(DE)GLOBALIZATION AND THE ASIANIZATION OF THE WORLD ECONOMY

upa-admin 12 Eylül 2020 1.966 Okunma 0
(DE)GLOBALIZATION AND THE ASIANIZATION OF THE WORLD ECONOMY

The COVID-19 pandemic came at a time of diminishing role of the U.S. from the international scene, re-emergence of China as a global power, strengthening Asia-Pacific region, heightened protectionism, weakening international cooperation, rising discontent from hyper-globalization and over-financialization of our digitalized global economy. Actors of international community have never been engaged and interdependent in this level throughout the history.

Globalization describes a world economy increasingly integrated under a common set of rules and principles.” wrote Ian Bremmer, president of Eurasia Group, in a personal correspondence. This integration falls apart recently. Professor Emeritus of Sciences Po Paris, Bertrand Badie argues that we have stepped in to an “Act II of globalization” meaning a possible retreat from hyper-globalization.

Asian countries have been among the largest beneficiaries of the “Pax Americana” globalization after the World War II. Singaporean PM Lee Hsien Loong at his Foreign Affairs piece argues that Asia has prospered because Pax Americana, which provided a favorable strategic context: “The United States championed an open, integrated, and rules-based global order and provided a security umbrella under which regional countries could cooperate and peacefully compete.” Throughout history, the concept of “power” has been constantly changing within the literature of international relations. Countries in the Asia-Pacific region are have been adapting to the transforming components of power faster than other countries. Now the region hosts the fastest economies and most attractive emerging markets including 9 of the 10 most busiest ports in the world and has more than the rest of the world alone in GDP at PPP terms for the first time since the 19th century. According to OECD predictions, by 2030 Asia will represent 66 % of the global middle-class population and 59 % of middle-class consumption. Asia-Pacific countries that generate sophisticated technologies to tackle 21st century challenges, have handled the first wave of pandemic with a range of successes. Yet, the question is arising whether on how the Asianization of the global economy will be affected by this transforming globalization.

Current (de)globalization is defined by Washington’s lack of commitment towards global issues such as climate change or collective security, create concerns in international community. China sees this vacuum as an opportunity to fulfill its agenda globally. China’s rising influence in international institutions serves to benefit, but mostly a challenge the current multilateral system. China has already been posing “alternatives” to the current system, creating ambitious strategies for long-term goals such as the BRI on track to be the world’s largest China-centric international development initiative with its major institutions such as the AIIB. Nevertheless, Chinese challenge to U.S.-led globalization grows even further. Chinese experiment of Central Bank Digital Currency may also accelerate the internationalization of the Yuan and erode the status of the U.S. dollar. While the U.S.-China decoupling is about to deepen, Huawei and TikTok issues have already opened new fronts at U.S.-China decoupling added to Hong Kong dispute, Uighur issue, and South China Sea tensions. Yet, equating Asia with China will cause us to sideline some of the successful economies of Asia-Pacific. Japan, India, South Korea, Singapore, Vietnam, Indonesia, Australia are among them. ASEAN is expected to be the 4th largest economic power in the world by 2050, is now the most integrated regional economic union after the EU. Also, countries like Bangladesh are one of the fastest growing economies.

As we see actors seek more resources for minimizing risks, economic and political diversification will be the key word in a more (de)globalized post-pandemic world. It has been seen that boosting intra-regional is very beneficial for the countries within the region. In this case, it is becoming even more important for the EU and ASEAN to decrease their dependencies to respectively to U.S. and China by engaging more within the region. ASEAN, in particular, is expected to have a pivotal role in the region. Its member states such as Vietnam, Indonesia, Singapore and Malaysia represent important partners for structuring new supply chains and becoming crucial financial hubs. Plus, Vietnam emerges as a new manufacturing hub. Country’s participation in FTAs with a number of overseas countries, with significant tariff incentives eases this process. India and Thailand are also among to benefit from multi-country delocalization policies. Another example to that is $2.2 billion stimulus package announced by (ex) PM Abe, aims to relocate Japanese production from China to Southeast Asian countries.

Countries within the Asia Pacific region are better positioned in transforming international context. This is the reason why, EU’s focus on the region has recently been deepening with the signature new generation FTAs with Vietnam, Singapore, Japan, and South Korea – Australia and NZ on the way and countries like Turkey declaring initiatives (Asia Anew) to reach out to the Asia-Pacific. Thus, shifting from China was already on table because of rising labor costs and trade conflicts and it is not a coincidence that US’s fastest growing trade partners from 2018 to 2019 included Vietnam and Taiwan. Moreover, this pandemic has accelerated this process and encouraged states to shift to multi-country strategy.

UN ESCAP E.S. Armida Alisjahbana points out that the socio-economic impact of COVID-19 pandemic has been severe, with most economies of the region facing economic contraction, job losses & rise in extreme poverty & inequalities. (De)globalization trend in the context of U.S.-China decoupling will also be the game-changer for the Asia-Pacific countries, which it will definitely have strong impact on the strategies of internationalization and diversification of its businesses. For more sustainable societies to develop, countries in the region need to address these post-pandemic challenges alongside with recently emerging ones such as tackling climate change, establishing a rule-based international trade, digitalization and effective government models.

Temmuz Yiğit BEZMEZ

 

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