Asia is also better placed to withstand US-led disruption now than in the past: 60 years ago it was the world’s poorest region, but it now accounts for a third of the world’s gross domestic product and is likely to reach more than 50 per cent by 2050.
"Asia’s prosperity is clearly tied to a more open trading environment."
Mark Whelan, Group Executive, Institutional, ANZ
Recent data suggests export growth is returning to most Asia Pacific nations, with Korean exports – an excellent gauge of global trade – showing a 20 per cent rise from a year earlier.
China is one exception as it undergoes dramatic structural reform. Even so, the fact Xi Jinping became the first Chinese President to address world political and business leaders at the World Economic Forum this year would suggest an encouraging approach to a more open trading environment from China – at a time when the US is becoming more protectionist.
Ironically the positive signs for trade we are seeing in Asia could very well be sustained by US demand if promised US stimulus packages start to kick in and overly protectionist policies don’t emerge.
This stands to benefit raw material exporters in the Asia-Pacific like Australia, Indonesia, Malaysia and Thailand, and also the region more broadly, thanks to the complex supply chains which have evolved in recent years.
Considering the longer-term, regional integration looks set to continue even if the TPP is truly finished. For one thing, there will be a lot more focus on China’s role as the champion of multilateral trade deals, through initiatives like the Regional Comprehensive Economic Partnership (RCEP).
But it’s important to remember it’s not just trade flows that dictate prosperity: cross-border investment of the type Asia has typically welcomed plays a vast role.
Putting aside the very real geopolitical issues that can complicate such matters, China’s transformation into an exporter of capital and owner of more productive assets outside its borders should help cement economic integration within the region.
For banks like ANZ with a strong presence in Asia, we see daily the magnitude and importance of trade flows within the region and globally, and how this drives the world economy then ultimately feeds back to our home markets.
Looking ahead, we are optimistic - while there’s no denying they exist - the current geopolitical pressures won’t be enough to upset a system of global trade anchored in Asia that has flourished in decades past, even if the US pulls away.
Mark Whelan is Group Executive, Institutional at ANZ