In Foreign Policy, Minxin Pei offers an alternative perspective to the popular view that Asia’s global dominance is imminent:
Asia’s recent track record might seem to guarantee its economic superpower status. Goldman Sachs, for instance, expects that China will surpass the United States in economic output in 2027 and India will catch up by 2050.
Given Asia’s relatively low per capita income, its growth rate will indeed outpace the West’s for the foreseeable future. But the region faces enormous demographic hurdles in the decades ahead. More than 20 percent of Asians will be elderly by 2050. Aging is a principal cause of Japan’s stagnation. China’s elderly population will soar in the middle of the next decade. Its savings rate will fall while healthcare and pension costs explode. India is a lone exception to these trends-any one of which could help stall the region’s growth.
Environmental and natural resource constraints could also prove crippling. Pollution is worsening Asia’s shortage of fresh water while air pollution exacts a terrible toll on health (it kills almost 400,000 people each year in China alone). Without revolutionary advances in alternative energy, Asia could face a severe energy crunch. Climate change could devastate the region’s agriculture.
The current economic crisis, moreover, will lead to huge overcapacity as Western demand evaporates. Asian companies, facing anemic consumer demand at home, will not be able to sell their products in the region. The Asian export-dependent model of development will either disappear or cease to be a viable engine of growth.
Political instability could also throw Asia’s economic locomotive off course.