The Tigers Pause
Has the Asian Century ended before it begins? With markets down, currencies eroding, and growth at risk in many of the Asian Tiger nations, you might think so.
Don't believe it.
Yes, there are problems. And they may not be quickly solved. Some of them recall certain US economic difficulties over the past couple of decades: overbuilt office space. Too strong or too weak currency. Overextended banks nursing risky loans. A stock market bubble. Politicians jawboning.
Who would have believed in 1974, 1981, 1987, or 1991 that the US economy would again lead the world, enjoy low inflation, full employment, rising productivity, an outpouring of innovation, and record profits? Just as the ballyhooed American Century often seemed about to sink, so, too, the oft-touted Asian Century now is paying the penalty for excess.
But look at the basics. China's growth rate this year likely will be 10 percent. That may drop to 8 percent, then 7 percent in the first decade of the next century. True, that's down from the remarkable earlier average of some 13 percent. But 7 percent is still very vigorous.
Much attention has fixed on the recent mismanagement of the Thai and Malaysian economies, and the effect their falling currencies and stock markets have had on their fellow Asian Tigers. But most of the Tigers' currencies have fallen far less in the past year than Germany's reliable deutsche mark. Even Malaysia's and Thailand's troubled money has depreciated only slightly more. Economists praised the weaker D-mark as good for German exports. The same will be true for the Tigers' exports - even if China lets its currency sink to regain its export market share. China needs export growth to provide jobs for the millions to be mustered out of its downsizing army and hundreds of downsizing state industries.
Export competition in the region serves as a reminder that there also is growing intra-region trade, which creates more jobs and prosperity. Per capita income in Hong Kong, Singapore, and Japan already approaches that in the US. It's lower but rising well in most of the other Tigers. Education tends to increase with income. Savings rates are remarkable - between 30 and 40 percent in all but the Philippines.
Some politicians in the region have irritated the West with their tendency to lecture on superior Asian values. But that's not unusual for politicians anywhere. Besides, values of family support, hard work, educational improvement, and thrift are not to be sniffed at. The Tigers may have paused. They haven't stopped.