The Economic Growth of Asia

World War 2 in the mid-90's drew a hard blow and left a serious 
and lasting effect to many Asian countries. This however, did not 
hamper the growth of countries such as China, Japan and Vietnam as 
their government were taking serious steps to recover economically. 
Thus, the global market cannot deny a place for these 'Asian Dragons', 
because these countries are growing at a tremendous pace to the extent 
of being capable in emerging as global market leaders.
 China's capitalism and boom was born when their president, Deng 
Xiaoping permitted the provinces to dismantle their communes and 
collective farms. This led China to venture into free-market 
economics, although they were still under the communist political 
system. When President Deng announced that they needed Western money 
and expertise, China flung their trade doors wide open and China went 
on a capitalist drive without ever looking back. By mid 1960's, the 
Chinese Revolution settled down to the job of ruling China. Its main 
goal was essentially nationalist: a prosperous modern economy. While 
there continued to exist substantially economic inequalities, 
distribution of wealth was probably a bit more equal than in most 
Western countries. ( Moise 171 ) While there were great variations in 
income between different villages, and between different jobs in the 
urban sector, the overall averages showed a clear pattern: the cities 
were much richer than the countryside. Most capital investments were 
going into urban industries. The urban workers, using considerable 
amount of heavy machinery, had a much higher average level of 
productivity compared to the rural workers. The natural consequences 
was for the city people to arrange themselves an average income level 
twice as high as that of the people in the countryside. 
 The most obvious way to attack this poverty problem was to 
increase production, in all sectors of the economy. Though the easiest 
way to increase production was to increase capital inputs, China could 
only afford a limited amount of capital construction. In accordance to 
this, China went on a construction binge. Whole factories were 
purchased from abroad while others were built with local resources. By 
1978, the frenzy for new projects reached a level that reminded some 
people of the Great Leap Forward. In an effort to promote agricultural 
production, the government released many of the restrictions on the 
'spontaneous capitalist tendencies' of the peasantry. (173) In the 
late 1980's, the government decided to expand the scope of private 
marketing. Then the next step was to increase the amount land assigned 
to the peasants. The peasants were now not responsible to the 
government for the use they made to the private plots. They simply 
could grow what the wished, for the sale to the government or to 
private markets. This led to furious rebuilding and inflow of foreign 
investments. All this enabled China to remake itself into Asian's hub 
of finance, trade and culture.
 By 1984, they were producing more than $1 million worth of rice 
and a range of side products, including rice wine. Their residential 
earning was up to about $200 a year. ( Prager 52 ) This meant that 
they could begin replacing their mud-and-straw hats with solid brick 
houses. Shanghai today is a vast construction site with more than 
20,000 projects, with 27,000 companies building bridges, tunnels, 
flyovers, ring roads, hotels, villas, golf courses and also public 
housing. This sparked national growth of about 10% a year.( 53 ) The 
Chinese now are going home with fat wallets, stocks, bonds and large 
bank accounts. Banks are reporting that savings have increased 
sixty-fold and is still growing. This has led China to join the world 
economic community and has become the globe's third largest economy. 
China is now ranked 11th in the world in exports of trade goods. (54)
Of the coast of China, there was another growing country. Japan 
recovered tremendously well after the bombing of Hiroshima in World 
War 2. Under post war conservative governments, Japan made a 
remarkable economic recovery. American aid of $2 billion gave an 
initial boost and then the Korean War acted as a further stimulant by 
creating a demand for military hardware. (Rich 191) By the early 
1970's, Japan was the world's third biggest steel producer, one of the 
biggest ship builders, and ranked very high as a manufacturer of 
general engineering and chemical goods. Japan's motorcycles were 
winning import races in Europe, and Japanese cameras, transistor 
radios, cars, sewing machines, TV sets and optical goods competed 
successfully in the global market. 
 Japan's economy is second only to the U.S in absolute terms with 
a G.D.P of $3,385 billion dollars. By 1987, the Japanese were richer 
than the Americans with per capita income of almost $20,000. ( World 
247 )This was because the Japanese saved five times as much from their 
paychecks as did the Americans. Lower military spending, a consequence 
of the Yoshida doctrine, was an essential contributor to Japan's 
economic advancement. Japan net assets rose to about $1 trillion and 
thus making Japan effectively the world's banker. In the 50's through 
to the 70's, the Japanese economy was averaging 11% of growth. (250) 
The Bank of Japan backed commercial banks in providing capital for 

investments. Economic growth rates were the highest in the world based 
on high levels of savings and investments, rapid productivity growth 
and remarkable social consensus. 
 Japan was willing to forego immediate reward for long term 
benefits. Therefore, in large sections of world manufacturing, notably 
electronics, Japanese producers had no rivals. Manufacturing was the 
mainstay of the economy, improving quality and price. Japan has 
continually upgraded its economy and shifted from heavy industry with 
high-energy requirements to high technology, high value added 
industries such as semi-conductors, industrial robots and computers. 
Japanese manufactures than began investing heavily in foreign 
countries because of it's own rising yen. This massive outflow of 
money pushed many Japanese financial institutions to the top of the 
global financial markets. Japan was also the world largest importer of 
agricultural products where 60% of its food is imported. (Rich 192). 
If counted based on efficiency however, per unit of land, Japan is the 
most efficient in the world. Greater prosperity lead to a big demand 
for consumer goods. Western style clothing became very common and 
wheat products, meat and vegetables took the place of rice in many 
Japanese dishes. Scotch whiskey was now drunk in place of the 
traditional sake. The Japanese people now wanted to acquire more 
twentieth century gadgets - color televisions, electric sewing 
machine, washing machines, motor cars and so on. Western sports became 
very popular - in the 70's, there were already about 7,000 golf 
courses. By September 1986, the Japanese had a massive current account 
surplus of $10 billion U.S dollars. ( World 251). All this was a 
result of deep government planning, growth with high depreciation 
allowance, cheap loans, subsidies and light taxes. The Japanese 
recovery from its defeat in the Second War presents a truly remarkable 
story of persistence, determination and hard work by an entire 
population, and considerable financial and diplomatic skill. 
 Vietnam was the latest among these countries to emerge as a 
'gold mine'. This was set back by the Vietnam War in the 60's and the 
70's. The war practically crippled the country's economy. Vietnam's 
economy grew based on a five-year plan system. This has brought 
moderate success in repairing of three decades of war on 
infrastructure, forest and farmland. By the mid-1980's, the government 
began to liberalize in an attempt to encourage new resources. In 1987, 
businesses were given tax breaks in their first year, some companies 
were allowed to obtain bank loan and set their own prices while 
exporters were authorized to borrow foreign currency to import raw 
materials. There were higher cash incentives for peasants and workers. 
This lead farmers to earn almost 40% profits. ( Gibney 47). The 
government too began awarding bonuses and piece-rate wages to reward 
hard workers. In 1988, there were new investment laws that attracted 
overseas capital. The main investors were Taiwan, Australia, France, 
Hong Kong, the United States and also, Malaysia.
 In 1989, as communism seemed to be collapsing elsewhere in the 
world, Vietnam flung open its doors to foreign investment. The economy 
has been growing at an annual rate of 7% to 8% over the past three 
years. In February 1994, when the U.S. dropped its 19-year trade 
embargo, aid and investment began to flood in. (49). This led 
jetstreams of investors into Vietnam. Western companies such as 
Coca-Cola, AT&T, and Motorola all invested heavily in the country. 
This lead Vietnam to grow very fast. Population continued to grow by 
about 1 million a year. By the 1990, the country's exports were up to 
about $800 million U.S dollars while imports totaled nearly $1 
billion.( World 157). Vietnam's most lucrative business were oil and 
gas. In addition, it is in this sector of the industry that attracted 
the most attention of foreign investors. British Petroleum was the 
first western firm to make a significant contribution to Vietnam's 
growing economy. Tourism has helped Vietnam grow too. The Vietnamese 
government were promoting tourism in an effort to earn more hard 
currency. In addition, Vietnam succeeded in exporting 1.69 million 
tons of rice making it the third largest exporters of rice in the 
world. (Moise 49).
 From the border with China in the north to the rice mills of the 
Mekong Delta in the south, Vietnam is humming with activity. Hong Kong 
investors have been allowed to open a casino near Haiphong, and 
Westerners are bidding to develop tourist sites along the scenic coast 
of Vietnam. Hanoi, long a city of bicycles and moldy old colonial 
edifices, is now rich in motorcycles and office buildings. In Ho Chi 
Minh City, as Saigon is now called, the April 30 parade marking the 
end of the war will be set against a landscape bristling with 
billboards and construction cranes. ( World 159). All this has brought 
Vietnam to grow at a tremendous rate and there is no denying that soon 
Vietnam will become a distinctive force in Asia. The country's 
recovery after the Vietnam War shows a truly dedicated nation 
determined to wealth, success and most all, a better life for all the 
Vietnamese. 
 This research has shown that these 'Growing Asian Dragons' are a 
force to be reckoned with in the near future as these countries are 
developing at breakneck speed. China, even before the merging with 
Hong Kong, is currently the center of attraction in the business 
world. Japan has already establish itself and become the most 
influential partner in the business world while the 'youngest' of them 
all, Vietnam, is already beginning to stamp its mark in South East 
Asia and soon, without doubt, throughout the world. 
 
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Works Cited

Gibney, Frank. "Vietnam: Back In Business." Time. April 24, 1995 
Volume 145. No 17: 47-49 

Mcgeary, Johanna. "The Next China." Time. March 3,1997. Vol. 149. No. 
9.

Moise, Edwin E. Moise "Modern China, A History." The Economic Growth.
New York: Longman, Inc., 1986: 165-181.
 
Prager, Karsten. "China: Waking Up To The Next Superpower." Time. 
March 25, 1996. Volume 147. No 13: 51-54.

Rich, Joe. "Japan Since The Occupation." Asia's Modern Culture. 2nd 
Ed. Sydney: Longman Inc., 1980: 190-193 

"The World of Information.Asia & Pacific Review,1995." 14th Ed. 
London: Kogan Page Publishing: 153-256