I just came back from a trip to Shunde, just outside Guangzhou. What used to be a lovely rural village is today a massive construction site, with factories and highways coming up everywhere. It is as if the whole of Asia is busy building more and more factories for export. But now everyone is worried about how much exports will keep on falling.
Exports are the engine of Asian growth. In the 19th century, the Japanese first learned that if you export more than you import, you earn foreign exchange to buy new machinery and technology and then you can compete globally in trade. The Japanese have a flying geese theory, the lead goose to industrialize being Japan, followed by the four Dragon economies: South Korea, Taiwan, Hong Kong and Singapore. When these economies moved up the production chain, the four Tiger economies followed, namely, Malaysia, Indonesia, Thailand and Philippines. In the 1990s, China became part of the Asian global supply chain when its cheap labor and special economic zones in the coastal areas became very successful in attracting manufacturing. India became part of the supply chain in IT software services, whereas East Asia concentrated on textiles, electronics and consumer durables.
Of course, the success in manufacturing exports has made many Asians - countries as well as individuals - very rich. But as we discovered, holding lots of greenbacks carries some risks. Indeed, measuring wealth by pieces of paper that can devalue overnight makes you only more vulnerable, not more secure. This is also a problem when you trade paper money by cutting down all your forests, destroying your environment, polluting your rivers and eventually paying higher medical bills because of the bad environment.
As the conscience newspaper of Western wealth, the pink-sheeted Financial Times ponders the future of capitalism, it may do well for Asians to think what is the future of the Asian supply chain when its major customers are in deep crisis. Asians freshly out of poverty are not likely to be great philosophers - they care more about their rice bowls and their children`s education. Throughout Asia, I can feel the anger of the rural masses who are deeply disturbed when their sons and daughters go to the cities and some end up as prostitutes or drug addicts. Of course, in many Asian cities, large white mansions are sprouting up with Roman columns, gilded French furniture, and every apartment and hotel looks like it is designed by Philip Starck with glass and steel.
While the middle class all aspire to have huge white houses like Texan scoundrel millionaire JR in the TV series Dallas, it is quite clear that China and India with 2.3 billion people between them cannot all live like the average American. If they all consumed natural resources the way the average American lives, there would be no global resources left. The terrible pollution that we see from the ever-present smog overhanging cities in China and the forest burning from Indonesia remind us that we cannot consume and destroy our environment at the same time. If we all drive the same number of cars as the West, the price of oil will not be the current $50 per barrel, but more likely $200, as a recent study shows. There are still bottlenecks in supply that could easily cause prices to move from deflation to inflation very quickly.
Asian history teaches us that to consume is to waste away our scarce savings. It is not wrong to consume, but only in an environmentally and financially sustainable way. Hence, the right thing to do is to switch not from investment to consumption, but from a resource-intensive, polluting manufacturing towards high-quality services. Services are much more knowledge intensive, employment creating and low-resource usage and less polluting. When we improve our health and education services, increase our media and entertainment industries, we are not destroying our environment, but enriching our mental and physical well-being. We cannot have growth for growth`s sake, but need to have better quality of life, without destroying the fragile ecocosm that we live in.
The recent bubble was all about the inflation of quantities and the deflation of values. The banks printed quantity, especially paper money and leverage and forgot that people care more about the quality of life and basic values of honesty and integrity. It was greed and arrogance of the Madoffs and the investment bankers who thought that golden parachutes were their right, rather a privilege from the trust the people gave them. In the end, what did they create but toxic products that caused huge losses for the public? AIG had the most prominent and eminent economists and professionals on their boards, but nothing at the corporate governance level was done to check where the profits were coming from and whether the risks were highly correlated.
The best thing that we can create is trust in each other, service to our family, our nation and our environment. Trust and service with integrity is truly win-win, whereas consumption will eventually lead to a zero sum game in which the earth loses. And if the earth loses, we lose.
Andrew Sheng is an adjunct professor at Universiti Malaya, Kuala Lumpur, and Tsinghua University, Beijing. He has served as adviser and chief economist to Bank Negara, deputy chief executive of the Hong Kong Monetary Authority and chairman of the Hong Kong Securities and Futures Commission. - Ed.
(Asia News Network)
[출처 : 코리아헤럴드]
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