- Asia

Asia continues to surprise in terms of both the amplitude of the transformations that it has experienced over the past 20 years or so and the disparities and contrasts that continue there and complicate analysis. These transformations are based on major dynamics that have been perfectly identified - Chinese growth, the emergence of India, regional integration process - but the short- or medium-term anticipation of which is still a risky exercise. Above all, they raise issues that for Europe exceed simple economic and market or security issues. To a large extent, the world of tomorrow is taking shape in Asia today.

1/ A major economic issue: Asia has not been spared by the financial crisis. The region’s most developed economies have entered a recession (Japan, Hong Kong, Taiwan, Singapore, South Korea), while the big emerging economies (China, Indonesia) have also experienced a decline in their growth and have neared thresholds that they themselves consider to be critical for their stability (China in particular). First of all, this situation highlights the global integration of Asia’s economies(contrary to the theory of decoupling with the OECD countries). Nonetheless, Asia will lead world growth in 2009 and 2010, with growth rates in China, India and Indonesia, in particular that are expected to stabilize around 6% on average. The result is a dual assessment: on one hand, the crisis should accelerate Asia’s ascendancy in the reconstruction of the international banking and financial system, and on the other hand, it offers strategic diplomatic opportunities to countries in the region, in particular in the context of the G20. We need to play an active role in this dynamic. Besides, this new order, and the crisis that serves as its backdrop, are not without major challenges: the ILO, in a report published in February 2009, is forecasting the rate of poor workers in the Asia-Pacific region to return to its 2004 level.

2/ Positive regional integration: in November 2007, ASEAN celebrated its 40th anniversary in Singapore on a genuine record of success. It aims to present itself as a solid economic alternative, in view of national giants, India and China, for major Western partners (including Russia). The implementation of a Charter, complemented by human rights protection instruments, is an important milestone in the history of the Association. This integration effort, new since the construction of the European Union, makes ASEAN a natural and preferred partner for Europe, which is aiming at accession to its Treaty of Friendship and Cooperation.

3/ The emergence of foreign policies intended to go beyond the regional context: while China’s penetration of Africa is one of the essential developments of the past decade, India’s new positioning on the international scene makes it a major dialogue partner. Increasingly courted, boasting economic growth of 6-7%, relatively unexposed to the sudden fluctuations of the world economy, confirmed as a nuclear power through the joint USA-India declaration in July 2005, India will probably be increasingly legitimately ambitious on the international scene to grant its political power to the country’s new economic order. Indonesia will probably be able to take advantage of its status as biggest Muslim democracy, drawing on both the relationship of trust that it has been able to build with Iran and its active role in ASEAN.As such, it will be a crucial dialogue partner for us in the region.

4/ Stronger financial penetration: More than half of the world’s foreign exchange reserves are apparently in Asia now. China, with two thousand billion dollars in reserves, is probably sheltered from an American recession from which it could cushion the effects without too much damage, unlike the other countries in the region. This sanctuarization of China’s growth could be reinforced, while Beijing, learning its lessons from the crisis, is seeking to establish a more endogenous way to grow, focusing on domestic consumption. The destination of these reserves is one of the major issues of the changes in the international scene, while more than 70% of the world’s foreign exchange reserves currently serve to finance the US deficit. This is nearly 200 billion dollars that China intends to earmark for foreign investments over the next five years. Every year since 2005, India has doubled its foreign direct investment (FDI) volume. In 2006, the Indian group, Mittal, bought out Arcelor, prompting a raising of awareness: it might be the visible sign of a slow, in-depth movement of a trend reversal.

6/ An environmental challenge: keeping their distances form the operational conclusions of the Paris Conference for global economic governance, and in particular the creation of a UNEO, China and India have both expressed their reluctance to radically reassess their growth methods and pace in the name of environmental emergency. Nevertheless, while carbon emissions per capita are five times lower in China than in the United States, China alone already accounts for 17% of the world’s emissions today. For Beijing and Delhi alike, the challenge is major and cannot be dismissed, because if the choice is not made to adjust growth, the price will be paid in terms of public health and natural disasters. The search for a reasonable compromise with Asia’s big emerging economies, taking into account the specific historic characteristics and economic and social issues (principle called shared but differentiated responsibility) is now a priority for Europe.

7/ A key player in cultural diversity and exchanges: Asia is a major target and market in terms of scientific and cultural exchanges of all types: its educational and research potential opens up considerable possibilities for exchanges and partnerships. The emergence of middle classes is leading to exponential growth in the flows of students and scientists that should be encouraged and channelled. The economic stakes are considerable. More politically, Asia is an important force in promoting cultural diversity. Having made economic development a priority, the countries of Asia are reaching a stage where they are wondering more than ever about ways to reconcile modernity and tradition, opening up to the world, and respect for their identities. This is especially true for multiethnic and interdenominational societies, which perceive the uniformity of globalization as a threat to their identity or their cohesion. In this respect, the French example attracts real interest, because it advocates a way to develop that is respectful of everyone’s values and identities. The remarkable support in Asia and the Pacific region for the resolution launching negotiations for a convention on cultural diversity, adopted in UNESCO in October 2003, shows that this diplomatic battle will be widely played out in Asia.

Of course, we continue to be confronted in Asia with the traditional issues: market penetration and search for economic outlets for our companies, as well as humanitarian and security issues: the Korean Peninsula, Afghanistan, Pakistan, and terrorism. On this latter front, we must remain vigilant and active now more than ever.

But Asia, more than any other region in the world, is in the process of radical transformation. The resulting issues go beyond the regional framework. They carry the seeds for the major systemic reforms of the 21st century. In view of that which should be considered to be a challenge, rather than a threat, one should neither brace oneself nor yield. On the contrary, Europe and France must increase the areas of dialogue and strengthen the quality of existing partnerships. Europe, through ASEM and the EU-ASEAN dialogue in particular, has much to offer in terms of political reflection on the new Asian challenge.

Updated on 19.08.09.