2009 strategic political, economic trends in E. Asia (Part 2 of 2)

By Jusuf Wanandi

east-asiaLearning how to deal with each other as neighbors and major regional powers is critical not only for the two individual nations, but also for the broader region in general.

That is why regional cooperation institutions should assist them in finding the right modus vivendi. The role of the United States in supporting Japan is not helpful. It should be left to China and Japan to find the balance in their relationship.

In the early 1990s, following the bursting of its economic bubble, Japan entered a decade-long recession and deflation — a period that was prolonged by inadequate government policies, especially in the financial and banking sector. In the past few years, the economy has started to grow again, albeit slowly.

But now, again, Japan’s economy is in recession. Although the financial sector has been notably strengthened, dependency on exports is still high and demand has already slowed, while domestic consumption has not increased. Japan still faces several economic constraints, such as demographic problems including an aging society, inadequate productivity levels, low levels of foreign direct investment, rising poverty and worsening income inequality.

These are real issues that need to be tackled. It appears that Japanese leaders have been paying a great deal of attention to foreign policy and security, as well as to social issues such as education, but have not focused enough attention on the economy — especially in terms of continuing Koizumi’s economic reforms.

In the end, Japan’s leaders may be forced to take action to address problems associated with the country’s lackluster growth and aging population (much as Koizumi did with nonperforming loans) because these issues will place heavy financial pressures on voters.

Moreover, Japan’s economic needs intersect with the ambitious security goals of some of the country’s recent leaders: Japan needs to be economically stronger if it is going to be able to play a bigger role in East Asia. Meanwhile, political reforms have not been moving as fast as needed, which is hampering any other reforms.

In the end, the most important relationship for China is with the United States. Since the spy plane incident early in his first term, relations have been stable under President Bush. Both have tried to find common ground and expand on both security and economic ties, as well as on issues such as democracy and human rights.

The relationship between these two countries will always be one of both cooperation and competition. The intricate integration of their economies provides significant motivation for cooperation. China’s strategy not to push its own global and regional order but instead to adapt to the existing system of world governance (with a few exceptions when vital interests are involved) has greatly alleviated a lot of prejudice and misjudgment on the part of the United States (and the “West” in general).

Especially at this juncture, when the United States is under siege and has lost some soft power and ability to lead, China and East Asia in general have been farsighted and statesmanlike enough not to gloat or be arrogant regarding the mistakes of the United States. Not only is this wise, as the United States still has a lot of “power” left, but as history has shown, its political and economic system is flexible and innovative enough to be able to make corrections swiftly and come out even stronger. So the future of the United States is not completely a lost cause. After all, we are all in this financial mess together.

Besides, China does not have ideas incompatible with the rest of East Asia and has in general benefited from the existing international system, despite the occasional setback. It has not always been consistent, as many interests have to be balanced simultaneously.

Trends suggest that, in the longer term, the international system will be multipolar and see greater input and more ideas coming from East Asia and China.

How this current crisis of capitalism is ended, as dictated by the West, should be an indication of how soon this change in values and norms will happen.

East Asia and China should, as always, learn from history. Shifts of power have always been painful and many historical mistakes have been made as a result of arrogance and impatience.

We in East Asia, having always had a long historical perspective, should therefore be patient, cooperative and inclusive in all future developments of the global system of governance.

We have to be aware of our own weaknesses and deficiencies and improve on them. We should also be aware of our obligations (and rights) in this process of change in the international order. We must support a system that will bring welfare, peace and stability to East Asia.

The writer is vice chair of the Board of Trustees, CSIS Foundation, Jakarta.

Source: The Jakarta Post

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