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Sunday, Feb. 7, 2010

China's unwritten chapters feed speculation


LOS ANGELES — We were lucky enough the other night to attend a dinner party where the fare was California fusion and the killer item on the menu was serious table talk about Asia. So much food for thought was offered that, when the evening was over, few had much of an appetite for dessert. Which was chocolate cake!

What started as an evening of Asian fusion more or less ended in consensus about Asian confusion.

Many Asian economies are surging, especially compared to the United States. According to estimates or projections by Themes Investment Management, the red-hot Asia-based house headed by former Goldman Sachs Asia Chairman Kenneth Courtis, China again led the pack last year at more than 9 percent growth.

India, not too shabbily, crossed the growth finish line at over 6 percent.

Vietnam, the socialist republic with a reforming economy, hit the 5 percent growth mark. Even Indonesia, crawling its way through the developmental state of democracy, looks to have achieved 4 percent growth. These are numbers to drool over.

By contrast, the U.S. limped in last year at about minus 2.6 percent.

Investment-guru Courtis explains: "The global crisis has accelerated the shift to Asia. The magnitude and power of the shift result from the combination of the law of large numbers and the magic of compounding at high rates of expansion. The shift, occurring across a vast front, is a major factor in every aspect of the global economy."

To be sure, there's still trouble in the paradise of the Orient. Japan's growth was minus 6 percent; Taiwan's was almost as bad. What's more, the worldwide recession apparently has accentuated the different directions of Japan and China.

The guests around the dining table were glum at the thought of an authoritarian political system dramatically topping a parliamentary one like Japan. It seemed unfair and arguably ominous for the 21st century.

But the Japanese diplomats, academics, Japanese-Americans and scholars in attendance were far from ready to declare authoritarianism the winner in the East Asian economic development race. While China's growth achievements continually impress, questions remain about its political maturity.

The unseemly spat with Google over whether e-mail and other accounts should remain immune to the prying eyes of government was a reminder that China has many problems left to sort out internally. And everyone knows that the Chinese people have paid a heavy price for the economic upsurge in the form of a political system that offers more intimidation than reasoning to keep the lid clamped down tightly.

At the same time, Japan's political system itself seemed un-inspirational, to say the least. The new government, led by the Democratic Party of Japan (DPJ), is off to a terrible start. Corruption charges penetrate the party's inner circle. The current prime minister, Yukio Hatoyama, has impressed few people, so far, as the leader likely to get Japan moving again.

But rays of hope filtered across the table nonetheless. One came from the amazing scholarly work of professor Yusaku Horiuchi of Australian National University. He said recent electoral reform consolidations in Japanese municipalities may have been a profound hidden factor behind the recent historic victory of the DPJ over the long-governing Liberal Democratic Party. This transformation raises the possibility that America's leading ally in Asia may be evolving, structurally, into a genuine two-party system that will bring vigor, challenge and self-correcting mechanisms to the nation. One roots no more for Japan to continue to slide than for China to suddenly implode. Asian political stability is a prerequisite if the region is to continue to rise.

The Chinese economic story is a very good one, but many chapters remain to be written in the history book of this modern-age ancient nation. Counting Japan out would not seem to be a wise bet. The two need to grow in a healthy way together. It's hard to see how Asia will become more stable if the disparity between Japan and China continues to lengthen. That thought left the dinner guests with much to chew on.

Journalist and commentator Tom Plate, a former university professor, has just finished a book on Singapore's Lee Kuan Yew. The second edition of his book "Confessions of an American Media Man" will be released later this year. © 2010 Pacific Perspectives Media Center


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