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MARCH 2020 FORBES ASIANew Decade, New Paradigm
By Yuwa Hedrick-WongECONOMICS MATTERS
Yuwa Hedrick-Wong is Chief Economics
Commentator for Forbes Asia. He is also a
visiting scholar at the Lee Kuan Yew School
of Public Policy, National University of
Singapore. Having worked as an economist
across the Asia-Pacific, Europe, Middle East
and Africa in the past 25 years, he regularly
writes columns about the global economy for
Forbes Asia. Views expressed are his own. He
can be reached at: [email protected].compensated for that shortfall by selling more to the rest
of the world. China’s exports to ASEAN grew 10% and
climbed 4.5% to the EU, putting the latter on track to sur-
pass China’s exports to the U.S. this year. China’s exports
are now estimated to represent roughly 12% of total global
exports, which is a greater proportion, according to CPB
World Trade Monitor, than in July 2018 when the trade
war started.
The pessimism over emerging Asia was unwarranted. To
be sure, the ups and downs of the developed world used to
drive global trade, but this paradigm is obsolete, and has
been for some time. Between 2017 and 2019, the U.S.-Chi-
na trade war was intensifying and growth in North America
and western Europe was slowing. The strongest economy
in Europe, Germany, grew by an anemic 0.6% in 2019, its
weakest since 2013. Emerging Asia, meanwhile, overtook
developed countries to become the primary driver of the
global economy with China being the largest contributor to
global GDP growth, according to World Bank data.
Yet China was only one of three emerging Asian econo-
mies among the top five contributors to growth: China con-
tributed 35% of growth, India was third with an 18%, and
Indonesia was fifth with 2.5%. By contrast, the U.S. con-tribution to global growth was about half China’s at 18%.
The EU contributed less than India—7.9%. Between them,
China, India and Indonesia accounted for 55.5%—more
than half—of global GDP growth between 2017 and 2019.
Something new is happening in the global economy. The
economies of North America and western Europe are still
important, but they no longer dominate the global econo-
my. Emerging Asia, and China in particular, is reaching a
threshold at which its domestic markets are large enough,
and its ability to mobilize investment strong enough, to
drive global trade and investment, as well as global GDP.
To navigate this new decade, we’ll need to better under-
stand the ramifications of this new paradigm shaping the
global economy.DIETER SPANNKNEBEL/GETTY IMAGES
Much of the handwringing over China
and emerging markets this year has
stemmed from the unfolding damage
caused by the Covid-19 outbreak—but
while the virus is still spreading, it’s
hard to know the final cost. We can,
however, make a few judgments on
the effect of U.S.-China trade war on
emerging markets, which were sup-
posed to hammer Chinese exports.
It was also assumed that China-
centric global supply chains would
be disrupted—even partially disman-
tled—and that emerging markets in
Asia that are part of them would be
adversely affected. Yet China’s total
exports in 2019 were virtually un-
changed from 2018, falling by only
0.03% in dollar terms even as the
trade war intensified. Chinese exports
to the U.S. fell more than 8%, but
China was able to almost completely