The future of Asia

March 20, 1985

CHAT with an American businessman in Malaysia and you come up with an interesting story: Malaysians are today making all of the electronic innards of his company's American-labeled product. ``I doubt,'' he says, ``that we will ever manufacture these parts in the United States again. But anyway, Malaysian technology in this area has now overtaken our own. If we were to start producing these parts in the United States again, we would have to bring American workers to Malaysia to be trained by Malaysians.'' This is an indication of one of the most remarkable shifts of power in recent times: the evolution of Asia as a manufacturing, trading, and economic power that has outstripped Europe in importance to the United States.

Throughout most of the Pacific Basin area the story is the same, of booming factories, expansion, climbing prosperity.

In South Korea, fly north from Seoul to the demilitarized zone. Instead of the undeveloped terrain you flew over in the 1960s, there are now superhighways and flyovers and factories and apartment blocks. Korea, now a major exporter to the US, will soon be shipping cars. Some say Korea, poised for expansion, is where Japan was 20 years ago.

Hong Kong, despite the advent of Chinese communist rule in 1997, seems to have recovered from the nervousness that swirled around those treaty negotiations.

Taiwan is shipping increasingly sophisticated exports to the US, electronics outstripping textiles.

Singapore, looking at a booming economy, but limited territory and population, is thrusting into high technology.

Indonesia has suffered from falling prices for its export oil, but it is a country transformed from its poverty-stricken state of the 1960s and, with Thailand, is sharing in Southeast Asia's economic progress.

The exception is the Philippines, whose political problems have dealt its economy a major blow.

Overshadowing all economic development in Asia is that of Japan, which in economic terms is the only fellow superpower of the US in the world. Its strength is evident, the quality of its exports well-known to Americans and others, so much so that Japan's positive trade surplus is now an embarrassment even to the Japanese.

Even China has been making some neocapitalist moves, introducing incentives and embarking on a dramatic program of modernization that requires infusions of Western knowledge and capital.

Thus Asia, utilizing talented and industrious people, has climbed through what was often double-digit growth in the 1970s to a comfortable growth for most countries, between 6 and 8 percent annually today. It is fast moving from the ranks of developing to industrialized countries. A key ingredient is skilled, often Western-trained, management deeply committed to the free market system and sound financial management. For instance, East Asian countries owe less than 20 percent of the world's developing-country debt, compared with more than 50 percent in Latin America.

This new Asian capitalism, whose benefits are being expressed in such tangible form through improved standards of living, is a shining contrast to some of the muddled experiments in Marxist economics that have taken place elsewhere in the developing world.

Americans should be pleased by all this. The United States has long maintained a major interest in Asia. When in 1791 it set up its first two consulates abroad, one was in Liverpool, the other was in Canton, China.

Though American trade with Asia now outstrips American trade with Europe, the United States has not forsaken Europe. The American presence at the Geneva arms talks, the deep American commitment to West European defense, are testimony to that. There are many other ties.

But there is a strong conviction in Washington that we have seen the future in Asia -- and for the most part, it seems to work.

John Hughes was assistant US secretary of state for public affairs from 1982 through 1984.