February 21, 2014, by Editor
An Asian Century Paradox
Written by Lauren Johnston.
The phrase “Asian Century” is linked to a 1998 meeting between former Chinese leader Deng Xiaoping and former Indian Prime Minister Rajiv Gandhi. Implicit in comparison to the 20th “American” Century and the 19th “British” Century it induces speculation as to the parallel geopolitical and economic implications for the 21st. Yet both distract from the scaled-up global multipliers of an “Asian Century”. Here I elaborate my argument through an exploration of deepening Asia-Africa ties.
China-Africa trade dates back to 15th Century Chinese naval fleets, and has ebbed and flowed since. Changes in Chinese and African economic circumstances changed in favour of deeper ties in the mid 1990s. China then was transitioning to external energy dependence and looking to an expanded role in trade with its intended ascension to the WTO. In Africa, the continent’s largest economy, South Africa, was emerging from apartheid. Sub-Saharan countries collectively leapt forward in macro-economic terms in 1995, ending two decades of persistent zero or negative growth rates. In the preceding 20 years nearly all related countries saw zero or negative economic growth per capita. A more stable generalised macroeconomic growth path than in earlier periods has persisted since. Helped by investment and trade ties with Asia and beyond, especially China, sub-Saharan Africa is now home not just to the world’s fastest mammals but also to some of the world’s fastest-growing economies.
Although it is China that catches the international media’s attention, Malaysia is Africa’s largest Asian investor. Africa’s top five foreign investors according to the UN are France, the USA, Malaysia, China and India. China has been Africa’s largest trade partner since 2009. Trade between Africa as a continent and China surpassed $US200bn in 2013. Trade between emerging markets in general is expected to increase ten-fold by 2020 according to HSBC, with China-Africa trade leading the way. This has been echoed in the development of trade infrastructure. Tanzania, for instance, is looking to develop its Kariakoo Market area into the “Hong Kong of Africa”.
Further Asian Century multipliers can be found in new longer-term types of investment in Africa. For example, South Korean electronics giant Samsung has opened engineering academies in South Africa, Nigeria and Kenya. It aims to train 10,000 electronics engineers by 2015. China’s telecom giant Huawei offers financial assistance to graduate students of Tanzania’s Nelson Mandela African Institute of Science and Technology, among others.
Economic categorisations of ‘first’, ‘second’ and ‘third’ world economies from the 20th century appear to be fast disappearing – evidently well beyond just Asia. At such a rate of dispersal of economic activity, being from a high per capita country may soon mean a lot less than being a high per capita individual from anywhere.
The impact of such trends will be magnified by demographics. While China and India together represent almost half of humanity, in a case of Asia vs. Africa, and against other regions, the global balance of youth is shifting in favour of Africa. According to UN forecasts to 2040, Africa’s total population will exceed 2bn. By 2050, the two most populous countries in Africa, Nigeria and Ethiopia, are projected to be home to 400 and 300 million people respectively. Aware of these demographic trends and the size of potential markets they signify, China has already established investment zones in both.
It is too early to call the emerging century an Asian-African Century. That would also be to ignore the noodle bowl of economic links emerging across the world and even into space. What these trends do highlight however is that the “Asian Century” may paradoxically be less about Asia than the name suggests. The “Asian Century” title deflects attention away from the extraordinary multipliers that Asia’s contemporary economic transformation inspires.
The non-Asian “Asian Century” paradox is that its scale and connectivity may have the potential to foster a truly globalised century, echoing the “One World, One Dream” slogan of the Beijing Olympics slogan. Whether “one world, one dream” or “same bed, different dreams” will define the success of the “Asian Century”.
Lauren Johnston holds a PhD in Economics from Peking University and works freelance for the Economist Intelligence Unit.