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
