A 27 member group, the Asian Economic Panel, which consisted of Nanyang Technological University (NTU) of Singapore’s Tan Khee Giap and Chen Kang as well as well-known US economist Jeffrey Sachs argue that Asia is now key to combating the global financial crisis. They argue that coordinated effort by the region can spur growth and help to boost the world economy and get it out of its slump. China, Japan and Korea are expected to play leading role in this role for Asia. This may make for the problems that the US is facing.
After the US announced its US$700 billion bailout package for Wall Street, Japanese Prime Minister Taro Aso went on public record on 16 Oct 2008 to say that the US bailout was insufficient and contributing to plunges in the stock market (Japan’s key stock index fell 10% on the same day on 16 Oct 2008). It therefore dawned upon East Asian governments that their resources might be needed for the rescue, especially since Japan has more than US$950 billion in foreign exchange reserves next to China’s US$1.9 trillion.
China has also moved to prevent a US-like property meltdown. Property prices had been falling from the second quarter of 2008 with growth reduced to 5.3% compared to August 2008 ad Shenzhen’s property prices was down 40% from the peak a year before, prompting the Chinese local governments to lower transaction levies, direct subsidies and tax incentives and in places like Shanghai, the maximum sum first time home buyers can loan from the government was doubled to 200 000 Chinese yuan.
Media perceptions of US losing its shine in the region should be addressed. Even the so-called decoupling of East Asian from the US seems to have been proven wrong in the current bout of financial crisis. Christmas-time 2008 and the inability of American consumers to spend has caused factories in China to close down and Asian economies to cut off 2 to 3 percent from their growth rates.
There are calls for Asian countries to speak up at the G20 global summit in Washington DC in mid-2008. Major East Asian economies like China and Japan will be attending the summit. Some have called for Asian countries not to scold or blame the West for the crisis but at the same time, not to miss this opportunity to have their voices heard as well. They are urged to let their ideas be circulated in a possible attempt to re-engineer the global financial system. Some have called East Asian to make a clear stance that they are for free trade and not increased protectionism in an attempt to pressure the US not to impose inward-looking measures to protect their workers.
There are also calls to take this opportunity to bind East Asian economies closer to the US and not further. This can be done by utilizing the Asia Pacific Economic Cooperation (APEC) forum since the US will be hosting it after Singapore and Japan two years later and East Asian can also ride on the momentum created by the US’s interest on a Pacific-4 trade agreement linking Singapore, Brunei, Chile and New Zealand.
Agence France Presse, "China to Boost Property Market" dated 17 October 2008 in The Nation website (Thailand: The Nation), 2008, p. 6B.
Chan, Robin, “Asia Key to solving crisis: Experts” dated 15 November 2008 in the Straits Times (Singapore: The Straits Times, p. C20.
Tay, Simon, "Global Crisis Asian Opportunity" dated 5 November 2008 in the Straits Times, (Singapore: Straits Times), 2008, p. A24.
The Nation, "Japan's Aso warns US Bank bail-out plan is "insufficient"" dated 17 October 2008 in The Nation (Thailand: The Nation), 2008, p. 6B.