For Asia, The New Year, if such were possible, will be even more uncertain than the year we have just ended, a year lived in uncertainty and, for some, in economic upheavals that are still being felt in the wake of the long wave of the USA and European crisis. This creates difficulties both for the many economies geared almost exclusively towards exports, and for that rebalancing that the emergence of new producing nations contemporaneously with the economic slow-down renders unavoidable for more developed economies or those developing too fast, with China in the lead.
Six months of 2016 were taken up with the appearance of a new element, Brexit, an inevitable but also unforeseeable disturbance of the already muddied waters of the Orient, not exclusively but with potential domino effects. The exit of the United Kingdom from the European Union, in fact, is not a unilateral, British element or multilateral in its variously graduated relations among the Asiatic nations and London, but it is in danger of worsening existing tensions in Europe and to start, or even accelerate a divisive process, with the emergence of the European right that so often has pursued protectionist, nationalist and, in some cases, xenophobic aims.
On the other hand, it could also motivate a reaction of identity, convergence, adhesion and unity of direction among the remaining EU states which find a strong stimulus for the re-launch of the union in the perceived threats coming chiefly from the Orient: from Russia on the strategic-military level, Turkey in the case of relations with Islam and the management of Middle-East refugees halted at the doors of Europe and from China on the economic and financial level. The difficulties and the risks indicated synthetically above are specially accentuated by the ‘Trump Effect’ on the global level and, of course, the direct action of the United States under a presidency which, while giving many cause for concern, has in itself a wide margin of unpredictability.
Doubtless, relations with the US will be central throughout the year 2017 possibly because, as never before in this contingency, the needs, aspirations and occasional convulsions of the USA superpower will be linked to those of Asia which, in turn and, as a whole, increasingly occupies a role of leadership but one which, according to the situations, manifests its shortcomings in the economic, financial, political, social and military fields.
The election of Donald Trump to the presidency of the United States presents unknowns as to the strategic and economic plan that may significantly mark the situation of the immense Asia-Pacific area. Paradoxically, what causes concern it is not the American presence but its possible withdrawal, given the insistence of the electoral campaign of Donald Trump on diplomatic isolation and commercial protectionism. These proposals are capable of re-shaping the political and economic scenarios of the continent that would need ‘more America’ and not less. This because, “in a world in which South-East Asia is in 25th place in the priorities of the USA” – as stated by Brian Kennedy, lecturer at the Thailand Thammasat University – “the Obama administration itself made many promises but accomplished very little”.
What is at stake is, above all else, the destiny of the two main US Asia-Pacific strategies: the ‘Asian pillar’ on the military and strategic level and the Trans-Pacific Partnership (TPP) on the commercial level. The first provided for the deployment of 60% of US naval forces in the Asia-Pacific while the second aimed to amalgamate an area which, apart from the USA, would include eleven countries to form the largest commercial conglomerate in the world. Both, though not explicitly, were intended to counteract Chinese expansion.
If implemented concretely, the desire expressed by Trump for military withdrawal and greater commitment for their own defence by the Japanese and South Korean allies, would risk destabilising the Far East and provoking a nuclear arms race to counteract the North Korean threat and compensate for potential Chinese nuclear power. It was not by chance that, in the days leading up to the Trump victory, South Korean members of parliament asked that the country consider equipping itself with nuclear arms at the prospect of North Korea having, by year’s end, despite the further strict global sanctions imposed on 1 December last, rockets capable of launching the warheads it is developing. This is such a dangerous prospect that even some Chinese analysts are hoping for a re-think by Trump regarding election promises. “The worst thing that could happen to Asia would be the withdrawal of US forces and a significant readjustment of alliances in the region”, said Yuan Zheng, an expert in US politics at the Chinese Academy of Social Sciences.
There exists even the danger of increasing tensions in the Eastern and South China Sea around which 30% of the global economy is based, whose trade routes carry goods worth 5,000 billion dollars annually and are vital to the US and many of its allies. Economic and financial stability is already at risk in a region greatly dependent upon the politics of the USA which also absorbs 20% of local exports.
The Australian premier Malcolm Turnbull, one of the first to congratulate Trump personally by telephone, poured oil on the troubled waters. As regards the military, Turnbull spoke of US expansion in the Asia-Pacific, especially in naval terms but was ‘not very optimistic’ as regards the TPP which, at this stage, has little hope of being ratified by Washington.
Desperately seeking room to manoeuvre for its exports and to sustain its social politics, Japan, for its part, is, at present, the main supporter of the TPP, being among those who stand to gain most from it and is the country that most needs the TPP to avoid having to negotiate alternative agreements with China, its commercial ally and strategic rival, agreements to which Peking hold the key and which are gaining momentum at the prospect of a readjustment of American interests and strategies.
At the purely economic and development level, except for sporadic cases, the trends are mostly in downturn regarding the Asia-Pacific region which includes 45 countries and a great variety of socio-cultural situations, economies and regimes. Growth for 2016, expected to reach 5.6%, as calculated by the periodic updating of the report of the Asian Development Bank (ADB), is the lowest in the area for 15 years, seriously affected by the Chinese situation that certainly shows great uncertainty and inevitably impacts upon commercial and economic partners.
The ADB indicates that a slight effort by mainland China noted in the second trimester of 2016 showing significant figures for industrial recovery, could still allow the country to reach 6.5% as foreseen for the year. However, the simultaneous record contraction of private investment leaves no room for facile optimism and suggests that Peking take further action to sustain development. The new forecast for 2017 is 6.7% which has to take account of the cuts announced in industrial output and employment.
The Indian economy, in a slight downturn, is expected to achieve 7.8% growth in 2017, after the 7.4% reached in 2016. The forecast for South-East Asia is for growth of 4.5% in 2016 and 4.8% average growth in 2017. Thailand is distinguished in the region for negative growth, having failed in its efforts due to political turmoil and delayed infrastructure, with a low rate of growth (3%) and second only to Singapore (2%). Growth was expected to reach 3% last year and 3.5% is the target in 2017.
Caution bordering on pessimism characterises present prospects which once again demand that those responsible for the regional economies consolidate what has thus far been achieved and re-evaluate potential in terms of greater autonomy from global conditions. It was not by chance that Shang-Jin Wei, one of those who produce the economic analysis of the Asian Development Bank said: “given the modest prospects for growth in the largest industry-based economies, Asiatic leadership ought to be more vigilant and prepare to respond to external crises”.