11/9/2014

The key challenges for Asia and the Pacific in 2015 - Forum:Blog Forum:Blog | The World Economic Forum

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The key challenges for

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By Kevin Rudd
Nov 9 2014
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Despite positive growth prospects, respondents to the Survey on the Global Agenda
2015 across the Asia Pacific believe the region faces inherent challenges, including
structural economic reforms, effective management of urbanization, and geopolitical
conflicts.
In recent years much of Asias geopolitical tension has been centred upon the South
China Sea and on maritime disputes between China and Vietnam, Japan and the
Philippines. But for Kevin Rudd, former prime minister of Australia, the roots of Asias
fundamental geopolitical disputes reside in the low degree of cultural and linguistic
identification as a community, and in long-standing historical animosities fuelled by
unresolved territorial boundaries.
Rudd highlights how opposing forces of nationalism and globalization are fuelling
deep regional acrimonies in countries that are otherwise interconnected through
supply chains. We need to involve a common concept of community through the
wider East Asia-Pacific, he says.
In Rudds view, the formation of this community will involve economic, political,
security and socio-cultural concepts. Trade propositions such as the Regional
Comprehensive Economic Partnership (RCEP) are an important step, as are
stronger effective political mechanisms within the Asia-Pacific Economic
Cooperation (APEC) forum and the ASEAN Regional Forum.
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The key challenges for Asia and the Pacific in 2015 - Forum:Blog Forum:Blog | The World Economic Forum

The truth is, regional institutions in the Asia- Pacific are not as robust as those that
have evolved in Europe, says Rudd. Because the Asia-Pacific region looms as
being the strategic cockpit of the 21st century, we need more robust institutions than
those we have at present.
Another challenge for Asia will be presented in the rapid growth of cities across the
region. There are already 170 cities in China that have populations in excess of 1
million citizens, and the country is forecast to gain 292 million city-dwellers by 2050.
Meanwhile, a further 404 million Indians are expected to have migrated to cities.
These increases will place a heavy strain on national infrastructure, requiring
increased investment in housing, transportation, healthcare and education, among
other services. In the long run, Asian economies will also be reshaped by significant
demographic shifts.
Population ageing has profound implications, not least in terms of how sufficient
revenue can be generated to sustain the enormous infrastructure investment by the
government, says Rudd. Parallel reforms will also be required for long-term social
security insurance, as the traditional patterns of looking after older people will
change as family sizes decrease.
In light of these incoming challenges, Asian countries are reforming their economic
structures in a bid to adapt. In 2012, President Shinzo Abe initiated bold reforms in
Japan for economic revitalization. Dubbed Abenomics, the stimulus package
focused on monetary, fiscal and growth strategies, but critics argue Japan needs
structural reforms for the ambitious economic experiment to succeed.
Meanwhile, Chinas reform agenda, unveiled at the Communist Partys Central
Committee 2013 meeting, placed clear priority on market forces. President Xi
Jinpings administration is also aiming to boost the role of the national private sector,
to encourage the efficient allocation of financial resources to SMEs, and to reduce
Chinas role in strengthening market prices.
If China succeeds in this direction, then we are going to have a buoyant half century
ahead, Rudd explains. If not, it wont only be China that faces a massive problem.
The rest of Asia will too, and given the global importance of the Chinese economy,
so will the rest of the world.
The Outlook on the Global Agenda 2015 report is now live.
This article was drafted for the World Economic Forums Outlook on the Global
Agenda 2015 report, based on an interview with Kevin Rudd.
Author: Kevin Rudd is former prime minister of Australia.
Image: A man rides an escalator near Shanghai Tower (R, under construction), Jin
Mao Tower (C) and the Shanghai World Financial Center (L) at the Pudong financial
district in Shanghai July 4, 2013. REUTERS/Carlos Barria
Posted by Kevin Rudd - 05:54
All opinions expressed are those of the author. The World Economic Forum Blog is an independent and neutral platform
dedicated to generating debate around the key topics that shape global, regional and industry agendas.
Asia

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Population Growth

Asia-Pacific Community

China

Global Agenda Councils

Rapid Growth Of Cities

Development

Japan

Economics And Growth

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Outlook On The Global Agenda 2015

Structural Reforms

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