Europe is pallid; APEC (Asia-Pacific Economic Cooperation) is “in a deep hole”; the future for Australia lies in its engagement with Asia. Thus spake the Hon Paul J Keating, former Prime Minister of Australia, preaching, I suspect, largely to the converted – a group of 300 or so Hong Kong-based business people, many from Australia.
Keating spoke to the assembled throng on “the way Asia is changing and the new challenges it faces”, and Australia’s future in Asia.
He himself was “always among the optimists who thought recovery would come quickly” post-Asia crisis; he is particularly impressed with China’s transformation in the last few years, and what he calls “its commitment to policies of reform and openness”.
Not wanting to paint an “unrealistically rosy picture”, he went on to enumerate the “many and serious problems” China faces – having adequate resources for 1.3 billion people, growing economic disparities between the coast and the inland provinces, widespread poverty, rising nationalism in border provinces such as Xinjiang, reforming state owned enterprises and dealing with the consequences for unemployment, continuing problems with non-performing loans in the banking system and the future of Communist Party control. It is, as he puts it, “a formidable list”.
Despite this, he feels the desire for reform is genuine among the higher echelons of the Chinese government, with whom he met in the week prior to his Hong Kong visit last week. In particular, he points to China’s impressive economic performance over the past few years as the main reason for optimism.
“The pace and success of economic reform so far has been unprecedented – four million government jobs have already been eliminated in a fundamental reform of government structures, the PLA has moved out of many parts of industry and 500,000 soldiers have been discharged, successful attacks have been made on smuggling, State-owned enterprises have been shaken up.”
Asia crisis 'in the nick of time'
China, he believes, was saved by the Asia crisis – it came “just in time” to prevent China from following the well-worn path to the “flawed Korean and Japanese economic models in favour of one which ... will secure a much better, and much more appropriate, balance between domestic demand and net exports and which is fundamentally based on the Chinese individual and not on a business elite.”
What he terms the “initial mishandling” of the crisis by countries in the West – notably the United States – had “one important result”. That is, it highlighted the need for Asia to have more say in solving its own problems. “The idea that if only Asia had been able to respond in its own fashion to the problems it faced, the outcome would have been different – that is, the fall would have been smaller and the social consequences less severe – is a seductive one.”
APEC, on the other hand, has fallen into a "deep hole", admitting countries like Russia and Peru "which wanted to join for diplomatic reasons ... rather than because they were part of those great trade and economic sinews across the Asia Pacific ... APEC also conspicuously failed to rise to the challenge of the economic crisis in 1997 and it has lost its initial impetus to trade reform."
He feels, however, that it is imperative that the US – and Australia – retain an active role in the region, and that cooperation be strengthened rather than weakened. As long, that is, as the old cold war notion of engagement in Asia does not predominate.
Some more equal than others
One concern he highlighted is the inequality of the recovery in the region.
“Although growth is picking up in Southeast Asia, it is on the whole slower than in Northeast Asia ... and it feels less robustly based,” he said. “The stock exchanges of Indonesia, Thailand and the Philippines have all fallen 40% this year in US dollar terms. Foreign investment dropped from $21.5 billion in 1997 to $13.1 billion in 1999.”
He is optimistic about Indonesia, which he calls the “epicentre of the region”, and where, he maintains, “nationalism is a much stronger force than many outsiders appreciate”.
“Although I don’t for a moment underestimate the difficulties ahead in Indonesia, or the changes that will accompany the transition it is experiencing, I believe that this great country – the fifth most populous in the world – will emerge stronger for it."
The most important idea
Keating ended his speech with a look at Australia, and the ongoing discussion – in Australia at least – of what “role” it should play in the region. Referring to his own political history, Keating said his (Labor) government, while he was leader, had “accused me of being obsessed with the region, of going at it too hard and leaving the community behind”.
And with a none-too-subtle dig at the policies of the present (Liberal) government, [the current Prime Minister, John Howard, has been criticized for failing to publicly denounce the policies of the notorious One Nation party, led by Pauline Hanson, for fear of upsetting a large block of voters sympathetic to her cause] he went on to say:
“I suppose that it gets down to a basic disagreement about what governments are supposed to do. In my view it is to lead, not simply to reflect back to the electors the views and prejudices people already have.
“For Australia, engagement with Asia is the most important idea of the first part of the 21st century – one of those big issues which will change our nation.
“The pulse and energy of Asia, the richness and dynamism of the cultures, the scale of the challenges, the global importance of the issues at stake here, make this such an exciting opportunity. I always enjoy Europe, but frankly it’s pallid in comparison. In Europe the camphor balls of history are always in your nostrils.”
The audience seemed to agree.
