We have to look at how Asia is changing, and the astonishing pace of that change.
China’s Pearl River Delta now encompasses 42 million people, making it the largest urban area on the planet. There are 160 cities of over one million people in China alone.
Despite hundreds of millions of people moving into cities in the last decade, Asia’s urbanization surge is only just beginning. The urbanization is directly linked to income growth and consumer spending.
The purchasing power of Asia’s growing middle classes is going up faster than the skyscrapers they are moving into.
This huge movement of people is not restricted to Asia. They are traveling overseas in ever greater numbers. India overtook China recently to become the fastest growing outbound travel market – predicted to more than triple to 50 million between now and 2020.
Two of the world’s top three economies are now Asian; a third of global trade and GDP is represented by Asia. Some predict that by 2025 as many as two thirds of the world’s population will be Asian. Both the G7 and G20 will be hosted in the region this year – clear testament to its growing significance.
Impact on the UK
There is no doubt that these seismic economic shifts are being felt right across the world, and the UK is feeling them too.
Some observers have pointed out that the Asian economic centre of gravity is shifting westwards. Others have argued just as forcefully that it’s the centre of gravity of western economies that is heading east.
Of course both are right. People in Europe are looking east as never before, but Asians are also increasingly looking west – as students, investors and tourists.
Some estimates suggest that Chinese tourists spend as much as 8,000 pounds during a visit to the UK. This increasing integration is having a huge impact on the UK.
Cheaper Asian imports — from T-shirts to televisions — have given British people today a standard of living their grandparents could only dream of. But at the same time these products threaten the livelihoods of lower skilled British workers.
So economics spills over into politics, with protests about globalization – not least against free trade agreements such as the Transatlantic Trade and Investment Partnership (TTIP), which is already the subject of urban myths.
But we all have to accept that this increasing global inter-connectivity is here to stay and embrace it.
Asia is embracing e-commerce. Ten years ago only two percent of Indonesia’s population used the internet. This year a third are expected to: that means 100 million Indonesians connected globally, with huge implications for economic growth and social change.
Chinese consumers spent a record 10 billion pounds online in just one day last year.
At an individual level, it means that a teenager on a laptop in Hanoi can do business with a company in Huddersfield. At a country level, it has meant recognition of growing economic inter-dependence and the need to join forces with others.
Like Britain’s work with the Republic of Korea – building a new fleet of ships for the Royal Navy, which has led us to work together to promote the project to third countries. Or our plans to bring Typhoon fighter jets to Japan later this year, for the first non-US military exercise Japan has ever hosted.
Cooperation like this not only breaks down barriers between countries inside the grouping or partnership, it also magnifies their individual power and influence outside it.
In the trading context, you can see the proof of this in the EU – which I’ll come to in a moment. You can see it in the Commonwealth, where we are expecting to see the value of intra-Commonwealth trade reach one trillion dollars by 2020.
And you can see it in ASEAN’s economic success, and the launch of the ASEAN Economic Community (AEC). Almost two thirds of ASEAN’s growth in the last quarter century has come from productivity gains. Today ASEAN is the fourth largest exporting region in the world, accounting for 7 percent of global exports.
Britain supports ASEAN’s Vision 2025, with its plan to tackle non-tariff barriers, harmonize the regulatory environment and liberalize services. These changes will be crucial for boosting growth in South East Asia and strengthening integration with the rest of the world economy.
We also support the Free Trade Agreements that the EU is pursuing with countries in the region – we see these as laying the foundations for an EU-ASEAN FTA.
The UK, EU and other like-minded economies are gradually building a global free trade network – through the Trans-Pacific Partnership (TPP), the Transatlantic Trade and Investment Partnership (TTIP) and various EU Free Trade Agreements, with the Republic of Korea, Vietnam and Singapore.
An agreement with Japan is in the pipeline. I very much hope to see soon a resumption of negotiations on the EU-Thailand FTA.
Meanwhile, the UK is also advocating a feasibility study on an EU-China FTA.
This is excerpted from a speech delivered by Mr. Swire, the British Foreign Office Minister, in London on Wednesday.
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