Page 13 - Forbes - Asia (March 2020)

ECONOMICS MATTERS
By Yuwa Hedrick-Wong

New Decade, New Paradigm

11

Much of the handwringing over China
and emerging markets this year has
stemmed from the unfolding damage
caused by the Covid-19 outbreak—but
while the virus is still spreading, it’s
hard to know the final cost. We can,
however, make a few judgments on
the effect of U.S.-China trade war on
emerging markets, which were sup-
posed to hammer Chinese exports.
It was also assumed that China-
centric global supply chains would
be disrupted—even partially disman-
tled—and that emerging markets in
Asia that are part of them would be
adversely affected. Yet China’s total
exports in 2019 were virtually un-
changed from 2018, falling by only
0.03% in dollar terms even as the
trade war intensified. Chinese exports
to the U.S. fell more than 8%, but
China was able to almost completely
compensated for that shortfall by selling more to the rest tribution to global growth was about half China’s at 18%.
of the world. China’s exports to ASEAN grew 10% and The EU contributed less than India—7.9%. Between them,
climbed 4.5% to the EU, putting the latter on track to sur- China, India and Indonesia accounted for 55.5%—more
pass China’s exports to the U.S. this year. China’s exports than half—of global GDP growth between 2017 and 2019.
are now estimated to represent roughly 12% of total global Something new is happening in the global economy. The
exports, which is a greater proportion, according to CPB economies of North America and western Europe are still
World Trade Monitor, than in July 2018 when the trade important, but they no longer dominate the global econo-
war started. my. Emerging Asia, and China in particular, is reaching a
The pessimism over emerging Asia was unwarranted. To threshold at which its domestic markets are large enough,
be sure, the ups and downs of the developed world used to and its ability to mobilize investment strong enough, to
drive global trade, but this paradigm is obsolete, and has drive global trade and investment, as well as global GDP.
been for some time. Between 2017 and 2019, the U.S.-Chi- To navigate this new decade, we’ll need to better under-
na trade war was intensifying and growth in North America stand the ramifications of this new paradigm shaping the
and western Europe was slowing. The strongest economy global economy.
DIETER SPANNKNEBEL/GETTY IMAGES developed countries to become the primary driver of the Yuwa Hedrick-Wong is Chief Economics
in Europe, Germany, grew by an anemic 0.6% in 2019, its
weakest since 2013. Emerging Asia, meanwhile, overtook

Commentator for Forbes Asia. He is also a
global economy with China being the largest contributor to
visiting scholar at the Lee Kuan Yew School
of Public Policy, National University of
global GDP growth, according to World Bank data.
Singapore. Having worked as an economist
Yet China was only one of three emerging Asian econo-
across the Asia-Pacific, Europe, Middle East
and Africa in the past 25 years, he regularly
mies among the top five contributors to growth: China con-
writes columns about the global economy for
tributed 35% of growth, India was third with an 18%, and
Indonesia was fifth with 2.5%. By contrast, the U.S. con-
can be reached at: yuwa@forbesasia.com.
MAR CH 2020 Forbes Asia. Views expressed are his own. He
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