The Pinnacle of Prosperity
It’s the burgeoning prioritization of learning Mandarin in school. The Hondas and Toyotas that populate our streets. The 2018, 2020, and 2022 Olympics in South Korea, Japan, and China respectively. Within the past 50 years, Asian products, companies, and culture has manifested across the world.
And while the world views the prosperity reaped from this cultural and economic proliferation, there’s more to the story. It’s also the dwindling working-age population in Japan and South Korea. The slowing job market in China. The movement of industry away from East Asia. With these caveats, has this long-prophesied East Asian boom peaked?
Ever since the end of major wars there (WWII, Korean War, Chinese Civil War), East Asia has been an area of economic growth. It’s evident in the miraculous economic recoveries of Japan post-WWII and of South Korea post-Korean War. In more recent times, Western media (i.e. American and European media) has focused on “the rise of China.” The “Middle Kingdom” has become one of the fastest growing economies in the world. Cities like Beijing, Seoul, and Tokyo have evolved from regional commercial hubs to booming global metropolises over the past decades. And East Asia has become a world leader in innovation, leading the way in rising fields like artificial intelligence and renewable energy. With this, focus has shifted more and more away from Europe and the U.S., who’ve traditionally dominated global society for years. And while on an economic scale, companies and governments may appreciate being able to lower production prices by exporting factories, the true issue lies on a geopolitical level. Rising economies also mean rising power, and the addition of new global players is always going to incite some distress and enmity within the old guard i.e. the West. But interestingly, this East Asian golden era may be waning.
In the latest reports, the growth of East Asia’s economy overall is expected to continue slowing. This is largely fueled by China’s slowing GDP growth rate, the third major country in East Asia to start experiencing economic slowdown after decades of growth. With a GDP growth rate of 6.4% for the first quarter of 2019 in comparison to a 6.8% growth rate at the same time last year. In comparison to some other Western nations, this GDP growth rate remains strong, the 2018 Chinese GDP growth rate was it’s slowest since 1990. This phenomena isn’t abnormal. China, which has been seen as one of the fastest growing economies since the 1980s, is only one of eight countries that have achieved more than thirty years of rapid growth, and those that did all experienced the end of growth before the forty year mark. This was seen in Japan, where an economic slowdown in the 1990s has caused Japan’s GDP to dip to historic lows, even dipping beneath zero at one point, with a 2018 GDP growth rate of under one percent. Granted, while Japan’s 1990s slump was attributable to extraneous factors such as speculative lending bubbles bursting, the Japanese economy hasn’t recovered to anywhere near pre-1990s levels since. South Korea has similarly had issues as their GDP growth rate has dipped below five percent since 2003 and hasn’t topped three percent since 2012. China’s GDP growth, which has been in a slow decline since 2010 has fallen beneath seven percent in the past four years, with a stimulus package failing to prevent this continuous fall.
The reasons for these countries’ declines hold striking similarities to the history of Western nations like the U.S. The move from “developing” to “developed” nation has its own pitfalls. Economic success leads to greater life expectancy and lower birth rates, causing a rising aging population that’s exiting the workforce and a smaller contingent of younger workers coming in. This is clearly seen in Japan. Research has projected that by 2036, one in three Japanese people will be elderly as the island nation’s birth rate has fallen to its lowest levels since 1899. The working population of China has similarly been in decline since 2014. This decline China’s economy has also not been helped by its trade friction with the U.S. Furthermore, while China has traditionally been the home of many international companies’ factories, the increasing standard of living has caused movement towards other countries like Myanmar or Vietnam, where the cost of employing laborers is cheaper. This holds eerie similarities to events that have taken place in the West, where similar cheap labor costs caused factories to shift towards East Asia in the first place. The West’s cautionary tale may itself be a predictor for how East Asia will fare in the coming decades.
The economic miracles that took place in East Asia in the past seventy years have brought the region into the world’s spotlight. Rising powers like China sense opportunity with their newfound economic force and act with measures like President Xi Jinping’s Belt and Road initiative. But every rise has a peak. Many European nations in the past have diminished in influence on the world stage as their populations age and their economies slow. East Asian nations have enjoyed their growth for the past few decades, but the same historical consequences seem to be coming all the same. As East Asia enjoys the attention, it would do well to pay attention to the fate of its global predecessors in the West.