Asian Century

Business Daily wonders if this will be the Asian century, or will the recession derail the great ambitions of India and China?

Now that America's economy is broken, is economic power shifting across the Pacific or have countries that rose by making things to export to the rest of the world now run into trouble?

There are two views. On the one hand, some assert that America has let everyone else down by borrowing beyond its means and that economic power is now shifting away. In this scenario, the Asian manufacturing countries will be relatively unhurt by recession everywhere else, and poised to gain when we all emerge.

The counter-argument is that Asian countries like South Korea and China, in particular, have become prosperous by manufacturing cheap and exporting. In other words, they depend on Western consumption and now that Westerners aren't consuming like there's no tomorrow, Asian manufacturers are in a hole.

Kishore Mahbubani is a professor at the Lee Kuan Yew School of Public Policy at the National University of Singapore, and author of a new book, The New Asian Hemisphere: The Irresistible Shift of Power to the East - he thinks a time of Western smugness is over.

There is no doubt that there has been some sort of shift. After all, the G8 group of countries has become the G20. India and China are economic forces, not to mention Brazil. There are leading companies like Embraer, the Brazilian aircraft maker, or Tata, the Indian conglomerate into everything from steel to hotels to finance to the new Tata Nano super-cheap car.

Arindam Bhattacharya of the Boston Consulting Group thinks that there's a vibrancy to companies in the new economies - in Asia but also in South America.

There is also a view that the Asian economies may not emerge that well out of this recession. On this argument, many of them have built themselves as exporters and not consumers - all very virtuous no doubt but not much use when demand abroad falls. Steve Evans asked Ajay Chhibber, Assistant Secretary-General of the United Nations what the Asian economies had to do not to fall into this trap.