Outspoken strategist David Roche, of Independent Strategy in London, has poked his nose into the East Asia trade performance debate. Deteriorating trade positions with declining exports in East Asia has stirred a debate about whether this is a short-term cyclical thing, which is nothing to worry about, or a more significant, longer-term development. Mr Roche sides with the bears. He argues East Asia's exports finance the region's development. The poor performance in trade indicates there is a structural deficiency. Exchange rate policy, based on the dollar bloc, is an anachronism and is hurting the region's global competitiveness. He describes the exchange rate policy as the worm in the bud of East Asia's emergence. 'Unless policy is changed, economic growth, return on capital and foreign direct investment will suffer,' he says. 'Trade deficits will get worse and nominal exchange rates will come under pressure.' A breaking of the chains in exchange-rate policy would give exporters the right price signals to adapt to global competitive forces. Over the long term, Mr Roche thinks this will happen. But in the short-to-medium term profit margins and economic growth are due to suffer. A lower return on capital, which is the bedrock of Mr Roche's conclusion, also will have a knock on effect on inflation and the real value of assets, including real estate.