By Ernie Bower
When you can’t see a Berlin Wall falling, it is hard to recognize when you are living through a historical pivot point.
Heads up! The wall is falling. Asia is transitioning from its role as the world’s production center to the world’s premier market. Traders and policy makers both seem to be missing this point.
Asia is taking us up on talking points which started a couple years ago at the advent of the U.S. economic slowdown. Policy makers and analysts warned Asian partners not to assume the United States could be the market of last resort. We could not, they correctly pointed out, continue to buy the world out of recession. American consumerism and debt levels couldn’t be sustained. The same was true for Europe.
This guidance was correct and we’re living through the transition. The United States is still the world’s largest economy, but China is moving quickly to challenge that status. The number of Asian middle class consumers –families that can buy consumer goods like cars, phones, and computers — is nearing 800 million, while recent reports indicate that up to 15 percent of the U.S. population of 280 million is living below the poverty line. Europe’s commitment to a lifestyle it can no longer afford is now the focal point of daily headlines.
Ironically, as Philip Bowring notes in his article in the Asia Sentinel today, currency traders and equity markets have apparently failed to develop a granular understanding of the fundamentals in Asian economies. Failure to access this pivotal transition is also on display in U.S. policy. Congress and the White House are engaged in partisan small-ball, seriously undermining American competitiveness and strangling hope for a trade policy while Asia powers forward.
It is time to recognize history’s signals and focus on our real national security objectives including trade. Asia’s transition from producer to market can be a great engine for the United States economy. We still have the heft to help shape the rules of engagement as Asian economic integration its dominant role in the global market takes place. However, markets and policy makers must recognize trends, become much more familiar with the personalities, trends and drivers of Asian economies and act swiftly and strategically.
Ernest Z. Bower is a senior adviser and director of the Southeast Asia Program at CSIS.
Ernest Bower is Chair of the Southeast Asia Advisory Board at CSIS.