Shift from exports to rebuild Asian economy

• Source: Global Times
• [02:36 September 11 2009]
• Comments

The Asian model, which has driven much of the region's rapid economic growth in the past two decades, is one of five hot topics to be discussed during the three-day Summer Davos 2009 summit, opening Thursday in the northeastern China port city of Dalian.

The meeting, carrying the theme of "Relaunching Growth," was scheduled to be attended by over 1,300 business leaders, scholars and policy makers from 86 countries and regions.

The summit's topic isn't a new one, though. Voices questioning Asia's export-oriented economic model were heard in the wake of the 1997 Asian financial crisis and even before.

But the question has been raised again in the context of the current global financial crisis and economic recovery, with two opposite arguments. While some declare that the model has gone "bankrupt," others believe it has weathered the storm and signals a realignment of world power since Asia's emerging economies are rebounding faster than expected.

Both arguments were raised by Western analysts. But as indicated by the term itself, it is the Asian nations themselves that should render judgment and determine the destiny of the Asian growth model.

Building a sustainable Asian model is the key to restarting economic growth. Creating such a model depends on restructuring the region's export-dependent economy.

Sources of growth need to be diversified, healthcare systems need to be overhauled, and domestic and intra-regional demand must be built up.

The financial crisis shows how vulnerable economies are that rely too much on the consumption of other nations.

That is also why despite the fast and strong rebounds, many economists remain cautious about predicting the end of the economic crisis in Asia, afraid that the rebounds are merely short-term effects of aggressive stimulus packages.

With economic matters and politics closely tied, a sustainable Asian growth model needs to be built into the much bigger geopolitical landscape.

Bill Emmott, former chief editor of The Economist magazine, famously said in his book Rivals, that "the rise of Asia is not just, or even mainly, going to pit Asia against the West – it is going to pit Asians against Asians." It is a pity that the rivalry and mistrust within Asia has led to an arena "with no one to steer the boat."

When and how will Asian nations really understand their mutual need for each other, and lead the way hand in hand out of the economic slump? In reshaping the Asian model, this is a crucial question to answer.

In a world that is increasingly diversified and unpredictable, there is not really an American or Asian blueprint to economic success for each nation to follow.

Achieving a lasting recovery and a solid footing in the new world order requires every Asian nation to take its own path, just as other nations do. As local conditions vary, so too will the economic models employed.

We must, therefore, know ourselves and have a realistic idea of our own economic conditions and needs.

We must enhance cooperation with our neighbors.

This will form the basis of a sustainable model for Asia, and one for the world.