ON A KNIFE-EDGE A 360 Degree Analysis of Asia's Recent Economic Development John West Asian Century… on a Knife-edge John West Asian Century… on a Knife-edge A 360 Degree Analysis of Asia’s Recent Economic Development John West Center for Global Discovery Sophia University Tokyo, Japan ISBN 978-981-10-7181-2 ISBN 978-981-10-7182-9 (eBook) https://doi.org/10.1007/978-981-10-7182-9 Library of Congress Control Number: 2017961555 © The Editor(s) (if applicable) and The Author(s) 2018, corrected publication July 2018 This book is an open access publication Open Access This book is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution, and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made. 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Neither the pub- lisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institu- tional affiliations. Cover illustration: © Creative Crop / Getty Images This Palgrave Macmillan imprint is published by the registered company Springer Nature Singapore Pte Ltd. The registered company address is: 152 Beach Road, #21-­01/04 Gateway East, Singapore 189721, Singapore ACKNOWLEDGMENTS This book is dedicated to my students at Tokyo’s Sophia University. Through our discussions and debates over the years, they inspired me to research many aspects of Asia’s development, and motivated me to write this book. Naturally, I am responsible for any remaining errors and shortcomings. I would also like to extend my sincere gratitude to the Asian Century Institute for its generous support that enables this book to be available through Open Access. v CONTENTS 1 Introduction 1 US Reboots Post-war Asia 1 From Asian Renaissance to Asian Century Hype 2 From Asian Century Hype to Donald J. Trump 4 Trump Administration Moves into Action 5 Taking Stock of Asia’s Economic and Social Development 8 Seven Challenges for an Asian Century 9 What Next for the Asian Century? 12 Part I Taking Stock of Asia’s Economic and Social Development 17 2 Asia’s Stunted Economic Development 19 What Is the Outlook for Asia’s Catch Up Economies? 21 Size Matters, But Not 100% 23 Japan Almost Made It! 25 Korea: The Chaebol Republic 30 China’s Conundrums 35 India: A Slow Burner 41 Indonesia’s Oligarchy 45 Vietnam, the Next China? 49 Concluding Comments 52 vii viii CONTENTS 3 Asia’s Mythical Middle-Class Society 57 Asia’s Stunted Middle Class 58 Middle Class in Manila 59 Escaping Extreme Poverty 60 Inequality Holds Back Asia’s Poverty Reduction 61 Asia’s Precariat 62 Surviving on the Threshold of Poverty in Bangladesh 64 Poverty in the Midst of Prosperity: The Case of Singapore 66 Japan’s Two-Track Job Market and Vulnerability 67 A Deeper Look at Poverty Reduction and Asia’s Toilet Crisis 69 A Deeper Look at Poverty Reduction and the Impact of Natural Disasters 71 Asia’s Education Divide 73 Asia’s Digital Divide 75 Asia’s Appalling Human Rights 77 Happiness and Asia’s Middle Class 82 The Rise of Asia’s Super Rich 83 Part II Seven Challenges for an Asian Century 89 4 Getting Better Value Out of Global Value Chains 91 Birth of GVCs 93 GVCs, a Fast Track to Development 96 Hooking on to GVCs 98 Asian Trade and Investment Liberalization 99 Trans-Pacific Partnership 100 Trump Trade Policy 101 Regional Comprehensive Economic Partnership 103 Climbing GVCs 105 China’s Efforts to Climb GVCs 106 Asia’s Weak Participation in GVCs for Services 111 Risks and Challenges of GVC-Based Development 113 The Quest for Socially Responsible GVCs 115 5 Making the Most of Urbanization’s Potential 125 Insights from Sir W. Arthur Lewis 127 CONTENTS ix Labor Unrest in China 129 China’s Urban Apartheid 130 Urban Poverty and Slums 133 Dharavi, India’s Most Famous Slum 135 Indonesia’s Infrastructure Crisis 138 Asia’s Urban Environmental Disaster 140 Urbanization and Asia’s Innovation Imperative 143 Asia’s Best City: Singapore Versus Hong Kong 147 6 Giving All Asians a Chance! 153 LGBT Rights in Asia 154 The Many Trials of Womanhood in Japan 156 The Plight of South Asia’s Women 159 Asia’s Missing Women 160 Forced Child Marriage in South Asia 161 Pakistan’s Dishonorable Honor-Killing Epidemic 162 Asia’s Indigenous Peoples 165 Indonesia’s West Papuans 167 China’s Tibetans 169 Dire Situation of China’s Uighurs 171 Sri Lanka Needs National Reconciliation 174 India’s Caste System Is Still Alive and Well 177 7 Solving Asia’s Demographic Dilemmas 183 Asia’s Demographic Transitions 185 India’s Demographic Destiny 187 East Asia’s Fading Fertility 189 China’s “Two-Child Policy” 192 Economic Costs of Asia’s Aging Populations 194 Social Policy Challenges of Asia’s Aging Populations 197 Korea’s Shameful Demographic Drama 198 Japan’s Silver Democracy 200 Japan’s Immigration Imperative 202 Toward a Multicultural Korea 205 8 Fixing Asia’s Flawed Politics 213 Asia’s Democracy Deficit 213 x CONTENTS What’s Holding Back Asia’s Democratization? 215 Will China Democratize? 218 Korea’s Corrupt Democracy 222 Japan’s Oligarchic Democracy 225 Philippines’ Populist Temptation 228 Thailand, the Land of a Thousand Coups 232 Military Hangs on in Myanmar 235 Naïve Appeal of Authoritarian Government 240 Why Democracy Matters, Even in Asia 242 9 Combating Asia’s Economic Crime 247 Counterfeiting and Piracy 248 Illegal Drug Production and Trafficking in Asia 251 Environmental Crime 254 Human Trafficking in Asia 256 Human Smuggling 260 Corruption in Asia 262 Japan’s Institutionalized Corruption 264 Malaysia’s Crime of the Century 265 China’s Cancerous Corruption 267 Mongolia’s Corruption Curse 271 Lessons from Clean Singapore 272 Money Laundering in Asia 273 Cybercrime 274 10 Can Asian Countries Live Together in Peace and Harmony? 279 US and Asia During the Cold War 281 Rehabilitation of China 284 Japan, from Chinese Friend to Foe 286 Taiwan and China: It’s Complicated 288 Hong Kong and China: It’s Even More Complicated 291 North Korean Imbroglio 293 China Snaffles the South China Sea from Its Southeast Asian Neighbors 297 China Fractures ASEAN 301 China’s Leadership for Asian Infrastructure 304 Contents xi Belt and Road Initiative for a Sinocentric Asia 305 Chinese and Indian Frictions 308 Obama’s Pivot to Asia 310 Trump’s Potshots at Asia 312 The Future of Peace and Harmony in Asia 315 Part III Looking Ahead 321 11 What Next for the Asian Century? 323 Can Asia Rise to the Challenge? 324 The Donald Trump Collision 325 A World with Increasingly Divergent Interests 326 Risks of Conflict and Crisis 327 Erratum to: Introduction E1 Index 329 CHAPTER 1 Introduction Asia, the continent just across the Pacific Ocean from the US, has been pushed into unchartered waters with the election of Donald Trump to the presidency of the US. The challenge of navigating this “new normal” comes just as Asia’s own economies and politics are more vulnerable and fragile than they have been for a very long time. How well prepared is Asia for this new phase in its renaissance follow- ing almost two centuries in an economic and political abyss? What are the major challenges that Asia faces? In short, what next for the Asian Century? US REBOOTs POsT-WAr AsIA In the aftermath of World War 2 and the Korean War, the US planted the seeds for an “Asian Century” being realized in the twenty-first century. It remade its arch-enemy Japan into a democracy with a pacifist constitution. It offered security alliances and partnerships to Japan, Korea, the Philippines, Taiwan, Thailand and Singapore. It provided financial assis- tance to rebuild war-torn economies. America’s open markets enabled these countries to pursue export-driven development. And the post-war liberal international order led by the US, which includes the United Nations, the International Monetary Fund (IMF), the World Bank and The original version of this chapter was revised. An erratum to this chapter can be found at https://doi.org/10.1007/978-981-10-7182-9_12 © The Author(s) 2018 1 J. West, Asian Century… on a Knife-edge, https://doi.org/10.1007/978-981-10-7182-9_1 2 J. WEST the World Trade Organization (WTO), formerly the General Agreement on Tariffs and Trade, underpinned an open and secure international sys- tem which facilitated Asia’s development.