Under the context of slow economic recovery of developed countries and the strategic industrial restructuring of the manufacturing industry, Asia's closely linked intra-regional trade and investment can play a buffering role, helping Asian countries to resist the impact of global trade barriers and the uncertainty of external economic growth.
Since the World War II, the industrial division of labor in Asia has been continuously adjusted; the scale of regional capital flow and industrial transfer has grown rapidly. On October 25, 2017, the Asian Economic Integration Report 2017 released by the Asian Development Bank (ADB) pointing out that the Asia's intraregional trade share―measured by value―rose to 57.3% in 2016, a record high, up from an average of 55.9% from 2010 to 2015. Foreign direct investment (FDI) within Asia increased as a share of total FDI to the region from 48% in 2015 to 55% in 2016. The international monetary fund (IMF) forecasts that Asia's GDP will account for more than a third of global GDP by 2030.
Looking at the process of global industrialization, it is not difficult to observe that most of the countries in the Asian region have relatively abundant labor force and lower production costs, hence the manufacturing base of the world's goods has been more concentrated in Asia. Follow by the rise of Japan, the "Four Asian Tigers", China and India, the economic and industrial structure of the Asian region has become increasingly complementary. As the world's manufacturing center, Asia has formed a sound production chain and close trade relations within the region. Each Asian economy has its own characteristics and advantages; the industrial bases in different parts of Asia conduct on the middle and lower reaches of different production respectively, from offering a wide range of raw materials, components, intermediates, zone import part of the materials and key parts, the region ends up producing a wide variety of manufactured goods and most of the products are exported to Europe, America and other markets. The service industries that support the manufacturing industry, including modern logistics, financial credit, information services, e-commerce and other industries also form an organic integration in the region.
At present, the international division of labor has been evolved into the stage of value chain. The mode of division of labor which takes products and the production as the basic has changed to which enterprises play a more dominant role in the international division of labor. Cross-border investment and business transfer are both autonomous business activities for enterprises to allocate resources globally. Taking advantage of geographical proximity, Asian companies can engage in industrial docking in a planned and purposeful way. For example, China and ASEAN both play the roles as industrial receivers and industrial transfer parties. On the other hand, China imports more raw materials and products from India, and India imports more processing machinery and equipment from China.
Industrialization is not the only the path for Asia's economic development, and the regional economy is becoming less dependent on its goods exports. Anbound's chief researcher Chan Kung has analyzed this important trend back 2014; he pointed out that even in developing countries there is transition for production-oriented society to consumption-oriented society at certain stage of development. In developed economies, what determines the economic level is actually the aggregate output and the purchasing power, rather than the cheap and diverse production.
In the past, Japan and other newly industrialized Asian countries mainly process and export goods to meet the needs of European and American markets. Today, the huge consumer groups in Asia, especially the young population (for example, the average age of Malaysians and Vietnamese is 28 years old), and the huge market demand in Asia have become an important engine of economic growth in Asia. After years of economic development, with the increase of national wealth and the continuous improvement of per capita income in Asia, there is an increasing of higher quality consumer demand. Asia's urbanization and growing middle class are driving rapid growth in demand for services such as finance, education, tourism, healthcare, pensions and so on. According to the ADB's statistics, the service industry accounted for 48.5% of Asia's GDP in 2010; the importance of services industry to Asia's future economic development will become even more evident.
Globalization promotes scientific and technological progress, which in turn could accelerates the development of globalization itself. Driven by the power of science and technology, the transfer of international industrial clusters has become a trend, which then leads to the change of international division of labor, and the international capital flows would also lead to the changed of geopolitical and economic system. Science and technology cooperation with other countries will play an important role in industrial intermediary. Follow by the development of internet and digitalization, Asia seize to pursuing technological progress and industrial innovation will further enhance the integration of industries within Asia and thus improving the overall competitiveness of Asia in the global economy. Asia is emerging as a new high ground of global development and will change the global economic landscape on a larger scale.
