China, India and Japan are sketching out new growth models

[SouthDesi]

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Asia's three biggest economies are suddenly experiencing a burst of change that could alter the growth trajectory for the world's most populous region. Are we seeing the birth of a new "Axis of Reform," one which could revive the global economy? China's Xi Jinping, India's Narendra Modi and Japan's Shinzo Abe are simultaneously sketching out vague-but-promising plans to revitalise their rigid economies. It's not a coordinated process — more of a serendipitous coincidence, driven by a dire need for change in all three nations.

Still, the possibilities are enticing: a truly dynamic and innovative Asia would raise living standards for billions and fresh hope for a world wondering where all its big growth engines went.

Reformation Trio

"With Asia's giants in the firm grip of reformers, prospects have certainly improved," says Frederic Neumann, economist at HSBC Holdings Plc in Hong Kong. "Not only are India and China now led by men that have spelled out an ambitious reform agenda, but so is Japan, with Abenomics ticking away in the background, too."

I have argued that China and India should join forces to accelerate upgrades to their respective economies.

As Stephen Roach, author of Unbalanced: The Codependency of America and China, puts it: "While the challenges and macro structures of China and India are different, if both leaderships deliver on longawaited reforms, the resurrection of the 'Chindia' construct could provide a surprisingly compelling boost to the emerging markets story at just the point when many in the markets have dismissed this opportunity."

Taking an even broader view, it's heartening to see Asia's top economies — and I'm tempted to add South Korea here, too — simultaneously being helmed by leaders who say they're committed to wholesale turnarounds. "It'll take at least a couple of years to restore the dynamo," Neumann continues, "but political developments give hope that the Asia will continue to put in a good run."

Make It Real

It's dangerous to overstate the commonalities between these or any group of nations. Face it, the BRICs — Brazil, China, India and China — have been a dud as an economic bloc. (And the "CIJ countries" — China, India, Japan — don't even have that poetic ring.)

Each of these countries, as Neumann says, "pretty much tick to their own rhythm." What they share is a growing realisation that the old growth models that have gotten them this far are running out of steam. The need for change seems to be broadly accepted across their populaces, barring certain key interest groups.

If leaders can deliver, their combined efforts could "offer a tremendous boost to the world economy at large and not least commodity markets," says Neumann.

They would also offer a striking counterpoint to the US and Europe, where reform fatigue rules debates from Washington to Brussels.

It's too simplistic to say the West should learn from Asia. The nature, magnitude and breadth of the challenges differ hugely, as do demographic trends and political realities.

Along with trying to deregulate economies, for example, Xi and Abe are trying to stave off armed conflict over old rivalries (or at least pretending they are).

Also, revival efforts in Tokyo and Beijing are still more myth than reality. Abe has yet to implement any major structural tweaks; Xi is too busy keeping the economy in the 7.5% growth range to tackle the most difficult reforms.

For Modi, taking on New Delhi's corrupt and changeresistant system will require as much courage as policy innovation. But Asia's Axis of Reform is worth watching. It could be the growth driver the world's been hoping to find.

 

[Chinese-Dragon]

China's announced economic reforms, to be carried out over the next few years, are going to be truly massive. Some are even comparing Xi Jinping's reform efforts to those of Deng Xiaoping.

Xi Jinping, Narenda Modi, and Shinzo Abe are exactly the right type of leaders (strong nationalists) to push through large-scale economic reforms in Asia.

The next few years are going to be very exciting, no doubt about it. The economic futures of half the world's population lie in the balance.

 

[Dillinger]

China's announced economic reforms, to be carried out over the next few years, are going to be truly massive. Some are even comparing Xi Jinping's reform efforts to those of Deng Xiaoping.

Xi Jinping, Narenda Modi, and Shinzo Abe are exactly the right type of leaders (strong nationalists) to push through large-scale economic reforms in Asia.

The next few years are going to be very exciting, no doubt about it. The economic futures of half the world's population lie in the balance.

But all the three countries also have both active and somewhat nascent disputes, the next few years could also see every tom dick and harry flaming the fires along with the said three nations themselves perhaps engaging in actions that might lead to instability, without a certain amount trust things might not turn out as well as they actually could, we'll all still grow but will we achieve all that our potential entitles us to will remain a question that is yet to be answered.

 

[Chinese-Dragon]

But all the three countries also have both active and somewhat nascent disputes, the next few years could also see every tom dick and harry flaming the fires along with the said three nations themselves perhaps engaging in actions that might lead to instability, without a certain amount trust things might not turn out as well as they actually could, we'll all still grow but will we achieve all that our potential entitles us to will remain a question that is yet to be answered.

Yes, there is a risk of the reforms not being successful. Or some kind of regional instability occurring.

Considering the amount of people involved (half of humanity), it could be the best thing, or the worst thing to happen in the modern era, depending on how those reforms go.

The stakes are high. But with the current set of leaders in all three countries, it seems like the reforms will be able to push through successfully.

 

[Dillinger]

Yep, there is a risk of the reforms not being successful. Or some kind of regional instability occurring.

Considering the amount of people involved (half of humanity), it could be the best thing, or the worst thing to happen in the modern era, depending on how those reforms go.

The stakes are high. But with the current set of leaders in all three countries, it seems like the reforms will be able to push through successfully.

I'm pretty confident that the respective leaders will deliver, my concern (stated in the previous post) was that the existing lack of trust between the nations (India, China and Japan) could lead to incidents and scenarios where the prosperity resulting from the aforementioned reforms in the respective countries might be dented as focus could shift towards conflict rather than growth.

There needs to be an actual push towards resolving the disputes between the three nations, otherwise I think we will end up underachieving by a certain margin, although there might be folks who disagree with this. While there are other nations in the continent which have shown high growth prospects the three nations mentioned are the one's with the greatest potential (with China and Japan already well on their way by having realized quite a bit of said potential and India being the late entry). The rest of the nations (all with their respective strengths) don't quite measure up in the long run in absolute terms (albeit their contributions and role in the relations between the nations of Asia are still rather important) but even they need to be brought in line with minimum tensions abounding and minimum leeway for external powers (in geopolitics and strategic affairs) to fix the game.

 

[Chinese-Dragon]

I'm pretty confident that the respective leaders will deliver, my concern (stated in the previous post) was that the existing lack of trust between the nations (India, China and Japan) could lead to incidents and scenarios where the prosperity resulting from the aforementioned reforms in the respective countries might be dented as focus could shift towards conflict rather than growth.

There needs to be an actual push towards resolving the disputes between the three nations, otherwise I think we will end up underachieving by a certain margin, although there might be folks who disagree with this. While there are other nations in the continent which have shown high growth prospects the three nations mentioned are the one's with the greatest potential (with China and Japan already well on their way by having realized quite a bit of said potential and India being the late entry). The rest of the nations (all with their respective strengths) don't quite measure up in the long run in absolute terms (albeit their contributions and role in the relations between the nations of Asia are still rather important) but even they need to be brought in line with minimum tensions abounding and minimum leeway for external powers (in geopolitics and strategic affairs) to fix the game.

I strongly believe that none of these three Asian powers (China/Japan/India) are interested in a war with each other.

China in particular, we are gaining the most from the status quo by far, adding over a trillion dollars to our economy every year. There is no reason for us to derail our economic development, which is our number one priority.

As for our military, check the Japanese Navy thread. Japan back in the 1940's had a massive amount of aircraft carriers, whereas China just got our first "training" carrier in 2012! It's not as if we can't afford more, with our $4 trillion in currency reserves alone, right?

Many people are skeptical about "China's peaceful rise", but that's our policy, and it has been working. The result is that we have not been in any wars for over three decades. Our economic development will always be first priority, as long as no one attacks us with a first strike, then there will be no conflict that involves us.

 

[TimeToScoot]

Xi Jinping, Narenda Modi, and Shinzo Abe are exactly the right type of leaders (strong nationalists) to push through large-scale economic reforms in Asia.

Strongly agree with 'Strong nationalists'. I genuinely hope China and Japan can put their disputes behind and work together for the betterment/growth of Asia.

 

[Dillinger]

I strongly believe that none of these three Asian powers (China/Japan/India) are interested in a war with each other.

China in particular, we are gaining the most from the status quo by far, adding over a trillion dollars to our economy every year. There is no reason for us to derail our economic development, which is our number one priority.

As for our military, check the Japanese Navy thread. Japan back in the 1940's had a massive amount of aircraft carriers, whereas China just got our first "training" carrier in 2012! It's not as if we can't afford more, with our $4 trillion in currency reserves alone, right?

Many people are skeptical about "China's peaceful rise", but that's our policy, and it has been working. The result is that we have not been in any wars for over three decades. Our economic development will always be first priority, as long as no one attacks us with a first strike, then there will be no conflict that involves us.

For our part we don't have an issue with the stated peaceful rise, between our two countries the major issue lies in the border dispute alone. Lets see whether any course can be charted out for resolution. I believe Minister Wang Yi's trip was said to be fruitful, hopefully this will extend beyond pleasant conversation and get down to actual tangible results. But as I said, and I repeat, it remains to be seen. Another issue is the SCS dispute between China and Japan, Japan's economy took a hit but with PM Abe at the helm it will chart a turnaround, a resurgent Japan that is willing to militarize in proportion to its wealth along with China facing each other off would again be BAD for trade.

As it is, the day Honbl. PM Modi Ji came to power I spotted many articles sprout up in American publications about how the personal relations between him and PM Abe should be exploited to create an India-Japan nexus against China. As misplaced as that analysis seems to me, there isn't a dearth of gora/meiguo ren analysts who are trying to find an angle to exploit in pursuit of such a goal.

 

[Chinese-Dragon]

For our part we don't have an issue with the stated peaceful rise, between our two countries the major issue lies in the border dispute alone. Lets see whether any course can be charted out for resolution. I believe Minister Wang Yi's trip was said to be fruitful, hopefully this will extend beyond pleasant conversation and get down to actual tangible results. But as I said, and I repeat, it remains to be seen. Another issue is the SCS dispute between China and Japan, Japan's economy took a hit but with PM Abe at the helm it will chart a turnaround, a resurgent Japan that is willing to militarize in proportion to its wealth along with China facing each other off would again be BAD for trade.

As it is, the day Honbl. PM Modi Ji came to power I spotted many articles sprout up in American publications about how the personal relations between him and PM Abe should be exploited to create an India-Japan nexus against China. As misplaced as that analysis seems to me, there isn't a dearth of gora/meiguo ren analysts who are trying to find an angle to exploit in pursuit of such a goal.

China has always tried to advocate for a border solution, with even Zhou Enlai making the unprecedented step of offering to do a territorial swap, where we both held on to the territories we controlled. That was back in 1960, and well I guess you know Nehru's response.

China again (as you saw with Wang Yi) is putting in a huge effort to boost friendliness with the Modi government. In fact we were doing this long before Modi was even elected.

Now, you don't have to respond positively. But as long as we remain basically neutral to each other, that should suffice. Respectful neutrality would be more than good enough.

As for your last paragraph, I do not believe that India is willing to use themselves as a meat shield against China, on behalf of America. The recent spats (diplomat arrest, US threat of economic sanctions, etc.) and the negative media coverage of India in the Western media seem to show quite clearly that India is refusing to become a vassal of the US. This is surely good news for a future multipolar world.