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
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
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
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
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
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.