Hello, welcome to visit Shanghai Forum
A few years ago, when Asia was growing at afaster pace, with some countries in the region growing at a double-digit pace,the world was excited about it. There was much talk about the 21st centurybeing the Asian Century. Indeed, compared to the rest of the world, Asia'srobust economic performance over the past three decades, made a strong case forthe emergence of an Asian Century. Although Asia had its weak spots andsetbacks, the momentum and impact of Asia’s rise was even more tangiblefollowing the onset of the world financial crisis in 2008.
With Asia being the engine of growth forthe world, there was increasing discussion about the distribution of power onthe planet shifting to Asia. One or more of Asian countries, it was argued,would assume global leadership in diplomacy, in science and technology, and insoft power. China, of course, was very much at the centre of this debate.
However, with China’s growth slowing downto 7.5%, and India’s to about 4.5% in the last couple of years, we began towitness a fall in enthusiasm over the Asian Century. There seems to be concern,if not alarm, over whether the uninterrupted and seemingly unstoppable growthof China is finally running out of steam. It has become fashionable to showskepticism about emerging economies, the BRICS in particular.
Diversity of views is healthy; and I thinkhitting the pause button and reflecting over the past is healthy. But I don’tshare the fashionable skepticism about China or Asia. Let me just give you tworeasons, among others.
First, recovery is now seen in a growingnumber of high income economies, even though it is uneven and the effect of thecrisis and the subsequent recession lingers.
Second, Asian economies are resilient andgovernments in the region are coming to grips with policy shortcomings andstructural problems.
Indeed, the IMF, the World Bank and theUnited Nations all see stronger growth prospects in Asia, with growth in theregion projected to reach about 5% and emerging Asia about 7% this year and next.
So, does that mean I assume that Asia’seconomy will be trouble-free? No. I think Asia, and of course China, do faceimpediments. The region must seek transformative changes to overcome theseobstacles. Let me elaborate.
First:the challenge of manufacturing upgrade.
With rising factor costs and erodingcompetitiveness, these Asian economies, including China, face the daunting taskof making the leap to the next stage of growth – growth that relies oninnovation, resource efficiency and higher productivity.
Second:the challenge of sustainability.
Despite the financial crisis, the increasein economic wealth has been accompanied by unprecedented threats to theecosystems and to the natural environment. As is publicized, some of the mostpolluted cities in the world are found in Asia. But there is more to thisworrisome state of our planet, which brings me to the third challenge: thechallenge of inequality.
Inequality has been on the rise. Incomeinequality in developed countries is at its highest level for the past halfcentury. The average income of the richest 10% of the population is about ninetimes that of the poorest 10%. The income inequalities are replicated in accessinequalities.
Solutions
Asia’s rise will almost certainly not besmooth. There will be ups and downs along the way. How countries navigatethrough them will decide if Asia rises or gets stuck in the middle income trap.
With each successive crisis, Asia hasdemonstrated a growing capacity to manage crises. I am therefore confident thatChina and other Asian governments will be able to tackle these challengesthrough enhanced resilience to external shocks.
Before I conclude, let me flag some ideasas possible approaches to the three challenges.
First:investing in human capital.
To overcome the manufacturing challenge,Asian economies must make more efforts to upgrade their human capital.Successful Asian economies are manufacturing-based economies that have reliedon human capital to transform their economies, to move up the technology ladderand the value chain.
Second:investing in sustainability.
We need to launch a new industrialrevolution – the sustainability revolution that will disrupt our dependence onresource consumption. If we fail to improve resource efficiency, we will spendmuch of our future years dealing with tensions arising from resourceconsumption, such as energy insecurity, water scarcity, climate change, waste,pollution, etc. A sustainability revolution is no longer optional. It is a mustnow.
Third:addressing inequalities.
Asian countries must emphasize inclusiveand sustainable economic growth that directly addresses inequality, throughmacroeconomic and fiscal policies that bring about real income gains for thepoor and vulnerable.
Growth must be inclusive. To sustain growthover the long-term, almost all Asian countries must give much higher priorityto inclusion and reducing inequalities. Inclusive growth must not only addresspoverty, but also deal with aspects of equity, equality of access andopportunity, generation of employment and provision of protection to vulnerablegroups in daily living.
Conclusion
By now you may have noticed that I amadvocating a sustainable development strategy for China and Asia. The 21stcentury will be an Asian Century only if countries in the region are capable ofmaking transformative changes and pursue sustainable development.
I am fortunate that in the latter part ofmy public service, I have had a chance to work on sustainable development.Without sustainable development, there will be no lasting peace, security ordevelopment. Sustainable development is the foundation for peace, security andprosperity.
As we engage in our daily business, it willbe beneficial for us to pause and look beyond our individual, immediate horizon... and ask: Are we, as a global community, on a sustainable track? Will Chinaand Asia be capable of making the transformative changes?
Thank you for your attention.
