that maybe foreigners knew a thing or two after all.
A willingness to learn from foreigners is perhaps what distinguishes New Brits most from previous generations. A measure of this willingness is the fact that some of Britain’s most chauvinistic and reactionary clubs have thrown their doors wide open to foreigners. Britain’s football clubs – flush with cash from new TV deals – now field players from all over the globe. Even more surprising is that some of the top clubs have hired foreign managers – a radical development for the country that claims to have invented the game.
Big Next: an Independent Asia
One hundred years ago, vast tracts of Asia were under colonial rule or foreign domination. Powerful industrialized countries controlled the destinies of many millions of Asians – in the region, only Thailand and Japan could be regarded as sovereign nations. And so it continued for almost fifty years more, through and beyond the Second World War.
Now, as the twentieth century draws to a close, the continent can look back over several decades of extraordinary changes and rapid development. Many Asians enjoy levels of education and affluence that surpass even those of the old colonial masters. The last vestige of foreign dominion was removed at midnight, 30 June 1997, when Britain returned Hong Kong to China, thereby ending what many Chinese described as ‘150 years of shame’.
Asians now control their own destiny. The region’s response to several big issues will be crucial in shaping that destiny and determining what sort of century the next one will be.
Economic Adjustment
It is a great pity for the region that the Hong Kong handover celebrations on 30 June were almost immediately overtaken by months of headlines about a regional economic crisis that grew and grew, just as forest fires in Indonesia burned out of control and blanketed much of south-east Asia in choking smoke. The sobering effect of the crisis has led to widespread fears that the hard-won economic gains of the last decades may be lost in some countries and that the twenty-first century may not after all turn out to be ‘the Asian century’ as had been so widely predicted.
At the time of writing, the ramifications of the regional economic crisis are still working themselves through. Many analysts have come to the conclusion that the crisis was caused by structural problems, which the region is now being forced to tackle. According to this analysis, a good shakeout will help the countries of the region to discard unproductive practices and get themselves into shape for the next stage in their development. Lower currencies will provide an extra edge in export markets for manufacturers in the region who ride out the storm.
‘Structural,’ however, may be too pat an explanation, and if accepted at face value could deflect the deeper analysis and problem-solving necessary to restore the tigers’ roar. Rampant over-investment in icons such as office buildings, hotels and airports soaked up billions of dollars that may have been better invested in future productivity. Over-reliance on traditional relationships as the basis for business, at the expense of a truly open market, led to many self-interested decisions. And a natural business cycle was at play here, too. Boom to bust, expansion followed by recession, has been the hallmark of the twentieth century. No one should have believed Asia was immune.
Not all countries in the region were affected. The Philippines barely merited a mention in the frenzied media coverage. Perhaps it should have. Its growth period started later (having been held back by the Marcos years), so it had less far to fall, but it did fall … and hard. In contrast, Vietnam only recently hooked into the global economy (when the US trade embargo was lifted in 1994) and its currency, the dong, isn’t convertible, so its exposure to the storm was limited. As a highly placed resident Westerner put it, ‘We haven’t seen much of the economic crisis here. Vietnam is still trying to sort out a local problem – Stalinism.’
China’s experience of the economic storm came mainly through Hong Kong, which is exposed to regional economies through its finance sector. Unlike in other countries in the region, Hong Kong bank authorities managed to defend the Hong Kong dollar against the pressure of the foreign exchange markets. Its peg against the US dollar is widely expected to hold, thanks to the dollar reserves of the city and the pride that’s at stake – for the Hong Kong dollar to weaken so soon after the departure of Britain would mean a terrible loss of face for Beijing. The main Hong Kong casualty of the Asian crisis to date is Peregrine Investment Holdings, which collapsed largely as a result of its exposure in Indonesia.
As for the rest, Taiwan appears confident that it can continue its steady economic growth, and the effects of the Asian economic crisis have barely been felt in China, although the warning has not gone unnoticed. Dentsu Young & Rubicam (DY&R) Guangzhou reports that ‘there is much fear in China given the recent drop in economy in the region and the talk of devaluing the yuan or the renminbi’. China gives the region cause to hold its collective breath. If the renminbi were to fall, it is likely to take the rest of the region’s currencies down with it.
As many commentators have pointed out, the only foreseeable major threat to the region lies in the social consequences of the economic crisis and the adjustments that the region is going through. For the last twenty years Asia has been largely stable and peaceful. Only a very small minority of Asians has been concerned with political freedom and social inequality – South Koreans routinely take to the streets to do battle with the authorities – as the majority has been more interested in working hard for material prosperity. However, any setback to rising standards of living could prompt social unrest, as was seen in Indonesia in late 1997 and early 1998. Indonesia has emerged as one of the most deeply troubled economies, with its authorities apparently reluctant to take the sort of action that has the potential to salvage the situation in other hard-hit countries, such as Thailand and South Korea.
DY&R Korea reports cautious optimism there as people tentatively hope for a return to Korea’s previous record of growth. South Korea is no stranger to the vested interests and cosy behind-the-scenes deal-making that have characterized Asian economies in recent years, but it has taken the IMF’s strictures very seriously. With the country’s recent record of solid achievement as an economic power, and its national determination to out-do neighbouring Japan, the economic crisis could strengthen South Korea in the long run.
Although China has been barely affected there are fears that even the current process of economic change there could lead to problems. As DY&R’s Sharon Lee in Shanghai put it, ‘If the income gaps between rural and urban centres are not narrowed, there may be tremendous social upheaval.’
The Journal of Business Ethics spelled out the issues: ‘In the transformation of the employment system and the opening of labor markets, there are nearly one hundred million potentially unemployed people in rural areas, and ten million in state-owned enterprises. If the enterprises continue to employ the latter, the reforms in the enterprises will fail and the new enterprise cannot bear such heavy burdens. Moreover, it is easier for rural workers to find jobs in cities because they are willing to accept lower wages than urban workers … Shanghai has two million unemployed workers but four million and sixty thousand jobs are offered to the non-local workers.’
The factors that were expected to make ‘the Asian Century’ on the whole still apply: large, dynamic populations eager to work for prosperity (and to work for less than many of their ‘developed market’ counterparts); belief in education and training; belief in market economics along with respect for collective values; social stability; growing self confidence; and huge, largely untapped markets for growth-minded multinationals. The region has already established a track record for realizing its potential, and there is clearly still more potential to be tapped in the twenty-first century.
Asian Consciousness
National
