Saturday, April 17, 2010
Challenges of shaping an East Asia regional architecture
East Asia’s position in the world has been significantly elevated due to the economic clout that the region has accumulated over the past 20 years or so.
Projections suggest that the size of the East Asian economy is likely to surpass that of Europe or North America over the next 20 years. The recent global financial crisis appears to have only accelerated this process.
What has been the impact of this development so far, and what are the likely implications in the years to come?
The world’s attention has definitely shifted towards East Asia, which has become a force to be reckoned with, if mainly as an economic force. Wealth creation in the region has been enormous, and productivity gains have been very rapid, while the catching up process is being sustained as the region continues to undertake economic reforms and strengthen their open economic policies.
Regional economic integration, which has been largely market driven, is manifested in the creation of regional production networks that are continuously strengthened by improved regional connectivity and logistics.
Regional financial cooperation has also progressed albeit less rapid than expected about a decade ago.
Despite these developments the East Asian region remains economically open to the global economy. Economic “decoupling” has been hypothesized and proclaimed but the fact remains that the region continues to have a great stake in developments of the world economy. What has changed is that East Asia is no longer at the receiving end but that it now has to assume a greater economic role for sustaining world growth and prosperity.
East Asia as a region today, as was an emerging Japan in the 1960s and 1970s, benefits from the existing global economic order. Japan, which became the second largest economy in the world, has been totally absorbed by the existing order. It has assumed an important economic role globally, through trade, investment and aid, especially in Asia, but it has not had any incentive to transform its economic might into political power.
In a sense it has become a status quo power at best, but essentially remains a good follower of US leadership.
East Asia today aspires to become a region that has its own identity and can have a greater voice in shaping a new global order. But as East Asian identity is currently being formed largely through economic interactions rather than political aspirations or even ideological commonality, East Asians, including the new emerging major powers — China and India — are essentially status quo powers, recognizing that they have been able to make great progress by riding on the existing global economic order. Pragmatism has been and remains to be the name of the game in East Asia.
East Asia has not been short of big ideas and visions but it has failed to organize itself to turn those ideas and visions into clear directions and workable plans for the region itself and in shaping the world.
East Asians have not articulated an alternative global economic order. This may have come as a big surprise to many observers given the noises with which East Asian regional initiatives have been proposed or launched since Mahathir’s EAEG many years ago.
What they have sought has been to mainly achieve better representation in existing global institutions such as the World Bank, the International Monetary Fund, and the newly established Financial Stability Board. In fact, East Asia is now well represented in today’s most important international economic forum, the G20, which has been designated – following the Pittsburgh Summit – as the premier forum for international economic cooperation.
Of the 11 new participants, excluding the EU, in addition to the G8 members that now constitute the G20, almost half (5) are East Asian countries — broadly defined to include India and Australia. But these countries have not been invited to join simply to “optically” broaden the representation in the global forum. The G20 is about a new sharing of responsibilities as well: Responsibilities in shaping the global order as well as responsibilities in carrying the burden of managing that global order.
It cannot be denied that China and India, and by implication – East Asia, figure most prominently in the group of the new members of the G20. There is the feeling among the old powers that these new, emerging powers cannot be allowed a free ride, and that some kind of burden sharing scheme is called for. This became apparent at the Copenhagen UN Conference of the Parties (COP) on Climate Change last December.
The global political setting of today is characterized by these uncertain, uneasy, and rather unsettling developments, in which new emerging powers are expected to do more for the world but are responding to these expectations extra cautiously and perhaps reluctantly. This issue may lie at the heart of what G20 will need to manage, namely to calibrate the expectations of members and their responses to them.
Given East Asia’s prominence here, the region will need to organize itself more purposefully and strategically.
This provides an additional, and powerful, context for shaping East Asian cooperation and community building.
I believe China and Indonesia have a role to play here. Recently there has been a flurry of ideas and proposals on how the region should be organizing itself, two of which are Kevin Rudd’s Asia Pacific community proposal and Hatoyama’s East Asian Community idea.
But they have not led to a process that is driven by a clear strategic purpose with sufficient recognition of what institutional arrangements already exist in the region and how they could be structured to effectively contribute to the shaping of the global order.
China and Indonesia are developing countries, but they cannot usefully act to represent the developing world alone in the shaping of the global order. The developing world is just too diverse and too fragmented. China and Indonesia are first and foremost emerging East Asian countries that are an integral part of a region that is having a systemic impact on the world as a whole.
China and Indonesia can initiate an informal process involving the six East Asian G20 members to address the key issue of how the region can be brought to bear in the shaping and implementation of international economic cooperation in the years ahead. In June 2010 in Canada, the six leaders can have a conversation on how best to pursue this task and in November 2010 in Korea our two leaders can submit a joint non-paper as a basis for further exploration.
The writer, Hadi Soesastro is senior fellow at the Center for Strategic and International Studies, Jakarta.