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Forging a New Regional Architecture for Asia

Will Asia’s growing economic independence lead to conflict with the West?

June 29, 2006

Will Asia's growing economic independence lead to conflict with the West?

Increased stability and cooperation between a number of Asian countries has led to the continent’s growing global influence. Prime Minister Lee Hsien Loong of Singapore offers his thoughts on what Asian countries must do to continue their economic development — and how to handle their new geostrategic leverage.

Within Asia, the trend is towards greater economic cooperation, and hence a stabler, more secure regional order.

New patterns of trade and investments are emerging. China has become the largest trading partner of many Asian countries including Japan and South Korea and the second-largest trading partner of India.

India started to reform and open up only in the 1990s, but it has made significant progress over the last dozen years and has strengthened its ties with the region.

Overall, intra-regional trade now accounts for more than half of the region's total trade, while intra-regional FDI makes up more than 40% of the region's total investment flows to the rest of the world. A complex web of economic linkages is stitching East Asia together.

The changing economic patterns in East Asia will create a new regional architecture of cooperation.

In the past, many Asian countries traded more with the United States than with one another. The result was a "hub and spokes" model of cooperation, with the United States as the hub engaging each of the countries in the region bilaterally.

The trans-Pacific link continues to be of vital importance today, but a new framework of regional cooperation that reflects the growing intra-regional trade, investment and people linkages is emerging.

One manifestation is the East Asia Summit (EAS), a new cooperation forum which comprises ASEAN countries, their three dialogue partners in Northeast Asia — China, Japan and South Korea — and also India, Australia and New Zealand.

It is too early to predict the final form of the regional architecture, but from East Asia's perspective, the most robust and stable configuration for regional cooperation is an open and inclusive one.

Closer cooperation within Asia is good, but the downside risk is that the region may neglect its ties with the rest of the world and across the Pacific.

If we end up with a closed Asian bloc centered on China on the Western side of the Pacific, with a rival bloc centered on the United States on the Eastern side, rivalry, antagonism and conflict will be inevitable.

The way to avoid this is not to hold back Asian cooperation, but to acknowledge the growing intra-regional linkages and to simultaneously nurture the links between Asia and the rest of the world. Asia's prosperity will always depend on its being part of the global economy and not a closed trading bloc.

When Asia grows a diversified web of trade and investments, an open architecture for economic cooperation will naturally follow.

Building this comprehensive web of linkages is a deliberate process that requires effort on the part of Asian countries, as well as its partners outside the region, including the United States.

The new economic realities in the region will have strategic and security implications. As the regional countries strengthen their economic linkages with one another, their strategic priorities will shift towards attending to these relationships.

China has been diligently and thoroughly engaging all ASEAN countries, allaying fears of a future dominant China. It participates actively in regional fora, including the ASEAN Plus processes and the ASEAN Regional Forum (ARF).

In the South China Sea, where China's claims overlap with several ASEAN countries, China has handled disputes in a restrained manner. It has adopted a joint declaration with ASEAN to reduce the risk of a clash — and reached bilateral understandings with several of the other claimants individually on joint development of the area.

Japan is another key player. It is still the largest and most advanced economy in Asia. A revitalized Japan will continue to bring high value investments into the region and play an important role in shaping the emerging regional architecture.

Japan will need to maintain its Security Alliance with the United States, while developing mutually beneficial economic interdependence with its neighbors.

Japan can do this better if it comes to terms with its war past. Then it can close this chapter of history and move on to forge stronger cooperation and integration in the region.

India's economic revival will be another factor in Asia's regional architecture. Increasingly India's "Look East" policy will give India an interest in what happens in East Asia.

India and China have signed a "strategic and cooperative partnership for peace and prosperity," and agreed on the parameters for settling their longstanding border dispute.

Both sides understand that they need peace to grow and prosper, and are engaging in strategic dialogue to address bilateral and regional issues.

Two other actors can affect the outcome of Asia's transformation. The EU has the economic weight and the civilian technology to speed up the advance of the Asian economies.

Russia has the military technology to shorten the learning curve of China and India. Asian countries should welcome both to play constructive roles in the region.

Within a decade, economic and technological advances of the major countries in Asia will alter the economic and strategic weights of the world's steering economies and require a reconfiguration of the G3, G7 and G8 groupings.

We are living through a period of rapid shifts in the global balance. The big question is whether these changes will occur without disruptive conflicts.

While the strategic picture will change and evolve, we can maintain international order and stability only if the emerging powers accept that the underlying basis for strategic cooperation will not change so quickly.

This Globalist Document was adapted from the Shangri-La Dialogue 2006 Keynote Address by Lee Hsien Loong, Prime Minister and Minister for Finance of Singapore, at the IISS Asia Security Summit, June 2, 2006.