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Asia’s Economy: Changing Roles, Shifting Realities

Original Broadcast Date:
June 10, 2017(UTC)
Co-host: Singapore Institute of International Affairs (SIIA)

Asia has long been the growth engine for the global economy and its fate was intimately connected with that of the US. But the election of Donald Trump, fueled by opposition to globalization, could change all that. Meanwhile, China has bold plans to bring the rest of Asia into its economic orbit. In this edition of Global Agenda, our panelists discussed key issues, including the future course of the region's economy and who will take the lead.

TPP without the US

The discussion kicked off with the withdrawal of the US from the Trans-Pacific Partnership agreement (TPP). Mr. Daisuke Iwase said the Japanese government was disappointed by the US withdrawal. But he said the TPP was not the end in itself but a means to an end. And he suggested that different kinds of agreements with the US remain possible, such as TPP11 or FTAs. Meanwhile, Mr. Michael Stumo said that his organization was happy that President Trump pulled out of the TPP due to concerns over a 40-year history of trade deficits and erosion of the US manufacturing base. Stumo also said that the US has sacrificed economic benefits in order to make friends through trade agreements to which many Americans are now opposed.

Trump's "America First"

Prof. Khong Yuen Foong said Trump's policy is about revitalizing the American economy and getting jobs back for Americans. Stumo said the US has approached trade in an extremely open way. He said the country tends to run trade deficits, unlike more closed and strategic countries including Japan, South Korea, and Germany. But Dr. Victor Gao insisted the economic policies of the current US administration are misguided. He said the US should focus on making higher-end products since it can't win by competing in lower-end products. He called it a losing proposition, even if the US manages to lure companies back to the US.

China's Emerging Role

Our panelists then discussed China's influence on the world economic order. Of particular interest was China's "One Belt, One Road" initiative which aims to create an economic zone linking Asia and Europe. Iwase agreed that China will play a bigger role in the global economy. But he pointed out that free trade does not fit with the traditional image of China. And he said that if China is to play a responsible role, it can't simply build bridges and roads and invest in ports. It has to become more open and transparent.

Khong said that as China expands its influence in the region, many other Asian countries want the US to maintain a strong presence there. He also raised the issue of geopolitical rivalry between the US and China: since the US likes being number one, there is bound to be friction. And Gao said that one of the biggest questions is whether the US will be able to adjust to the idea that China is the larger country.

Rising China, Rising Concerns

Prof. Simon Tay turned the conversation to geopolitics. Khong said economics could have a strong influence on strategic alignments. He said that China could become the major investor and number one trading partner with most of the countries in Asia as they shift their strategic alignment away from the US. But Gao countered that China is not forcing Asian countries to choose between China and the US. He offered South Korea as an example: it remains a US ally, but is China's largest trading partner. Khong said economic and political rules are generally made by the most powerful country; therefore, China will want to change some of the economic rules as its power increases.

Asia's Economic Future

Iwase said a lot will depend on where the Trump administration goes with its economic policies, and he wants to be optimistic that they will be pragmatic. Stumo stated that Trump's economic team thinks more in terms of strategic development than pure laissez-faire or free-market principles. Gao suggested everyone needs to develop, maintain stability at home, and work for a peaceful world: otherwise, everyone will lose. And finally, Tay said that people in America have paused to look inward under the Trump administration. But major doubts remain over China. So what comes next, and how we respond, remain very open questions.

Panelists

Victor Gao

Chairman, China Energy Security Institute

Dr. Gao is chairman of the China Energy Security Institute. He has worked with the Chinese Foreign Ministry and the United Nations, and served as a China policy advisor to the Hong Kong Securities and Futures Commission. Gao is an expert on foreign policy and the economy.

Michael Stumo

CEO, Coalition for a Prosperous America

Mr. Stumo is the chief executive officer of the Coalition for a Prosperous America, a bipartisan coalition of farmers, manufacturers and labor groups. The non-profit organization supports Trump's goals of eliminating the trade deficit, creating jobs and protecting US sovereignty.

Khong Yuen Foong

Professor, Lee Kuan Yew School of Public Policy, National University of Singapore

Prof. Khong is a professor at the Lee Kuan Yew School of Public Policy at the National University of Singapore. He researches international relations and policy both in the US and the UK. Khong now focuses on US foreign policy and international relations in the Asia Pacific.

Daisuke Iwase

Co-founder and President, Lifenet Insurance Company

Mr. Iwase is president of Lifenet Insurance Company. As a member of a Japanese government panel, he made proposals on deregulating the information-technology sector.

Moderator

Simon Tay

Chairman, Singapore Institute of International Affairs

Prof. Tay is a public intellectual and the author of many books and articles on international relations in Asia. He also advises various policy-makers and leading businesses on international politics and economy.