Despite a shaky global recovery and rising trade protectionism, the Asian economy will maintain robust growth in the upcoming years, as countries in the region deepen economic cooperation and benefit from the Belt and Road Initiative, renowned economists and officials recently said at the Boao Forum for Asia annual conference.
Dai Xianglong, China’s former central bank governor, said Asia will remain the world’s fastest-growing region in the coming 20 years, or even by the middle of this century.”An important driver will be China, whose intensified push to further open itself to the world will generate more opportunities for other Asian economies,” Dai said. According to him, China’s GDP is expected to expand at around 6 percent in the next decade. Though such a rate is slower than previous figures, the growth will be of higher quality and more consumption-driven.
The rising purchasing power of Chinese consumers will help boost China’s trade links with other Asian countries, Dai said, adding that India is also expected to post faster growth, which will also spur the overall development of the region. Moreover, China’s Belt and Road Initiative will help build sprawling infrastructure connections among Asian countries, which will lay a sound base for closer economic ties, said Yasuyuki Sawada, chief economist of the Asian Development Bank.
Promoting free trade is one of the keys to maintaining the strong momentum of the Asian economy. To achieve that, it is of great importance to build broader infrastructure connections in transportation, energy and information communication technology. That’s exactly what the Belt and Road Initiative has been calling for, Sawada added. His view was echoed by Qian Keming, China’s vice-minister of commerce. “The Belt and Road Initiative will play a big role in boosting Asian economic integration. On top of closer infrastructure links, it will also promote more dialogue in policy, trade and institutional mechanisms,” Qian said.
According to him, amid rising trade protectionism, the initiative’s call for openness, inclusiveness, and the common destiny of a shared future will help advance multilateral trade and drive the overall development of Asia. “The past years have already seen significant progress in Asian economic integration. Currently, trade among ASEAN countries accounts for 30 percent of ASEAN’s overall trade volume. The figure in European countries is 70 percent. This highlights huge potential for further development in Asia,” Qian added.
The remarks came as a report forecast that Asia is expected to lead the world in economic development in the future. According to the Asian Competitiveness Annual Report 2018, which was released at the BFA conference, the continent will benefit from improved external growth, restructured internal drivers, and deepened Asia economic integration. Such optimism was also evident in a report released by the Center for Economics and Business Research in London. The research institute forecast that three of the world’s four largest economies will be Asian－China, India and Japan－by 2032, with China expected to overtake the United States to top the global list by that time.
But to turn these long-term projections into reality, strong efforts are needed to tackle short-term risks including the US administration’s trade protectionism which is marked by higher tariffs, analysts said. Also, how to properly resolve the debt issue will be a challenge. “But there is no need to exaggerate the problem. China’s government debt is relatively low, and the country has ample domestic savings,” said Fan Gang, director of the National Economic Research Institute and a member of the monetary policy committee of the People’s Bank of China. Another important impetus to growth will be Asian countries’ willingness to embrace technology and cultivate innovation, as part of their broader push to advance economic restructuring, said Zhou Wenzhong, former secretary general of the 2018 Boao Forum for Asia. “Innovation is the primary driving force to get emerging Asian economies on the fast track and help them achieve significant growth,” Zhou said.
A good example is China’s quick adoption of new technologies, which has effectively bolstered the country’s growth in recent years, he added. Sanjaya Baru, secretary general of the Federation of Indian Chambers of Commerce and Industry, said China’s transition to consumption-driven growth and greater market access to the country will also create opportunities for other economies in Asia and boost the region’s overall development. Though no specific data is immediately available to show exactly how big the opportunities are that China’s consumer market can offer for foreign countries, a clue can be gained through observation of the cross-border e-commerce sector. Market research firm eMarketer estimates that by 2020, half of China’s digital shoppers－about one-quarter of the country’s population of 1.4 billion－will be buying foreign products online and total sales will top $157 billion. “China’s growing role as an importer and investor is something that most developing countries will welcome,” Baru said.