The End of the Asian Miracle: Five Game-Changing Events That Are Reshaping the Global Economy
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Where I went: I recently returned from a two-week trip to Asia, visiting India, Thailand, Hong Kong, China, Taiwan, and South Korea. I’ve been to these countries many times over the past 25 years in my capacity as chief investment officer and later chairman of Emerging Markets Management and AshmoreEMM. During my trip I met with a number of high-level policymakers, bankers, company executives, investors, think tanks, and scholars. But where there was once almost universal optimism, this time I came away with a very different sense. A few years ago there was a widespread feeling that the developed world had fallen off its pedestal — that Asia had not only escaped the global financial crisis but that its system was somehow superior. That overconfidence seems gone now. Instead, there is a sense of vulnerability. There is more awareness of the political Achilles’ heel of their own path of development and even new economic concerns about challenges to their newly acquired competitive edge.
The takeaway: Confidence about political stability and effectiveness has been shaken in China, India, and other emerging markets. The Arab Spring was a shock wave that not only brought to light misdeeds of autocratic regimes but also created economic uncertainties for the future. In BRICs at two ends of the political spectrum, political stability has turned out to be more fragile than earlier assumed. The Bo Xilai case in China has raised questions about the legitimacy of the whole political succession process. And Prime Minister Manmohan Singh’s disappointing performance in India (some business leaders even told me he had “lost it”) has created gridlock in New Delhi while emboldening states.
At the height of the financial crisis, local elites and the broader population in India and China viewed indecision, stagnation in policymaking, corruptive power of vested interests, and lack of leadership as major problems in the United States, Europe, and Japan — but these same people are now concerned that they face similar problems. On the positive side, turmoil from Tunisia to Myanmar has brought hope and a feeling of empowerment. The sudden transformation now under way in Myanmar has re-energized Southeast Asia and the Association of Southeast Asian Nations as a sizable, relevant, and vital economic entity nestled between the two emerging regional superpowers, China and India.