Asia and The G20

The industrial transformation of Asia is a development on a scale unprecedented in human history. Following the industrial revolution towards the end of the eighteenth century, Europe and North America each in turn came to dominate the world economy and global power. Now economic weight is shifting towards population weight due to convergence in productivity. Asia is re-emerging as the world’s biggest element in the world economy. In 1980, Asia produced just under 20 per cent of global output measured at purchasing power parity. In 2010 that share was 35 per cent.2 This has happened in the space of a few decades whereas it took more than three quarters of a century for the industrial revolution to transform the European economy and political power. In the last twenty five years the economy of China, a nation of 1.3 billion, has grown by a factor of twenty. Twenty years from now, even ten years from now, Asia’s influence will be even greater. By 2025, one in two of the world’s population and four of the 10 largest economies will be in Asia. Asia is likely then to account for almost half of the world output and more than half world trade, with China accounting for half of that. In 2010, China’s per capita income was 30 per cent of the United States’; by 2050 it will be 55 per cent and India’s likely 42 per cent. The Chinese economy will likely be bigger than America’s within the coming half decade. Asia has never been of greater global significance, as global economic and strategic weight shifts from west to east. Global institutional frameworks are coming to reflect this, with six Asian members of the G20, including Australia. These developments set the context in which the G20 has emerged as a new fulcrum for global economic governance.