Asia has been a fast growing region in recent years. Many, if not most, of the world’s economic “super stars” are now located in Asia. In 2011, the region as a whole recorded a growth rate of 6.9 percent. Yet while Asia is clearly on the rise, most nations have been surprisingly quiet on the international stage, with China being the notable exception. In recent years, even Japan has been more quiet and reserved in international discussion.
All of that has changed with European leaders facing strong criticism at the biennial Asia-Europe Meeting (ASEM). While Japan led the charge, Asian leaders as a whole were more vocal in demanding reform and action from their European counter-parts. Japan was also quick to point out its contributions to the IMF’s Eurozone funds. Asian leaders have called for increased reform and a stronger response to the on-going Eurozone crisis.
Asian leaders have good reason to be concerned over Europe. Many countries in Asia are still growing, but their economies are still in the development stage and most Asian economies are still dependent on exports, despite recent strides to develop stronger internal and regional markets.
Any slide in Europe threatens to quickly spill over into Asia. At the same time, the governments of numerous Asian countries, from China to Singapore, are coming under increasing pressure for reforms and improved living conditions. An economic recession could spell unrest for many countries and could potentially sweep ruling parties out of power.
European leaders, on the other hand, have not taken the critiques sitting back. While most leaders have acknowledged the need for reform, European leaders are also pushing for Asian reforms. For example, several leaders pushed China on its currency policies, arguing that the Chinese are artificially deflating their currency. European leaders have also been vocal about what they view as trade barriers protecting many domestic Asian markets.
The two regions are major trade partners. In 2011 the European Union exported some USD 422 billion worth of goods to ASEM’s Asian members while receiving just over USD 681 billion. These numbers are both significant and demonstrate the E.U.’s massive trade imbalance with ASEM’s Asian members.
Besides the current economic malaise, Asian-European issues are complicated by a long and intertwined history stemming from European colonialism and also stark contrasts in culture and governing styles. These historical and cultural issues could help strain tensions, especially if conditions deteriorate.
The heated discussions at the ASEM conference demonstrates both the seriousness of Europe’s continued economic decline and Asia’s growing clout and confidence. With Europe, as a whole, likely to continue to decline over the next few years and projections in Asia continuing to point upwards, tensions are likely to increase.
If trends continue, in all likelihood, European leaders (along with their North American counterparts) will grow envious of Asia’s economic success. Without reform now, internal politics and calls for protectionism may become a serious threat for international growth.