Since the 1997 Asian crisis and the 2008 global financial crisis, such predications have become more difficult as the risks and associated uncertainties increase. Clearly, wealth has shifted to East Asia, which is increasingly integrated with the global economy. But if wealth accords East Asia some political weight in the world economy, the more pertinent question is what this means for the global economic order. Will East Asia support a liberal international order, or is East Asia heading towards an economic order characterised by the ‘Beijing Consensus’ in which there is greater acceptance of illiberal economic and political arrangements with a concomitant substantial role for the state in the market? A related question is whether East Asia’s economic weight can translate into leadership in the world economy.

Although East Asian states have adopted pro-integration reforms aimed at liberalising their economies and enhancing market-based economic arrangements, there is still a degree of ambivalence between liberalisation, protectionism and state intervention, despite official recognition of the benefits of competitive markets and global integration. Policy ambivalence is also a feature of regional and bilateral cooperation strategies, such as the rather flexible regional liberalisation schedules and carve-outs in bilateral preferential trading arrangements (PTAs). This mix of strategies is aimed at aiding global market integration but in ways that do not disadvantage domestic firms, sectors or groups deemed to be strategically or politically important. In short, East Asia does support a liberal global economic order, albeit on East Asian terms. While seeking the gains from global market integration, there remains concern with maintaining a degree of domestic policy autonomy in order to meet domestic social and political goals that cannot be attained through the market.

But it is because of these domestic preoccupations that it becomes hard to see East Asia assuming any form of leadership in the global economy. This is not just a question of whether East Asia will be permitted to assume that role, as Kishore Mahbubani recently asked in a 2011 article in the Review of International Political Economy. It is also whether East Asia is willing to shoulder the global responsibilities that come with leadership. East Asian states remain constrained by domestic politics that make it difficult for the region, either in a coalition of regional states or individually, to assume global responsibilities, because that means acting beyond national interests to safeguard system stability or advance global economic justice. The case of undervalued exchange rates and global imbalances is a case in point. Global financial stability is a global public good that requires changes in domestic economic governance in both the US and East Asia. Although a degree of East Asian leadership is evident in the multilateralised Chiang Mai Initiative (CMIM), domestic political constraints mean that a more effective CMIM will not be easy to come by if that requires a more intrusive surveillance system beyond information-sharing.

China has the wherewithal to act as a leader and no doubt boosted global growth by acting as the world’s factory. However, China has much to do on the domestic front, which can make it less willing to take on system stabilising roles, including maintaining liberal markets if these do not coincide with its domestic interests. Whether Japan and China will act in concert globally or even regionally is also uncertain. While the compromise that allowed multilateralisation of the CMIM suggests that such rivalries can be managed, that may not always be possible.

The prevailing multiple, overlapping and less than reliably effective regional institutional architecture is also unhelpful. Even if the region’s different institutions provide functional benefits to members, this alone is not sufficient for international leadership. East Asia’s ‘concentric circle’ approach to regional governance, rather than being mutually reinforcing, can undermine regional coherence and the capacity of the region to act in concert in providing leadership on a range of pressing global and regional issues such as global trade governance, open markets in the region, rebalancing, financial architecture and climate change.

Although East Asian governments rightly challenge elements of contemporary global governance that are ineffective or unjust, and may even offer statist or developmental variants of economic governance, ultimately leadership must encompass more than this. It is not evident at this point that regional states are themselves clear on the kinds of global change or global/regional governance arrangement they want to see. East Asia’s preoccupation with domestic agendas and the diversity of domestic interests, the strategic rivalry between Japan and China, and the fragmented and still rather ineffective East Asian regional institutional architecture means that East Asia’s economic weight in the world economy may not easily translate into political leadership in the near to medium term.

Helen E. S. Nesadurai is Associate Professor at the College of Arts and Social Sciences, Monash University, Malaysia campus.

This article appeared in the most recent edition of the East Asia Forum Quarterly, ‘Asia’s global impact‘.