In September 1997, at the height of the Asian financial crisis, former US Treasury secretary Robert Rubin visited China's Great Wall. It was a brief respite from the tense talks in which he was embroiled in Beijing.
As we walked along, he paused for a moment, pulled at one of the wall's stones and deadpanned: "Yep, pretty solid. Hopefully we can say the same about the yuan."
The reference was to the first of two missions back in the Chinese capital -- encouraging China not to devalue its currency. The concern was that China would join Thailand in weakening its exchange rate. Even though Indonesia and South Korea did it too, investors predicted disaster if China were to do so.
Today marks the 10th anniversary of the start of the Asian crisis, and China's currency is still effectively pegged. China formally severed the yuan's link to the US dollar in 2005, though it has amassed more than US$1 trillion of reserves to hold the exchange rate in place. Even so, getting China to keep the yuan steady was a big coup for Rubin at the time.
Ten years on, Rubin's other mission in Beijing that week -- nudging China toward democracy -- isn't looking so good. At the time, US president Bill Clinton felt Rubin, a Goldman Sachs Group Inc alumnus, would have more success than his State Department in making the case for more openness. The pitch: Democracy leads to prosperity.
Given China's 11 percent growth and rising global stature, it's doubtful many officials in Beijing regret ignoring the US' democracy-is-best message. What may be surprising, though, is how China's views on democracy are gaining favor in Asia.
The region is certainly back. While much work remains to be done to improve economies and spread the benefits of growth, Asia is again a hot investment destination. Many -- including Federal Reserve Bank of New York president Tim Geithner -- say the crisis made Asia more resilient.
"They are much less likely to face the type of crisis, the acute, self-reinforcing panic produced by the balance sheet problems of that era," Geithner, who visited China's Great Wall with Rubin 10 years ago as a Treasury official, said of the region's economies on June 20.
One of US President George W. Bush's most consistent philosophies is that democracy is a necessary ingredient to economic success. It's well-known that China, Russia and Venezuela see things differently. However, less recognized is how Asia isn't embracing political openness the way officials in Washington expected in the late 1990s.
Thailand is one example. Last September, popularly elected prime minister Thaksin Shinawatra was removed by a coup. Prior to that, Thailand's post-crisis recovery made it an investment darling. Since September, three years of economic gains and wealth creation have been squandered. Singapore's politics, meanwhile, haven't changed much since the late 1990s. Hong Kong residents still don't have universal suffrage.
Asia does have its democracy success stories. Taiwan is one example, of course. India, Japan, South Korea, Malaysia, Indo-nesia and the Philippines are others.
Yet there are a couple of reasons to be disappointed about the state of democracy in Asia. One is weak government institutions: They hold democracies together more than national leaders do.
The Philippines is a case in point. While Gloria Arroyo is the elected president, democracy hasn't been the panacea that was supposed to reduce poverty. The country was never one of the Asian tigers, and corruption remains rampant.
Across Asia, strong ministries, independent courts, a free press, credible central banks and outside watchdog agencies would not only enhance democracy, but also the forces of capitalism. In Thailand, Thaksin governed according to his own playbook and circumvented the rule of law. A constitution and elections isn't enough to ensure democracy.
The other reason democracy isn't thriving in many parts of Asia is disillusionment with the process, coupled with the example offered by China. Instead of US-style government, Asia may be moving toward "illiberal democracy."
The phrase was made popular by Fareed Zakaria in a Foreign Affairs article in 1997, the year the Asian financial crisis began.
It refers to a model in which leaders are elected to some extent, but civil liberties and press freedom are kept under tight watch in the name of stability. Some call such leaders "elected autocrats."
The US' founders pursued democracy in sync with capitalism. In the age of globalization, though, capitalism often widens the gap between rich and poor, and even undermines the push toward democracy. If political freedom doesn't quickly translate into riches, populations will question its utility.
Meeting with businesspeople in India, one often hears some variation of "it's so hard for us to get things done, but China's top-down system can do what it wants, when it wants."
It's not that Indians want to live in a China-like system that censors the Internet.
It's more a recognition that democracy can have its limits when it comes to economic policy making.
Rumblings in Asia may increasingly shift toward economic growth first, full-blown democracy second. It doesn't mean openness and capitalism are incompatible in the long run. It's just that Asia needs more convincing in the short run.
William Pesek is a Bloomberg News columnist. The opinions expressed are his own.
Two sets of economic data released last week by the Directorate-General of Budget, Accounting and Statistics (DGBAS) have drawn mixed reactions from the public: One on the nation’s economic performance in the first quarter of the year and the other on Taiwan’s household wealth distribution in 2021. GDP growth for the first quarter was faster than expected, at 6.51 percent year-on-year, an acceleration from the previous quarter’s 4.93 percent and higher than the agency’s February estimate of 5.92 percent. It was also the highest growth since the second quarter of 2021, when the economy expanded 8.07 percent, DGBAS data showed. The growth
In the intricate ballet of geopolitics, names signify more than mere identification: They embody history, culture and sovereignty. The recent decision by China to refer to Arunachal Pradesh as “Tsang Nan” or South Tibet, and to rename Tibet as “Xizang,” is a strategic move that extends beyond cartography into the realm of diplomatic signaling. This op-ed explores the implications of these actions and India’s potential response. Names are potent symbols in international relations, encapsulating the essence of a nation’s stance on territorial disputes. China’s choice to rename regions within Indian territory is not merely a linguistic exercise, but a symbolic assertion
More than seven months into the armed conflict in Gaza, the International Court of Justice ordered Israel to take “immediate and effective measures” to protect Palestinians in Gaza from the risk of genocide following a case brought by South Africa regarding Israel’s breaches of the 1948 Genocide Convention. The international community, including Amnesty International, called for an immediate ceasefire by all parties to prevent further loss of civilian lives and to ensure access to life-saving aid. Several protests have been organized around the world, including at the University of California Los Angeles (UCLA) and many other universities in the US.
In the 2022 book Danger Zone: The Coming Conflict with China, academics Hal Brands and Michael Beckley warned, against conventional wisdom, that it was not a rising China that the US and its allies had to fear, but a declining China. This is because “peaking powers” — nations at the peak of their relative power and staring over the precipice of decline — are particularly dangerous, as they might believe they only have a narrow window of opportunity to grab what they can before decline sets in, they said. The tailwinds that propelled China’s spectacular economic rise over the past