US-China trade war and short-term economic slowdowns need not shatter hopes for an Asian century

Recent tensions between countries in the region could be read as the growing pains of a new world order

While Southeast Asia may benefit from the shift in manufacturing away from China as a result of the trade war, it must plan for a future disrupted by technology

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The Petronas Twin Towers are seen in the distance through a shattered glass pane inside The Exchange 106 tower at the Tun Razak Exchange financial district in Kuala Lumpur, Malaysia, on October 23. Malaysia’s latest budget offers manufacturers incentives to relocate their plants to the country. Photographer: Bloomberg

Stephen Green is chairman of Asia House.

Published: 2:00pm, 29 Oct 2019Updated: 10:25pm, 29 Oct 2019

Last week, the International Monetary Fund downgraded its economic forecast for Asia, predicting that the region will grow 0.4 per cent slower than previously anticipated. While the revised growth rate of 5 per cent is still reasonably robust, the news added to concerns about stalling economic performance in the region.

Perhaps those despairing about Asia’s growth should brush up on their Confucius, who tells us in the Analects that “those who crave speed may never arrive”.

In other words, the fastest route is not always the most successful. Policymakers in Asia should not become preoccupied with breakneck growth, but should instead think long term if the much-celebrated “Asian century” is to deliver its full potential.

Of course, opportunities must be seized, especially where they involve making the best of a bad situation. The US-China trade war is causing chaos in the markets and investment uncertainty, but there are potential winners, although not among the combatants. Southeast Asia is routinely cited as “one to watch” as multinationals shift production and investment away from China.

We see this playing out in policy. Malaysia’s budget, released earlier this month, included US$239 million worth of incentives to attract relocating manufacturers. “The protracted trade war has created a unique opportunity for Malaysia to again be the preferred investment destination for high value-added foreign direct investments,” Finance Minister Lim Guan Eng said.