05:55 AM Apr 20, 2010
by William Pesek
Kishore Mahbubani is an unabashed Asia bull.
The title of the former Singaporean diplomat's 2008 book says it all: The New Asian Hemisphere: The Irresistible Shift of Global Power to the East. The dynamism of China, India and Indonesia shows why it's happening. West, look out!
If things seem too good to be true, they often are. When I asked what could muck things up in Asia, Mr Mahbubani's response wasn't what I expected.
"What keeps me awake is the stupidity of US congressmen," Mr Mahbubani, 61, told me in Tokyo last week. "They're so amazingly ignorant about the rest of the world and they continue to believe that the US is so powerful that all they need to do is stand up at the podium and shout and everyone's going to listen to them."
We are gravitating toward a multi-polar world economy faster than many in Washington realise. Just the risk that the United States and China will be at each other's throats is enough to tarnish any bullish take on Asia's future.
The focus is often on how China acts. It also must be on how the US, a nation used to having its way in global circles, responds to changing dynamics. From afar, it feels as if Capitol Hill's views toward Asia are evolving glacially.
US President Barack Obama and his Chinese counterpart Hu Jintao are making nice these days, and that's great.
Mr Obama's economic team delayed labelling China a currency manipulator; China has returned the favour by attending a nuclear-security meeting in Washington.
Markets reacted positively to the sudden show of affection after months of tension involving Google, climate change, US arms sales to Taiwan and the Dalai Lama. The coming congressional elections in November will shine a spotlight on China.
The argument that China's undervalued currency is stealing US jobs will be made early, often and loudly. China, in turn, is skilled at using US policies to influence nationalistic sentiments at home.
OVERPLAY THEIR HAND
China should let its currency appreciate, though elected officials in the US may overplay their hand to the detriment of stability in markets. Slapping duties on imports would hurt the US economy as much as China's, and it would unnerve investors.
The yuan is really a proxy. It is the most powerful focal point for those fretting about China's rise. Some academics refer to it as the financial equivalent of the Berlin Wall.
That's a bit much. China isn't the Soviet Union, and it doesn't aspire to rule Asia.
If there is a Chinese Iron Curtain, it's a competing development model. For many, China's centrally-planned approach may have more appeal than anything-goes US capitalism.
Asia's Wall Street envy faded with the collapse of Lehman Brothers. In Japan, there is considerable relief that regulators didn't allow the kind of leveraging that tanked US investment banks.
In China, many see the events of Sept 11, 2001 - when terrorists attacked the US - and Sept 15, 2008 - when Lehman died - as perfect bookends of a period that ended the US's stranglehold over markets.
Is the US ready to find the shoe on the other foot - seeking views rather than voicing them? As foreign companies and investors look to scoop up distressed US assets, it's unclear how Washington will react. Perhaps not well.
The same goes for the US dollar's status as a reserve currency. Many in Asia can't see the dollar being the centre of the financial universe a decade from now. Many Americans, meanwhile, can't fathom one without the dollar as a lynchpin.
We're seeing a bit more realpolitik on the part of Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke. Mr Geithner put off an April 15 deadline to admonish China for its currency stance, paving the way for US trade retaliation. Mr Bernanke has been making a strong economic case for a change in China's policies.
This more nuanced approach will pay bigger dividends. Every time a US congressman throws a punch China's way, he or she validates the view of many Chinese that America wants to contain China's rise.
Anyone on Capitol Hill who believes containing Asia's ascent is possible hasn't been there recently. Continued growth is inevitable as large pools of still-untapped Asian workers become better educated and wealthier.
Congress "has got to learn to make tactical and strategic adjustments to a new world order in the same way that other nations have to make", said Mr Mahbubani.
Asia needs to be sensitive to US priorities, too. Partnerships are a two-way street. It's about engagement and negotiation at a time when no global challenge of the future can be tackled without Asia's help.
The US has long been used to speaking softly and carrying a big stick in Asia. It's time for a new strategy.
The writer is a Bloomberg News columnist. The opinions expressed are his own.