:00:00. > :00:00.Now on BBC News, Linda Yueh explores the roles of Asia, America and
:00:00. > :00:08.Europe in the global economy in Talking Business.
:00:09. > :00:14.Is the Asian century already over before it has begun? Will America's
:00:15. > :00:17.power remain unchallenged? And will Europe be a significant player?
:00:18. > :00:19.Plus, what does this all mean for your money? I am Linda Yueh and we
:00:20. > :00:46.are Talking Business. If Europe dominated the 19th century
:00:47. > :00:50.and the 20th belonged to America, then Will this be Asia's moment?
:00:51. > :00:56.Asia's remarkable growth in the past few years may lead the region to
:00:57. > :01:00.dominate the economy. Or at least that is one version. But can we ever
:01:01. > :01:03.count out the United States, which remains the most important economy
:01:04. > :01:10.in the world? And where does Europe stand? Joining me to talk about who
:01:11. > :01:13.the 21st`century belongs to our Antony Phillipson, British High
:01:14. > :01:18.Commissioner to Singapore. He is here to give us the UK and European
:01:19. > :01:21.perspective. Stephen Groff, vice president at the Asian Development
:01:22. > :01:29.Bank, has argued that the demise of the US is overblown. And's, Dean of
:01:30. > :01:37.public policy at the National University of Singapore, known for
:01:38. > :01:41.calling the past two centuries of Western domination a major
:01:42. > :01:46.aberration. `` Kishore Mahbubani. I have to start with you on that, a
:01:47. > :01:51.major historical aberration. Do elaborate. Is it really all about
:01:52. > :01:59.Asia? It is very simple. If you look at history of the past 2000 years,
:02:00. > :02:02.from year one to your 1820, for the past 2000 years, the two largest
:02:03. > :02:08.economies in the world have always been China and India. It is only the
:02:09. > :02:13.19th century that Europe took off. The 20th century, American attack.
:02:14. > :02:16.If you view the past 200 years against the previous 2000, it is
:02:17. > :02:22.very clear that the past 200 years have been a major historical
:02:23. > :02:26.aberration. As you know, all historical aberration is come to a
:02:27. > :02:31.natural end. We should not be surprised. But say, yes, this is a
:02:32. > :02:38.return to the norm and the 21st`century will be the Asian
:02:39. > :02:42.century. Return to the norm? Well, I agree entirely with Kishore
:02:43. > :02:44.Mahbubani. If you look until the industrial revolution, the biggest
:02:45. > :02:51.economies were in Asia. One thing we have to be careful of, whilst this
:02:52. > :02:57.could be the Asian century, and by 2050, as our research indicates, we
:02:58. > :03:03.could see Asia taking about 50% of global GDP. There are fairly strong
:03:04. > :03:06.assumptions built into the mantle, including that we would have to see
:03:07. > :03:10.growth continue as it has over the last couple of decades. We would
:03:11. > :03:14.have to seek an avoidance of a middle`income trap, with the major
:03:15. > :03:17.economies in the region. We would have to see a management of some of
:03:18. > :03:22.the risks associated with climate change and environmental
:03:23. > :03:27.degradation. Equally importantly, there is a huge inequality challenge
:03:28. > :03:31.that the region faces in respect to how well distributed economic growth
:03:32. > :03:42.has been. So, these things have to fall into place for realising these
:03:43. > :03:49.very possible projections for Asia. Europe was a power once. Will it be
:03:50. > :03:54.significant in the 21st`century as the US and Asia start to battle for
:03:55. > :03:59.supremacy? The point I would make at the outset is that it's not just
:04:00. > :04:03.about the size of economy. I do not dispute those figures, I have always
:04:04. > :04:07.felt the rise of Asia now is not the rise from nothing, it is a
:04:08. > :04:12.rebalancing of trade towards Asia, which is where trade was for the
:04:13. > :04:16.first 10,000 years. But if you want to look at the influence in the
:04:17. > :04:26.world, if we want to look up values, democracy, the other measures on if
:04:27. > :04:30.a country is influential and if a continent is go to dominate, I don't
:04:31. > :04:33.think Asia will dominate the 21st`century. I think it will be
:04:34. > :04:36.hugely influential. But I think the Americas, North and South, will be
:04:37. > :04:45.as well. And I think Europe still has an important part to play. What
:04:46. > :04:50.do you have to say to that? I don't disagree fundamentally with Steve
:04:51. > :04:54.Waugh and funny. `` Steve or Anthony. There are huge challenges
:04:55. > :05:01.that Asia faces. You also cannot deny how fast Asia is coming back.
:05:02. > :05:08.I'll give you one statistic. In 1980, in purchasing power parity
:05:09. > :05:15.terms, the United States share of global GDP was 29%. China's share
:05:16. > :05:20.was 2.2%. Less than 10% that of the United States. Come 2017, three
:05:21. > :05:25.years from now, the United States's share is going to go down to 17.6%.
:05:26. > :05:35.China's share will have risen to 18%. That is a remarkable thing. We
:05:36. > :05:39.are talking about 32, 34, 35 years. An economy that was one tenth the
:05:40. > :05:43.size of the United States is becoming bigger than the United
:05:44. > :05:48.States. Something very powerful is happening, on a scale that we have
:05:49. > :05:53.never before seen in human history. So, it is important to emphasise
:05:54. > :05:59.that what is happening in Asia today is unprecedented. It may slow down,
:06:00. > :06:05.but the trajectory cannot be changed. I agree what we have seen
:06:06. > :06:08.is unprecedented. I agree with the notion that what we are seeing is
:06:09. > :06:13.nothing short of miraculous. At the same time, another statistics that
:06:14. > :06:19.adds to your point, is that we have seen poverty rates fall dramatically
:06:20. > :06:21.during that period of time. Again, that is an incredible achievement
:06:22. > :06:27.for the region. But we have also seen inequality rise during that
:06:28. > :06:32.same period of time. We have seen the measures of inequality in these
:06:33. > :06:36.countries increase astronomically. Had we held steady inequality during
:06:37. > :06:40.the same period of time, some 250 million additional people would have
:06:41. > :06:42.been lifted out of poverty during the same time frame. I think the
:06:43. > :06:48.challenge for the region is one of continuing along this growth path,
:06:49. > :06:52.which is critical, for this to be the engine of growth for the global
:06:53. > :06:57.economy. At the same time, we need to address this issue of inequality
:06:58. > :07:00.and we need to address this issue of environmental degradation, which has
:07:01. > :07:08.been driving to an extent this growth. I don't disagree with
:07:09. > :07:13.anything said, but I think, you're absolutely right, the pace of change
:07:14. > :07:16.been absolutely startling, it is relentless, to some people it is
:07:17. > :07:21.terrifying. But the drives of that change are unique. It is the
:07:22. > :07:25.internet, it is the power of social media, the power of communications.
:07:26. > :07:30.We all know those. But this is not going to be a world in which Asia
:07:31. > :07:34.alone can dominate and exist. Asia is going to need Europe. Asia is
:07:35. > :07:39.going to need markets. Asia will need the US. The relationship
:07:40. > :07:45.between Asia and, if you boil it down, China and the US, is one of
:07:46. > :07:47.the most important in the world. It is about interconnectedness. We are
:07:48. > :07:54.not going to live in a world where one continent or region can dominate
:07:55. > :08:00.the rest. But you do think it will be the Asian century. Or do you
:08:01. > :08:07.accept and funny's point? I suspect you want me to be slightly
:08:08. > :08:13.provocative. I completely agree, yes, it is a mistake to write of
:08:14. > :08:16.America. It is a mistake to write of Europe. From the Asian point of
:08:17. > :08:20.view, Asians want to see a strong America and they want to see a
:08:21. > :08:25.strong Europe. That is very clear. At the same time, I am throwing out
:08:26. > :08:31.statistics, but let's illustrate the pace of change. Anthony mentioned
:08:32. > :08:36.markets. That is about the number of middle`class consumers you have. In
:08:37. > :08:40.Asia today, all of Asia, from West Asia to East Asia, the total size of
:08:41. > :08:48.the middle classes about 500 million people. Come 2020, only six or seven
:08:49. > :08:58.years from now, that number is going to explode from 500 million to 1.75
:08:59. > :09:01.billion, an increase of three and a half times. The world has seen
:09:02. > :09:08.nothing like this at all. I go to many conferences, I meet the CEOs, I
:09:09. > :09:13.talked to the board. What they do with each of their businesses,
:09:14. > :09:18.whether it is in chemicals, energy, toys, they do sales projections. And
:09:19. > :09:22.they show very clearly that all of the new markets are in Asia. That is
:09:23. > :09:28.why all of the big companies are moving over here. Let me just be
:09:29. > :09:37.slightly provocative on Europe. Let me say something about Angela
:09:38. > :09:42.Merkel. She captured the challenge Europe faces in one sentence. She
:09:43. > :09:53.said, Europe has got 7% of the world's population. 25% of the
:09:54. > :10:00.world's GNP. And 60% of the world's social spending. If you do the
:10:01. > :10:05.maths, this is not sustainable. Anthony, the maths, it is not
:10:06. > :10:09.sustainable? I would not say anybody in Europe thinks it is sustainable.
:10:10. > :10:15.There is acceptance across Europe that we need reform. Believe me,
:10:16. > :10:18.Angela Merkel, David Cameron, other European leaders, they know Europe
:10:19. > :10:23.needs reforming. I would go back to the point, and one other point, this
:10:24. > :10:31.is not a 0`sum game. It's not a seesaw, Asia is up, Europe is down.
:10:32. > :10:34.It is a global economy that needs to keep growing for all of us. I
:10:35. > :10:41.believe Asia will be a major driver of growth, but I think the US will
:10:42. > :10:50.as well. If they can address these systemic social spending problems. I
:10:51. > :10:53.think the mantra of the coming century needs to be shared
:10:54. > :10:56.prosperity. This has got to be the direction we're heading in. Your
:10:57. > :11:01.point about the middle classes is critically important for the region.
:11:02. > :11:05.We project that you could see an increase in consumption of 9% per
:11:06. > :11:10.annum and we now on 2030. That is huge. It will be a great driver of
:11:11. > :11:14.growth. At the same time, the market turbulence we have seen with just
:11:15. > :11:18.the threat of a tapering off quantitive easing in the US has
:11:19. > :11:21.underscored some of the deep economic challenges and structural
:11:22. > :11:26.transformation challenges that exist in the Major economies of the region
:11:27. > :11:32.as well. This interdependence across the world, the kind of cooperation
:11:33. > :11:38.that will be necessary to see an Asian century, a century of shared
:11:39. > :11:45.prosperity, it is critical that Asia has a lot of housekeeping to do. I
:11:46. > :11:48.want to make a point about influence. Even if we can accept
:11:49. > :11:55.that Asia can rise and the US might be able to sort out its problems,
:11:56. > :11:59.what about influence? This soft power, is there the equivalent of
:12:00. > :12:09.Asian influence that can match what America has been in the world? If
:12:10. > :12:14.you look at history, when you look at the changes happening, the first
:12:15. > :12:21.stage is economic growth. After the, growth, after you have middle class
:12:22. > :12:30.is emerging, after surplus wealth, it is followed by a culture in ``
:12:31. > :12:35.cultural renaissance. I'm confident that not just one but many cultural
:12:36. > :12:41.renaissance is going to appear in Asia, just through the sheer Kim
:12:42. > :12:50.Little well. `` the sheer accumulation of wealth. China has a
:12:51. > :12:58.rich historical past and it is very powerful. I have been in Beijing and
:12:59. > :13:06.Shanghai in the past few weeks. You can feel the desire. They say, hey,
:13:07. > :13:15.we have a great history, too. You are nodding along there. That's the
:13:16. > :13:26.important point. It is with `` the most important and exciting thing
:13:27. > :13:29.about Asia. There is going to need to be the same power of innovation
:13:30. > :13:35.and creativity and bottom`up cultural input that I would argue we
:13:36. > :13:45.have had in Europe, and we will not lose, by the way. Also, what we are
:13:46. > :13:49.also going to have, we go to to have Asian influence. The challenges the
:13:50. > :13:55.world faces today cannot be addressed by just the US or just the
:13:56. > :13:58.EU. They have to be addressed by the nations of the world coming
:13:59. > :14:06.together. This is a point you make in your latest book. The world is
:14:07. > :14:10.converging with global challenges. It is scattering at the individual
:14:11. > :14:15.level, which is a challenge. We can't deal with resource carers ``
:14:16. > :14:23.scarcity of Asia is not engaged. That is why the UK and other nations
:14:24. > :14:30.have been pushing to update the global architecture that we created
:14:31. > :14:37.after World War II, that is now sometimes not fit for purpose. That
:14:38. > :14:44.is why the G8 became the G20. You have talked about the Asian
:14:45. > :14:46.century, the multipolar world. Here's a question that really
:14:47. > :14:53.reveals to me what your true preferences are. What languages are
:14:54. > :15:00.your children learning? My children are learning English and Mandarin,
:15:01. > :15:11.although I am I worth `` wife are Chinese. Image and Mandarin, and one
:15:12. > :15:19.of them wants to learn Spanish. `` English. English and Mandarin, and
:15:20. > :15:23.French. We are out of time. That was interesting. I think the jury is
:15:24. > :15:28.going to be out as to whether there is this cultural renaissance or if
:15:29. > :15:35.there are challenges to make it harder for Asia to dominate. Thank
:15:36. > :15:45.you all very much indeed. Again, thanks to my panel. This debate is
:15:46. > :15:49.likely to be further fuelled by the current turmoil that politics is
:15:50. > :15:54.befitting on the US economy. Despite economic worries, money continues to
:15:55. > :15:59.flow to the US. This by the concerns over the Fed and the debacle over
:16:00. > :16:05.the debt ceiling, markets have more than we done it. `` despite
:16:06. > :16:08.concerns. If you put money in US stocks five years ago, at the height
:16:09. > :16:12.of the crisis, you would have doubled your money by now. Asia may
:16:13. > :16:17.be garnering the headlines, but Asian equity would have yielded an
:16:18. > :16:22.87% return, slightly less spent the `` the US. That is better than the
:16:23. > :16:30.EU, where we would only see a 28% rise. The Dax has recently hit
:16:31. > :16:41.record highs. Is the US the right place to be? Joining me are
:16:42. > :16:48.Catherine Young and the chief investment officer at Finaport.
:16:49. > :16:53.Welcome to the show to both of you. Catherine, Asian equities would have
:16:54. > :16:57.learned less than American ones had you put your money in their five
:16:58. > :17:07.years ago. Do you think age is the right place to put your money? It is
:17:08. > :17:14.about diversification. Fidelity fund managers `` managers in Asia believe
:17:15. > :17:25.Asia is the future growth engine. In Asia, the rise of demand, and a
:17:26. > :17:31.growing market share... Is Asia the place you are going to see the most
:17:32. > :17:34.growth potential? Clearly. Asia is the growth engine of the world.
:17:35. > :17:43.China is becoming the largest economy in the world. It does not
:17:44. > :17:47.mean that in the near term, six months, you have to put more weight
:17:48. > :17:55.on Asia. There are other factors driving equity markets today. Such
:17:56. > :18:01.as? Central banks are left, right and Centre in all of this. We have
:18:02. > :18:08.cogitated easing. `` quantitative easing. We had QE1, which was
:18:09. > :18:11.introduced to fight a financial meltdown, now we are acutely or key
:18:12. > :18:32.for. `` Keith Reed or key for. Are you missing this wave? Now is a
:18:33. > :18:37.good time to get into Asia. The US stock market is doing well. Asian
:18:38. > :18:41.equities are seen to be risky. When investors get nervous, they pull
:18:42. > :18:46.money out of this part of the world. As he mentioned, you are seeing a
:18:47. > :18:49.lot of central bank policies and the printing of money offshore. In Asia,
:18:50. > :18:56.one of the best things to happen with the Asian currency crisis.
:18:57. > :19:12.Today, balance sheets across Asia are very healthy. So you think it is
:19:13. > :19:19.wrong for the Fed... Money should be coming into Asia? Tapering equates
:19:20. > :19:24.to healthy growth. Hence, global investors will look for growth
:19:25. > :19:32.assets again. Growth equates to Asia. Asia will benefit. What about
:19:33. > :19:36.diversification? What about Europe? We like Europe as well. On the
:19:37. > :19:43.valuation basis, it is more attractive than the US. European
:19:44. > :19:51.shares have lacked against the US. Even there, you start to see the
:19:52. > :19:57.peripheral Europe undergoing an adjustment process. The Eurozone has
:19:58. > :20:09.a positive current account balance. That includes the periphery. Germany
:20:10. > :20:16.is way ahead of the pack. What is the right allocation across the
:20:17. > :20:28.world? What would you advise? We have an overweight in Europe and, in
:20:29. > :20:35.the US and in Japan. I think the weak session in China this week
:20:36. > :20:42.could send out some particular messages that could be a catalyst
:20:43. > :20:49.for the Chinese stock market. Hound diversify are you? Chinese equity
:20:50. > :20:55.only makes up 3% of the global index. It doesn't equate to wear
:20:56. > :21:00.Chinese in terms of its presence on the global stage being the second
:21:01. > :21:05.largest economy in the world. Some stage I think there be a
:21:06. > :21:13.rebalancing. We only have to look at the markets. What do you think about
:21:14. > :21:23.the Chinese market? Some people worry it could collapse. Look where
:21:24. > :21:30.it was in 2007. The Chinese market offers good value at the moment.
:21:31. > :21:37.Valuations are low. There are a lot of expectations in China. Maybe they
:21:38. > :21:47.are overblown. Overall, we think China is attractively priced. In
:21:48. > :21:52.Asia, we expect a continuation of this central bank policy. On a
:21:53. > :22:00.relative basis, the US and Europe are doing better. There is a lot of
:22:01. > :22:08.volatility, still. We look at it as old China versus new China. I am
:22:09. > :22:20.going to put one more question to you. You have talked about your
:22:21. > :22:23.strategy. Where is your money? I have an exposure to Asian equities.
:22:24. > :22:28.We were talking about the rise of the consumer in the US. I bet a lot
:22:29. > :22:36.of them are buying Korean branded cars. Your own money. Is it Asian
:22:37. > :22:45.equity you are banking on? I have about 40% is Asian equities. That is
:22:46. > :22:52.about correct. I have US equity, I have property of Australia, and some
:22:53. > :23:01.gold. My biggest overweight is gold. You may jump at me now. A little
:23:02. > :23:06.bit! I don't know if they are going to turn, but looking two or three
:23:07. > :23:16.years out, they could have a true subside. You have are the star.
:23:17. > :23:22.Quite a bit of cash and equities. `` you have are the stuff. Interesting.
:23:23. > :23:27.Thanks very much. The jury is still out on who will dominate the
:23:28. > :23:31.21st`century or whether it will not be just one player. The smart money
:23:32. > :23:38.says keep your options open and your risks diversify. I would like to
:23:39. > :23:41.thank my panellists. Check out our website in the meantime come and
:23:42. > :23:48.join us in a sweet formal Talking Business with me, Linda Yueh. ``
:23:49. > :23:56.join us next week for more Talking Business.
:23:57. > :24:01.Good evening. After a day where we have seen some rain to the south and
:24:02. > :24:04.heavy showers further north, things are really quite an encounter
:24:05. > :24:10.through the night, allowing temperatures to tumble. Most places
:24:11. > :24:14.will be dry and clear. Still a bit more cloud and rain to come in the
:24:15. > :24:16.South. Moving through pretty quickly in the first part of the night. We
:24:17. > :24:17.may