A Conversation on Asia's Economic Challenges

Frederic Neumann '00, PhD '05, Co-Head Of Asian Economic Research and Managing Director, Global Research, The Hong Kong and Shanghai Banking Corporation Limited (HSBC)

Moderated by John Lipsky, Senior Fellow, Foreign Policy Institute and Peter G. Peterson Distinguished Scholar, Henry A. Kissinger Center for Global Affairs

February 13, 2017

Frederic Neumann took on the imposing task of analyzing challenges facing Asia today and deliberating over its future prospects. Neumann described the present situation as a balancing act involving delicate and difficult choices in the midst of miscellaneous pressures.

The discussion started with a brief history of how the West and the East have gotten where they are today; the former stagnating and the latter soaring. He attributed the troubles in the West as the fallout of the 2008 financial crisis, and said Asia's strong growth is due to the region’s ability to push up leverage and offset slow demand from the West. Neumann argued that the problem with debt-driven growth is that it is not sustainable and the region must pursue export-led growth to restore the balance. Yet the demographic trends, growing labor costs, surging protectionism and changing consumption patterns all slow trade and suggest a new reality for Asia, he contended. Most of the factors that drive these bleak prospects are structural and there is no quick medicine for solving them. Neumann argued that the answer to regional problems lies in raising productivity growth, which means that hard domestic choices await. 

Questions from the audience covered a broad range of topics, including China’s dwindling forex reserves, demonetization in India, deflation in Japan, and innovation in China.