October 2007
Asia 2012: Security Challenges and Opportunities for Development
The Asia-Pacific region is undergoing continuous change as China, India, and Japan emerge as great powers with a wide array of political, economic, and military interests. How will these emerging powers compete with each other--and the United States--for primacy in Asia? Will economic growth sustain the rise of these economic powers, or will unexpected economic fault lines shatter ambitions for ever-growing GDPs? How will Asia's burgeoning regional organizations respond to the array of transnational threats in the region?
On October 23, 2007, AEI hosted leading scholars and policymakers in a one-day seminar to address these and other questions concerning the challenges and opportunities that Asia will face over the next five years.
Panel I: The Road to Rivalry? Security Challenges in Asia
Brigadier Arun Sahgal
United Service Institution of India
Asia is made up of systems and subsystems connected in such a way that they all affect each other and the changing landscape of the region. India is particularly interested in the effect that China's growing influence and Russia's alliance-building will have on Asia. Additionally, Asian nations are now cooperating with the United States and countries in Europe, creating new opportunities for trade and development.
India is attempting to identify opportunities to form connections within Asia for cooperation and growth. However, most of the nations surrounding India are inimical to India's interests or are allied with other powers. Japan and Australia, the other Asian democracies, are geographically too far away to alleviate the isolation India faces in an Asia where there is little cooperation or stability.
There is potential for regional cooperation, but progress is slow. One reason is the decline of U.S. strategic involvement in the region. If U.S. involvement declines further, the regional powers will have to devise their own strategies to fill the gap, a trend that concerns India because of the lack of democratic nations in the region. India, though valuing its relationship with the United States, must make compromises with its neighbors that the United States might not approve of in order to maintain a regional voice. It is necessary for each power in the region to work towards a cooperative regional security structure.
Lanxin Xiang
Graduate Institute of International Studies
Since the end of the Cold War, Asian security issues have been a topic of concern, and many policymakers have argued that Asia will explode at any time. Policymakers in Washington are worried about the rise of China and believe that a major conflict over Taiwan is inevitable.
While this conflict has not yet occurred, there is real potential for it in Asia. First, it is possible that regional powers could have a serious confrontation over a misinterpretation of another power's strategic intentions. It is therefore important to create mechanisms by which regional powers can explain the intentions of their long-term strategic plans to each other. Second, differing value systems cause problems. Misunderstandings exist in the West regarding the meaning of China's development. China, for example, would not say that it is "rising" but that it is restoring its traditional position in Asia. Changes in China's economy, however, do not predict that it will naturally become a Western democracy, as many hope. China does not need to become a Western democracy, but should instead adopt a governing structure that best meets its unique needs. The value-laden language used to frame these debates requires a vocabulary better suited to the modern age than one based on a Westphalian order that is beginning to disappear.
The Honorable Masafumi Ishii
Embassy of Japan
Japan is Asia's past, China its present, and India its future. China will soon begin facing difficulties that Japan has already encountered, while India will emerge as a major power in the next ten years or so. Therefore, when considering Asian policy, it is important to be mindful of China's role and to involve India.
Japan and Chinese relations for the next five years will remain difficult. These two countries have never been major powers at the same time, and this leads to conflict. However, relations between Japan and China will begin to improve because both countries have common economic and security interests that will lead to cooperation.
With respect to India, there is even greater potential for cooperation. Trade, for example, between Japan and India is still small, so the potential for increasing trade relationships is enormous. In the security arena, naval exercises between Japan, the United States, and India point to greater cooperation in the future
Japan is not pessimistic about the future of Asia, but a better infrastructure between the nations in the region must be created. Japan is concerned with the development of three particular infrastructures. The first is the continuation of the East Asian Summit (EAS) for economic cooperation. The second is the development of the U.S.-Japanese-Chinese government-level dialogue for trade and security issues. And the third is the extension of the cooperation that began after the Asian tsunami between the Unites States, India, Australia, and Japan to secure sea lanes.
Panel II: Is Growth Sustainable? Fault Lines in Asia's Economic Future
Richard Katz
Oriental Economist
While some argue that Japan is recovering from its economic slump as a result, in part, of economic reforms, reform is not moving fast enough and not addressing the more serious problems. Reform is occurring in the strongest sectors, where it is least urgent, and not in the sectors that most need it. The sole source of growth is in output-per-hour, but since the working-age population is shrinking at a relatively high rate, the total number of hours of work has not been growing. Thus productivity does not increase. Japan's recovery is unstable and is based on its ability to grow its trade surpluses. GDP growth is not translating into better standards of living for Japanese people.
The political and geopolitical ramifications of Japan's economic growth patterns are very significant since economic vibrancy and security are closely related. The United States has been focusing on the development of Japan's security state, mistakenly assuming that Japan's economic recovery is assured. The strong focus on security at the expense of economic growth is misguided, however, since the economic situation of the country is not as positive as it is commonly understood to be.
Philip I. Levy
AEI
Many would agree that China has been highly successful in the area of economic growth. The question is whether this pattern of growth is sustainable. Though China has been successful until now, its growth cannot continue indefinitely. There exists a pattern of heavy dependence on investment, capital intensive growth with relatively little job creation, a large and unemployed rural population that is pressing into urban centers, and a heavy dependence on international demand and foreign capital. In addition, multilateral trade balances and the buildup of foreign exchange reserves are unsustainable. Considering the shaky economic situation in the world today, heavy dependence on international trade is also a cause for worry in addition to rule of law concerns.
In terms of demographic issues, China's working-age population will peak and begin to decline within less than a decade, though China has spent little time considering how to deal with the problems this will cause. Additionally, the environmental costs that China is incurring will begin to damage its economic growth. It is therefore somewhat risky to predict that China's economic growth will continue as strongly as in the past.
Beth Anne Wilson
Federal Reserve Board of Governors
Many argue that India has had an exceptional record of recent growth and that India is looking at a future of high workforce growth rates that will help it continue to grow economically. However, India's population under twenty-five is mainly rural and barely literate, and the next generation is not showing signs of improvement. Historically, spending on primary and secondary education has been much less than spending on tertiary education, which leads to a largely uneducated workforce. Finally, a large portion of the population is undernourished, a factor that has been linked to poor performance in school.
If India is to continue to be an economic force, it must shift from agriculture towards manufacturing. The lack of success in the agriculture sector as a significant force of economic growth is a result of the emphasis on subsidies rather than investment, constraints on private sector investment, limited foreign investment, restricted trade, and weak legal institutions. Without investment in agriculture and an increase in productivity, India will be unable to free the workforce for manufacturing work. Additionally, labor restrictions in India should be loosened to encourage industry to grow. India must focus less on high-skill sectors and more on reforms of agriculture, health, education, and industry regulations in order to produce high-quality workers for an efficient industrial base.
Keynote Address
The Honorable John D. Negroponte
U.S. Department of State
The United States considers itself an active leader in the Asia-Pacific region. It encourages cooperation with Asian nations on global threats and the war on terror, and the peaceful resolution of problems in regions like the Taiwan Strait, the Korean Peninsula, and Kashmir.
The United States will focus on three key issues in Asia over the next half decade. First, it will encourage the development of regional security architecture. Although the United States does value its bilateral relationships with Asian allies, it also recognizes the importance of multilateral frameworks for bringing stability to the region. Second, it will encourage regional and international burden-sharing in countries such as China and India. Asia must bear the burdens as well as reap the benefits of globalization by taking a lead in trade liberalization and by supporting the resolutions of the international community through the United Nations. Finally, the United States will address global challenges with its Asian partners. The war on terror has expanded into Southeast Asia, where the United States supports anti-terrorism efforts. Environmental concerns continue to affect the entire world, so the United States will work with Asia on solutions to climate change. Nonproliferation will continue to be a matter of concern in Asia because of the North Korean situation. The United States will continue to support the six-party talks as the best mechanism to bring peace to the Korean Peninsula. The United States will continue to remain closely engaged in Asia.
Panel III: Transnational Challenges and Regionalist Responses
Richard Cronin
Henry L. Stimson Center
Transnational issues in Asia develop from the impacts of globalization penetrating even to remote parts of Southeast Asia, encouraging growth while destroying traditional livelihoods. Construction of transportation infrastructure allows for the easy flow of manufactured goods as well as illegal activities across borders. Environmental dangers arise along with economic development. The environmental and energy concerns in the Mekong River region are a good example of transnational problems. The river's resources are shared by many countries, but all nations want to monopolize those resources for their own benefits. Downstream nations suffer energy, fishery, and agriculture losses because of the activities of upstream nations.
Despite the recognition of transnational threats, a lack of governance, insufficient human and technological capacity, corruption, and a lack of understanding hamper efforts to improve the situation. It is vital to address these issues so that current nontraditional security issues do not become traditional security issues in the future. Regional institutions have yet to prove effective in addressing these issues. Additionally, all Asian nations agree that they would like more U.S. engagement in these areas and are disappointed in its apparent lack of interest.
Da Wei
China Institutes of Contemporary International Relations
China was once skeptical about the concept of Asian regionalism, feeling that it was impossible to build consensus between Asian nations. Recently, China has become much more interested in Asian regionalism, but it recognizes that the development of regional mechanisms is still in its infancy. There is no consensus on what issues should be addressed, what nations should participate, and what type of institutions should be created. China therefore participates in most regional groups in order to determine the best methods to address Asian regional concerns. Its participation with regional institutions is giving China a sense of being part of the region. China believes that current mechanisms are inefficient but that the process of multilateral dialogue is as important as the results of the dialogue.
China respects the role of the Association of Southeast Asian Nations (ASEAN) and associated forums and believes that it is the driver of Asian regionalism. The greatest challenge for the future is to continue moving forward with regional cooperation until the institutions begin actually cooperating on specific issues. The United States should encourage Asian regionalism by participating in forums and institutions, promoting regional networks to its bilateral partners, and participating in the EAS.
Keiichi Hori
Asian Forum Japan
Japan recognizes the importance of regional networks in Asia. Though existing regional institutions are inefficient and progress is slow, Japan believes that current efforts are promoting confidence and dialogue and are still in the early stages of development. There is currently no effective regional framework for discussing security matters, though Japan believes that the ASEAN Regional Forum shows great potential. Currently, the forum discusses most of the important regional and international security matters, but actions have neither been proposed nor taken. Therefore, the question remains about the effectiveness of regional institutions for security matters.
If the institutions are not prepared to act on security concerns, Japan must move alone to eliminate threats. Regional frameworks mean nothing if threats go unresolved. There are alternatives to regional security mechanisms, such as cooperation with NATO or the United Nations. Japan also believes in the potential of the "arc of freedom and prosperity" proposed by former Japanese minister of foreign affairs Taro Aso. These potential alliances, however, would require Japan to resolve the constitutional issues regarding the use of force, issues that Prime Minister Yasuo Fukuda seems unlikely to address. The Japanese government should address these problems and respond to global and regional security threats as current problems, not as something that can be resolved in the future.
AEI research assistant Jennifer Gregg and AEI intern Semira Ahdiyyih prepared this summary.
