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Balances and Imbalances in the two major Asian economies

by Matthew Gertken

Making Sense of "Asia"

East Asia has passed through anticolonial revolutions, civil wars, rapid growth, and financial crises. Now it hosts a number of populous, prosperous, and increasingly self-confident states with greater means than ever of acting independently to secure their resources and territory. It is ripe for competition and conflict.

The region divides up geographically into blocs. One obvious grouping consists of the major archipelagos—Japan, the Philippines, Indonesia—which form a long-standing trading system that extends into the Indian Ocean. These states developed with a focus on sea trade. Japan’s history prior to the 19th century is characterized not by isolation, as is commonly stated, so much as by highly selective opening. The purpose was to appropriate superior foreign technology rather than allow it to dominate.

Indonesia and the Philippines share the maritime focus but contrast with Japan in their diversity and fragmentation. Indonesia has been trading actively since at least as far back as the seventh century, but it consisted of a multitude of indigenous groups ruled by waves of immigrants that brought the world’s major religions and organizational systems. The Philippines suffered a similar fate. Unlike Japan, these scattered kingdoms lacked the unity to control foreigners or seal them off.

The second grouping of Asian states—countries like China, Thailand, and Myanmar—also developed an extensive coastal trade, but they consist primarily of large inland populations. The North China Plain and the Yangtze River up to the Sichuan Basin produced dozens of kingdoms with large armies. Merchants might get rich at sea, but ultimately they lay exposed to the combined might of people from the interior—whether peasants or barbarian invaders—who, if brought under effective leadership, could levy taxes, build infrastructure, and amass great armies. Southern China, however aloof it stood from the northern masses, repeatedly fell subject to them.

The fault lines of the 20th century run through countries that faced the greatest strain in balancing these two maritime and inland systems. Korea and Vietnam divided along the old lines, with the native parties that strove for internal control summoning different sets of foreigners for assistance, thus causing further division. Meanwhile, Taiwan split from Beijing, just as it did in the 17th century when Zheng Chenggong fled to the island to prolong the Ming resistance against Manchu invaders. His brief invasion of Shanghai at that time helps to explain modern Beijing’s visceral reaction to the existence of a rival military power rooted there.

Looking at the way Asian states responded to European and American colonization, Japan benefited from the fact that it had a unified culture with an effective central authority, unlike almost any of the others (except perhaps Thailand). The Portuguese and the Spanish had some early success with introducing Christianity into Japan, but Tokyo rapidly moved to overturn this dissident system of thought. The Japanese proved extremely skillful at playing off the various European powers against each other, favoring the Protestant Dutch against Catholic Spain. By the time the United States arrived, the Japanese faced an irresistible combination of external and internal pressure for change. The Japanese conformed quickly to Western standards of statehood and technology and began to expand their influence abroad.

China’s initial serious contact with the West was not a happy one. In the 1800s internal stresses and Western imperialist pressures backed by overwhelming military might created a 100-year period where China went from seeing itself as a leading civilization to being a subjected and stressed country. Japan’s rapid adaption to contact with the West and the growth of Japanese militarism enabled it to defeat China in the 1894-95 war between the two countries over influence in Korea. Before this, the first Opium War (1839-42) between China and Great Britain – when China tried to block the import of opium – had led to a humiliating defeat for China and the imposition of the first of many onerous Treaties.

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Further reading


  • Askew, Marc (ed.). Legitimacy Crisis in Thailand. Chiang Mai, Thailand: Silkworm Books, 2010. A collection of academic studies explaining the causes and consequences of Thailand’s rolling political crisis.
  • Bokhari, Kamran, and Farid Senzai. Political Islam in the Age of Democratization. New York: Palgrave Macmillan, 2013. Bokhari is vice-president of Middle Eastern and South Asian Affairs at Stratfor. Understanding political Islam in the Middle East has value even for those primarily interested in the future of Indonesia, the Philippines, and Malaysia.
  • Kaplan, Robert D. Asia’s Cauldron: The South China Sea and the End of a Stable Pacific. New York: Random House, 2014. Kaplan is Stratfor’s chief geopolitical analyst and a world-renowned author on geopolitics. Released in March 2014, this book is his latest.
  • Pettis, Michael. The Great Rebalancing: Trade, Conflict, and the Perilous Road Ahead for the World Economy. Princeton, NJ: Princeton University Press, 2013. Pettis is a bold and instructive commentator, especially unflinching in his assessments of China’s economy.
  • Steinberg, David I. Burma/Myanmar: What Everyone Needs to Know. 2nd ed. Oxford, UK: Oxford University Press, 2013. Steinberg is an authority on East Asia, and here he gives a concise introduction to a strategically positioned country that has just embarked on economic opening and political reform.
  • Tchou, W. Kang (ed.). China and the Humanities: At the Crossroads of the Human and the Humane. Champaign, IL: Common Ground, 2013. Tchou is an up-and-coming China scholar who has assembled a variety of academic papers on recent cultural and academic developments in China.
  • Vu, Tuong. Paths to Development in Asia: South Korea, Vietnam, China, and Indonesia. Cambridge, UK: Cambridge University Press, 2010. Everyone knows that the state plays a powerful role in East Asian economies, but Vu dives deep into several countries to show how the state affected their development paths.



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