Chapter 18

ASIA IN 2015

What will Asia look like in the second decade of the twenty-first century? While no one knows, this doesnt mean all guesses are equally good. To get a better fix on the future, a promising place to start is with three key indicators of the future economic and military position of the principal Asian countries includingbesides the United StatesChina, Japan, Korea, Indonesia, and India. Inclusion of India is based on the premise that its size, growth, and history will make it increasingly influential in the broad Asian region in the twenty-first century. The three key indicators are gross domestic product (GDP), per capita GDP, and military capitalmilitary capital is the accumulated cost of new military procurement, plus spending on military research and development, and minus depreciation of the previously accumulated stock of military capital. To be sure, there are many other important indicators of what the future of Asia will look like. For example, trade and investment flows will both portend and affect the future, as will the leadership successions in China and Indonesia, Chinas management of Hong Kong, the relationship between Taiwan and the mainland, and the process of reunification in Korea. Nevertheless, these three key quantitative indicators provide a good place to begin consideration of what the future Asian environment will look like. All of the estimates summarized below are based on a recently published RAND study, using exchange rates that reflect the ______________
A slightly edited version was published in The Wall Street Journal on March 20, 1997 under the same title.

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real purchasing power of the respective currencies expressed in 1997 U.S. dollars, rather than the nominal current exchange rates of these currencies. In 2015, Chinas GDP will reach between 11 and 12 trillion U.S. dollars. This estimate is the average of two alternative scenarios for Chinas growth in the intervening period: one positing stable and sustained growth, and the other envisaging slower, interrupted growth. Even in the higher growth scenario, we envisaged an appreciable slowing in Chinas growth rates from the extremely high levels of the 1980s and 1990s. This slowing, which would still leave China with a substantial average annual growth rate between 4 and 5 percent (compared to World Bank estimates of 8 percent), is due to several factors: higher initial GDP (so a specified percentage growth requires larger annual increments), government policy explicitly designed to transfer wealth from the high-growth eastern provinces to poorer western ones, and a modest reduction in the inflow of capital to the mainland from overseas Chinese sources. (Hong Kong and Taiwan are not included in the estimates for China.) The corresponding forecast for the GDP of the United States is about the same as that for Chinabetween 11 and 12 trillion dollars compared with the current annual U.S. GDP of about 7.5 trillion. The forecasts for the other major Asian countries are shown in Table 18.1. The estimates shown in the table compare with current GDP levels of about $5 trillion for China, $3 trillion for Japan, $1.3 trillion for India, $430 billion for Korea, and $545 billion for Indonesia.
Table 18.1 Gross Domestic Products, 2015 (in trillions of 1997 U.S. dollars)
United States 1112 China 1112 Japan 45 India 4 Korea 2 Indonesia 1.52.0 SOURCE: Charles Wolf and K. C. Yeh. Long-Term Economic and Military Trends, 19942015, 1995.

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Two other benchmarks are useful for sizing these forecasts. Using the same forecasting model, the RAND study estimated that Germanys GDP will reach about $2.7 trillion in 2015, compared to about $1.7 trillion at present. Assuming that Germanys GDP is about 40 percent of that of the European Union, the Asian countries shown in the table, including the United States, will comprise about 70 percent of the global product, while that of the European Union will be about 15 percent. By 2015, the GDP of the United States will represent about a quarter of the global economy, about the same proportion as at the present time. Chinas economy, which will also constitute about a quarter of the global product in 2015, will be about twice as large as that of Japan, and Koreas GDP will be half that of Japan. Indias GDP will, by 2015, be about 60 percent as large as that of the European Union. Based on population estimates from United Nations and national sources, per capita GDP estimates for 2015 show, not surprisingly, a very different picture. Japans per capita GDP will reach about $36,000, about the same as that of the United States (and Germany), while Chinas per capita GDP will be about one quarter of this figure. Koreas reunified 80 million population will reach about two-thirds of the per capita figure of the richer countries, while per capita GDP in India will be only 40 percent that of China, and Indonesias per capita GDP (about $6,600) will be nearly twice that of India. Use of military capital as a relevant indicator requires explanation. Military capital is only a partial and imperfect indicator of effective military capabilities. These depend on much more than procurement of military hardware, and spending on military research and development. Military capabilities also depend on training, leadership, morale, and command and control of military forces. And, of course, military capabilities themselves do not indicate much about either the intentions or purposes for which these capabilities may be used. Nevertheless, despite its limitations, the accumulation of military capital does provide one salient indicator of military power. Estimated military capital in 2015, drawn from the same RAND study as Table 18.1, is summarized in Table 18.2.

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Table 18.2 Military Capital, 2015 (in billions of 1997 dollars)

United States China Japan Korea India Indonesia 895 410 173 129 353 60

Except for the United States estimate, all of the military capital stock figures represent substantial increases from the corresponding 1997 levels. For example, the estimates for China and Japan are about double their present levels, while the estimate for India is nearly four times its present figure. For the United States, the 2015 military capital estimate is actually about 25 percent less than the current level, because annual depreciation of the large existing military capital stocks of the United States is likely to exceed new military procurement in the intervening years. These estimates of GDP, per capita GDP, and military capital provide a partial answer to the question of what Asia will look like in 2015: 1. The economies and military scale of the principal Asian countries will grow substantially, relative to those of the rest of the world. The GDP and military capital of China will become relatively large, while its per capita GDP will remain relatively low. India will reach a substantially increased economic and military scale in the Asian region. The economic and military capabilities of a reunified Korea will increase relative to those of Japan. The economic and military position of the United States in Asia will remain prominent, although its relative scale will be reduced.

2. 3. 4. 5.

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6.

Chinas position in the region, though greatly enhanced, will be modulated by several factors: notably, an appreciable slowing of its high rate of growth during the last decade, and the counterweights presented by Japan, India, Korea, and Indonesia, as well as the United States.

Postaudit The only estimates and conclusions in this essay that warrant a significant change are those relating to the United States. Developments since 9/11 would call for increasing rather than reducing the relative U.S. standing.