Unequal rivalry in Asia

Unequal rivalry in Asia
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First Published: Mon, Jun 16 2008. 10 16 PM IST
Updated: Mon, Jun 16 2008. 10 16 PM IST
Bill Emmott, former editor of The Economist, has written another book. It is on China, Japan and India, and is appropriately titled Rivals. The temptation to go for “Pillars of the new Asian century” would have been too high to resist for some others. But Emmott is not one of those woolly-eyed observers of Asia to take the common consent that this would be Asia’s century for granted. He sees plenty of risks, and rightly so.
For the most part, the book is an engaging and easy read. As it winds down, the pace appears to slacken and the reader gets impatient. But that could quite legitimately be put down to the reader’s unjustified lack of interest in the subject of North and South Korea that comes up in the end. The book has at least two fascinating chapters on the environmental risks of the rise of China and India; not just to the rest of the world, but also to themselves. Whereas India’s pollution comes from its poverty, China’s comes from its breakneck capacity addition. In other words, the story of India’s pollution and environmental decay is in its early chapters.
In the case of China, while it reaped some environmental dividends when it replaced Mao-era industries between 1980 and 2002, since 2002, its energy consumption and greenhouse gas output have been rising faster than even its GDP. Its stance on interest rates and exchange rates since 2002 is pushing China into an economic and environmental collapse. The recent earthquake is a tragic warning of that.
The book sheds useful light on how Japan turned from being a polluter to a country with much cleaner air and water. The oil shock of the 1970s was used as a wake-up call. World price for oil was passed on to domestic users, and when the price dropped, taxes were imposed so that the importance of judiciously using a scarce and polluting resource was kept up. Energy conservation became a priority. One should leave it to the readers to judge for themselves the wisdom of India’s handling of the global oil price developments and, even more comprehensively, India’s energy policy, its approach to public transportation, etc.
Readers ignorant of Asian history, such as yours truly, would learn valuable lessons from the chapter on the origins of Sino-Japan or Korean-Japan distrust. The author’s observation, that the Tokyo trial of the 1940s punished Japan for having had the temerity to attack the US and the European empires and that neither America nor the European powers had cared much about what Japan did in Korea, Taiwan or Manchuria, is pertinent even today. The West’s response to acts of terrorism on its own soil and its indifference to terror inflicted on India by Pakistan are consistent with its treatment of Japanese war crimes.
Emmott does some overdue revisionism, recanting some of the points he forcefully and wrongly made while as editor at The Economist. He appreciates the Indo-American nuclear deal better now (although I am told that the revision occurred in February 2007 in an article he wrote for The Times newspaper in England). The Economist was certain of India’s overheating early in 2007 and now he concedes that better monetary policy avoided the worst. Also, Emmott seems to appreciate the need for yuan revaluation better than when he was working for The Economist.
On India, Emmott exudes optimism mostly. He says that India is held to a higher standard by Western commentators since it speaks English, has the rule of law and is a democracy. Hence, the criticism of India sounds harsher and the praise for China too fulsome. Interesting. By the end of next decade (2020), he reckons that no country in the world would believe that India did not matter. Sadly, politicians have done much in the last four years to delay that prediction, if not wholly falsify it. Further, India’s much-touted private initiative as opposed to state-directed growth floundered on the moral quicksand of land acquisition for special economic zones. So, it remains to be seen if, in the face of likely political stagnation or worse, India would still come up trumps.
At least for Bare Talk, it is difficult to plump for “credible optimism” over “plausible pessimism” because of instant communication, international law and transparency, and because resources can be had for money today instead of through military conflict. At least, none of these things has prevented financial and economic crises. In fact, they have become more frequent and bigger.
With economic boom giving way to uncertainty and worse, and “joining politics in hell”, the outlook for Asia and the world in the next decade depends on the post-Olympics behaviour of China and the US under a new president. Japan and India would be relative bystanders. The rivalry is about to become more unequal, one way or the other.
(V. Anantha Nageswaran is head, investment research, Bank Julius Baer & Co. Ltd in Singapore.These are his personal views and do not represent those of his employer. Your comments are welcome at baretalk@livemint.com)
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First Published: Mon, Jun 16 2008. 10 16 PM IST
More Topics: Bill Emmott | The Economist | Asia | Growth | India |