The Advantages and Challenges in a Close Relationship with Asia

Conversations and commentary about Hawaii's future often revolve around the need for energy self-sufficiency, food self-sufficiency, pumping up the construction industry, or attracting more tourists to our shores. Less emphasized is Hawaii's vital connection to Asia as the U.S. state closest to the growing center of global economic importance. How long have we strove to fashion Hawaii as the bridge connecting the mainland and Asia but always come up short?

Owing to the success of the recent Hawaii-hosted APEC, the appreciation and visibility of Hawaii as a vital link between both sides of the Pacific is at an all-time high. But are we really ready to permanently capitalize on this good fortune and use it to create more and better jobs to the degree that so many keiki o ka 'aina will not go to the mainland in search of jobs that pay more than minimum wage? Or will we just look inward and create barriers to starting businesses and foreign investment that will prevent the creation of better jobs, cutting ourselves off from Asia and the world in general.

However much advantage to Hawaii's economy a closer relationship to Asia holds, there are a number of challenges this growing global center poses for the U.S. For example:

Japan has been in relative decline for the last 20-plus years. Japanese national debt stands close to 218 percent of GDP. The political system is in turmoil with prime ministers constantly being replaced after short terms of service. The strength of the yen has hurt Japanese exports — the strength of what was once called the "Japanese economic miracle." The Japanese-American security relationship has served the interests of both countries well. It is the lynchpin of the U.S. position in Asia. Nevertheless, it is challenged over the ongoing dispute on resolving U.S. basing issues in Okinawa.

On the global stage, China's rise has been breathtaking. Within the short period of 30 years, it has soared to economic heights surpassing Japan to become the second largest economy in the world. Its 3.2 trillion U.S. dollars in foreign reserves is the envy of all. Its growing military power and unclear intentions have sparked a relative arms race in Asia. Domestically, economic policies have lifted millions out of poverty. Yet disparities in regional development as well as in personal wealth persist, corruption is rampant, housing remains out of the reach of many, and it seems just a matter of time before China's economic bubble bursts. More stringent labor standards and higher wages are forcing some investors to build factories in other places such as Cambodia where labor costs are only 20 percent of what they are in China.

Under the leadership of President Lee Myung-bak, South Korea is America's staunchest Asian ally. But what will the relationship be under Lee's successor? The U.S.-Korea relationship under Lee's predecessor was problematic due to differences over how to deal with North Korea. While large scale demonstrations against the importation of American beef have been tamed, will similar protests erupt against some other American product?

India has been touted as a democratic counter balance to China. However, statements and actions by the Indian government make it clear that while India wants a closer relationship with the U.S., it will not automatically do everything the U.S. wishes. For example, it wasn't supportive of U.S. sanctions on Iran or pressure on Burma to democratize. India's economic rise has been impressive, but it is now hitting snags due to political bickering.

Despite the challenges, Hawaii's and America's economic future lies in tapping the mounting consumer power of Asia's growing middle class.

About the author: William Sharp teaches courses about East Asian politics at HPU and hosts Asia in Review, a weekly TV show dedicated to substantive discussion of contemporary events in Asia. He is also the author of a new book, "Random Views of Asia from the Mid-Pacific" that is built around more than 50 essays that were originally written for the column "Look East" which appeared in the Honolulu Star-Bulletin and provides an easy to read, quick study on contemporary Asia.

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