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How prepared is Asia for its changing demographics?

Posted By Travis B. Kupp, Friday, March 27, 2020

Travis Kupp, a member of our Emerging Fellows program checks the preparedness of Asia for demographic changes in his third post for our EF blog. The views expressed are those of the author and not necessarily those of the APF or its other members.

 

Among the most significant determinants of an Asian Century is demographics. The expectations and behaviors of a nation’s people—driven in part by attributes that can be measured in aggregate, like age—influence economic performance and political dynamics. Projected declines in the working age populations in East Asia present a major challenge to maintaining their gravitas. Meanwhile, the rest of the continent generally has a much better outlook, at least in terms of potentially productive youth. Immigration policies that succeed in overcoming ideological intolerance may be the key to sustaining Asia’s rise to global dominance.

 

Japan is a preview of what could potentially happen at a different scale for its neighbors. The archipelago nation is now selling more adult diapers than baby diapers in supermarkets. The increased spending on healthcare that comes with this age demographic inversion is unsustainable with a simultaneously shrinking workforce and tax base. Japan recognizes that efforts to raise its fertility rate will not be sufficient to address the problems already emerging. Longevity of life is coming to also mean longevity of work-life well beyond the age of 60. Automation of care is being developed, where possible, to lower the costs of the ballooning system. It is yet to be seen whether this will be a successful formula for saving the nation’s economy.

 

China is taking a different approach. Demographic data shows their working population shrinking and the trend portends a net population decline starting as soon as 2032. Like Japan, China has started offering cash bonuses and subsidies to encourage more births, but it is unlikely that this will be enough to cover the dearth of young people to care for the elderly in the short term. Nor will automation of such services soon be ready to take on the task at scale. Instead, China is bolstering its economy by moving the value chain from the Middle Kingdom to tributary states in Central, South, and Southeast Asia through its Belt and Road Initiative. In a time of national economic war, however, it is not unthinkable that some of these target states may attempt to limit the extent to which others draw on their resources.

 

Migration will increasingly be a flashpoint as Asian demographics change. Cultural similarities make Southeast Asia the clearest option from which China and Japan could draw human capital, or at least extract the output. China is adamant that newcomers assimilate to their norms, an approach that may need to be loosened in light of its expanding global reach. India’s government, particularly in the case of Muslims, seems determined to reject even its own over ideological differences. West and Central Asia have growing populations that could strengthen the Asian position but are better poised to bolster Russian and European populations, even though immigration policies in both destinations are lacking. All of these tensions will escalate if regimes do not adapt quickly enough to the inevitable changes in their constituencies.

 

Asian nations, on the whole, are unprepared for what lies ahead demographically. Economic and social policies are slowly and insufficiently trying to adapt to a future in which families are small and the old outnumber the young. Regimes attempting to unilaterally solve for these shifts without sufficient regard for pressures beyond their centralized control, like accelerated migration, will face the most serious challenge. While some nations may have more reason to be optimistic, they will need to be ready to compete to keep their workforce from migrating to other more attractive markets. If an Asian Century does come to pass, one thing is certain: it will be with a populace that looks quite different than the one we know today.

 

© Travis Kupp 2020

Tags:  Asia  China  demographics 

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Are Asia’s economic growth and expansion sustainable?

Posted By Travis B. Kupp, Thursday, February 27, 2020

Travis Kupp, a member of our Emerging Fellows program checks the sustainability of Asia’s economic growth in his second post for our EF blog. The views expressed are those of the author and not necessarily those of the APF or its other members.

 

What goes up must come down, or so they say. Asian economies have expanded over the last half-century, especially in the South and East, positioning the continent as the modern leader of global economic growth. Much of the rest of the continent has an imminent opportunity to benefit from this success in exchange for certain concessions. Regardless, the region must now discover how to make this position sustainable in two senses: maintaining its trajectory while weathering societal and political change and addressing the impacts of increased consumption on the environment. Contrary to popular belief, there exists no technological silver bullet to solve for this conundrum.

 

China is the posterchild of Asia’s economic potential. Since opening up to the world in the 1970s, its growing production and trade has lifted hundreds of millions out of poverty leading to a massive increase in standard of living and therefore, critically, consumption. India is on a similar course. In both countries, the rise in disposable income for these many millions has created an extremely attractive market for goods and services along with a favorable financial climate for entrepreneurship. A wealthier and better educated populace has led naturally to a rise in more skilled labor and associated jobs. Southeast Asia is set to reap the benefits of this shift as demand for its low-end manufacturing increases.

 

Asia’s growth has led to regional integration and a vast realignment of international economic alliances. If geo-economics is in fact war by other means, then China is rapidly becoming one of the most battle-hardened nations on earth. The state is simultaneously flexing its influence through the Belt and Road Initiative (BRI), so called “trade wars,” and other significant foreign investments while learning from its mistakes in each area. The BRI may project the benefits of East Asia’s growth more intensely into the Central and Western Asian nations. Then again, it could also entangle China in far-flung conflicts to protect its investments if it does not carefully manage its relationships, especially with its neighbor India.

 

The central importance of China to Asia’s economic hopes presents a major systemic risk. The rest of Asia, and much of the world, has become to varying degrees vulnerable to abrupt changes in the nation. Over the next decade, for instance, China needs to find a solution to its population’s declining birth rate and increased life expectancy. A more favorable policy toward immigrants could help mitigate this looming crisis but may require or introduce societal liberalization that could be politically destabilizing. Sudden regime change, however triggered, would create a significant hurdle to sustained economic growth across the region.

 

The deeper existential risk lies in the impact of growth on the environment. While modern technologies have made significant strides toward lessening the ills of industry, they are unlikely to keep pace with the increasing demand for goods. Environmental concerns only influence consumption patterns in wealthy nations to the extent that they are economically viable to the consumer and do not compromise standards of living. The question then becomes whether the ruling parties of Asian nation states are prepared to sacrifice their economic gains in the name of environmental stewardship. The broad multilateral cooperation required to effectively mitigate climate change and environmental degradation makes it is possible, and dangerously plausible, that continued development may ultimately win out.

 

Asian economic leadership has an uncertain future, but the outlook is not without hope. Even if the Chinese engine of Asia’s economic miracle stalls and internal and external political realignment ensues, it is possible that this could usher in a wave of more sustainable growth, in both senses of the word. New policies, rather than technologies, to address shifting demographics and a changing global climate are likely to be the key deciding factors of what future unfolds. Asia’s economy may have room to grow yet.

 

© Travis Kupp 2020

Tags:  Asia  economics  sustainability 

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What is Asia’s role on the global stage?

Posted By Travis B. Kupp, Friday, January 24, 2020

Travis Kupp, a member of our Emerging Fellows program initiates publishing a series of blog posts to inspect the widespread assumption that Asia is the rising star of this century. This is his first post in our EF blog. The views expressed are those of the author and not necessarily those of the APF or its other members.

 

Many eyes lately seem to be on Asia, and with good reason. Over the last 30 years, few regions of the world have transformed as dramatically as the Asian continent. Its rise in global economic, political, and cultural influence a difficult reality to ignore. However, Asia is anything but a monolith and there is no guarantee that the next 30 years will unfold as a continuation of recent tendencies. The future of the continent will depend on how its constituent powers navigate their differences in light of forces largely beyond their individual control.

 

Where Asia was once, in eyes of the West, nothing more than the Eastern shore of the Aegean Sea, Europe and the world have come to better understand the significance of this third of the planet's total land area. The first millennium and a half of the common era saw Asian civilizations push the geographical limits of their ambition and develop the most important trade routes of Afro-Eurasia. Then came the centuries of Western colonialism and exploitation. Not until the tumultuous wars of the 20th century did much of the continent gradually emancipate from foreign hegemony and regain control of its destiny, though in a vastly different international playing field. The legacy of unbridled resource extraction, imposed ideologies, and poorly drawn borderlines left by alien governments challenges Asia to the present day.

 

From this starting position, the nations of Asia have stepped into the 21st century on different paths. Today, East Asia continues to emerge with China as an overwhelming center of gravity and North Korea as a potential radical force. The Southeast is taking the spotlight for low-end manufacturing and export growth. India still struggles with its neighbor Pakistan, the key to future of the South. West Asia, which makes up a large part of the Middle East, is redefining its identity for a post-oil future. Central Asia, meanwhile, sits at the literal crossroads of Russia and China with the potential to benefit tremendously from the latter’s Belt and Road Initiative. The majority of the Asian population resides in nations that have managed to integrate into the functioning core of the globalized world, namely in India, China, and few of their neighbors. Whether Southeast, West, and Central Asia follow suit, however, remains to be seen and is far from guaranteed.

 

Headlines of a flourishing Asia, on some metrics, mask the fact that this development has not been geographically homogenous nor is it entirely stable. Already the sustainability of broad economic growth is under question, especially considering the global environmental dynamics at play. China’s long reach West across land and South across sea has raised alarms locally and internationally, triggering realignment in trade and security relationships. The future holds additional challenges for the continent in the form of demographic changes driven by aging populations, and migration and more border disputes as resources become scarce and the effects of climate change intensify. All this in a part of the world where regionalism has historically had a distinctly different flavor from a European or an African Union, which begs the question of whether thinking of Asia as a unit is even a fruitful exercise.

 

The urgent global attention given to Asia is warranted. Each part of the continent has transformed uniquely in recent decades with ambitions of economic growth, political control, or technological superiority. Whether any given ethnic or ideological group in the region is able to manifest these dreams or not, the interaction of those pursuits with the environment and the world order—even if less connected or cooperative in some scenarios—will be a significant determining factor in the futures of all other nation-states. Though its future is uncertain, what plays out in Asia over the coming three decades will have decisive and lasting impact on planetary systems and the fate of humanity.

 

© Travis Kupp 2020

Tags:  Asia  China  global powers 

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