Inflection Points for Asia's Economic Giants
In 2015, the combined size of “Asia-10 economies,” which includes China, India and Indonesia, grew to rival that of the U.S. economy. The economic projections tell the story: Over the next 3.5 years, Timothy Wong, Managing Director and Regional Head for DBS Group Research stated, Asia-10 will have added an entire German economy to its economic heft. Over the next 25 years, it will have added the value of “three Euro Zones.”
China became a middle-income economy 4-5 years ago, having reached the US$7,000 per capita income level. With that, the challenge for Beijing’s leadership now lies in realizing painful structural reforms and maintaining a steady 5-6% GDP growth over the next quarter century. Responding to queries by Chris Cooper, Managing Partner of Deloitte & Touche’s Private Equity Audit Practice who moderated the event, Tim Wong characterized China as a “very new player on the international stage” and even a “600 lb. teenager” with tremendous wealth, power and capacity to initiate ambitious new programs like the Asian Infrastructure Investment Bank and the “One Belt, One Road” initiative. Although there is distrust among China’s neighbors, the Asia-Pacific needs US$8 trillion-worth of infrastructure construction over the next ten years, and “as with all things,” asserted Tim, “money talks.”
Characterizing India as the “sleeping giant” that the world hopes will “finally wake up,” Tim asserted that it has a “fantastic platform from which it could come into its own.” Tim counted off the number of advantages: a young demographic, an outstanding talent pool, strong education and language skills, a strong entrepreneurial base and “no shortage of capital globally that wants to invest in India.” A few “micro-efficiency moves” that could exponentially lift India’s economy and release the “virus of entrepreneurship” are improving the business ecosystem, improving its infrastructure, and successfully carrying out Modi’s “Make in India” program.
Turning next to Indonesia, Tim Wong pointed to the “green shoots” after a disappointing year for Joko Widodo. Jokowi faces a fractured political base, but Indonesia just needs to “get the basics right” of fixing roads, building ports and utilizing its cheap labor pool to move into a manufacturing economy rather than continuing to rely on the export of commodity goods.
To Tim Wong, San Francisco is the “easternmost city of Asia.” It is “only three hours more away from Beijing than Singapore” with a vibrant economy and a large population of Asian-Americans. As such, he expressed his hope that this city by the Bay would lead the charge for the U.S. in its “pivot to Asia.”
Missed the program? You can view the complete footage here (1 hr., 8 min.)
Video Clip: Reforms in China, India and Indonesia (5 mins., 54 sec.): Timothy Wong of DBS describes the economic prospects for the three Asian Giants