China. The external environment of Asia faces major changes and challenges.

In terms of security, the US has constantly fueled tensions and confrontations, threatening the peace and stability of Asia. It has strengthened military deployment in the Asia-Pacific region, held frequent and large-scale military drills to provoke conflicts in the region, and instigated European countries to intervene in the South China Sea issue. The US has also repeatedly challenged China's redline on the Taiwan question by increasing arms sale to the island and assisting Taiwan in developing its asymmetrical defense capabilities. US House Speaker Nancy Pelosi's visit to Taiwan in August also escalated tensions across the Straits.

The developed countries led by the US have pushed for a return to manufacturing for the purpose of "security of supply chains". The Joe Biden administration revised the Buy American Act to raise the domestic content threshold from 55 percent to 75 percent for products purchased by the federal government, which means a product is considered "made in the US" only when at least 75 percent of their component parts are made in the country. Biden also signed into law the Inflation Reduction Act, which extends tax credits for the electric vehicle and spare parts industry. The US is also using administrative means to force leading semiconductor companies in Asia to invest in the US and hand in their confidential business information. The rising protectionism is hindering Asia's development.

In terms of regional cooperation, the US withdrew from the Trans-Pacific Partnership which contained terms of comprehensive and mutual concessions, and instead, put forward the "Indo-Pacific Economic Framework for Prosperity", aiming to force participating countries to make unilateral concessions and arrange policies that only favor the US. The IPEF claims that participants can voluntarily join its four pillars, namely trade rules, clean energy, supply chains and tax, and anti-corruption. Once put in place, the IPEF will create barriers that hinder the free flow of production and service factors among Asian economies, and compromise the efficiency of the Asian economy, undermining the foundation for regional integration and cooperation.

Whether Asia's economic miracle can continue depends on how Asian countries review the successful experience of the past and face up to the immediate challenges. Asian countries should exclude external interference, stay committed to sincere consultations and pragmatic cooperation, firmly oppose the disruptive behavior of external forces, and jointly preserve the region's peace and stability.

In the face of the West's protectionism and nationalism under various guises, Asian countries should hold high the banner of openness even more firmly, fight against various forms of protectionism, and work together to safeguard the free multilateral trade and investment system.

Meanwhile, Asia should adhere to genuine multilateralism and inclusive regionalism, stick to the Asian spirit of equality, mutual benefit and joint consultation, and improve the existing multi-field, multi-level and multi-subject regional cooperation framework with the Association of Southeast Asian Nations at the core to push regional cooperation to a higher level.

As such, Asian countries can establish a more distinct Asian identity and increasingly put forward more effective Asian propositions. They could work together to usher in the "Asian Century" and make more contributions to global governance.

The author is deputy director of the Department for International and Strategic Studies at the China Institute of International Studies. The author contributed this article to China Watch, a think tank powered by China Daily.