Asia is becoming a Center of world policy In an era of globalization, the center of world policy is gradually shifting to Asia. In recent years Asian economies are developing rapidly and their weight are growing in global economy. Due to their size of territories, population, share in global economy and finance, the role of Asia is becoming increasingly influential in the formulation of world policy. Asia occupies 29.9% of the land, with a population of around 4 billion people representing 60% of the world's total population. By 2050 the world population will reach 9 billion people and 86% of whom will live in developing countries, half of them - in China and India. By that time, the population living in Western countries -United States, Europe and Japan will account for only 9% of world population. Currently eight countries from Asia, namely -China (the world's second economy), Japan (3), India (4), Russia (7), ROK(13), Indonesia (14), Turkey (15), and Saudi Arabia (19) belong to a group of twenty largest economies in the world-G20. The Asian countries represent one fourth of the UN members States,which is an influential political force in the international arena. China and Russia are permanent members of the Security Council. But Africa and Latin America are not represented by permanent members in the Security Council. Asia's economy is considered to be the healthiest since the Asian countries have carried out economic structural reforms after the Asian financial crisis of 1997-1998. In period of international economic and financial crisis, Asian economy serves as a locomotive of world economy and provides more than half its growth. The following table shows that this trend will continue in the future. Table 1 Asia Population and GDP projections for 2020 Economies Population (billion)
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GDP at market Average growth price rate (billion $) 2005 2020 2005 2020 at (%) PPP Asia 3,1 3,5 9783 32120 4.1 Europa 0,45 0,47 13568 18011 2.3 USA 0,29 0.33 12376 19904 3.2 World 6,12 7,46 3,6 44309 93057 *GDP-gross domestic product, PPP-purchasing power parity
GDP per capita at market price 5074 40619 60097 10051
Chinese GDP at PPP is 10%, Indian GDP - 5% of world GDP and their share will grow in 2020 - respectively till 15% and 10%.
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Emerging Asian Regionalisme, p 38, www.adb.org
Due to globalization and the acceleration of development of national economies in the last 20 years, a consumption of energy resources and raw materials increases, their prices raise on the world market, resulting in a strengthened positive balance of payments and significant savings in developing countries. In an era of global financial and economic crisis these accumulations is a good tool for strengthening their influence in the international affairs. The industrialized countries are implementing plans to overcome the crisis and stimulate their economies, but they can not afford enough financial resources. In these circumstances, China, India, Russia and the Gulf states, which become the world's creditors, possess the largest financial and foreign exchange reserves and provide them with credits. According to studies by economists, only Europe sold state treasury bonds amounting tomore than 20 trillion dollars each week in 20092. Thus industrialized countries have ceased to be creditors and become the new debtors. In this background, we observe a redistribution of global wealth in favor of developing countries. A period of international economic and financial crisis, emerging countries and their independent foundations as well large companies in developing countries are actively buying shares of major banks, financial institutions and companies that the price of them has devalued over half. One hundred large firms in developing countries possess more than 1000 trillion dollars, setting up their branches abroad and thus yield more than 40% of their total profits from abroad. Among them 70 companies are Asian, 44 -Chinese and 21 - Indian3. Today many developing countries are setting up independent funds designed for the future. Their financial resources by far exceed the assets of the IMF and the World Bank. According to financial specialists, the IMF assets for making credit amo4unt to more than $ 250 billion, whereasthe assets of those independent funds - 3865 billion dollars, of which 427.3 billion dollars are accumulated in independent funds of Asia and 1606 billion dollars in independent funds of the Middle East5. Developing countries have already started to give loans to each other on equal and mutually advantageous terms and provide each other the economic and financial assistance. They have also created cooperation clubs "China-Africa", "India-Africa", “China-Arab world”. By reason of cheap labor force and not very well-developed social system, product costs of produced goods in developing countries are 40% less than in industrialized countries. Yet an average age of equipment in developing countries - 7.2 years, those in industrialized countries - 19 years,of which developing countries take a significant advantage6. Based on relatively open markets and labor resources, Asian countries have 2 Le monde, 20.02.2009 3
100 entreprisesdes mrchesemerging, qui bouleversent l’economie mondiale, Bostong Consulting group, p 5 souverains et crises des surpimes, Diplomatie 34, 2008
4Fonds
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100 entreprisesdes mrchesemerging, qui bouleversent l’economie mondiale, Bostong Consulting group, p 3
traditionally specialized in the production of export-oriented goods and services, invest their earnings in the economy and buy modern equipment and technology. In this way, they are now becoming industrialized economies with high competitive ability based on modern technologies and techniques. Availability of qualified man power and financial resources in Asia, developed transportation networks, low barriers to trade and cooperation in the field of production allow them to develop regional cooperation and economic integration of individual countries and ultimately create a unified Asian economy. Volume of foreign trade of Asian countries in GDP represents 62.3%. This indicator is 22,4% in the USA and 64,3% in the EU. Nowadays the Asia has become a second integrated regional economy after the EU. Asian trade and economic integration, with the ASEAN is a driving force where there are most deeply integrated economies in Asia. In the framework of ASEAN already exists a zone of free trade zone and now they are seeking to create an economic community by 2015. The ASEAN framework provides an advanced model of international cooperation and a framework for exploring new integration strategies. The ASEAN has also been active in expanding the scope of regional cooperation, initially through relations with dialogue partners, beginning Japan in 1973 and now including China, Japan, ROK, Australia, India and New Zealand. More recently the ASEAN has invited China, Japan, ROK to set up“the ASEAN+3” and China, Japan, ROK, Australia, India and New Zealand to develop “ASEAN+6”,the ultimate goal of which is to create regional economic communities. Within these arrangements countries have attached priority to the development and deepening of the bilateral relations and there has been achieved considerable progress in this direction. Examples are the signing of agreements between ASEAN and India, Japan, ROK, New Zealand and Australia. Negotiations to create a free trade zone between China, Japan and the ROK are under way. The Summit between the above-mentioned three countries held in March 2010 approved a core document "Trilateral cooperation Vision 20207" and decided to establish the Permanent Secretariat of the said cooperation in 2011 in Seoul. Main purpose of this Permanent Secretariat is to explore further possibilities of cooperation in all areas and formulate immediate tasks of its deepening. Due to the peculiarity of their civilization, the Asian countries give a priority to the economic development and the increase of the wealth of their nations than the development of democracy in the country. Therefore, it is called "Asian consensus." Success of Asian countries in their economy and management deserve the attention of other countries and more countries are interested in their experience of market economy with centralized governance. In the international arena China has a significant weight than the other Asian countries. A recent study by American economists predicts that China will surpass the USA in all major economic indicators by 2025. According to them China even today has the right of veto to the decision making of major problems facing mankind such as global security, global trade, finance, 7
http://mofa.go.jp/region/asia-paci/jck/summit1005/vision2020htm/
foreign direct investment and global warming. China is a member of group G2 where the burning issues of the world are discussed and decided in principle. Although the USA still remains influential power on the solution of world problems, but it is not in a position to force other countries anymore. In the nearest 15-20 years India will be one of the leading countries of the world. If China, India and Russia integrate their political and economic influence might on a concrete biggest problems they will become a decisive force in world policy. From the above said, we can conclude that the dominant position of the United States and Europe in the global economy, banking, finance, technology, culture and information in the twentieth century, as well the center of world politics are gradually moving to Asia, whichisthe main trend of development in the twenty-first century. B. Sanjmyatav PhD in International Economics
