According to Michael Auslin, Asia’s future is increasingly uncertain. Auslin, a resident scholar at the American Enterprise Institute and author of the End of the Asian Century: War, Stagnation, and the Risks to the World’s Most Dynamic Region, says Asia a fractured region threatened by stagnation and instability.
Auslin recently appeared on Financial Myth Busting with Dawn J. Bennett, where he further described his viewpoint.
“I think that the danger is that we have gotten ourselves into a mindset where China is a 12-foot tall monster that can do no wrong when the reality is that the golden era of China’s growth, as for almost all of Asia, is over,” he said. “They’ve had an incredible run for a long time, but what they didn’t do was resolve many of the fundamental structural problems in their economies, and so we’re seeing a slowdown throughout the region. The bigger danger is that we’re going to have to worry about a weak Asia and a weak China than we will about a strong one.”
According to Auslin, “one of the big problems has been the breakneck pace of economic growth really papered over so many of the deeper reforms that had to be undertaken.” For instance, many of the financial systems in Asia are very weak and facing massive debt. Asia’s not very good at things like innovation, research, and development, which America takes for granted. Additionally, the region is facing labor problems, including China due to their One Child policy. The government in many Asian countries is too involved, which makes entrepreneurship and innovation very difficult.
During his campaign trail, Trump argued that China is stealing American jobs. On the contrary, Auslin believes what China is stealing and will continue to steal is America’s trade secrets and intellectual policy. According to Auslin, a lot of American jobs are already gone. Some policies that Trump opposes, such as the Trans-Pacific Partnership, were actually designed to give the U.S. access to markets that had a lot of barriers against American goods, such as Japan. The TPP wasn’t going to see Japan steal American jobs, and those jobs left long ago, he said.
Auslin also explained that there are many differences between Japan and China. Compared to China, Japan was a much wealthier country when it hit its slowdown, he said, and this has allowed Japan to deal with it in better ways that did not cause a lot of despair to the population.
“There were high standards of living and there were already social mechanisms in place and entitlements and the like,” he said. “China doesn’t have that, and China being still a developing nation that’s fairly poor, it’s going to be harder, in fact, for China to deal with its slowdown than it was for Japan. In Japan, it’s been two and a half decades now, and they’ve really found a sort of modus vivendi, being able to deal with lower growth and yet maintain higher standards of living and the like, so I’m actually more bullish on Japan’s ability to weather a continuing slowdown and an aging population.”