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CHINA IN SPOTLIGHT
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AseanAffairs Magazine November - December 2010
CONTENT • ASEAN TRADE
ASEAN AVIATION • ASEAN TRAVELLER
• ASEAN ENVIRONMENT

• BEYOND ASEAN 

• ASEAN MONEY  INSIDE OUT
• ASEAN TALK • CHINA IN SPOTLIGHT

China in Spotlight
The emerging role of China in the 21st century is a focal point for conjecture and a certain degree of apprehension in the world outside of China. Is China an ally, a competitor, an adversary or perhaps all three?

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By
Dan Brutto

 

 

   Globalization 4.0: Trade’s New Center of Gravity

How logistics and other key elements are helping Asean members thrive in today’s rapidly changing global marketplace.

 In the wake of the economic downturn, global trade is entering a new phase – an era I call “Globalization 4.0.” This era is distinguished by an uptick in trade – a distinct shift in its center of gravity from developed nations like the U.S. to emerging economies.

            Eras of Globalization

1.0: Late 19th Century - 1960s. A long era of trade between neighboring nations, such as trans-Atlantic trade in the West; often marked by periods of protectionism.

2.0: 1980s-1990s. A trade growth era when markets opened after the Berlin Wall fell, the Internet and mobile phones boosted global commerce, and trade agreements grew.

3.0: Late 1990s - early 2000s: The “flat world” era, as described by author Tom Friedman, when China entered the WTO, India became a technology and services powerhouse, and BRIC nations emerged. The U.S. was a big global growth driver.

4.0: 2010-? An era of trade growth following the economic downturn, driven by emerging economies as the hard-hit west pulls inward.

As the hard-hit developed economies recover and consumer spending in the U.S. is weak, trade lanes are growing in emerging economies, particularly in Asia. Over the past seven years, trade within Asia has risen 75 percent faster than its trade with Europe and the United States.
In fact, trade with developed economies is now half that of intra-Asian trade.i

In the last several years, emerging nations made trade agreements with each other and lowered tariffs. Asean has been a free trade agreement leader. In fact, when the Asean-China FTA was signed with China earlier this year, it created the world’s largest free trade area in terms of population (1.9 billion people) and the third largest free trade zone in economic size (a cumulative gross domestic product of US$5.8 trillion).ii

But as trade-oriented Asean nations drive more global growth, other countries – especially in Western Europe and North America – are pulling inward. With high unemployment and slow growth, major developed nations are threatening to raise barriers to commerce. The United States is a case in point. Troubling signs of protectionism include tariffs on Chinese aluminum.

Major U.S. trade agreements with South Korea, Colombia and Panama are stuck on the docket, and a few industry-specific disagreements are blocking legislation that would boost U.S. trade and growth. These moves threaten to impede U.S. exports and imports and even increase the risk of a trade war in which everyone loses.

The second factor of Globalization 4.0 is investment in transportation and technology infrastructure. This is an area where Asia also leads the way. After the Asean-China agreement was signed, Indonesia, one of the largest exporters of raw materials in South East Asia, pledged to triple spending on ports and airports this year to support trade.iii And in China, the government is building new highways to open western provinces to development and bring even more people into the global economy. Contrast that with the United States’ crumbling transportation infrastructure, which hasn’t seen a major influx of investment since the 1960s.

Another critical part of the Globalization 4.0 story is logistics, which underpins all global trade. Logistics is the art and science of moving something exactly where it needs to be, exactly when it needs to be there. Logistics is the key to ensuring that global trade continues to expand and thrive, and it helps companies compete. ..............................



 


 

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