The past few decades have been golden for international trade, spurring industrialization and urbanization in developing countries and resulting in the creation of manufacturing clusters around the globe. Nowhere have the impacts been greater than in Asia, which has enjoyed tremendous growth in international trade since the 1960s. Originating in postwar Japan, then taking root among the Four Tigers (South Korea, Hong Kong, Singapore, and Taiwan), the Asian miracle has followed a trajectory that shows little sign of slowing.
The 21st century presents both challenges and opportunities for the region, and may well be the "Asian century." Demographics will play a key role in the region's growth trends for decades to come. Japan, South Korea, Singapore, and especially China, all economies that account for much of the region's output, have aging populations, and the decline in labor force will present challenges. Other countries like Thailand, the Philippines, Malaysia, and Indonesia have less developed economies, but they can claim more advantageous demographics and less costly labor, both vital to growth.
As China redirects its growth strategy, moving from an export-dependent economy to a service-oriented economy, what will be the effect on the region? Will its neighbors be able to adapt to fill China's huge export gaps? And how will they have to change to do so? The answer is that they likely will, but the trading patterns in Asia must be radically altered.
This paper discusses the "new normal" of trade patterns in Asia after the financial crisis, with special focus on China's structural changes, as well as the challenges and opportunities that these changes represent.