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Opinion

August 17, 2016

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Why makes this the Asian century?

Two hundred years after losing its preeminent position as the centre of world economy, Asia has regained it. The largest and most populous continent, birthplace of major religions, home to multiple and diverse civilisations – Indus valley, Babylon, Huang-He valley – Asia has always been big and bountiful.

This was so until the Industrial Revolution – unfolding after 1750 – which multiplied the capabilities of Europeans and turned the tables on Asia’ s power and prosperity. One simple fact will show the consequences of these enhanced capabilities. At no time, for instance, during the British occupation and administration of the Indian subcontinent, did the number of British civil and military manpower administering the whole of the Subcontinent increase beyond 22,000; India’ s population in 1857 was 250 million which grew up to over 350 million by 1947 when the British left the Subcontinent.

So, the 19th century was certainly the European century – in which Pax Britannica reigned supreme. But two European civil wars of the 20th century – World Wars I and II – took a massive toll on Europe’s human resources, destroyed social and physical infrastructure and bankrupted their economies. As the US rescued Europe and helped in its reconstruction after WWII, it heralded the arrival of the American century.

The 20th century became the American century. The US further consolidated its position as the sole superpower after the fall of the USSR and end of the cold war in 1991. However, the US’ s disastrous military intervention in Iraq in 2003 and the financial meltdown of the subprime mortgage crisis of 2007-10 severely derailed Francis Fukuyama’s dream of the ‘end of history’ .

By then Asia had come of age. The path pioneered by Japan at the beginning of the 20th century was followed by the ‘East Asian Miracle’ of Hong Kong, Taiwan (China), South Korea, and Singapore later in its second half. Soon other success stories of the emerging markets of Malaysia, Indonesia, India, Thailand strengthened the Asian argument (how I wish I could put Pakistan here; our economic resurgence around this time was once again derailed by our politics).

But, it was China’s arrival as the global economic power at the beginning of the 21st century – the fastest rise in the history of any country – that clinched the argument that Asia was now on an irreversible path of power and prosperity and was becoming the centre of gravity of the world economy. How did this Chinese miracle come about?

“The most important strategic choice the Chinese made [in the late 1970s] was to embrace globalisation”, said the leading Chinese scholar and reformer Zheng Bijian in ‘China’ s Peaceful Rise to Great Power Status’ published in Foreign Affairs magazine in 2005.

I have been visiting China since the early 1980s when Shenzhen was still a construction site and its 51-story building in those days was counted as the tallest building of China! Guided by the governance reforms of Deng Xiaoping (1978), the speed and expanse of industrialisation of its economy has been breathtaking for the world. Its meteoric rise was built upon the earlier foundations of large-scale education and skill development programmes.

Deng’s wisdom married the educated and skilled workforce of China’s socialist reforms with foreign investment and technology and used globalisation of markets to leap forward the Chinese economy and fill up the world markets with its products. According to him: “It doesn’t matter whether the cat is black or white, so long it catches the mice”.

As the world became a global village, Chinese exports which in 1978 were about $10 billion, kept leaping forward and in 2015 stood at $1.2 trillion or $1200 billion. (Pakistani exports in the same period grew at a snail’s pace – from about $3 billion to $23 billion). And the IMF tells us that successful pursuit of this strategy helped China become the largest economic power when in 2014 its share in the world economy became 17 percent compared to 16 percent of the US.

For Pakistan the lessons are obvious. Globalisation may not be the panacea but its rules for success and failure are clearly known; as are the rewards and punishments for countries and companies. If the Chinese and other Asians have used globalisation so successfully and Pakistan has not, the reason lies in our laidback, horse-and-buggy system of governance which lacked the vision to see the forces driving the world economy. It also didn’t recognise value of timely decision-making and kept letting opportunities fall by the wayside.

Internally, we failed to create a foundation of educated and skilled workforce; did not encourage discipline and work ethics, and did not develop policies to attract FDI, technology, and quality management for industrialisation of its economy. The result is: Pakistani exports have essentially stagnated and their value addition is the lowest even among South Asian countries.

Let us also be clear: without discipline and work ethics, neither democracy nor development is sustainable – a point highlighted by Quaid-e-Azam when he made ‘discipline’ one of the three pillars of the governance of the modern democratic Pakistan – something we forgot soon after his passing away.

On the occasion of attending an Asia Society conference on ‘China and its neighbours’ in Beijing, I had opportunity of meeting Madam Wu Yi – a good old friend of Pakistan – then China’ s minister for international trade and later deputy prime minister of China. She spoke fondly of the history of China-Pakistan relations and advised that both China and Pakistan should deepen their relations by building economic bridges between the two countries.

Which brings me to the China-Pakistan Economic Corridor (CPEC) – the strongest economic bridge between our two countries which will help Pakistan cross over and enter into the power and prosperity of the Asian Century. All this provided it moves out of its laidback, inefficient, horse-and-buggy system of governance. It is good that the Pakistan Army has taken principal responsibility for its timely and efficient completion, which is extremely important as there is more to come after that.

China’s ‘One Road, One Belt’ project, the Asia Infrastructure Investment Bank (AIIB) and a 15,000 kms railway line passing through Pakistan and linking Shenzhen with Amsterdam are mammoth undertakings which would further integrate Asian economies.

However, the major challenge to Asia’s rising prosperity could come if access to Western markets is denied to its competitive economies under various protective and inward-looking measures. History tells us that such tectonic changes as shifting the centre of gravity of the world economy have not happened easily and peacefully in the past. Nevertheless, Asia must develop skills and sophistication for a peaceful realisation of its dreams.

For Pakistan, the only way out of the losers’ corner in a globalised economy is by enhancing ‘efficiency of governance’ and ‘productivity of economy’. But on both counts, the laidback medieval political culture controlling its governance was defeated and colonised in the 19th century Subcontinent.

The question is: how does Pakistan hope to successfully navigate through 21st century challenges on the back of a defeated political culture of the 19th century?

 

The writer designed the Boardof Investment and the First Women’s Bank.

Email: [email protected]

 

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