East Asia 2022 Forecast

Translation by Maria Luís Dias

The year has changed, but the main issue remains: the pandemic caused by the many variants of COVID-19.

Everywhere in the world were we exposed to another three variants of the virus, which one with its own characteristics. Gamma delta and omicron made the world pause its plans of reconstruction of the pandemic and focus on preventing tests and vaccinating everyone.

Vaccination was one of the most controversial issues of the year 2021, with denialism of its effectiveness, necessity and safety prevailing on all continents. However, for most of these countries the real challenge was the logistical organization and the collection of resources for vaccination to be carried out and accessible to the entire population, and in this sense international collaboration was crucial to the successes achieved in 2021. At the end of the year, vaccination reached values of 70% in almost all countries of this region. According to WHO data, South Korea has the highest complete vaccination rate, followed by China.

Even so, over the course of the year several countries faced diplomatic, political, and economic challenges that may or may not have been linked to the pandemic. From China’s new international conflicts, to Japan’s political crisis, to North Korea’s retreat and extreme external dependence, to South Korea’s splendid pandemic reaction.

2021 was a very challenging year, mainly because of the inequalities that were accentuated in the fight and recovery from this pandemic. In all countries, racial minorities (such as indigenous people), women, youth, and other minority groups have suffered the main and most devastating consequences of this virus, whether in terms of employment, opportunities, or even access to support infrastructure. Only 2022 will tell us how the reaction will be and more importantly what steps will be taken by leaders for the challenges that this year will bring. With the omicron in force and the reverse migration from the cities to the hinterlands, will we see a more equal distribution of population or were these just temporary realities? Part of these measures will be inter-continental cooperation, and on January 1, 2022 the RCEP (Regional Comprehensive Economic Partnership) will be put in place to expand free trade in the Asia-Pacific area (including Australia and New Zealand) to help pandemic recovery. It will also be one of the highlights of the geopolitics and world economy in 2022 to analyze the coexistence of the world’s largest free trade agreements: RCEP and CPTPP, which together represent more than 30% of the world’s GDP.

New technologies have also made great strides in the year 2021 and pose huge challenges for many of the regimes in East Asia, and while the economy may depend on digital platforms in a certain spectrum of business and economic activities, they can contribute to the growth of criticism and toxicity in the population.

An extremely worrying aspect was the arms race that affected all of Asia with several conflicts and a possible Cold War 2.0 between the main world powers that many say has already begun. Additionally, the conflicts in South Asia could also interfere with the speed and possible use of this weaponry. In summary, throughout the year 2021 military movements were visible along the Pacific-Indian by several world powers and the arms race by several East Asian countries. Only in the following years can we see the possible outcome of these changes in military strategy.

Another extremely relevant topic in East Asia was the effects of climate change and how this could cause many changes by the year 2022 with measures such as China ceasing funding for coal mining in foreign territory.

South Korea is an example of sustainable development using the advancement of technologies with the ecological needs of the world, and although hesitant, once it began the transition to a “greener” country its progression has been steady and dedicated with various advancements from energy systems, to transportation and even new sustainable and technological policies such as Digital New and Green New Deals.

Returning again to the topic of the year, East Asia has been particularly affected by the pandemic, specifically the Delta variant which has caused the major waves in the countries in question. According to the World Bank’s East Asia and Pacific Fall 2021 Economic Update, the growth prospects for these countries are not optimistic, although China still stands out in this regard. The same document analyzes the damage caused by the pandemic as detrimental in the short and long term, especially with regard to economic growth and the social inequalities present in these countries.

Both households and businesses have suffered and will continue to suffer the crushing consequences of the pandemic, especially those that would have been in a position of social disadvantage previously. Losses in their income, financial insecurity, inability to keep up with school progress, among others. As for the companies, if on the one hand many small and medium-sized businesses could not resist the financial pressure, the most prominent in the market that saw a drop in their volume ended up taking financial contingency measures such as postponing growth investments and requesting state support, among others.

Regarding China, we continued in 2021 with an economy extremely dominated by internal intervention, and Xi Jinping made very clear the importance of the role of consumers provoking a significant increase in the economy. The objective of this year, which looks prosperous going forward, was to address the pressure on the middle class and not give the emphasis to the poorest and the richest. Even so, towards the end of the year the Chinese economy was declining dramatically. The president’s approach to the pandemic situation did not contribute to the country’s economic development since, during the whole year, he adopted an intransigent position, and at the slightest sign of contagion chains, cities and regions were totally isolated and quarantined. On the other hand, it allowed an effective prevention of contagions and consequently of the cases of the disease and its consequences. In 2021 the censuses were also carried out, in the normal period of 10 years, which showed a decrease in population growth, already anticipated, with a 50% increase in the population that is now “urbanized”.

Japan has definitely had a politically challenging year, with Prime Minister Yoshihide Suga resigning after about a year in office. In the meantime, the country has encountered some difficulties, mostly caused by the pandemic and the labor crisis (related to the birth rate crisis) that the country has been facing for some years. During 2021 it faced three distinct waves, with several variations, and the insistence on holding the Olympic Games in Tokyo was probably not conducive to the situation. Japan spent more than half of its year in a state of emergency and it was not until October, already under Fumio Kishida’s regulation, that it was lifted. By the end of the year the economy was at a stabilized growth point, however, it is difficult to predict the effects of the following variants on the population and how the new prime minister will handle the situation. In November 2021 the most recent census results were published and they are even more worrying. As mentioned before, the country is going through a birth rate crisis and these data confirm a decrease in the active population of about 2 million people compared to the previous census conducted 5 years earlier. This will undoubtedly be one of the biggest challenges of 2022 in conjunction with the fight against the pandemic so that there is considerable growth in the economy and the country can prosper.

North Korea faced an extremely critical situation as it isolated itself in total quarantine and closed its borders to any outside contact. It is believed that in some remote regions of the country malnutrition and even extreme starvation were recurrent phenomena, reaching a fatal extreme. Still, the country, with some reluctance, accepted external support notably from China. By October 2021 it had received no support for pandemic resistance, no vaccines, and kept its number of reported cases at zero. Therefore, the only way for the country to fight Covid-19 has been its own total isolation. In turn, this external dependence for maintaining the economy contributes to a decreasing interest on the part of the leader to develop or foster the country’s economy by locking himself in a hermit state fixated on arms development, and without access to vaccines, with a population weakened by hunger and carelessness it will be necessary to continue with the same approach to avoid a rapid and potentially fatal proliferation of the virus.

South Korea, in turn, despite facing some difficulties and increases in public and domestic debt, ended 2021 with a positive economic balance, as the government adopted assertive and reactive measures to prevent a major pandemic crisis in the country. Thus, its economy functioned relatively normally, national economic isolation was reduced to a minimum, and support was offered to workers in adverse situations. Its previous experience dealing with pandemics prepared not only the government but also the population for the challenges of COVID-19 by controlling risky contacts, individual quarantine, and the use of masks. Likewise, through its pandemic management skills it offered assistance to the international community with masks and vaccines for countries such as the United States and Vietnam.

In general terms, it is known that for the economic recovery of all countries it will be necessary to focus on vaccination and control of the networks of contagion. However, the challenges are extreme for some countries in the region, not only because of the fragile regimes and economies, but also because of the logistical and financial difficulty in distributing the vaccines.

For the new year 2022, the challenges of recovering from the pandemic while still dealing unpredictably with it will require extremely cooperative international support and reforms in virtually all states and economic approaches, including the standardization of new technologies and more competitive markets. Reform in education and health care will also be needed to recover from the shock of the last two years. It will be a particularly challenging year, however, as contact with the pandemic progresses it is believed that responsiveness can enhance and facilitate resistance to it.

At the political and diplomatic level countries have faced an extremely unstable global context, for obvious reasons. The unpredictability of COVID-19 coupled with the slowness of vaccination in many countries meant that international relations themselves had a particularly tense year.

Political instability marked the Japan of 2021 as at the end of the previous year, for health reasons, the then Prime Minister Shinzo Abe was forced into an early retirement. This caused a provisional succession of Yoshihide Suga who had only one year until the following party and national elections. That year corresponded to a large part of 2021, in which Suga found himself subject to the continuation of his predecessor’s policies mostly regarding the staging of the Tokyo Olympics. Abe considered holding them as a demonstration of political, economic and social recovery for the country, but in fact it proved to be one of the most controversial issues of 2021. Several statistics prove that a large part of the population attributes to the staging of the Olympic competitions the largest portion of responsibility for the fifth and most destructive wave that Japan went through due to COVID-19. This caused Suga’s popularity to plummet irrecoverably, and consequently his absence from the September elections. The party elections were won by Fumio Kishida, who went on to govern in the last months of 2021. Because of his liberal characteristics that contrast with Abe’s more conservative ideas and policies, a new hope for Japanese politics has arisen that will not be easy to respond to. Because of the way he was elected and the conversational characteristics of the upper house, Kishida faces the predominant influence of the conservative and nationalist side of the party which will make it difficult to make the radical changes that would be needed to reverse abstention and motivate voters, for example. Japanese democracy is facing a dark and apathetic period, with no effective opposition and extremely high abstentions; only the upper house elections in the year 2022 can change the national landscape in any way.

Kishida persists in international politics trying to maintain alliances with the United States, Australia and other members of the Quad or Quadrilateral Security Dialogue. With China and South Korea their relations remain unstable and the year 2022 will mark the 50th anniversary of the normalization of their post-war relations with China, and in his speech Kishida assigned the responsibility for resolving the conflicts to Korea. We will see how relations between the three countries evolve during the year and how Kishida will proceed in his domestic and foreign policy: whether by a conservative approach, subjugating himself to the reality of the Upper House, or whether he will revolutionize and try to change the course of Japanese democracy.

The year 2021 was very busy in the international conflict chain for China. If on one hand the conflicts with the United States seem mitigated by a competitive alliance, the arms race and diplomatic conflicts have distorted the relationships with other countries like Australia and Canada. Even so, the commercial dependence of the other countries on China is still visible, and as soon as Australia loses about 12 billion dollars in commercial exchanges with China, countries like the United States, Canada and New Zealand replace what would be the lost markets. While there is no consensus on whether it will be advantageous for these countries to cut economic relations with China, it is in full agreement that 2022 will present a development in these conflicts even if the course of them is not easy to predict. If on the one hand, the cutting of trade by these countries may not affect the main members in a direct way, the alliances created and the trade choices of the rest of the international community may eventually change the whole geopolitical panorama as we know it. One piece of good news was China’s application to the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership), which opens a window of trade cooperation between China and the rest of the Western countries. In 2022, it is certain that we will see Xi Jinping retake the Chinese government, which will solidify his political position as the country’s supreme leader. We also know that China is currently one of the main actors in the international economy and politics, being the primary agent of the communist pole and authoritarian regimes, and that the change in trade agreements and in the world trade map may have very negative consequences for the remaining countries of this pole and for the whole world.

South Korea faces a decisive year with presidential elections in March 2022 and the leading candidates, in addition to scarce parliamentary experience, are embroiled in several controversies. Lee Jae-myung, candidate for the ruling Democratic Party (DP) and his main opponent Yoon Seok-youl for the People Power Party (PPP). The polls have been divergent, and much of their results depend on the population’s satisfaction with incumbent President Moon’s fight, of the PD party, against the COVID-19 pandemic. He who had excellent leadership skills and implemented the measures that worked well in his country in order to avoid a pandemic crisis was facing at the end of the year the relentless omicron that delayed plans to return to normalcy. Even so, South Korea remains among the countries with the most positive figures and always below the world average in terms of infections, hospitalizations and deaths from the disease. However, with the increase in cases and hospitalizations due to the latest highly contagious variant and a “cohabitation” approach to the virus, South Koreans are dissatisfied with the president’s most recent management and this has had a major effect on political views. It is believed that the biggest electoral influence is from the 20 to 30 age group and this will be the main target of the campaigns. By the end of 2021, the opposition candidate was ahead in the polls, but nothing is guaranteed yet.

Forecast: It seems to me that Indo-Pacific trade will undergo some changes to its dynamics as the international community continues to try to find a replacement for China and the United States seeing the very high level of trade cooperation that exists in that region and the potential for trade development that that region signifies. Let’s see if Biden’s administration decides to root its trade in that region or participate in the existing ones. It is possible that the political apathy in Japan will continue unless there is a major change in the political landscape in 2022.

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