East Asia’s wealth continues to spurt, with the hope that it will not also sputter.
BEHIND
the faceless economic data of countries and regions is the wealth of
individual people. But how does this relate to global conditions, and
vice-versa?
One answer comes by way of the High Net Worth
Individual (HNWI), as defined jointly by the French consulting firm
Capgemini and the
Royal Bank of Canada (RBC).
Where net worth is
generally taken as total assets minus total debts, the HNWI as conceived
by Capgemini, RBC and
Merrill Lynch is a person with at least
US$1mil
(RM3.2mil) in disposable funds to invest.
In their calculation,
growth of East Asia’s personal wealth last year bypassed North America’s
for the first time. In their latest
World Wealth Report 2011 released just four days ago, the number of HNWIs in the “
Asia-Pacific” region grew 1.6% to 3.37 million.
Widening
gap: China continues to develop rapidly, chalking up multiple
achievements such as lifting nearly a billion people out of poverty
within one generation. Yet some 100 million people in China still live
in poverty. — EPA
However, the Asia-Pacific mega-region
often presents a problem of definition, and does so clearly in this
case. Australia is included but not New Zealand, nor is any country in
North America which also lies in the “Pacific” portion of the
Asia-Pacific.
India is also included even when it is not a
Pacific nation, but not any other South Asian country which is similarly
located and equally (in)eligible. The Philippines is also excluded
along with five of the smallest or newest Asean countries.
Such
concepts and their comparisons, particularly when defined by specific
corporate interests, tend to be notional at best. Nonetheless, one trend
is clear: individual and thus regional wealth in East Asia is growing
faster than in North America.
But much of this new wealth also
has shallower roots. East Asian economies are seeing fast gainers and
almost as rapid losers among HNWIs.
Hong Kong and Singapore
respectively lost 17.4% and 7.8% in HNWIs. The volatility is typical of
rapidly growing regions: easier come, easier go.
Overall, East
Asian wealth accumulation for investment is still behind North America’s
– US$10.7tril (RM34tril) to US$11.4tril (RM36.4tril). The gap remains,
but it is just as obvious that it is narrowing.
Without East
Asian volatility, the gap would be narrower still. And if the number of
HNWIs were considered on per capita terms, East Asian development would
seem even more impressive.
That leaves a large question mark over
China, with the world’s largest population at more than 1.3 billion. It
has already produced the fastest and most sustained growth anywhere on
the planet, with the prospect of much more to come.
China
continues to develop rapidly, chalking up multiple achievements such as
lifting nearly a billion people out of poverty within one generation.
Yet some 100 million people in China still live in poverty, as Prime
Minister Wen Jiabao conceded during the week.
In essence, much of
China’s economic growth has yet to come. How far it still has to go may
be taken as a measure of how much further it can still go.
Owing
to its sheer size and the scale on which it operates, China’s progress
will determine the fate of both greater China (the mainland, plus Hong
Kong, Macao and Taiwan) and much of the world.
That was the broad
consensus reached during the week at both the Rio+20 summit in Brazil
attended by Wen, and the G20 summit in Mexico attended by
President Hu
Jintao.
And that is where the sums and the conclusions, whether
tentative or premature, become mired in obscurities. But if it is any
consolation, the obscurities are also the realities.
When
comparisons are made between (East) Asian and
North American growth,
investment or expenditure, the comparisons are essentially between China
and the US.
And in economic growth in particular, much of
China’s data is derived from trade with and investment from the US. The
most important bilateral relationship in the Asia-Pacific, if not also
in the world, is also growing steadily on multiple fronts: economic, but
also diplomatic and strategic.
How the world’s two largest
economies get along has always been important for the world. That
becomes much more so when it encompasses other spheres of their
relationship as well.
In Hu’s address in Los Cabos on Tuesday to
an audience that included his US counterpart
Barack Obama, he developed a
model of bilateral relations he introduced at a China-US Strategic and
Economic Dialogue last month in Beijing. This consisted largely of two
prongs, each with three main points.
The three key principles are
for both countries to maintain strategic communication between them at
the highest levels, to manage any differences between them without
letting anything get out of control, and to keep any prospective
interference from any quarter boxed up.
The three broad areas of
interest outlined by Hu in his “hopes” are that the US will act
positively in opting for a pragmatic rather than an ideological approach
to relations, respect China’s legitimate sovereign interests, and stop
the narrower concerns of domestic politics from upsetting ties.
These
points may be taken to mean China’s preference for a full, direct
relationship that avoids hiccups from occasional sentiments in the US
over China’s internal political affairs, currency valuation or a
lingering US tendency to protectionism.
There were at least three
points of immediate agreement at Los Cabos: that both countries should
develop the next phase of their relationship meaningfully, that
relations were so far going well, and that more should be done to build
mutual trust.
This G20 summit is seen as the second meeting
between Hu and Obama this year, and the 12th in three years. It is also
timed just right for Hu in reminding Obama that bilateral relations
should not be subordinated to domestic pressures in a US election year,
as Obama begins his campaign for re-election.
These personal
exchanges are crucial, despite the passing nature of the presidencies.
Hu is due to be succeeded next year, and even if Obama is re-elected, he
has only another four years in office.
But formal relations
between major powers are made of more durable stuff. There is scant
difference between the Democratic and Republican parties on ties with
China, and Beijing itself is known for worldviews that endure.
Beyond these, the summits in both Los Cabos and Rio de Janeiro took due notice of the gravity of the eurozone debt crisis.
The
eurozone is after all an important leg of the world economic tripod,
and its economic prospects are bound to be of concern to other regions.
At
both summits, China and the US tried to shore up global confidence in
the eurozone by helping to talk up prospects of recovery, or at least
avoided consideration of worst-case scenarios.
The next EU summit
in the following days should do more to spell out specific measures
that member countries can take to that end.
Europe has the
greatest responsibility in putting its collective house in order. North
American and East Asian economic entities can do no more than assist in
the hard decisions that Europeans have to take themselves.
For
East Asia and North America at least, how well China and the US work
together will determine prospects for all players in both regions. For
East Asia in particular, HNWIs and standards of living generally are
determined by the peace and prosperity that only close ties between
major powers can offer.
Behind The Headlines
By Bunn Nagara
Assets grow fast and furious!
