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The Honolulu Advertiser

Posted on: Sunday, November 11, 2001

Asian nations worry about stalled U.S. economy

By Tom Plate

TAIPEI, Taiwan — Asia, on the whole, offers the world phenomenal human capital, a set of exceptional cultural values and virtually limitless future growth potential. Indeed, a lot of the world's smart money has Asia emerging, in the fullness of time, as the century's regional leader of the world.

This assumes, of course, that China stays post-Mao politically sane; that Japan somehow recovers economically; that the two Koreas don't self-destruct with another hostile peninsula war; that Hindu India and Muslim Pakistan rise above their respective warring religions and achieve peace on earth and good will toward men and women, especially including their respective populaces; and that the bombing campaign in Afghanistan doesn't go on forever. OK, so I'm a silly optimist, but wouldn't that be a sensible wish list for Asia?

Too bad that's not the mood here now. Even Asian countries that are ordinarily models of composure are deeply worried, mainly about their economies but also about the United States. Consider stalwart Taiwan, the tiny offshore democracy that ordinarily gets nervous only about mainland China. This is the smart place that walked through the Asian financial crisis (1997-99) almost without losing a step. Now it's beginning to feel off-balance. Economically dependent on exports — as are almost all smaller countries in the region — Taiwan is witnessing an almost unprecedented shrinking of its information-technology sector, which racked up a growth rate of almost 18 percent last year. It's down no less than 20 percent this year.

Says Chen Po-chih, a highly regarded government economist, "We haven't faced this kind of situation in the last 50 years."

Asia knows it's in trouble when even Singapore is singing the blues.

Like Taiwan, it weathered the prior Asian financial crisis with near-balletic sure-footedness. But these days its economy is plummeting so fast that its cash-rich government is reaching into its rainy-day savings account to sprinkle stimulus over its bleak economic horizon.

Even Hong Kong is worried. It's feeling the economic pain — and the post-9/11 blues. Says Sir Donald Tsang, the head of Hong Kong's well-respected civil service, "When the WTC is hit, everyone is hit. Sept. 11 has globalized everyone."

To be sure, Hong Kong may be less pained than Taiwan or Singapore — but for an unusual reason: the substantial contribution of the adjacent economy of mainland China. Hong Kong, now part of China proper, of course, is more intimately tied to that economy, still going strong, sturdier than any other country in Asia. When Hong Kong's landlord became Beijing instead of London back in 1997, "Everyone thought we were going to be subsumed by China," says Tsang, laughing. Yet those very political ties, which worried so many, have turned into Hong Kong's economic lifeline. History can be funny that way.

That sense of connectedness has even extended to reluctant Taiwan — unofficially, of course, as it's politically at odds with the mainland.

Now, however, the bilateral cross-straits economic relationship may be just the thing that keeps Taiwan afloat. But the Taiwanese realize that they may wind up paying a high price for the action. "In five years, the way things are going," observes a member of Taiwan's national-security inner circle, "Taiwan could well be economically absorbed by China. It's a process that perhaps no one can stop."

Asia also worries because the United States, the chief buyer of the region's many exports, is fixated on terrorism as its all-important economy stalls. Consider that the Bush administration, citing military reasons, opposes, currently at least, any pause in the bombing campaign during the holy period of Ramadan, which is only about a month long. But there are times when military priorities need to take a back seat to larger concerns.

If this war against terrorism is truly a new kind of war, as the Bush administration has declaimed over and over again, then a short pause would hardly be a capitulation.

In Asia's eyes, the rich and powerful United States has inflicted so much punishment on the Taliban's Afghanistan — a pathetically poor and inept state — that the time will soon come when negotiation, rather than bombs, could bring what threatens to be years of conflict closer to resolution.

President Bush, highly esteemed in America, could easily garner public support for negotiation. Such a move would make Asia, and the rest of the world, a lot less nervous — and perhaps increase the focus, in Washington and elsewhere, on getting the world economy moving again.

Tom Plate, a columnist with The Honolulu Advertiser and the South China Morning Post, is a professor at UCLA. He also has a spot on the Web.