Towards a new 'balance of economic power'
Is a new international economic order taking shape amid the din and
bustle over the ongoing 'global' financial crisis? There is no firm
answer yet, although some clear political signals can be detected in
East Asia. China, an ascendant economic power, and Japan, still the
world's second largest but deeply-stricken economy and an ally of the
United States, have now come together.
In the process, Tokyo and Beijing have risen above their unresolved
political concern about each other. And, they have also associated
themselves with South Korea to form a new 'Tripartite Partnership.'
These three contiguous Northeast Asian States together produce 74 per
cent of the collective Gross Domestic Product of the 16 East Asia Summit
(EAS) countries, inclusive of India. The EAS covers China, Japan, South
Korea, India, Australia, New Zealand, and all 10 members of the
Association of South East Asian Nations (ASEAN). Viewed differently,
unambiguous indeed is the economic relevance of Japan and China to the
United States, the European Union, Russia, and the petro-dollar powers
in West Asia and elsewhere.
Two strands of thinking
Two strands of out-of-the-box thinking in East Asia raise the
statistical importance of the new 'Tripartite Partnership' to the level
of a substantive political reality. First, political leaders like Prime
Minister Kevin Rudd of Australia, finance-executives like World Bank
President Robert Zoellick, and economics professors like Ilian Mihov at
INSEAD in Singapore are generally agreed about the future direction of
the current U.S.-origin financial crisis. It has, in their view, turned
already into an economic crisis across the world and can become
"unemployment crisis" in the early part of next year.
The related theory is that the potential humanitarian fallout,
ranging from widespread job losses and troubles on the household-economy
front to the urgency of 'social safety nets,' might be acutely felt from
early-2009 onwards. And, in the most optimistic scenario, the crisis is
set to last for most part of next year. For the immediate present,
therefore, policy-planners and opinion-makers in East Asia remain
considerably focussed on the macro-economic scene and relatively less so
on social security aspects. It is in this macro-level ambience that the
China-Japan-South Korea 'Partnership' has caught much attention as a
potential 'future-oriented' regional order with implications for the
The second strand of out-of-the-box thinking has more to do with the
political logic of the formation of this 'Tripartite Partnership.' It is
learnt on good authority that Japan, under its former Prime Minister
Yasuo Fukuda, took the "initiative" last year to suggest this exclusive
network. And, the logistical genesis of this "initiative" could be
traced to the fact that the three countries established their first-ever
summit-level contact in 1999, on the sideline of a regional conference.
Prior to their latest 'stand-alone summit' at Fukuoka in Japan on
December 13, they had, through a chequered phase, met invariably on the
margins of major multilateral events.
The progression of these trilateral contacts received a space-age
political boost last year itself, when Chinese President Hu Jintao and
Mr. Fukuda agreed that the two countries posed "no threat" to each other
any longer. The factors behind that path-breaking piece of accord have
now propelled Beijing and Tokyo to associate themselves with Seoul on
economic matters, in the wider context of the unresolved North Korean
nuclear arms issue. One of these factors common to both Japan and China
is the sign, ballooning in recent years, that the U.S. may have hit a
trajectory of "relative economic decline" in East Asia, where Washington
is a long-time 'resident power.' This particular perception, not
universally shared by all East Asian powers, has come into sharp focus
in the current global economic situation. As a result, the new
'Tripartite Partnership' can be seen as a form of political 'hedging'
against the U.S., now in an economic slide-down. Relevant to this
reasoning are the deep and diverse economic linkages between the U.S.,
on one side, and China as also Japan, on the other. However, official
versions downplay the U.S. factor in the 'Tripartite Partnership.'
Top Japanese spokesman Kazuo Kodama has told this correspondent that
there is "nothing" in Tokyo's initiative that could link it to the
perceptions that the next U.S. President, Barack Obama, might seek to
refashion ties with East Asia. On the contrary, according to Mr. Kodama,
the current global financial crisis was the real "catalyst" for this
'Partnership,' now signed by Japanese Prime Minister Taro Aso, his
Chinese counterpart Wen Jiabao, and South Korean President Lee Myung-bak.
In fact, so runs the argument, the signing was preceded by the
independent decisions of China and Japan to raise the limit for their
"currency swap," on parallel tracks, with South Korea. The aim was to
bail out Seoul in the context of its rapidly weakening money.
The catalytic effect of the ongoing 'global' financial crisis does
not, on balance, negate the perceived long-term compulsions of China and
Japan to "hedge" against the U.S. in "relative decline."
Moreover, a few other factors, essentially political in scope, have
guided China and Japan towards this 'Partnership.' China's paramount
policy objective of becoming an advanced economic power dictates the
need for better ties with neighbouring Japan. Their largely
"complementary economic links" are already very strong; and any
precautionary "hedging" against the U.S. will make sense to China in
this context as well. China's State Councillor Dai Bingguo told the
Washington-based Brookings Institution on December 11, the increasingly
"interdependent" China-U.S. ties had inspired economic historian Niall
Ferguson to describe this new reality as "Chimerica" at work on the
global stage. A U.S. slow-down or setback is, therefore, something that
China will want to address suitably.
Will India be left out?
For Japan, a policy of being accommodative towards a rising China had
long ceased to be just an option. And, as U.S.-based strategic affairs
expert Mike Mochizuki has noted, Japan has for some time begun to see
China as "a potential partner in establishing an attractive global
economic balance of power." A logical poser is whether India will be
Answering a related question from this correspondent, Mr. Zoellick
said in Singapore on December 18 that the new "[Tripartite Partnership]
is not a negative for India or other countries." Echoes of U.S.