Coping with a New Monetary Order after the Global Crisis
East Asian economies have been growing rapidly and are likely to lead the world economy as the new locomotives, replacing the US and EU, two regions which are still suff ering from the fallout from the global fi nancial crisis. Greater economic openness and globalization are the key factors in the rise of the East Asian economy as a pole of economic growth. Despite this remarkable performance, however, East Asian economies are not immune from economic turbulence caused by global and regional financial crises. This has led many East Asian countries to search for collective remedial solutions and to intensify regional economic cooperation. Along with globalization, there is increasing regionalization in East Asia. East Asian economies are currently facing three challenges. The first challenge is to construct a zone of sustained economic growth, amid the long and gradual decline of the US economy. The US has been the main East Asian export market and has played a dominant role in the ‘East Asian miracle’, headed by Japan and followed by the Asian tigers (Korea, Taiwan, Singapore and Hong Kong), then by the ASEAN economies, Malaysia, Thailand, Indonesia, and the Philippines, and fi nally by China. Compared to the past when the US absorbed more than half of East Asian countries’ exports, however, the influence of the US on the East Asian economy has been declining rapidly and it currently absorbs only 15 per cent of East Asian countries’ exports. Considering the recurring huge trade imbalances of the US economy, it is clear that the US will no longer be a main engine for the growth of the East Asian economy. The East Asian region itself will be a new pole of economic growth and this will lead East Asian economies to strengthen their economic ties among themselves and, in particular, with China. Increasing regional economic integration in East Asia will inevitably contribute to a significant reshaping of the global economic and monetary order.