The changing US-Asia relationship

ARTICLE: S.E. Asia Faces Long-Term Trade Shift, By Tim Johnston, Washington Post, February 7, 2009; Page A10

The structural changes in global trade described here are monumental. For several decades, America encouraged Asia's rise by sucking in its exports, with the informal agreement being that the trade surplus would be funneled back into US debt markets. That transaction, plus the outsourcing of security to the U.S., made for a rapid and peaceful rise.

Now, the U.S. can't pursue that relationship in the same way. For a long time it's been apparent that we should decrease our military presence in order to deal with high commitments in southwest Asia. Now, it's also apparent that we need to rethink our debt structure.

So what does Asia do? Ideally its own domestic demand picks up and it seeks to move up certain production chains, sending current facilities "downward" to the next emerging market region. Easy to say, hard to do.

But it's also interesting to consider more defense spending as a stimulant unrelated to actual security requirements. The problem there is the lack of regional schemes within which such spending could be multilaterally justified. There is no NATO to keep everything cool at home and to consider power projection elsewhere by Asia to protect its growing strategic interests.

And yet, as they move "upward," are such trends not logical?

Comments

[Louis Heberlein]

I believe China is smart enough to emphasize developing technologies that also have civilian and industrial applications. Russia has emphasized energy fuel exports and weapons exports. That will cause her to modernize and globalize more slowly.