The End of the Asian Century: War, Stagnation, and the Risks to the World’s Most Dynamic Region

Shanghai skyline at night. GoodFreePhotos.com/Li Yang

An excerpt from Michael Auslin's new book.

From Japan to India, the nations of Asia struggle to maintain growth, balance their economies, and fight slowdowns. For most of these countries, the days of high-flying growth are long over, while for others, they never began. It is past time for the rest of the world to pay attention to the threats to Asia’s economic health. Uneven development, asset bubbles, malinvestment, labor issues, and state control over markets are just some of the features of economic risk in the Asia-Pacific. And because Asian economies are increasingly interlinked, problems in one country spill over to others.

This region of Asia’s risk map, economic slowdown or collapse, directly concerns non-Asian nations. Global stock markets tanked in the summer of 2015 and the beginning of 2016 when China’s stock exchanges collapsed. Even if Asia’s economies manage to muddle through, the world must ask what will happen to global trade and investment if growth in Asia simply cools off. It is increasingly prudent to prepare for a far less economically energetic Asia than we are used to. And we must account for both long-term structural stagnation, as in Japan, and the style of house-of-cards capitalism currently practiced in China. There is little doubt that the world must prepare for a China whose growth has dramatically slowed if not stagnated, and for mature economies like Japan’s never to recapture their former vibrancy. As for the developing states, the risk is that they will never attain the growth needed to ensure the modernization of their societies.

Economics, being about people and wealth, leads us directly into the second region of Asia’s risk map: demographics. All of the Indo-Pacific faces a Goldilocks dilemma: either too many people or too few. I once visited Tokyo right after spending nearly a month in India; I received a palpable culture shock in going from a seething kaleidoscope of people in Delhi and Calcutta to the rapidly aging Japan.

Most of Asia’s developed countries, including Japan, South Korea, Taiwan, and Singapore, are facing or will soon face unprecedented demographic drops. China’s one-child policy and horrendous environmental pollution will also bring a population decline in the world’s most populous nation, at a time when the country is not yet rich enough to deal with the resulting dislocation. On the other hand, India has a growing surfeit of young people and needs to improve educational standards, expand its urban and rural infrastructure, and find them all jobs. Much of Southeast Asia is in India’s situation, offering opportunity along with challenge.

The costs of Asia’s rapid modernization have long been ignored, foremost among them environmental damage. The polluted skies and waters of Asia affect demographics as much as do fertility rates. The horrors of Japan’s Thalidomide babies during the 1950s may seem a relic of another era, but images of the darkness of Chinese cities at noon, thousands of dead pig carcasses floating down major rivers, and towering garbage heaps reveal the almost inconceivable environmental harm that now threatens the future of youth in some of Asia’s major countries. Demographics will put enormous pressure on Asia’s domestic political and economic systems; understanding this is a must for understanding risk in the region.

The third enormous region of risk on our map comprises Asia’s unfinished political revolutions, in both democracies and autocracies. How political leaders respond to economic and social challenges will ensure domestic tranquility or produce civil unrest. Ever since the last Chinese emperor left his throne in Beijing’s Forbidden City, Asia’s political his- tory has been one of unfinished revolution.

Given the ongoing struggle for the political soul of Asia, Americans should not be complacent about the future of democracy there. The fight is far from over. Hundreds of millions of men, women, and children have been freed from oppressive governments but have not completed their journey. The gains of democracy continue to be put at risk by corruption, cliques, protest, cynicism, and fear of instability. The spread of democracy, which has succeeded so well in recent decades, may be reaching a limit—how temporary is impossible to say. Even mature democracies, like Japan and India, face a crisis of political confidence and a “political arthritis” that leaves vital problems unsolved.

Autocracy maintains its grip on China, North Korea, and other Asian nations. The cold stares of security forces in Tiananmen Square and the empty chair of Liu Xiaobo at his 2010 Nobel Prize ceremony showed Chinese and foreign observers alike that China remains decades, perhaps generations, away from political freedom. As long as China remains un- free, democracy and autocracy will remain in a stalemate.

Yet autocratic regimes face their own grave dangers. There is probably no more important risk factor for Asian politics in the coming years than China. Talk to ordinary citizens in Beijing or Shanghai, and their pride in their country’s economic growth quickly turns to silence about its political future. Despite its economic successes, the Chinese Communist Party has become ever more isolated from the citizenry and is seen as corrupt, inefficient, and often brutal. With over two hundred thousand protests of varying sizes every year, China’s society is at more risk than most people realize. The party has kept a lid on dissent, but it has been able to do so in part because of the country’s huge economic gains. As growth starts to wane, unrest will very likely increase.

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