THE world's economic sights are on Asia in more ways than one these days. At the Tokyo summit ending today, the Group of Seven industrial democracies has been trying to agree on policies to set the world economy back on an upward path. But outside this week's summit limelight, Asian nations are setting the world's best economic example, analysts say.
China is booming. And smaller "tigers" like Malaysia and Singapore promise not to be far behind. This growth provides a boost to the world economy at a time of economic difficulty in the G-7 nations.
"This is a significant help to the US," says Lawrence Krause, an economist at the University of California, San Diego, who follows the Pacific Rim economies. "California in particular is oriented to exporting towards the Pacific." That state and its West Coast neighbors can use the help, as they have been battered by an aerospace downturn, military base closings, and timber-industry restructuring.
Consider the Boeing Company, which is preparing to lay off thousands of workers in the next few months because many airlines cannot afford to buy planes. The Seattle company would be a lot worse off without big orders from China. "We will deliver 47 airplanes to the People's Republic of China this year," or one in every seven jets Boeing delivers, says spokesman David Jensen.
Mr. Krause notes that with only about 6 percent of Asians currently making air trips, continued economic development in the region will make it a huge market for planes made by Boeing or California's McDonnell Douglas.
The Pacific market is also a big one for a host of other US industries, analysts say, including construction, telecommunications, medical equipment, and high-tech goods such as software and chipmaking equipment.
DRI/McGraw-Hill, economic consultants in Lexington, Mass., forecast growth in the 1993-98 period of 8.2 percent in China, 6.9 percent in Malaysia, 6.6 percent in Korea, and 6.4 percent in Taiwan, versus growth in the US and European nations in the 2- to 4-percent range.
But the Pacific Rim dynamos face challenges, too:
Rising labor costs. Nations such as South Korea "have grown so phenomenally for so long" by using low-wage labor to make goods for export, says Ken Goldstein, an economist with the Conference Board in New York. With living standards on the rise in these nations and China emerging as a lower-wage alternative, the smaller "tigers" must emphasize higher-value exports and expansion of their own domestic economies.
Slow recovery in Japan. Economists do not foresee Japan returning to strong growth, around 3 percent, until 1994. "Japan's still going to be a drag on the world economy" this year, Krause predicts, noting that imports continue to drop in the world's second-biggest economy. When recovery does come, it promises to help California by boosting the important tourist industry, Krause adds.
Uncertain world trade climate. "World trade had been growing at double-digit rates in the 1980s," before recession hit the US, Japan, and Germany, Mr. Goldstein says. This week the G-7 nations made a last-ditch effort to revive the long-stalled talks to further liberalize world trade and restore that growth.
"The main interest of these [Pacific Rim] countries is in global free trade," as opposed to regional trading blocs or bilateral deals, says Christopher Mills, director of DRI's world markets service. He says that Mr. Clinton may run amock by pushing Japan to set sector-by-sector targets for reducing its trade surplus with the US. "It can bring short-term gains to the US economy," Mr. Mills says, but "nobody else in the world likes the US going around and telling them to `import this' ."
Shifting political landscape. The Pacific Rim "used to be thought of as a region dominated by Japan and the United States," but China's rapid growth is changing that, Krause says. Taiwan's economy is increasingly linked back to the mainland, for example. Tension over the pace of political reform in China has shown itself in the Clinton administration's "one-year probation" approach to renewing the nation's trade privileges, and Hong Kong's dispute with Beijing over the terms under which it will merge int o China in 1997.
Mills downplays the idea of a revived Sino-Japanese rivalry. For now, the two economies are complementary, with China labor-rich and Japan capital-rich.