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5 STEPS INTO THE ASIAN MILENNIUM
PAGE 2 OF 7

Ensuring a constructive American response to their efforts may well be the trickiest task East Asian leaders face.
     Even today most Asian leaders are products of an age when what counted were iron discipline and the reliable comradeship of school chums who shared the ordeal of rebuilding devastated economies. These men are genuine heroes of their day who, through sheer effort of will and sacrifice, raised gleaming cities in place of mud-filled bomb craters. But they succeeded too well. They modernized their societies so quickly that they couldn't keep up with the hopes and dreams of the young men and women who grew up in gleaming cities and work in hushed industrial parks. The old men achieved what only the most successful ever achieve -- they succeeded in obsoleting themselves.
     The problem is, they don't know it yet, but continue to pull the levers of power. Fortunately, there are important exceptions -- most notably, China's strong, canny Premier Zhu Rongji and Corea's visionary, youthful septuagenarian President Kim Dae-jung. More recently and surprisingly, Japan's new lowkey Prime Minister Keizo Obuchi is showing signs of being the savvy, forward-looking leader Japan so desperately needs. Each of these men are pushing their nations into the future by streamlining bureaucracies to speed up the introduction of a dynamic new generation of leadership. Leaders like Zhu, Kim and Obuchi may have come into power even without the crisis, but they wouldn't have been armed with the mandate needed to perform the kinds of radical surgery needed to turn East Asia into the next milennium's socio-economic center.
     Individually and collectively these leaders have shown signs that they see the need to free Asia from having to play catch-up in an economic game whose rules give the west an immense premium on the value of its output while imposing a commensurate tax on the value of Asian output. More importantly, these leaders are showing signs that they have the nerve to take the needed steps, even at the risk of alienating the current order and its champion, the U.S. This poses a threat to U.S. dominance. On the other hand, it gives the U.S. the opportunity to make a smooth transition into a more constructive and secure role in the new milennium. Ensuring a constructive American response to their efforts may well be the trickiest task East Asian leaders face.


STEP 1: An East Asian Free-Trade Zone

     Already the leading East Asian economies are highly interdependent. Japan is the second most important trading partner of both China and Corea. China is the leading trading partner of Japan and the second most important partner of Corea. Corea is the third-ranked trading partner of both Japan and China. The only other nation that enjoys the same level of economic importance among these three East Asian nations is the U.S.
     Recently Kim approached Japan and China about creating free-trade, free-travel zones. Both nations are receptive. Such market-opening arrangements would stimulate faster growth by producing vast new economic efficiencies. Among them China, Japan and Corea have the huge markets, highly educated laborce forces, natural resources, technology and production capacity needed to drive global growth. Currently their combined gross national product is $6 trillion, smaller than the U.S. GNP of $8.3 trillion. But assuming likely growth rates, the East Asian economies will match the U.S. by 2005 and double it by 2022. And that's without factoring in the benefits of the four other milestone events discussed below.

ther recent developments augur the dawn of a prosperous new era for East Asia. Thanks to the efforts of Hyundai founder Chung Ju-yung combined with the Sunshine Policy instituted by Presient Kim Dae-jung, South Coreans are already sailing regularly to the North Corean resort of Mt Kumgang and are looking forward to the imminent opening of more North Corean resorts. Building on this momentum, the two governments are discussing the reopening of rail ties severed in 1950. Even as the sabre-rattling and posturing continue, South Corean, Japanese, Chinese, European and American companies are lining up to invest as much as $8 billion over the next five years to open factories, hotels, retail operations and even fast-food restaurants in the North.


STEP 2: Reunification of Corea

     While capitalist corporations reap the benefits of low-cost, high-quality labor, expanded economic contact will open North Corean eyes to the benefits of rejoining the global economy. Neither nationalism nor historical prejudices can stand up for long to the concerete benefits of economic progress. A perfect example of this social law is the dramatic opening of China in 1979 and the ensuing rapid modernization, liberalization and rising living standards. The current explosion of business contacts can produce only one outcome on the Corean peninsula -- peaceful reunification. The timeframe will likely be two to five years rather than ten to twenty. Both sides have too much to gain to postpone reunfication indefinitely. PAGE 3

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