The anti-globalization sentiment that originated from the West continues to spread over the world, and is challenging Asian economic integration, a report released by the Boao Forum for Asia (BFA) said Sunday.[Special coverage]
According to the "Progress of Asian Economic Integration Annual Report 2018," a cautious attitude should be adopted to predict the future of Asia's economic integration.
Although there were some good signs for Asia's trade performance in 2017, globalization -- the most important driver of Asia's economic integration -- faces unprecedented challenges, the report said.
With deteriorating economic growth and growing trade deficits in the United States and some members of the European Union (EU), the traditional model of Asia's global value chain -- where intermediate parts and components are sourced from Asian partners and assembled locally before the final goods are exported to the United States and Europe -- faces difficulties, it said.
The market forces seem to be at work to reshape the basis of globalization -- the global value chain. New innovations in precise machines, robots, 3D technology and lower resource costs may bring some manufacturing capacities back to the developed countries.
The report also noted that the United States and EU absorbed 96 percent of the world total portfolio investment in 2016. This pattern of capital flow would expose Asian economies to high risks of capital flight and higher cost of financing. The problem has become more prominent with volatile internal and external environments in recent years.
To face up to the challenges, Zhou Wenzhong, secretary-general of BFA, said in the foreword of the report that expanding Asia's internal markets is very crucial to sustain the further growth of the global value chain and provide new momentum to the global trade growth.
He said the Asian economies should spare no efforts to take advantage of the opportunity to move collectively toward creating a world-class integrated local financial market throughout determined reforms.
Looking ahead, Asia should work out clear policies to deal with the structural changes of the global value chain and find new and innovative ways to grow, which chimes with the theme of the BFA annual conference 2018 -- An Open and Innovative Asia for a World of Greater Prosperity, Zhou said.
This year's conference runs from April 8 to 11 in Boao, a town in the southern Chinese island province of Hainan.