Financial Crisis and Asia's Changing Balance of Powers
Abstract
The 2008 financial crisis led to the most serious global recession since the 1930s (Krugman 2009). The crisis originated in the United States, with its origin in the excess in the US housing and mortgage markets. Persistent high unemployment and declining personal net worth contributed to Americans' sense of insecurity and turned their attention inward: reorginizing dysfunctional financial institutions, revitalizing the economy, adopting a more cautious foreign policy, and locking in presidential election-year politicking. Beginning in 2011, several European countries became afflicted with economic crises, threatening the cohesiveness and viability of the euro zone. While traditional American and European powerhouses are grappling with the aftermath of what has become known as the Great Financial Crisis (GFC), several large developing countries - the so-called BRlCS - have experienced sustained rapid economic growth, devoted considerable resources to developing their military capabilities, expanded their influence in their neighborhoods, and become more vocal on global governance. China's "rise" (or "second rise," or "resurgence") amidst the CFC has been especially noteworthy: its successful hosting of the 2008 Olympics, its economy serving as the new engine of growth, its increasingly assertive posture in the maritime territorial disputes in East Asia, the allure of the so-called "Beijing Consensus," etc. While the various major international players' variegated fortunes are still unfolding and being sorted out, the CFC is shaping up as a geopolitical as well as a geoeconomic event - particularly in Asia, an economically dynamic region where America's staying power and China's growing aspirations intersect. Does the GFC help alter the balance of power in Asia?