Asian countries may be excused for feeling a bit smug for having so smartly regained their footings after the shock of the so-called financial tsunami that is still wrecking havoc on the economies of the developed world.
While we congratulate ourselves on our governments' quick and seemingly effective response to the crisis and the resilience of their long-standing economic policies, we should take time to reflect on what those wounded economic giants of the West are going to do next. It is important to bear in mind that the many predictions of the decline of the West in the media and on the Internet are presumptuous.
The financial crisis may have shaken the economic foundations of the United States and Europe. But these countries still enjoy a comfortable lead in technology over their developing counterparts. More important, perhaps, is that the US and a few European nations have maintained their firm hold on the global trade in oil and many other key natural resources.
To be sure, the major Western economies are still grounded in an economic recession triggered by the financial crisis of their own making. Many mighty financial houses in the US and Europe have shrunken in size as well as stature. Hundreds of thousands of workers in the developed economies have been laid off and many others have had their pay trimmed. The unemployment rate in the US, for instance, has hovered above 10 percent for many months. But these must be seen as temporary setbacks and not, as some Chinese commentators have suggested, a debilitating breakdown of the Western economic system.
To many people in the US and Europe, the economic problem they are facing now is rooted in the massive imbalance in international payment that manifested itself most obviously in the large US trade deficit with various Asian countries, particularly China. Such a notion is forcing the governments of some Western economies to hastily introduce barriers against more and more items of import from the developing countries.
Of course, economic planners around the world have an intellectual understanding that there are no winners in any global trade war. But the governments of the major importing countries, which are running huge trade deficits, are under increasing pressure from their voters to address the imbalance.
The rising wave of trade protectionism in some Western economies has extended beyond import barriers to the currency front. The call for the revaluation of the Chinese currency has gathered momentum, although it is not clear how big a role currency parity plays in influencing global trade pattern.
A decline in economic fortunes in the West does not mean a corresponding rise in Asia. Instead, the economic problems of the US and Europe can eventually drag into the mire many developing economies that do not have large and well developed enough domestic markets to counter a prolonged export slump.
It is in the interest of the exporting countries in Asia, or elsewhere, to be seen to take a positive stance in cooperating with leaders of the developed countries to combat the economic woes their countries are facing. There is nothing to rejoice about the decline of the West, even if it were true. Ask the exporters in Wenzhou or Zhuhai, I am sure they will say they wish their customers in the US and Europe to prosper rather than being squeezed by the credit crunch.
(China Daily 12/11/2009 page9)