Welcome to the Asian century - part 1

There exists a wealth of speculation as to what the Asian Century is. In the first of a two-part series, we explore what it could mean for global politics, economics, trade and mobility.

Globe with Asia highlighted on a white background

Relo Network Asia

30 August 2019

The Asian Century has been a topic of conversation for many years. The term was used as early as 1985 during US Senate hearings on security and development assistance. As the years went past, an ever-increasing number of articles have been written, and a group called the Asian Century Institute was even formed in 2012.Much of the publicly available information on the topic centres around the financial and geopolitical aspects. Within the global mobility space, there has been little use of the specific term “Asian Century” and few conversations about the implications for our industry.The year 2019 seems to mark a change in the conversation. This was the year when most, but not all, major publications ceased speculation around whether the Asian Century will occur and announced its arrival. In July, McKinsey Global Institute published 'Asia’s future is now'; on 25th March the Financial Times wrote 'The Asian Century is Set to Begin'; and on 29th March, the World Economic Forum republished a Fast Company article under the heading 'Why We’re Living in the Asian Century'.The Asian Century has arrived. It will have significant implications for global politics, economics, trade, and mobility. This first instalment of a two-part series will focus on putting into perspective what the Asian Century is and what it means for the mobility industry, as well as the world at large. The second instalment will further explore the impact on our industry and how we might begin to prepare for what is to come.

What is the Asian Century?

The Asian Century is typically defined as the time when the economies of Asia will be larger than the combined economies of the rest of the world. The term is also used to refer to the dominant role the region is expected to play in the 21st century, as an outcome of the past two decades of economic growth that was initially led by China and India.The statistics make a compelling argument. Asia is home to:

More than half of the world’s population
50% of global GDP
70% of the world’s 30 largest cities
The world’s largest manufacturing hub
Soon, the largest consumer market in the world

If some believe that the Asian Century has not completely yet arrived, Asia is at least well on its way to meeting the definition by outpacing other economic regions of the world.Within the countries of Asia, however, the topic isn’t as prominent as it is in Europe and North America. The general idea of Asia having a dominant position in the world is far from a new concept. For 2,000 years, China and India were the world's two largest economies. Throughout its history, Asia has always accounted for more than half of the global population. It wasn’t until the 19th century that Europe became the dominant global power, followed in the 20th century by the United States.During those 200 years, Asia’s progress was impeded by Western Imperialism. The individual countries and the entire region did not partake in the global economy. Trade across borders flourished, but it was between the colonised and the colonising country, which by design, meted out one-sided benefits. Following the end of World War II and the end of colonialism shortly thereafter, Asian economies began their recovery. The rise of those economies has been uneven, but in several cases, it has been meteoric.

Outperformers are more than China and India

Two of the countries often cited for their enormous growth have been China and India. Both countries are economic forces, but they aren’t the only rising economies. The McKinsey Global Institutes paper on Outperformers in ASEAN ranks China, Hong Kong, Indonesia, Malaysia, Singapore, South Korea, and Thailand as long-term outperformers and Cambodia, Laos, Myanmar, and Vietnam as recent outperformers.

What is an outperformer?

Outperformers are defined as those whose per capita growth has consistently outpaced US growth from 1965 through 2016.

Why are these economies growing?

Globalisation and low-cost labour helped Asia to become the world’s largest manufacturing hub. While it continues to hold that position, there is far more happening in the region. The World Intellectual Property Organization (WIPO) publishes the Global Innovation Index, which ranks countries based on 80 indicators. Several countries ranked highly on the 2019 Index, including Korea, Hong Kong, China, Japan, Malaysia, Vietnam, Thailand, and India. Singapore continues to hold its spot in the top ten.The Asian Digital Transformation Index 2018, published by The Economist ranks Singapore highest in the world for digital technology advancement. Other key findings from the study showcase areas in which Asia is closing the disparity gap between itself and the countries of the West regarding commitment to long-term digital strategies. It specifically cites upcoming critical technologies including Fiber, 5G and AI as Asian strengths. For example, Chinese company Huawei is the recognised global leader in 5G technology. In 2018, South Korea introduced the first 5G service in the world – although it was not yet available to consumers – and Japan is the world leader in robotics.

How could the Asian Century impact the rest of the world?

Asia is quickly moving from an observer of the global economy into an active leadership position. It is doing so without some of the advantages that helped to enable cohesion in Europe and North America. Comparatively speaking, communication is more challenged because Asia has no common root language to tie the more than 15 major and hundreds of minor languages together. Neither do the countries have a common history, culture or religion. Despite those obstacles to understanding and cooperation, Asia continues to develop relationships between its countries. The success of the region’s ability to do so will help to dictate the extent of ongoing and future influence the countries of Asia will have on the rest of the world.

Trade within Asian countries is second only to trade within the EU

Asian countries' trade with the rest of the world has continued and even expanded, but the regional trade and cooperation that was all but eliminated during the colonial years have now been re-established. There is more intra-Asia trade than that which occurs through the North American Free Trade Agreement (NAFTA). At 52.4% of all the trade of Asian countries, Asian intra-regional trade is second only to the European Union, whose rate is 63%. The exchange is not just in the manufacturing sector, most prominently on display in the US-China trade war – it’s technology, finance and logistics.

An example of intra-Asian cooperation: the Belt and Road Initiative (BRI)

One example of the growing power and presence of intra-Asian regional cooperation is the Belt and Road Initiative (BRI). Parag Khanna’s book The Future is Asian discusses the importance of BRI and touts it as "the most significant diplomatic project of the 21st century ... conceived in Asia and launched in Asia and will be led by Asians." The China-led initiative has a goal to link Asia, Africa and Europe via land and sea trade routes reminiscent of the Silk Road of 2,000 years ago. The end result of BRI will be better regional integration, as well as more trade and economic growth. It is estimated to cost more than US $1 trillion and involves infrastructure projects in excess of 68 participating countries.

Map illustrating the Belt and Road initiative

But the success of Asia doesn’t necessarily mean the downfall of any other country. There is little doubt that power is shifting back to the East and that what happens in Asia will have as significant a global impact on our intra-connected world as events in the US or EU. Those who view this change as a threat to American dominance or fear dominance of China promote a dismal view of a future with a strong Asia. Some in Asia see the use of the "Asian Century" term as a code for the "Asian Threat," which may be the underlying intent by some. More analytical minds tend to see a future that is multi-polar, in which the management of the global economy and politics is shared more equally between Asia, North America, and Europe.Growing economic power, regional cooperation and leadership positions in manufacturing, as well as the technology of the future, will give Asia a greater voice on the world stage. As more companies from the region expand their footprints globally, that voice will also be making requests for the services and programmes that best support Asian assignees and families relocating into other areas of the world.Read part 2 of Welcome to the Asian Century. Learn more about Relo Network Asia.

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