The End of the Asian Century | Michael R. Auslin

Summary of: The End of the Asian Century: War, Stagnation, and the Risks to the World’s Most Dynamic Region
By: Michael R. Auslin

Introduction

In Michael R. Auslin’s book, The End of the Asian Century, the author delivers a clear-eyed assessment of the potential risks in the world’s most dynamic region. Contrary to widespread expectations of inexorable growth and prosperity, the book offers a sober view of possible stagnation and conflict in Asia. Within these pages, expect to explore the struggles plaguing China, India, and various Asian nations. The author exposes their vulnerabilities and provides insight into the ever-looming threat of military conflict. By delving into these varied facets of Asia’s present and future, Auslin reveals the complexities and crucial aspects of this region’s development.

Asia’s Rise: Opportunities and Risks

Asia’s rise as a dominant force in the global economy has been long predicted by Western intellectuals and leaders. Japan emerged as a world economic powerhouse after World War II, but its economy later fell into a long malaise. Today, China dominates world attention, but there are signs of its economic growth slowing down. With a population of over 4 billion people, Asia exports 40% of the world’s products and is home to China and India, which make up one-third of the global population. However, Asia also poses many risks amidst these opportunities. The Korean peninsula remains tense, China’s regime is aggressive towards its neighbors, and many Asian states invest in military weapons. Investors and policy makers need to take a clear-headed look beyond the hype of economic growth and assess the risks and opportunities that Asia presents in order to make informed decisions.

China’s Economy: From Miracle to Reality

China’s once-miraculous economy that grew at a breakneck pace for three decades is now slowing down, no longer an emerging economy but with the export-heavy economy of a poor nation. China’s modest starting point, cheap labor, and natural resources were crucial factors behind its astonishing economic growth. However, over the past 30 years, China’s “unbalanced, government-driven development” has led to an incomplete transformation of its markets, with 155,000 state-owned enterprises still accounting for 40% or more of commercial profits. Moreover, China remains a state-run economy without trusted, impartial courts and private property rights recognition until 2004. Despite growing privatization, the blurred line between the private sector and state influence impedes entrepreneurs and investors’ confidence. The nation’s reliance on exports also leaves the economy vulnerable to global demand, revealed by the 2008 financial crash. Furthermore, Chinese workers toil in “Dickensian” conditions, and vulnerable, low-wage Chinese workers are increasingly unhappy. The lenient enforcement of intellectual property rights also poses a threat to foreign businesses, with billions lost to theft every year. At the same time, China owes a massive government debt, partly caused by public construction projects, which led to significant overdevelopment in some cities and an inventory of 49 million vacant homes, casting a shadow on the housing market’s stability, which accounts for over 12% of China’s GDP. China’s economic transformation had its share of miracle and debacle, but it’s now a “reality,” not an illusion or a dream.

China’s Fragile Political Regime

China’s economic success has been key to the power and control of the Communist Party, but the regime remains fragile. Xi Jinping’s government is distrusted by most of the Chinese population, and the country’s economic miracle is reaching its limits. With hundreds of millions still living in poverty, seething resentment could lead to unrest. Wealthy Chinese people are increasingly moving their money overseas, with nearly half of millionaires hoping to emigrate by 2020, reflecting a corrosive cynicism within society. The Communist Party thrives on control, but in order to rebuild trust, it must relinquish its hold on power.

India’s Unequal Economy

India’s economic growth is largely concentrated in the tech sector and big corporations, but the reality is that the country’s economy is deeply unequal. Despite the success of Indian call centers and tech giants like Infosys and Wipro, the per capita GDP is only $1,500, which is a fraction of China’s. About 260 million Indians live on less than $1.90 a day, and 30% of the population is illiterate and lacks access to electricity. Corruption remains rampant, and wealth is concentrated among a few families. Despite its reputation as a tech hub, India’s infrastructure is primitive, with a lack of roads, bridges, and ports causing produce to rot before it reaches markets. Any disruption in the flow of goods from India could significantly impact the global economy, and there are concerns that the government is not adequately addressing these issues.

Asia’s booming Military Arsenal

Asian governments’ military spending has outpaced Europe’s, with China leading the charge with $145 billion spent on defense in 2015. Rather than avoiding hostilities, Asian leaders seem to court conflict. The Korean conflict, in particular, with its barbed-wire border, tunnels of aggression, and the North Korean hermit regime’s erratic aggressions and nuclear tests, presents a clear and present danger to Asia’s stability in general and Seoul’s millions of civilians, in particular. With millions of soldiers, thousands of fighter jets, and dozens of attack submarines in the region’s combined arsenals, the Asian governments continue to beef up their military might as they become wealthier and have more resources to devote to their militaries.

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