Asia needs its own Group of Seven
Perhaps an Asian G-7 that adds India, Indonesia, Thailand and the Philippines makes sense
The Nobel Peace Prize committee should ignore the quixotic campaign to honour Donald Trump and eye Kim Jong Un instead.
Love or hate the North Korean leader, he is bringing North Asia together in ways that could be an economic winner.
Last Wednesday, Japan’s Shinzo Abe hosted China’s Li Keqiang and South Korea’s Moon Jae-in in Tokyo for the first trilateral summit since 2015.
What made these talks different is focus. The 2015 meeting of the three nations in Seoul was really just a photo-op, achievement enough getting Abe, Li and then-South Korean President Park Geun-hye in the same room for the first time since 2012.
Pyongyang’s pivot to the outside world, and President Trump’s plan to sit down with Kim, gave 9 May a clear function. But along with paving the way for a Kim-Trump match-up, North Asia should forge an economic pact. Why not take things a step forward and create an Asian Group of Seven framework?
Trump’s arrival on the scene gives North Asian cooperation an urgency that did not exist in 2015.
Back then, the burning question was whether President Barack Obama’s “pivot to Asia” was real or rhetorical.
Trump’s pivot is away from the most dynamic region, a protectionist U-turn sowing conflict and challenging loyalties.
Until Kim’s own about-face, North Asia’s three biggest economies were largely gazing inward. Kim is giving Tokyo, Beijing and Seoul an impetus to join hands.
To be sure, the odds of Kim denuclearizing by the global community’s definition—destroying his entire arsenal—are minuscule.
It follows that Trump’s White House could be back in “fire and fury” mode before long.
But a crisis, as Nobel laureate Milton Friedman said, is a terrible thing to waste. Only time will tell if Trump versus Kim is crisis or triumph. Trump versus Asian trade, though, has catastrophe written all over it.
Asia needs a collective response to the fallout. The effects of Trump’s bluster could be with Asia long after Americans elects a free-trade leader. In the meantime, Abe, Li and Moon would be wise to make three commitments.
One, biannual summits no matter what happens. At least twice a year, the leaders of Japan, China and South Korea should convene to plot courses for regional peace, prosperity and note-sharing. Even better if President Xi Jinping bigfoots Li out of the way and attends. The direct involvement of China’s strongest leader in generations would add gravitas. Xi’s presence also could help Abe’s domestic standing amid deepening cronyism scandals—a chance to look strong on the global stage.
Two, get serious about cooperation. If Trump’s erraticness has proven anything to Japan and South Korea, it is that they are on their own versus China. Prime Minister Abe learned that the hard way when Trump reneged on Obama’s Trans-Pacific Partnership (TPP), on which Abe spent vast political capital joining. Even as Abe clings to a smaller TPP project, he should work with Beijing and Seoul to lower trade barriers, devise links between currency, bond and stock markets and craft a way to at least partially pool $4.8 trillion of foreign change reserves.
China could toss in a sweetener: pledge that the next phases of stock-connect schemes linking Shanghai, Shenzhen and Hong Kong will extend to Tokyo and Seoul. Tokyo could formally join Beijing’s Belt and Road scheme.
Three, build an Asian G-7. In its neck of the woods, the US can interact with other Americas economies through a number of forums. The European Union, for all its flaws, provides an infrastructure to share ideas, devise strategy and air grievances. Asia has nothing of the sort. The 10-member Association of Southeast Asian Nations (Asean) excludes the broader region’s four biggest economies. Myriad non-interference clauses make Asean a nice grouping to have, but toothless. An Asian Group of Three—China, Japan, South—would not be sufficiently representational in the long run. Perhaps an Asian G-7 that adds India, Indonesia, Thailand and the Philippines makes sense. Or a G-10 that, depending on metrics, might give seats to Malaysia, Pakistan, Singapore or Vietnam. Asia needs an overarching mechanism to facilitate the freer flow of goods, services, capital and people.
But as Asian leaders partake in regularly-scheduled summitry, technocrats can work on closer currency-swap arrangements and harmonizing tax, customs and regulatory policies to lend greater efficiency to Asian commerce. There is scope, too, for a joint response to climate change.
Trump’s trade-war threats add urgency to the need for Asia to pool not just resources, but political energy to stabilize the region. Anger over World War II, nationalism and the occasional testosterone flash may be inevitable. But it is time Asia kept its eyes on the real prize: looking closer to home for partnerships in what is destined to feature many of the world’s biggest economies.
William Pesek, based in Tokyo, is a former columnist for Barron’s and Bloomberg and author of Japanization: What the World Can Learn from Japan’s Lost Decades.
Editor's Picks »
- ‘The biggest challenge being an SFB is listing out what the challenges are’
- Imran Khan, Nawaz Sharif face-off as Pakistan goes to polls this week
- Khazanah in early talks to invest in Pepe’s India arm
- Rajnath visits Assam days before release of second draft of NRC
- The Karnataka village that hit the headlines for the wrong reasons
- What ABB India’s performance in June quarter says about capex growth
- Bajaj Finance does well in Q1 even as competition hots up
- Kotak Mahindra Bank: The perils of being priced to perfection
- Higher cane price crushes hopes of sugar mills
- Market optimism before 2019 general election: History may not repeat itself