Economic partnership in NE Asia
Last week, the 38th G8 Summit meeting took place at Camp David, the summer retreat of U.S. presidents.
The world’s principal economic powers, namely the G8 nations, collectively made up 51 percent of 2011’s global nominal GDP. However, critics argue that the G8 does not properly reflect the world’s most powerful economies. Many articles discuss waning American preeminence. Also, since the 2008 world financial crisis, Western powers have been struggling to salvage themselves from their economic predicaments.
It is natural that leaders of the G8 discussed ways to tackle the crisis caused by the Greek situation which threatens to send economic shockwaves around the world. They vowed to take all steps necessary to combat financial turmoil while revitalizing a global economy increasingly endangered by Europe's debt crisis.
While Western powers struggle to regain their footing, emerging states are looking to a new economic horizon. Standard Chartered Bank, in November of 2010, reported that the global economy had entered a new ``super-cycle” driven by the industrialization and urbanization of emerging markets and global trade.
Due to the remarkable economic achievements of China over the last three decades, it now surpasses every economy around the world, except the United States, and has emerged as a potential partner for America to share the responsibilities of world leadership. India, Brazil and Turkey are the other emerging nations that could fuel the world’s economic engine in years to come.
Prior to the G8 summit, on May 13, leaders of China, Japan and South Korea have agreed to start negotiations this year on a three-way free trade agreement. The scene of the South Korean president, China's premier, and Japan's prime minister, holding hands together at the Fifth Trilateral Summit in Beijing, signaled a promising manifesto for a powerful economic partnership in Asia for the coming decades, during which the center of geopolitical power will likely shift from the West to the East.
In terms of volume, Korea is the seventh largest exporter and tenth largest importer in the world. Japan is the fourth largest exporter and importer. China is the largest exporter and second largest importer of goods. In terms of GDP China ranks second, Japan third and South Korea 15th in the world.
Today, the term globalization normally refers to economic realization of a global common market, where goods and capital are freely exchanged. Globalization has done enormous good for developing countries, by introducing hundreds of millions of new workers and consumers into the global economy and interconnecting them in complex networks of trade.
During the 1980s and ‘90s, Japan drew worldwide attention for its new role in the world economy. Thanks to its then high rate of domestic savings, massive inflows of world capital, and concentration of high-tech industries, Japan was able to rebuild itself from the devastation of World War II. Japan's economic success was later emulated by China and South Korea.
With the influence of globalization, China has experienced tremendous growth during the past decades. Successful implementation of an open and reform policy and the introduction of market-oriented economic reforms in 1978 have transformed China into the world's fastest-growing major economy. In recent years, it has racked up a huge trade surplus with the rest of the world. China is referred to as the ``locomotive of the world economy.” Its rise to the top ranks of world powers heralds the shift eastward of the global center of gravity.
Once-impoverished, South Korea was one of the world's fastest growing economies in the early 1960s to the late 1990s, and is still one of the fastest growing developed countries in the 2000s. It has been granted a high status within the global economic community and is willing to play a more significant role in global economic decision making, symbolically demonstrated by hosting the G20 Seoul Summit in 2010.
However, recent economic reports are discouraging. The weakness in the eurozone is depressing world trade volumes. Export levels for the export-driven South Korean economy fell 4.7 percent in April. China’s economy also slowed more than expected in April. Weak trade figures from China also heightened fears of a slowdown in the global economy. As China’s leaders were preoccupied with internal leadership change this autumn, there are increasing signs that the Chinese economy may be slowing down. Japan, haunted by the aftermath of the nuclear meltdown and tsunami, has not fully recovered from what it describes as their ‘lost decade’ of anemic economic growth over the past two decades.
Amid these obstacles, close economic cooperation between China, Japan and South Korea has become very important not only for each nation’s survival in the ailing global economy but also for continuously maintaining peace and stability in Northeast Asia. The time has come to transcend the chronic rivalries and resentment amongst one and another for the sake of working out solutions to deal with the ever mounting global threats of our time; issues of terrorism, nuclear security, and food and energy resources.
The need for international cooperation has never been greater. The free trade agreement is one system that can fully materialize economic partnership among three close neighbors in Northeast Asia.
The writer is a chair professor of the Catholic University of Daegu. He previously headed the Foreign News Division of the Korea Overseas Information Service. His email address is firstname.lastname@example.org.