September 24, 2009
The plans for creating an Asian economic community grouping China, ASEAN and Japan have received an important boost recently. During his informal meeting in New York with Chinese president Hu Jintao, the new Japanese premier Mr. Hatoyama has proposed the creation of an East-Asian community which would emulate the model of the European Union. Closer ties between Japan and China should eventually create the nucleus towards which the other East-Asian nations would gravitate economically :
“Whilst recognizing our differences, Japan and China should surpass them and build a relationship based on trust. This would be the basis of the East-Asian community that I would like to create”. (Yukio Hatoyama, quoted by Asahi Shimbun and Courrier International)
The Japanese prime minister’s overtures have been positively received by the Chinese leader, himself in favour of closer economic and political ties with Japan.
At first glance, the new Japanese premier’s plans might seem premature. Not according to new data provided by seasoned economists, such as Neal Soss of Credit Suisse New York. Talking to The New York Times reporters recently, he points out that for some time now the gravity centre of the global economy is shifting towards China. The current crisis, however, marks a turning point. Until now, the United States was always the first to recover from recessions, followed by Europe and then Asia. This year, China has replaced the US as Japan’s biggest trading partner and it is actually leading the world out of the crisis, due to its massive recovery package and the banking credits extended to the business sector and individuals alike .
The corresponding increase in consumption by Chinese businesses and households has also prompted a surge in US exports to China, especially in May, June and July this year. German manufacturers, too, are looking East to increase their exports, less towards the United States. According to Jens Nagel from the Federal Association of German Exporters, “what we lose in exports to the US, we gain in China” (Courrier International).
Nor is this all. The Chinese have not only increased the amount of imports from the US, but continue to finance the huge US budget deficit on which the American recovery depends.
This considerable economic clout would have been unachievable in such a short period of time without the financial crisis, which spurred the Chinese recovery efforts. Little wonder, therefore, that Japan sees its economic future in Asia, which is fast replacing the impoverished US market as its main trading partner.
When all these developments are taken into consideration, the Japanese prime minister’s proposal makes a lot of sense. The two leading actors of the European Union, France and Germany, have gone through two devastating wars before becoming founding partners of the EEC. The bitter enmity between the two nations was in time superseded by strong economic bonds and ever-closer political ties, an outcome surely desired by the Japanese premier in his dealings with China.
However disfunctional the EU might prove at times to be from a political perspective, from an economic point of view it is the great success story of the last few decades. To be sure, the success achieved by the 27 European nations in bridging their differences and working together for economic prosperity represents a good model to follow by the world’s largest emerging trade bloc.Florian Pantazi