Rising Asia to change world pattern
- By Wang Hui
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E-mail People's Daily, January 16, 2013
2013 is a crucial year for Asia to effectively resist the European debt crisis. Some Southeast Asian scholars who recently received interview from People's Daily generally agreed that the relations of Asia and Europe are undergoing profound changes due to the improvement of Asia's ability of withstanding the European debt crisis. The changes will influence the balance of power in the future global pattern.
Rajiv Biswas, chief Asian economist at IHS Global Insight, an analysis and consulting agency of the United States, said that The European economy is undergoing the "lost decade" since 2008. Influenced by the economic growth of China, Asian economy is expected to increase by 4.4 percent in 2013.
Chen Gang, research fellow at the East Asian Institute (EAI) under the National University of Singapore, told the reporter that Asia especially the East Asian region will be the main engine of world economy. The changes will have a profound impact on the world order.
Asia has the ability to deal with two negative effects
According to experts, the European debt crisis mainly has two negative effects on Asian economy: decrease of import demand and withdrawal of capital. However, the negative effects are limited thanks to positive interaction between Asian economies.
Biswas said that the E.U. will still be an important export market of Asia. The exports of East Asia to the E.U. had fallen sharply in 2012, which exerted a negative impact on the exports of China, India, Japan, Singapore and some other economies. But the adverse impacts are lower than that of 10 years ago as the importance of the E.U. as an export market of Asia is gradually declining while the export share between Asian economies is rising.
The role of new growth poles in Asia cannot be ignored. Biswas said that China became the world's second largest economy and increased its importance as an export market of other Asian economies, which can help to alleviate the negative effects of the European debt crisis on Asia.
The second negative effect of the European debt crisis is that the European banks seriously reduced international loans to Asia, which had been being an important source of Asian trade and merger financing. However, Asia is now able to cope with the withdrawal of European loans and many Asian banks also expanded credit activities and won new Asian customers.
Chen Kang, a professor at Lee Kuan Yew School of Public Policy of the National University of Singapore said that this is because that the Asian and European financial markets are not so closely linked with each other, and only the open international financial centers such as Singapore and Hong Kong have a close relation with European banks. The Asian financial market now remains a smooth circulation and the withdrawal of capital by European banks does not cause concerns for the public.
Asia will have smaller dependence on Europe and the United States in the future
Experts generally believe that as the main source of imports and investment for European Union’s, Asia will become more important to it in the next 10 years, while the E.U. will lose its influence over Asian countries. Biswas said that the Asian economy will rely less on the E.U. in the long run due to its slow economic growth and Asia’s relatively rapid growth. This will greatly promote the trade among Asian countries as well as South-South trade between developing countries in Asia and other regions.
Chen said that the world’s economic center of gravity started shifting eastward long ago, and the process has become more obvious after the global financial crisis erupted. Asia, particularly East Asia, is increasingly becoming the new engine for world economic growth. East Asia is expected to account for one-third of global economic output in the next 10 years, and may even become the locomotive for the world economy and surpass Europe and North America in terms of the share in global economic output.
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