SINGAPORE -- The economic recovery that rocketed through Asia starting last year has been felt in the usual ways -- a thickening parade of cargo ships around this trade-driven city-state, rising real estate and stock prices -- but it was demand for personal computers in Indonesia that caught the attention of executives at computer memory maker Showa Denko.
Even with U.S. and European consumers controlling their spending because of fears over the economy, the company boosted production and began building new manufacturing lines on the basis of expected growth in Asia. That dynamic shows the contours of the post-crisis global economy and the challenges President Obama faces in his effort to double U.S. exports.
U.S. sales abroad jumped by more than 3 percent from February to March, the Commerce Department reported this week, although imports jumped even more and the trade deficit grew slightly. Still, the administration is focused on exports as a source of new jobs, and it is hoping to encourage the trend with such initiatives as a trade mission to Indonesia and China this month being led by Commerce Secretary Gary Locke.
A rebound in exports from the lows of the recent recession was to be expected. The key to reaching the plateau set by Obama -- $3 trillion in annual exports by 2015 -- will be expanding the U.S. presence in Asia.
But right now, Asia appears to be doing fine on its own. It is the one region of the world that is relatively stable, largely free of the banking and debt troubles that have filled the streets of Athens with enraged demonstrators and forced Spain to cut wages, provoking the country's largest labor union to announce strike plans Thursday. Portugal responded with plans to raise taxes and cut pay for its government workers.
Asia, with its middle class rising, has led the world out of a recession. Its economies are also integrating faster than expected, with an abundance of projects and new trade agreements promising to accelerate the process. Economists, businessmen and politicians here say the United States risks being a step behind in a region increasingly able to turn raw materials into consumer and capital goods that it sells to itself.
"Who is going to double their imports? It's not clear," said Ravi Menon, permanent secretary at Singapore's Ministry of Trade and Industry. He said the rising demand in Asia for appliances, clothing, consumer electronics and household goods won't be of much help to U.S. businesses.
"We have seen demand rebound, but it is very much supported by emerging countries: China, India, Indonesia," said Masanori Kudo, senior vice president at Showa Denko, a Japanese conglomerate. Its Singapore-made hard-drive components are shipped to computer makers in such places as Taiwan for final assembly, an example of how production has been integrated across the region.
The addition of rising Asian consumer demand, the IMF reported recently, marks a historic turn.
"This is the first time Asia is leading a global recovery," the IMF wrote in a recent report, with growth based not just on exports but also on "resilient domestic demand" and a strong surge in investment.
There is indeed a broad sense here that the collapse of Lehman Brothers and the subsequent crisis marked a shift in the world's economic center of gravity.
The United States remains by far the world's largest economy, a critical market for other nations and central still to Asia's growth prospects. It also is still the world's top exporter of goods and services, although China is closing that gap.
But forecasts for sustained unemployment and slower growth in the developed world, as well as high levels of debt, have created a sense of retrenchment among the industrialized nations. In contrast, Asia features China's double-digit expansion, the extensive infrastructure spending being planned in India and the rising affluence of trading societies such as Singapore.
Asian growth will still be good news for U.S. companies. The silicon chips in an Indonesian family's new computer may well come from a U.S. plant. U.S. management and engineering companies may well oversee some of the billions of dollars expected to be spent on roads, airports and shipping terminals in the region. Rising incomes will mean more sales of U.S. or European branded goods, a bigger audience for Hollywood movies and more demand for management and other services.
But the competition on all fronts is only getting more intense. There is concern, both among U.S. business groups and among Asian officials and executives worried about the potential for China to dominate the region, that the Obama administration has not set a more encompassing trade agenda.
Dozens of trade agreements have been negotiated among the Asian and Pacific nations in recent years, and some potentially key ones are being explored, such as a free-trade agreement among Japan, South Korea and China that would knit the region's three mainstays into a closer economic alliance.
The Obama administration, meanwhile, has focused on one: the TransPacific Partnership, a grouping considered to be of little immediate economic importance.
The eight-nation grouping includes four countries with which the United States already has free-trade agreements, including Singapore. Among the others, only Vietnam is regarded as populous enough to be of potential significance as it develops.
"Trade architecture is being set, and we are not at the table," said Tami Overby, head of the Asia division at the U.S. Chamber of Commerce. "Countries are talking, and we cannot afford not to be there."
Domestic politics have made trade a complicated issue for Obama as he heads toward midterm elections with the nation's unemployment rate hovering stubbornly near 10 percent. Labor and some manufacturing groups argue that past trade agreements have shipped millions of U.S. jobs overseas, and they say the administration should push tax or industrial policies that would directly underwrite U.S. manufacturers.
Others contend that the most efficient way to support U.S. employment is by selling more overseas -- essentially using money from other countries to support American jobs. In addition, nations such as Singapore, South Korea and others have been quietly telling U.S. officials that the stakes involved are not just economic. They worry that without a counterweight, China's growth will lead its neighbors to become economically and politically dependent upon it.
"There is always a natural uneasiness that a comfortable balance might be upset," said Singapore's foreign minister, George Yeo. "The more China develops, the greater will be the desire for the U.S. to have a stronger presence here."
The TransPacific partnership is seen as a tentative compromise: an agreement that will put U.S., Asian and other negotiators in the same room, possibly set a template for talks with additional countries, and be of limited enough scope that it might be approved by Congress.
Whether it will help prompt the quick spike in exports that Obama envisions is another matter.
Among U.S. presidents, Obama "is the first to talk about exports. The others talked about free trade. That is a significant shift," said Tan Kah Chye, managing director for global trade at Standard Chartered Bank. "The U.S. is still a great producer of life-changing products. But the
SOURCE:
Asian nations merge from recession as stronger economic powers
By Howard Schneider, Washington Post Staff Writer, May 14, 2010