The 70th “Diplomatic Roundtable” meeting on “China and Japan in the Post-Crisis East Asia: Towards an Uncertain Regional Economic Order” Held

JFIR and its two sister organizations, the Global Forum of Japan and the Council on East Asian Community, taking advantage of an occasion of a visit to Japan of a prominent person on international and other affairs, monthly organize a “Diplomatic Roundtable” meeting, which is an informal gathering of members of the three organizations for a frank exchange of views and opinions with the visiting guest. The 70th “Diplomatic Roundtable” meeting was held on July 6, 2011 on the topic of “China and Japan in the Post-Crisis East Asia: Towards an Uncertain Regional Economic Order.” An outline of the presentation by Prof. John WONG, Professorial Fellow at East Asian Institute of National University of Singapore, was as follows:

Two Waves of East Asian Growth
East Asia, defined as the 13 countries, namely ASEAN 10 plus Japan, China and Korea, or as the 16 economies further including Hong Kong, Taiwan and Macau, has recorded high economic growth over decades. East Asian economies share such characteristics as high saving and investment rates, export-oriented development strategies and active governmental participations in their initial phases of industrialization. With this growth model, East Asia has seen two periods of high growth in the “flying geese” pattern, led by Japan and by China respectively. The first period of 1950s through early 1970s (EA-I) led by Japan’s high growth benefited NIEs, while the second period of 1980s through today (EA-II) led by China contributed to the growth of the ASEAN countries. Of the global GDP, EA-I in 1985 accounted for 15.2% and EA-II in 2010 for 23.4%, the latter being equivalent to the US share of 23.5%. The economic history as well as the human history has never witnessed such a colossal scale of industrialization as it is taking place in China today.

Different Institutional Bases for EA-I and EA-II
Since Japan in EA-I was under the US security umbrella, the rise of Japan posed no political threat to East Asian countries. The regional order of EA-I remained stable. In contrast, China in EA-II, amid the relative decline of the US, is creating apprehension in East Asia because China is ruled by the Communist Party and some neighboring countries are still skeptical of China’s “peaceful rise.” As such, EA-II is faced with the dilemma of “hot in economics, but cool in politics,” which poses a lot of uncertainty on the emerging regional order in East Asia.

The Economic Sustainability of EA-II
Is EA-II's high growth, or China's high growth, sustainable? It is unrealistic to predict that China will continue to sustain a 10 % level of annual growth in the future, which China has registered for three decades. Nevertheless, as China domestically enjoys abundant capital, labor, productivity and high demand, it is possible for China to achieve an 8-9 % growth rates for next five years and a 7-8 % for another five years. Furthermore, China is expected to catch up with the US in nominal GDP within 15 years or less. Owing to the maturity of NIEs and the rise of such countries as Indonesia, Malaysia, Thailand and Vietnam, EA-II as a whole is predicted to surpass US and EU to be the world largest economy in five years.

The Future Shape of the EA Regional Order
The East Asian Community has three possible components: Economic Community, Security Community and Socio-Cultural Community. Indeed East Asian countries, economically inter-dependent on one another, are gradually achieving an Economic Community, but they are not on their way to a political integration like EU. In order to overcome the contradiction of “hot in economics, but cool in politics,” East Asia should prioritize the embodiment of a Security Community. Should US leave East Asia to go home in 10-15 years, East Asian countries would need to maintain peaceful coexistence by themselves. The way to achieve a Security Community is for us to adopt “ASEAN Way of Cooperation” based on the process of consensus building through continuous dialogue and consultation, and for China and Japan to learn from the lesson of the "Franco-German Reconciliation" in the experience of EU and come closer to each other.

 

The Japan Forum on International Relations (JFIR)

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