The Asia Effect

Every night, it seems, I receive two or three calls from people trying to persuade me to purchase their product or service—a better credit card, a new water filter, a free air ticket. These calls used to be annoying; but now I find them rather fascinating and quite enjoyable.

Occasionally I end up involved in an interesting conversation with an amiable fellow from India, or a pleasant girl from the Philippines. This is intriguing. On virtually any night of week, for free and from the comfort of my own couch, I can learn firsthand about the weather in Baguio City, or politics in Islamabad. Asia has a very real presence in my home, and probably yours too.

Insignificant as it might seem, this personal story symbolizes a momentous trend occurring on the global scene—the incredible rise of the Far East.

Once beset with internal division and economic instability, Asia has moved from being significantly underdeveloped to emerging as the production house of the world.

We all have an intimate connection with this region. Our televisions, dvd players, shoes, microwaves, designer clothes and car stereos, and most Wal-Mart goods come from Asia. The increasingly popular Toyota, Nissan and Honda vehicles are manufactured in Japan. The semiconductor chips that form the brains of China’s technology goods came from Taiwan and South Korea.

India and the Philippines are home to call centers for some of America’s largest companies. Call tech support or customer service at Dell, United Airlines, GE, Microsoft, American Express, Citibank, ibm or Hewlett Packard and you’re more likely to be talking with someone from India than Idaho. Even your tax return could be prepared by a graduate accountant in India without your knowing it.

Asia has significantly more relevance to your life than you probably think!

And we’ve only considered the tip of the Asian iceberg. China and Japan’s purchase of U.S. bonds and Treasuries finances America’s current spending spree. The Australian, Latin American and African mining industry booms owe their success largely to Chinese projects and the region’s insatiable appetite for minerals. And politically, China, Japan and India are playing greater roles on the world scene.

Asia’s renewed political presence is redefining global politics, driving the evolution of historical alliances and proving to be a new challenge for American, and even European, foreign policy. Eastern influence now permeates the politics, economies and cultures of even the world’s most powerful states.

The Far East can no longer be marginalized or left alone. First-rate powers are seeking assurances and assistance from China, India, Japan and even the smaller Asian nations.

Asia’s mounting influence impacts entire regions and continents. China’s growing presence in Latin America, for example, is helping redefine the political landscape of the region—and the outcome doesn’t look good for America.

Wracked with internal division and embroiled in a war against radical Islam, America has failed to give Asia’s rise the attention it warrants. At a time when Asian states are becoming more influential in global politics, the U.S., though highly involved in trade within the region, finds itself being increasingly shunned by the East. Where America has been neglecting many of its traditional allies in Asia, China, India and Japan are not. Asia is no longer a dependable partner for Washington.

Asia’s rise will affect Europe even more dramatically. European integration is proving very challenging. Asia’s rise will prove to be a catalyst for Europe’s unification and subsequent ascension to power.

With largely non-Christian Asia growing more influential and the Islamic Middle East doing the same, European nations are beginning to realize that their religion and culture are under threat. Europe is starting to recognize that unless it sobers up and casts off the shackles of disunity, its largely Christian continent could be overrun by Islam or overtaken by Asia.

We need to learn about the rise of the East. Why? Because it is acting as a catalyst for two other global phenomena—the decline of the United States and the unification of Europe.

Dawn of the East

No one denies that Asia has had a global presence for decades, though that presence has recently been outshined by the machinations of other great powers. Times are changing, however.

The large-scale offshoring of factories and plants to places like China is redefining the manufacturing sector of the American economy. The outsourcing of service jobs such as call-center, tech-support and customer-service jobs to India is revolutionizing the way business is done in America, as well as Australia and many European nations. Asia’s deepening imprint increasingly impacts not only America, but also the whole world.

But by far the greatest impact has been the radical change in the American economy over the past half-century. Asia is largely the reason that the U.S. economy has moved from being a production-based economy to primarily a consumer-based one.

In his book Three Billion New Capitalists, Clyde Prestowitz wrote, “Increasingly, American, and also Japanese and European, companies are finding China’s low costs irresistible.” Prestowitz, president of the Economic Strategy Institute in Washington, d.c., and former counselor to the Secretary of Commerce during the Reagan administration, cites Jim Hemmerling of the Boston Consulting Group, who says that “going offshore, especially to China, will save a manufacturer 20-50 percent of the landed cost of making and shipping the goods. … Building and equipping factories in China can cost as much as 70 percent less than in the developed countries. Thus a $50 million factory in the United States might be available in China for as little as $15 million” (emphasis mine throughout).

This is startling. Is it all that surprising that American and European companies so frequently set sail to the Far East to set up shop?

China’s popularity as a place for corporations to manufacture reduced-cost goods has grown exponentially in recent times. For the entire decade of the 1980s, foreign direct investment (fdi) in China totaled $20 billion. The following decade, that figure soared to $200 billion, and from 2000 to 2003 it more than doubled to $450 billion—which meant that China surpassed the U.S. as the world’s top recipient of fdi.

In 2002, Wal-Mart imported about $12 billion worth of goods from China into the U.S. In 2003, this figure grew to an estimated $15 billion, or about 15 percent of America’s trade deficit with China for that year. As a company, Wal-Mart imports more from China than the entire nation of Germany does.

By developing into a manufacturing powerhouse, China has successfully carved itself a foothold into the economies, and even the lifestyles, of the Western world.

Many claim that outsourcing manufacturing jobs is a win-win scenario. This is an extremely short-sighted view. While corporations benefit from cheaper costs, and Asian nations such as China benefit from the influx of fdi, the nation that is benefitting from lower costs is also losing jobs, money and investment. This disturbing trend has been hurting the American economy for years!

Asia’s Common Denominator

As Asia has woven a common economic thread among nations, China has emerged as a tie that increasingly binds Asian nations together.

The analytical magazine American Prospect noted that Beijing is now the nucleus of Asia. “In Singapore, high officials describe the recent rise of China as akin to the arrival of a new sun in the solar system. All over Asia, one hears talk of a shift, not in the balance of power but in the ‘balance of influence.’ In a poll asking Thais which nation they considered their country’s closest ally, the response was 75 percent for China against 9 percent for the United States” (March 3, 2005). In the Philippines, Chinese pop stars are topping the charts and enjoying unprecedented success.

James F. Hoge Jr., editor of the analytical journal Foreign Affairs, noted China’s growing presence in Asia in his July-August 2004 article “A Global Power Shift in the Making”: “China has become the engine driving the recovery of other Asian economies from the setbacks of the 1990s,” he wrote. With more than a billion people, China is saturated with cheap labor and the ability to produce low-end goods. But it has lacked the technological knowledge and infrastructure to produce much-needed high-end goods. This is where some smaller Asian nations enter.

As the world leaders in production of high-end goods, Taiwan, South Korea and Japan are the primary suppliers of such goods to China. According to Prestowitz, “Although China is the world’s largest producer of such items as dvds, microwave ovens and television sets, it imports over 80 percent of the semiconductor chips that are the brains of these devices” (op. cit.). In 2000, China only produced $900 million worth of semi-conductors, while Taiwan and South Korea produced $11 billion and $12.4 billion worth respectively. Both nations sold most of this merchandise to China.

As the most technologically savvy nation in the region, and with one of the largest economies in the world, Japan too benefits from Chinese demand for high-end products. Tokyo has also come to realize the benefits of outsourcing some of its manufacturing to China. Japanese firms have invested hundreds of millions of dollars in China in their efforts to establish new factories, call centers and manufacturing plants.

One substantial difference separates American outsourcing and offshoring to China from Japan’s efforts to do the same. That difference is Beijing’s reciprocity.

At the expense of the U.S., trade between China and Japan is flourishing. In 2005, for the seventh year in a row, Japan’s trade with China increased, hitting an all-time record of $189.3 billion. Almost 80 percent of Japan’s increase in exports came as a result of Chinese demand. China currently buys more than twice as much from Japan as it does from the U.S. At the same time, Japan’s imports from China also continue to grow. “The truth is that Japan’s imports from China rose by 48 percent in the five years to 2002. Yet Japan’s imports from the U.S., ostensibly its closest ally, declined by more than 23 percent in that period. The end result is that, in 2002, China displaced the U.S. as Japan’s largest source of imports. Given that the Chinese economy is merely an eighth the size of America’s, this is remarkable” (Prospect, UK, May 2004). In matters of trade, China and Japan clearly give each other preferential treatment.

In his Foreign Affairs article, Hoge even wrote that it is China’s emergence that has sparked Japan’s rise out of its decade-long economic malaise. Regarding the region-wide trend of China becoming the common denominator, Hoge stated, “[Asian] states are steadily integrating their economies into a large web through trade and investment treaties. Unlike in the past, however, China—not Japan or the United States—is at the hub.

Bilateral trade between China and the 10-nation bloc of smaller Asian nations called the Association of Southeast Asian Nations (asean) is increasing faster than anyone expected. Trade between asean and China increased 25 percent over the previous year, to nearly us$60 billion in the first half of 2005.

Created in 1967, asean is comprised of Indonesia, Malaysia, Singapore, Thailand, the Philippines, Brunei, Vietnam, Laos, Myanmar and Cambodia. In recent years, asean has become the primary voice for these smaller nations of the region.

In 2002, when China and asean agreed to set up a free-trade area, they set a goal for trade to reach $100 billion by 2005—a goal they more than met a year ahead of schedule.

The growth of intra-Asian trade since 1970 amplifies the growing extent of Asia’s economic cooperation further. In 1970, about 30 percent of Asia’s total exports were intra-Asian. By 2001, that figure was 47 percent; today it is about 53 percent.

Trade and economic interests often strengthen the coalition of nations. With trade among Asian nations burgeoning to new heights, we will soon see these nations integrating politically. As this occurs, Asia will increasingly assume a more strident voice in global affairs.

Asia’s New Role

Asian integration was the principal theme of the book Remapping East Asia: The Construction of a Region. In the introduction, T.J. Pempel, director of the Institute of East Asian Studies at the University of California, Berkeley, stated, “… East Asia has in recent years become considerably more interdependent, connected and cohesive. This increased cohesiveness has been driven by developments, among other things, in trade and investment, cross-border production, banking, technology sharing, popular culture, transportation, communication, and environmental cooperation, as well as in crime, drug and disease control. Such areas demonstrate that the region has developed an increasingly dense network of cross-border cooperation, collaboration, interdependence, and even formalized institutional integration.” Once plagued by disputes and contention, Asian states are growing increasingly aware of the benefits of cohesion rather than conflict. A renewed spirit of collaboration and cooperation is settling over the region. Asia has undergone more political alignment over the past 10 years than in the previous 10 decades.

This newfound cooperation is steadily earning Southeast Asian nations a more prominent role in global politics.

Politically, asean is the face that largely represents the region in international politics. asean owes much of its growing geopolitical weight to the affirmation and support that it receives from such heavyweights as China, India and Japan.

A February 11 article in China Daily noted the mounting global influence of asean, commenting that it is “getting increasingly assertive as a player in regional and world arenas.” When asean sponsored the first East Asia Summit last year, the “United States, Russia and the European Union all had to be content sitting on the bench, watching the events unfold.”

asean’s success, as well as the credence it is being given on the international scene, “indicates that asean is by no means a passing trend in regional cooperation, but a permanent player” (ibid.).

This trend should not be surprising. asean nations comprise some of the most strategic territory in the world. They are cradled between the Indian and Pacific oceans and surround some of the most critical waterways in the world. The region is rich in natural resources, and home to some of the world’s most popular tourist destinations. asean has the potential to be much more than a secondary, to Western eyes, insignificant, “Third World” alliance.

In a sign of where Asian integration could be heading, asean signed a declaration last December that calls for the group to draft its first constitution, which could be signed as early as 2007. Although a lot of water needs to flow under the bridge before Asia can take such a step, the unification of asean nations, especially if China and Japan strengthen their influence over the alliance, would overturn the global balance of power in one gigantic swoop.

Geopolitics

Aside from the growing political influence of asean, Asia is home to three geopolitically crucial national governments—China, Japan and India. Of these three, most recently it has been China, bolstered by its massive economic clout, that has been throwing its weight around on the world scene.

A member of the World Trade Organization since 2001, China has not only transformed the global economic system—but it is also raising its political profile significantly. A member of the United Nations since 1945, Beijing has transitioned from a relatively unimportant state, once marginalized by fellow UN nations, to one of the UN’s most vocal members. Lately, it has proved an especially painful thorn in the side of its counterparts America and Europe.

When Europe and America turned up the heat on Iran over its nuclear program earlier this year, China quickly made clear which side of the line it stood on. Concerned that supporting UN sanctions against Iran might impair its burgeoning relations with the desert rogue, Beijing did as much as possible to thwart American and European efforts.

In fact, as America and Europe wrestled head to head with Iran over the nuclear issue, China made it abundantly clear that what Tehran can expect from Beijing is a warm handshake and a bucketload of money.

The Washington Post highlighted this trend: “China is hastening to complete a deal worth as much as $100 billion that would allow a Chinese state-owned energy firm to take a leading role in developing a vast oil field in Iran, complicating the Bush administration’s efforts to isolate the Middle Eastern nation and roll back its nuclear development plans, according to published reports” (February 17).

As the Post noted, this deal would not only advance China’s quest for resources, it “could also undermine U.S. and European initiatives to halt Tehran’s nuclear plans, possibly generating friction in Beijing’s relations with outside powers.” This is not an irrelevant trend.

China’s refusal to throw its weight behind America and Europe on this issue provides further evidence of its national determination and political independence. To disagree with some middle African state on such an issue would be one thing; but to stand up against Europe and America demonstrates ardent political determination and increasing national confidence.

India too weighed in on the Iranian equation earlier this year. While India has aligned itself more with Europe and America than with China, “the Singh administration has made it clear that despite its public siding with Washington to pressure Tehran, New Delhi will not sacrifice relations with its Iranian ally in the face of U.S. pressure” (Stratfor, February 17). The Iranian situation, according to Stratfor, demonstrates that “India is not interested in being pushed around by the United States; it much prefers performing its traditional balancing act among the big power players” (ibid.). China’s and India’s support of Tehran is making it increasingly difficult for the West to act convincingly against the nation.

As Asia stamps its new geopolitical mark on global affairs, it’s becoming evident that it isn’t shaping up to be nearly as pro-American or pro-Western as the West would like.

Impact on America

As China’s prestige increases, American power stands challenged, especially in Asia. Since World War ii, the U.S. has had strong allies in Asia, particularly Japan and the Philippines. Even today, many Asian nations, including Thailand, still work closely with America—especially in the war against terrorism. But this is rapidly changing!

Distracted by other pressures, America is neglecting relations with Asian states—and China is filling the void. The Far Eastern Economic Review presented the likely outcome of this Sino-American melee: “China’s feverish economic diplomacy has forged closer ties with the Association of Southeast Asian Nations, Japan and South Korea, stimulating trade and investment that the United States warmly welcomes. But behind Beijing’s ‘win-win’ rhetoric of gains for everyone lies another agenda that Washington may find less palatable in the long run. In a little-noticed ‘Strategic Partnership’ agreement, which China and asean quietly signed in Bali in early October [2003], are buried the seeds of closer security cooperation that analysts and officials say China aims to use to dilute American influence in the region” (Nov. 20, 2003).

The article quoted a senior asean official: “They want a situation in Southeast Asia that automatically takes into account China’s interests. The whole objective of the policy is to avoid strategic encirclement by the U.S.” China is finally acting on its long-held ambitions to unite East Asia and is squeezing out U.S. interests there.

Beijing’s plans for its Asian brothers extend beyond the south and east. “China’s ambitions stretch farther than asean. … China has a road map that envisages a Northeast Asia Free-Trade Agreement encompassing Japan and Korea, and a pan-regional East Asian fta. Chinese commentators, reflecting official thinking, envisage an East Asian economic and security community with institutions like an Asian Monetary Fund and an Organization of East Asian Cooperation … within five years” (ibid.).

In its November-December 2003 issue, Foreign Affairs wrote, “China is rapidly emerging as the engine of growth in Asia, which affords it increasing influence and leverage. Although the United States remains the strategic incumbent there, Washington needs to pay consistent attention to managing relations with regional friends and allies if it hopes to maintain its pull.”

Make no mistake: China is quickly becoming the nucleus of Asia. Within the region, it is proving itself an attractive alternative to America as an ally. From Kazakhstan to the Philippines, Japan to Thailand, and every nation in between, Beijing is forging a foreign policy aimed to passively increase its influence in the region. On its western borders, China has made such uncharacteristic gestures as conceding long-disputed tracts of land to historic rival India and other central Asian nations. Through warm gestures such as gigantic trade and commerce deals, Beijing is causing Eastern nations to grow more reliant on China.

Further complicating matters, China is taking its battle with America outside of the Asian ring. To fuel its growing economy, China, as well as other Asian states, is on the hunt for resources. This battle for resources is already impacting the U.S., as well as Europe, and is only going to grow more intense. (To learn more of the specifics of China’s war with America over resources, read “Superpower Under Siege” in the March 2006 Trumpet.)

China is also revamping its military to make it a more streamlined and battle-ready force. It is advancing its nuclear program, a program that, according to analyses by the Pentagon and intelligence officials, “threatens U.S. interests” (Washington Times, February 16). As China’s military muscle strengthens, and as the region continues to draw closer together, watch for Asian states to increasingly seek shelter under China’s military umbrella rather than America’s.

Regarding the rise of new power blocs, James Hoge stated, “Major shifts of power between states, not to mention regions, occur infrequently and are rarely peaceful.” He then cited the examples of Germany and Japan prior to World War ii. But “[t]his time, the populous states of Asia are the aspirants seeking to play a greater role. Like Japan and Germany back then, these rising powers are nationalistic, seek redress of past grievances, and want to claim their place in the sun” (op. cit.)

Responding to Asia’s rise is proving one of America’s most difficult tasks.Who can deny Asia’s growing influence over America? The region is slowly taking over U.S. manufacturing, transportation, industry and commerce sectors. As the largest holders of American Treasuries and bonds, both Japan and China are the pillars holding up the American economy. Buoyed by China’s increasing presence, many smaller Asian states are realigning themselves with Beijing and away from America. China and India are growing more willing to stand against American attempts to police the world.

The rapid evolution of this Eastern phenomenon is spurring a contrary trend across the Pacific—the decline of the United States!

Impact on Europe

Similar to its effect on the U.S., the rise of Asia is impacting Europe in a number of negative ways. European unemployment levels hover around 9 percent, and over the next 10 years the Continent is expected to lose more than a million jobs to Asia. Manufacturing and service jobs are increasingly farmed out to China, India and other Asian nations.

It’s not all bad news for Europe, though. “… Europe’s and Japan’s trade with China and the rest of the world, unlike America’s, is not all one way,” writes Prestowitz in his book. “[W]hile the EU has a [trade] deficit [with China] of $55 billion, it sells China bullet trains, ships, steel, machine tools, electronic components, silicon and lots of other capital equipment and high-tech components—things Americans no longer make or no longer make competitively for overseas markets.” China’s reciprocity with Europe overwhelmingly exceeds that with the United States.

Added to this is the fact that unlike the United States, European nations are not swimming in debt financed by foreigners. Japan and China are not financing weekend getaways and new kitchen appliances for Europeans. European nations don’t operate with extreme account deficits; many possess currencies that are rising, not falling.

Europe’s economic poise means it stands to gain from Asian ascendancy. In the short term, the same is true politically.

A desire to displace the U.S. from the helm of the globe underpins both Chinese and EU foreign policy. Beijing is aware that it cannot pursue this goal without securing somewhat stable relations with Europe based on shared efforts to limit U.S. hegemony.

As Europe steadily coalesces, and as its major national economies emerge from a state of economic malaise, Asian nations see the potential power of the Continent. Relations between both regions will likely remain amiable; in the short term, cohesion and cooperation will prevail.

Aside from trade and economic cohesion, Asia and Europe are working together on other fronts. India and China contribute significantly to Galileo, Europe’s gps-like satellite program. And Europe is committed to assisting both China and India in their efforts to construct nuclear power plants.

However, history tells us that cohesion between regions is fickle and rarely lasts long. Sympathies thrive only when both regions have something to gain. Collaboration will exist as long as it benefits both regions. Although Europe is enjoying the benefits of Asia’s newfound global influence, be assured that Europe’s politicians have considered the dangerous side of Asian supremacy.

Of course, the evolution of an Asian powerhouse isn’t Europe’s only concern. Islamic radicalism is dominating Middle East politics and becoming a threatening presence in Europe itself. To the east, as European-Russian relations cool, the resource-rich Russian bear appears to be augmenting its relations with China and the rest of Asia. Externally, Europe is feeling pressure from the east and south—while, internally, it still faces a severe identity crisis.

Unless decisive action occurs soon, the European people risk losing power and influence to radical Islam to the south and the Asian superpower to the east. Bible prophecy says that the next few years will be the most defining years of European history! Although it requires great foresight to see it now, decisive action against these trends is precisely what we can expect out of Europe in the coming months and years.

God says the pride of American and British power is broken (Leviticus 26:19), which is why their global power and influence is waning. Exactly the opposite is true for Germany and Europe. They will respond to Asia’s ascent much more assertively!

Watch Asia—Watch Europe

In Habakkuk 1:6, God says He is raising up the Chaldeans—modern-day Germany—and will use them to punish modern Israel, including America and Britain. This time period, called the Great Tribulation in Matthew 24, will be a period of unprecedented devastation and disaster. At the center of it all is a German-led European beast power!

Even as you read, this power is steadily rising. And the rise of Asia is helping to spur that growth!

Verses 6 through 17 of Habakkuk 1 describe the terrible and dreadful character of this European phenomenon. Asia is already a powerful force to reckon with, but it won’t dominate global affairs as the European superpower will. Nevertheless, after Europe rises temporarily to global domination, Bible prophecy explains that Asia will enter the picture in a big way.

The Bible says that toward the end of the Tribulation, after the European beast power has swooped down and defeated the king of the south (Daniel 11:40-43), it will turn its attention east because of rumblings out of Asia (verse 44). That is because by that time, Russia and Asia will have amassed a gigantic 200 million man army (Revelation 9:16) in preparation for war with the European power. That number may seem inconceivable, but not when you add China’s 1.2 billion people with Russia’s 150 million, along with several smaller nations in Asia that will join the alliance. Fearing the powerful Asian alliance, Europe will lash out against it first, setting off a final firestorm of fury just before Christ returns. In response, the Asian hordes will strike back, dealing a devastating, near-death blow to Europe.

Combining recent events and trends with what God prophesies makes the picture clear. Asia will one day use its mounting powers of destruction—not against America, as many may think, but against Europe! The Bible describes how these events culminate in the spectacular return of Jesus Christ to Jerusalem. These events are described in greater detail in our free booklet Russia and China in Prophecy.

All these geopolitical wranglings might seem confusing, but they are not to God. God’s hand is behind all of this. God has a plan that will be carried out with detailed precision, right up to the return of His Son, Jesus Christ. He will use a European power bloc to correct His people Israel during the Tribulation—then He will use the Asian hordes to correct Europe.

The evolution of Asia into a global power is incredibly important. In the short term, it is hijacking America’s influence on the world scene, and acting as a catalyst for Europe to unify. In the longer term, Asia’s rise proves that Jesus Christ’s return is drawing very, very near!

For more information, log on to theTrumpet.com to read or request our free booklet Russia and China in Prophecy.