A collaborative article by the Asia Business Council and McKinsey delved into the perspectives of business leaders in Asia as they navigate an emerging and potentially more turbulent era, in terms of world order, technology, demographics, resource and energy systems, and financial capitalization. Overall, they believe the region can sustain its growth but will need strategic adjustments to address disruptions and volatility in a multipolar world.
Increasingly, new cross-border environmental regulations like the EU’s carbon tax will leave countries such as Bangladesh and Cambodia little choice but to play catch up or risk losing out on global trade. Asian markets can embrace sustainability through artificial intelligence, clean energy investments and more collaboration among industries.
The Philippines, Indonesia, Vietnam, India, and Thailand have benefited from global supply chain diversification and are poised to capitalize on their large labor pool and potential consumer market to reach the next level of development
With Chinese lending to Africa shrinking, the continent must find ways to support its own development. It could do so by increasing internal trade, diversifying tradeable goods away from commodities, and developing its relationship with the U.S.
In a more competitive world with multiple economic hubs, the once-dominant influence of East-West superconnectors is waning. Hong Kong must capitalise on the Greater Bay Area, Belt and Road Initiative and focus on ‘sweet spot’ sectors where China and other regions seek better cooperation.
Washington should double down on combining policy support, financial incentives and advances in technology, to reduce its reliance on China-sourced material. As it strives to build a home-grown supply chain, investing in Canada’s critical minerals could be a game-changer.
For all the talk of the benefits reshoring and ‘de-risking’ can bring domestic workers, they also introduce new risks to people’s way of life. Neither the US nor China can afford to ignore these new risks, including limited job creation, expensive subsidies and greater material costs.
The US is turning to Vietnam in its attempts to diversify supply chains and curb China’s regional influence, but that is easier said than done. Vietnam’s booming durian exports are just one example of its close economic dependence on China, complicating US ‘friendshoring’ efforts.
China’s growth trajectory, the impact of global economic conditions, geopolitical tensions and ambiguity on the energy transition are all risks. But businesses can prepare by boosting in-house intelligence and diversity – both in recruitment and operations.
Asia’s economic growth and development have been unparalleled over the past 75 years. Poverty has declined continuously and more rapidly than at any time in recorded history, and significant welfare gains have been achieved. These achievements have been driven by Asia’s growing participation in international trade and global value chains, which underpin the globalization process. More broadly, globalization refers to the integration of economies that has been achieved through growing levels of international trade, finance, and investment, and through the mounting exchanges of people, ideas, and data.
