Growth center will eventually relocate to Asia-Pacific region, analysts say
Southeast Asia and China are poised to become one of the key drivers of the world economy following their commitments at this year's ASEAN summit, analysts say.
The 43rd Association of Southeast Asian Nations Summit concluded last week in Jakarta, Indonesia, with the adoption of the ASEAN Leaders' Declaration on ASEAN as an "epicentrum of growth". China participated in several summit meetings.
"It is probable that in the future the growth center will relocate to the Asia-Pacific region, and eventually the region will take over the position of the United States and Europe, and become a place of developed countries," said Sawidji Widoatmodjo, dean of the school of economics at Tarumanagara University in Indonesia.
"If China's economic power is put together with the power of ASEAN's economy, it would not be an exaggeration to say that China and ASEAN will be the leaders of global economic growth, while the US economy and the European economy will see low growth and will continue to slow down," Sawidji added.
Geoffrey Williams, professor and dean of the Institute of Postgraduate Studies at the Malaysia University of Science and Technology, said the US and Europe were once viewed as the engines of the global economy owing to their high per capita income and huge consumer demand. However, this trend has changed, as there is a shift in global demand, with China, India and ASEAN collectively providing big markets.
"Although per capita incomes (in developing Asia) are lower, the billions of consumers make these very large markets," Williams said, adding that Asian countries are benefiting from high growth, relatively young populations and an educated workforce.
"China is of course a major economic force not just in Asia but globally. It will remain a major force because of its size and growth as well as its influence politically and through the Belt and Road (Initiative) investments. In this way it can support ASEAN through trade and investment," he said.
Despite an economic slowdown, ASEAN has an ambitious goal, thanks to the region's growing population, rising investments, and technological advancement, which boost its global role. At the same time, ASEAN can learn from China's rise while strengthening bilateral ties can be mutually beneficial, they said.
Josua Pardede, chief economist at the Permata Bank in Jakarta, said China and ASEAN's growth is "interdependent" because China is a major trade partner and investment source for ASEAN.
Chinese investment focuses on the manufacturing sector, establishing an industrial supply chain in the region and spurring growth, he added.
The International Monetary Fund's Managing Director Kristalina Georgieva, in her report delivered at the plenary session of the summit, said ASEAN countries are contributing 10 percent to global growth, or more than twice their weight in the global economy. She said this is attributed to economic reforms implemented in the region.
Erica Tay, an economist at Malaysia's Maybank Investment Banking Group, said people and technology are the two forces propelling Southeast Asia's growth in the next decade.
She said the Philippines, Indonesia, Malaysia, and Vietnam are poised to reap demographic dividends thanks to their sizable and growing working-age populations. A young demographic combined with improving education and an influx of capital investment can create a large and highly skilled labor pool for global supply chains.
"As wages rise and more workers enter the ranks of the middle class, Southeast Asia will also come into its own as a key consumer market," Tay said, adding that advances in connectivity will also allow ASEAN countries to overcome geographical barriers and market fragmentation.
Through its global dominance in electric vehicle production, China has shown its companies are a source of cutting-edge innovation, and Chinese tech giants are global leaders in e-commerce and shared mobility, Tay said.
"There is immense scope for China and ASEAN economies to work together in these areas. Southeast Asian firms can learn from China's leading companies, not just in terms of their technological prowess," she said. "In turn, Southeast Asia can be a lucrative key market and overseas base for Chinese firms going global."
Hafidzi Razali, director of Bower-GroupAsia, said China can support ASEAN as an "enabler of development", and can provide financing, project expertise and knowledge transfer.
Williams from Malaysia added that ASEAN's growth "must be broadly based", and the region also has to nurture trade with the US, Europe, the Middle East and India.