Tackling challenges regionally and beyond
THE world economy continues to wallow in the doldrums. And that is just a somewhat masked way of saying it is still in very bad shape. Japan and Europe, the erstwhile two main pillars of the world economy, linger around growth rates ranging from near zero to one percent and, at least for Japan, sometimes even unwillingly toying with negative growth.
The United States economy registers slightly better growth rates, approaching 2 percent, but under President Donald Trump, the US is increasingly flirting with protectionism, with high tariffs being liberally imposed on friends and foes alike, so the comparatively higher US growth is hardly trickling down to the rest of the world economy. The headlines of newspapers and news sites everywhere are primed with the ongoing trade wars between the US and China, the world’s two largest economies. The Trump administration recently opined that the Sino-US trade war probably would not get resolved until after the next US presidential election in a year’s time, prepping us up for another year of global geopolitical and economic uncertainty. Lesser known, but perhaps also significantly destructive, are the comparatively “mini” trade wars being waged by the Trump administration against the likes of Japan and European countries, exacerbating their already frosty growths and, by extension, pulling down global economic growth.
Even China, the growth locomotive for the world over the past decade or so, is unambiguously slowing down. The official term for this slowdown is “new normal,” coined a few years ago as China slipped from its previous double-digit growth. The growth rate for China was then around eight, then seven, then six and now probably hovering between five and six percent. This is still impressive growth, as compared to the lackluster growth in many other major economies of the world. But, at least for many of my Chinese counterparts, this is a worryingly low growth rate, as they have been accustomed to much higher growth. I try my best to assuage my Chinese friends both privately and publicly, that this is actually a very good opportunity for the Chinese economy to take stock of what it has quite marvelously achieved over the past four decades since China started its reform and opening-up process. It is perhaps high time for China to move on from a focus on quantitative growth as exhibited by the much vaunted high growth rate, to that of a much more qualitatively oriented growth. China has to move on from labor- intensive, frankly lower- end manufacturing, to much higher- end, high technology-oriented industries. The transition is often painful, resulting in job losses and even temporary economic setbacks, as is now the case. But if it is done right, and China is moving along in this direction, it would give a new and potentially much brighter growth to the Chinese economy, and hopefully by extension, to the world economy as well.
Whither Southeast Asia? Well, in recent years we have often been touted as another growth engine for the world economy. Some Southeast Asian economies, most prominently Vietnam, have seen growth up to eight percent at times, and most registered four to six percent growths. We are not immune from the slowdown in world demand, but we also have huge populations (half that of China), which would give a domestic consumption push to the regional economy. The rise of the Indonesian middle class is particularly impressive, as Indonesia äOh A6