Twenty First Century to Belong to Asia, led by China and India: CIA Report

The National Intelligence Council, a think tank of the Central Intelligence Agency (CIA) of the United States has released a report considering the prospects of the world as it might evolve in 2020.   The report predicts an enormous rise in the powers of India and China along with other Asian states. “The 21^st century may be seen as the time when Asia, led by China and India, comes into its own. A combination of sustained high economic growth, expanding military capabilities, and large populations will be at the root of the expected rapid rise in economic and political power for both countries”, the report predicts.

The report, “ Mapping the Global Future”, envisages that the current phenomenon of globalisation, which is regarded as Americanisation, will take on a much more of a non-western face.  To be explicit, “Globalisation could be equated in the popular mind with a rising Asia”, the report emphasises.

The report further argues that by having the fastest-growing consumer markets, more firms becoming world-class multinationals, and greater S&T stature, Asia looks set to displace the Western countries as the focus for international economic dynamism. The report also draws attention to the current Asian contemplation over establishing an Asian Monetary Fund that would operate along different lines from IMF, attaching fewer strings on currency swaps and giving Asian decision makers more leeway from the “Washington macro-economic consensus”.  

The rise in Asia’s stature would primarily be led by India and China, who will be in a position to achieve higher economic growth than Europe and Japan whose aging work forces may inhibit their growth, says the report. By 2020,China’s economy will exceed all others except the United States in size, while India will have overtaken Europe, the report further suggests.

The report also insinuates that while currently China displays higher economic growth prospects, in the longer term, India might overtake China as the fastest growing economy due to several factors such as its growing working-age populations, well entrenched democratic institutions, working capital markets and world class institutions in some important high tech sectors, which China has yet to achieve.

 The CIA report, which concludes with the policy implications for USA, falls into place with current trends of high economic growth and cooperation being achieved in Asia. The conclusion reached at by the report well draws a sketch of the wonders that have just begun to happen to Asia.“ Dealing with the US-Asia relationship may arguably be more challenging for Washington because of the greater flux resulting from the rise of two world-class economic and political…Where US- Asia relations lead will results as much or more from what the Asians work out among themselves as any action by the US”, the report concludes, thereby reflecting the significant role that cooperation among Asian countries could play in future.

(This report is available at http://www.cia.gov/nic/NIC_globaltrend2020.html)

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JP Morgan for ERM-style Asian Currency Grid

The Financial Express
January 31, 2005 

Asian governments can respond to pressure to help reduce global economic imbalances while maintaining competitiveness against each other by tying their currencies together in an Asian version of Europe's Exchange Rate Mechanism, according to JP Morgan Chase Bank.

The proposal would pin the currencies of non-Japan Asia within adjustable bands but allow them to float freely against the dollar, euro and the yen.

In a report, JP Morgan economists Philip Suttle and David Fernandez acknowledge that this would be a leap in the dark for a region that relies on some sort of peg against the dollar, be it fixed or loose, to deliver stability and competitiveness.

Click here to read further: http://www.financialexpress.com/latest_full_story.php?content_id=81247

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India, China Twin Engines of Growth in Asia 

Press and Information Bureau of India 
January 27, 2005 

Describing India and China as the “twin engines of growth” of Asia, Shri Kamal Nath, Union Minister of Commerce & Industry, has emphasised that there are several complementarities in the economies of India and China which can be capitalised on to achieve rapid and further expansion of trade and economic ties between the two countries on a mutually beneficial basis. Addressing the Session on “Beijing and Delhi – Navigating New Territories” at the meeting of the World Economic Forum (WEF) at Davos today, the Minister said the complementarities were reflected in the fact that India had a comparative advantage in IT software and China in IT hardware. Similarly, India’s strength in auto-components, pharmaceuticals & chemicals and machine tools were complemented by China’s strengths in electronics, toys and machinery. Therefore, “I do not see this as an ‘India Vs China’ debate, but rather in a ‘India with China’ context”, Shri Kamal Nath said.

The tremendous untapped potential of trade between India and China was borne out by the fact that “the India-China two-way trade is now 1 billion dollars a month, compared to 1 billion dollars a year, a decade ago. This twelve-fold increase in the last decade only goes to prove that though we are competitors in many respects (as is only natural for two large and rapidly growing economies), we are also complementary and supplementary to each other”, the Minister said, adding that for the last 15 years the Indian and Chinese economies had been growing twice as fast as the rest of the world.

In a broader context, Shri Kamal Nath referred to the new dimension and content in India’s “Look East Policy” and pointed out that whereas a decade ago trade with Europe constituted 30% of India’s total trade and with US 15% and with all of Asia only 20%, the roles had now reversed as India’s trade with Asia today accounted for 30% of her total trade. “If you take ASEAN, China, Japan, Korea and India together, you can visualise an integrated market whose size is that of the European Union (EU) in terms of income, and bigger than NAFTA in terms of trade. They account for half the world’s population and foreign exchange reserves exceeding those for the EU and NAFTA put together. The Prime Minister of India has proposed the establishment of an Asian Economic Community which would constitute an ‘arc of advantage’ across which there would be movement of people, capital, ideas and creativity”, Shri Nath said.

While emphasising the complementarities between India and China, Shri Kamal Nath also mentioned the similarities, emanating from their characteristic political and social structures. Having reached a considerable degree of integration with a global economy, “India is now wanting to focus on targeting greater foreign direct investment (FDI) and engaging more aggressively in international trade”, Shri Kamal Nath stated.

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Pan-Asian Railway Set in Train

David Fullbrock
The Asia Times
January 25. 2005 

A seamless railway spanning Asia is moving closer, with trial runs inspiring officials and shippers, promising a boost for economic growth and jobs. Whether those benefits arrive on time depends on 27 governments - due to sign an agreement in 2006 - giving the project high priority.

Faster shipping can reduce costs, making goods more competitive, translating into more sales, higher profits and more jobs. Ripples go even further in a world of just-in-time manufacturing, allowing suppliers, producers and retailers to stock less, releasing money from inventories. "Logistics costs, including transport, storage, warehousing, packaging and related value-adding services, account for 10-40% of the delivered cost of goods," says Pierre Chartier, an economic affairs officer overseeing railway projects at the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).

Click here to read further: http://www.atimes.com/atimes/Asian_Economy/GA25Dk01.html

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India, China Raise Ties to Strategic Level

Indo-Asian News Service 
January 24, 2005 

India and China Monday added a strategic dimension to their growing, multifaceted ties by agreeing on a framework for "strategic and long-term relationship".

The two countries held their first strategic dialogue here and after nearly five hours of discussions agreed to institutionalise the process. The next meeting under the mechanism will be held in Beijing at a mutually convenient date.

"Launching of the new dialogue mechanism indicates the resolve of the two countries to take bilateral engagements into a long-term and strategic relationship," external affairs ministry spokesman Navtej Sarna told reporters after the talks.

Click here to read further: http://www.eians.net/2005/01/24/24raise.html

India, China Launch New Dialogue Mechanism 

The Hindustan Times
January 24, 2005 

Indicating their readiness to look at bilateral relationship in a long-term and strategic perspective, India and China on Monday launched a new dialogue mechanism with a "broad convergence" of views on important regional and global issues.

At the first-ever meeting of the strategic dialogue, detailed discussions took place on important regional and global issues that shape the present international environment, External Affairs Ministry spokesman Navtej Sarna said

Click here to read further: http://www.hindustantimes.com/news/181_1211890,0008.htm

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Japan to Push for Free Trade Pacts in Asia

Big News Network, Australia
January 20, 2005

Japan's trade diplomacy will move into high gear in the next few months as the government seeks to reach trade agreements with Malaysia and Thailand.

Japan will also launch talks with the Association of Southeast Asian Nations on a comprehensive economic partnership in April. These deals could change the trade and investment map of the region, officials said.

Click here to read further: http://feeds.bignewsnetwork.com/?sid=027c95b9c1a6768c

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APPF-13 Releases Joint Communiqué

Vietnam News Agency
January 12, 2005 

A joint communiqué highlighting accomplishments by the 13th Asia-Pacific Parliamentary Forum (APPF) was released at the closing session of the Forum on Thursday in Ha Long city of Viet Nam. The following are the main excerpts of the document:

In his opening remarks, the President of the forum and Chairman of the National Assembly of Viet Nam, Nguyen Van An, highlighted the challenges and opportunities for the APPF and called for greater legislative and economic cooperation among APPF member countries.

APPF Honorary President Y. Nakasone and Vice-chairperson of the Standing Committee of China's National People's Congress and representative of the host country of the APPF 12, and head of the Chinese delegation Gu Xiulian proposed ways to strengthen APPF's cooperation in the future.

Click here to read further:  http://www.vnagency.com.vn/newsA.asp?LANGUAGE_ID=2&CATEGORY_ID=29&NEWS_ID=135312

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Asian-Pacific Cooperation in Addressing Regional Issues Discussed

Vietnam News Agency
January 12, 2005 

Proposals  on issues of mutual concern in the Asian-Pacific region were raised at the third plenum of the 13th Asian-Pacific Parliamentary Forum (APPF-13) on Tuesday, under the theme of "Cooperation in addressing issues of mutual concern in Asia and the Pacific".

They focused on issues that attract the concerns of the international community and are topics for discussion at many international conferences: the enviroment, HIV/AIDS, infectious diseases (the danger of bird flu recurrence), power resources for sustainable development, trans-national crime and cooperation among cultures.

Participants expressed their worries about  increasing pollution, the greenhouse effect and the change in the global climate. They said that countries have recognised the necessity of merging environmental protection and sustainable development into the strategy and policy-making process for national development. Environmental protection, economic development and poverty reduction are closely connected with each other, they said.

Click here to read further: http://www.vnagency.com.vn/newsA.asp?LANGUAGE_ID=2&CATEGORY_ID=29&NEWS_ID=135152

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Special ASEAN Leaders' Meeting on Aftermath of Earthquake and Tsunami

January 6, 2005

A special ASEAN Leaders’ meeting on the aftermath of the massive earthquake and tsunami of 26 December 2004 that affected 8 Asian and 3 Eastern African countries was held in Jakarta on 6 January 2005. The ASEAN Leaders, who were joined by the heads of state/government of Australia, China, Japan, Republic of Korea, New Zealand, United Nations Secretary-General Kofi Annan, and special envoys of other donor countries and heads of international organizations, adopted a Declaration of Action to Strengthen Emergency Relief, Rehabilitation and Reconstruction.

The Leaders at the Meeting began the meeting by expressing their profound sorrow and solidarity to overcome the unprecedented catastrophe that befell the Indian Ocean rim countries on 26 December 2004.They recognised that such devastation would need unprecedented global response in assisting the national governments to cope with such disaster. This would entail efforts in emergency relief, rehabilitation, and reconstruction that may take five to ten years, with resources that cannot be borne by any individual country. Thus, they insisted that there would be a need to coordinate better and ensure that those contributions would be effective and sustainable, to truly address the suffering of the victims and to prevent such calamity from recurring.

The leaders drafted their response to the calamity at three fronts. At the first front was the decisions made with regard to Emergency relief. The leaders under this front emphasized on urgent mobilization of further additional resources to meet the emergency relief needs of victims in the affected countries. They further requested the United Nations to mobilize the international community to support the national relief emergency programs in the affected countries, and welcomed in this regard, the Flash Appeal by the United Nations. They also decided to strengthen coordination and cooperation of the national, regional and international relief efforts, to ensure effective and immediate distribution of the assistance. They also agreed upon supporting the efforts of the affected countries, as national coordinators, to ensure an effective channeling and utilization of assistance as offered by donor countries, international organizations and non-governmental relief organizations.

At the Rehabilitation and Reconstruction front, the leaders decided to support and emphasize the importance of national rehabilitation and reconstruction, call on the international community to provide the necessary fund for the viability and sustainability of those programs, establish a partnership, upon the request and the leadership of the country concerned to support the respective national programs of the affected countries, welcome the initiative of several countries on the moratorium of payments of the external debt of the affected countries to augment their national capacity to carry out the rehabilitation and reconstruction efforts and promote and encourage private sector participation in and contribution to the rehabilitation and reconstruction efforts.

Lastly, on the issue of prevention and mitigation of such calamities in future the leaders decided upon supporting ASEAN’s decision to establish regional mechanisms on disaster prevention and mitigation, establishing a regional early warning system, promoting public education and awareness as well as community participation in disaster prevention and developing and promoting national and regional human and institutional capacity, transfer of know-how, technology, and scientific knowledge in building and managing a regional early warning system and disaster management through international cooperation and partnership.

First Roundtable of Asian Ministers on Regional Cooperation in Oil and Gas Economy

Press and Information Bureau of India
January 5, 2005 

The First Roundtable of Asian Ministers on Regional Cooperation in the Oil and Gas Economy was held on January 5, 2004 in New Delhi. The One Day Round Table was held by Ministers from major Asian oil buying and selling countries including representatives of International Energy Forum (IEF), International Energy Agency (IEA), OPEC etc.

The Ministers at the Roundtable unanimously agreed that the Asian oil economy is integral to, and inseparable from, the global oil economy. They further stressed that with Asian destinations emerging as the principal consumers for Asian production, and the share of Asia in global production and consumption likely to progressively increase, cooperation between Asian producers and Asian consumers is crucial to ensuring Stability, Security and Sustainability through mutual interdependence in the Asian oil and gas economy. Thye also highlighted that the  fundamentals of such cooperation must include moderation, dialogue, mutual understanding and respect, security of international supplies, demand –supply equilibrium, and strategic partnerships ministers concurred that there is scope for improving Asian markets for petroleum and petroleum products. The ministers resolved that the prices should be sustained at levels which encourage Asian consumers to increase their purchases of Asian produce; at the same time, prices should be such as to encourage Asian producers to promote investment in oil and gas for Asian consumer destinations as an economic priority.

The Ministers also decided that crisscross investments all along the entire oil and gas products chain through reciprocal investment interlocking of producers and consumers will guarantee security of both supply and demand, thus contributing to stability of prices and thereby security of both supply and demand. Thus they agreed that the stability of prices would encourage domestic and cross-country investment in all streams of the petroleum sector and other energy-related projects.

However it was also taken into account that caution must be exercised in promoting balanced investment so that over-investment does not lead to excess capacity nor under-investment to shortage of supplies.

The Ministers also reflected upon the idea of strategic storage and stockpiling as they contribute to security, and in this regard the valuable experience of Japan, which might hold significant lessons for other major consumers, was sought.

The exchange of information and knowledge as the key to increasing confidence on the part of both buyers and sellers was also appreciated.

Participating countries made various individual proposals and suggestions also. Japan proposed a Sustainable And Flexible Energy system (“SAFE”), which constitutes a useful framework for further consideration of issues of energy security. Iran proposed the setting up of an Asian Bank for Energy Development.

 Endorsing the importance of energy conservation for the protection of the environment and issues of climate change, the need for technological cooperation in the pursuit of cleaner and more environmentally-sound fossil fuel technologies was emphasized on by the ministers To this end, cooperation among Asian research and development centers and the promotion of conservation awareness among the general public were recognized as key instrumentalities.

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