That Asia is set to overtake the west as the engine room of the global economy is accepted conventional wisdom. But once the pack leaders approach the technology and efficiency frontier, currently occupied predominantly by Western economies, what will they have to do to sustain and deepen their growth and development in order to avoid falling into the middle income trap? Tutwa Associate Razeen Sally argues that the key is for Asian countries to pursue greater economic freedoms for their citizens, in order to unleash their creative and entrepreneurial potentials.
He identifies a substantial menu of such reforms. The extent of the job required runs counter to the conventional wisdom on Asian economic destiny, the flip side of which asserts the inevitable eclipse of the West owing to the global financial crisis. Furthermore, he argues that once these reforms are seriously implemented, they will inevitably require extension of greater political freedoms to the implementing Asian countries’ citizens. That is where the rubber hits the road, as such reforms will inevitably generate political contestation and, potentially, instability.
This applies to China, not least of all. Some serious China analysts argue that the early signs of such political instability are evident. Indeed the transition to the fifth generation leaders experienced some serious road bumps this year with the arrest and effective exile of Bo Xilai, the erstwhile popular party leader in Chongking. Rumours of coup attempts, the postponement of the timetable, and gossip about Mr Xilai’s alleged private intelligence capabilities deployed against his party rivals all lend credence to this perspective. Such are the goings-on in a state characterised by lack of transparency and open political competition. How serious these rumblings are, only time will tell. Whether China can manage glasnost at the same time as perestroika also remains to be seen.