AUSLIN IS just somewhat more optimistic about the economies of the smaller, yet growing, Southeast Asian economies. Recalling his rides through Hanoi on a motor scooter—the book has numerous personal vignettes that enliven its hard analysis—he hails Vietnam’s dynamism, a sure contrast to stagnant Japan. Unlike Japan, Vietnam has a young population; its long coastline offers the potential of becoming a regional logistics hub; cars continue to replace bicycles, a sure sign of rising economic growth and concomitant living standards. Foreign direct investment continues to grow, in part, due to China’s declining attractiveness to investors.

But Vietnam has inbuilt structural problems that are not likely to disappear any time soon. The Communist Party’s control, as in China, is a vehicle for serious diseconomies. Like China, Vietnam has its own baggage of SOEs; it too lacks transparency and its statistics are suspect. Its export-driven economic strategy renders it vulnerable to disruptions in trade—it will also be hurt by the disappearance of TPP. Moreover, its population is undereducated, meaning that while it can provide workers for the shop floor, it has yet to develop a sufficiently large, technology-savvy cohort that is the key to consistent long-term growth in the twenty-first century.

Yet Vietnam is probably better off than many of its ASEAN partners in terms of its future economic prospects. Indonesia’s geography and ethnic diversity, its heavy reliance on commodities and agriculture, and its protectionism and dithering government policies have undermined its economic promise. Malaysia has been moving away from being solely a commodity producer, but it still has some distance to travel in that regard. In addition, long-standing tensions between its wealthier Chinese minority and the Malay majority are never far below the surface, given the government’s affirmative-action programs for Malays.

Auslin has little to say about Malaysia’s economic circumstances, and even less about some of the other ASEAN states. The economic success of Singapore, the most dynamic of the group, barely receives mention. As a multiethnic city-state, it could easily have remained the economic backwater that it was in the aftermath of World War II. How Lee Kuan Yew’s legacy continues to fuel Singapore’s economic miracle certainly deserved more of Auslin’s attention, if only to explain why its model is not really applicable to its ASEAN partners.

No discussion of Asia’s future, particularly in the economic realm, can omit India, whose economic growth exceeds China’s and whose population will soon do the same. India’s key economic hubs are world class. Bangalore is the center of a dynamic aerospace industry. Chennai is, in Auslin’s words, India’s “Detroit.” And he does not even mention Bollywood, the Hindi-language film industry based in Mumbai. The films produced there are distributed worldwide, and are growing in sophistication, though they still often have the song-and-dance routines that Americans will identify with the movie Slumdog Millionaire. India produces and exports non-Hindi language films as well, and its film industry rivals Hollywood in terms of the number of people employed and the number of films produced.

Nevertheless, despite its huge and well-educated middle class, India remains hobbled by everything from an infuriating bureaucracy, which certainly rivals all others for its ability to strangle anything in red tape, to an infrastructure so poor that it often makes more sense to fly even short distances than risk endless traffic jams resulting from U-turns by camel carts or cows blocking the road. Moreover, a huge, young and undereducated lower class, which often still suffers from caste-based discrimination, has never truly disappeared from the nation’s social structure.

The economic challenges that Asian states confront today, or likely will tomorrow, constitute only one of the four interlocking risk areas that Auslin maps for his readers. Demographics are working against the Asian states as well. For some, like Japan, it is an aging population, aggravated by women marrying later in life, or not marrying at all. Auslin recalls chatting with a forty-year-old woman at a Tokyo lunch counter who told him that her greatest fear was neither terrorism nor the economy, but growing old alone. Yet while the lady may worry less about the economy, it is the economy that is paying the price of a majority-elderly population, in terms of pensions and social assistance. Such entitlements drain government budgets—as they are increasingly doing in the United States—and limit government spending in other much-needed areas.

Auslin points to other, less obvious social challenges to the country’s future. He notes the increase in the number of stay-at-home young Japanese who opt out of the labor market, and the decline in Japanese students studying abroad. His visit to a Toyota plant gave him “a dystopian vision of Japan’s future.” Robotics is not only an area in which Japan hopes to maintain its position as a world leader; it is also a vehicle for “simply ensuring that production can continue” at all. There can be little doubt that all these developments pose serious challenges for Japan’s economic future. Prime Minister Abe is attempting to initiate small steps to bring foreign workers into the country—though, significantly, not to let them permanently immigrate. Old prejudices die hard.

Japan is not alone in confronting the economic and social implications of unfavorable demographics. Some studies project that South Korea’s population will drop by 80 percent over the course of the century. Hong Kong, Singapore and Taiwan also face declining populations due to low fertility rates, and Taiwan, like South Korea and Japan, is hampered by its general unwillingness to accept immigrants.

For India and the ASEAN states, apart from Singapore—the exception in so many ways—it is a youthful population that constitutes a major challenge and risk. Poorly educated young people can support these countries’ low-value-added activities, such as low-tech agriculture or processing natural resources, but they cannot provide the ballast for breaking into more sophisticated industries. Yet India and most of the ASEAN states simply do not have, and are having trouble establishing, an education system that will prepare young people for employment in leading manufacturing fields, much less those of high technology. Auslin recounts his visits to universities around the region (Singapore excepted, yet again). He found them woefully short of resources, though packed with students. He also devotes special attention to India’s horrendous treatment of women, with its all-too-frequent mob outbursts and rapes that garner worldwide attention. “There is no real movement for female emancipation in India,” he laments.

 

THEN THERE is China, with respect to demographics, as in all other areas, an entity unto itself. Its long-standing one-child policy, coupled with the desire of many families to ensure that the child was male (and thereby aborting female fetuses) has rendered the country not only facing a demographic decline but also one where males will far outnumber females. In addition, the flow of rural Chinese to the country’s megacities continues apace, with many workers calling factory dormitories their home. Respiratory disease, resulting from China’s refusal (until recently) to face up to the consequences of air pollution, has become one of the country’s leading causes of death. The lack of other environmental controls, such as those controlling the dumping of chemical waste, has been the cause of disease and death as well.

China’s huge aging population will require a national safety net that barely exists today, because the parents of one-child families will not have a network of children to support them. That in turn will create new strains on the budgets of both the central and provincial governments, at a time when the general demand for improved social programs will continue to grow. These developments, and their impact on social stability, will continue to be cause for concern for the Communist Party, whose primary objective is, as it has always been, to remain in power.

When Auslin turns to questions of political stability, he identifies risks that are equal to, if not more serious than, those of economics and demographics, in part because they are all linked. Whatever else it might be, the Chinese Communist Party (CCP) has been the country’s great unifying force. Yet, as Auslin notes, “the lack of trust between citizen and state is probably the single greatest risk to the CCP’s continued rule.” The lack of even moderate political reform raises the risk of unleashing widespread disorder; in that regard Auslin points to the Revolution of 1911. He could also have cited the nineteenth-century Taiping rebellion against the Qing Dynasty that left up to seventy million dead. The CCP’s dilemma is that its refusal to commit to any serious political reforms—and its harsh response to protests such as those of Tiananmen Square in 1989—increases the likelihood of regional- or warlord-based rebellion and unrest that has marked the country’s history and is its greatest nightmare.

Auslin observes that Japanese are both pessimistic about the future and cynical about politics. In this they are not alone. The populations of the EU are not much different, and have expressed themselves by veering toward leaders whose commitment to liberal democracy is hazy at best. Japan’s leaders, Auslin asserts, “have failed to give its citizens a compelling vision of their future in which economic health is restored and Japan plays an important role in the world.” The same could be said about the malaise that is gripping Europe. Similarly, it is arguable that Korea’s population may well be tending in the same pessimistic direction: certainly the latest scandal gives them good cause to do so. That North Korea could try, as it has often done, to precipitate a political crisis creates a unique danger for the South that only aggravates its tense political environment.