### Summary
Under the rivalry between the US and China, many middle and small powers are making their own mark on the international order by reshaping the world economy, affecting the global balance of power, and increasing their economic weight, military potential, and diplomatic stature. These changes have been caused by unhappiness with globalization, the risks of overreliance on rivals for vital supplies, and the rise of China.
### Facts
- The unhappiness with globalization in the West, especially in America, has caused economic anxiety, social discontent, and political backlash.
- Covid-19 exposed the risks of overreliance on another country, especially a rival, for vital supplies.
- Russia's invasion of Ukraine revealed the EU's dependence on Moscow for energy.
- The rise of China has rattled the US and other countries, leading to the search for a new geo-economics.
- US allies in the Indo-Pacific are strengthening their defenses through military and technological cooperation with Washington.
- Geo-economics and geopolitics have merged, with the US leading in redefining globalization that does not harm national security, technological supremacy, and economic leadership.
- India is at the crossroads of new geo-economics and geopolitics, being America's natural geopolitical partner and an attractive partner in geo-economics.
- Middle powers like India are benefiting by aligning themselves with the US and forming independent groupings at the global or regional levels.
- Many players are multi-aligning and multi-networking through mini forums, ad hoc groupings, and shifting coalitions, making the international order very fluid.
Main topic: The challenges, opportunities, and general outlook for Southeast Asia's startup ecosystem
Key points:
1. The overall outlook for Southeast Asia's startup ecosystem is promising, with a projected increase in growth potential and valuation.
2. While there was a slowdown in venture capital funding, the presence of VC dry powder and the potential profitability of listed tech unicorns provide optimism for a resurgent startup landscape.
3. Southeast Asia's unique advantages, such as a large and younger population, financial inclusion opportunities, and potential growth in consumer tech, healthcare, and infrastructure, offer exciting prospects for startups in the region.
China has a complex network of trade partnerships with over 200 countries, regions, and territories, and it has a trade surplus with the majority of them, including the US and India, while having deficits with major Asian economies like Taiwan, Japan, and South Korea. These trade relationships are influenced by historical, geopolitical, and strategic factors.
China's economy is facing multiple challenges, including tech and economic sanctions from the US, structural problems, and a decline in exports, hindering its goal of becoming a top global exporter and tech power, which could have long-lasting effects on its status in international relations and the global economy.
India is positioning itself as an alternative to China in the global supply chain, aiming to become a major manufacturing hub and increase its role in the production of goods, as the world seeks solutions to supply chain disruptions caused by health crises and geopolitical events.
China's economic troubles, including a real estate crisis, an aging population, and rising debt, resemble Japan's long-standing issues, leading some experts to predict a potential "lost decade" for China similar to Japan's economic stagnation in the 1990s, while Japan is showing signs of climbing out of its deflationary nightmare.
The economist Tharman Shanmugaratnam highlights India's challenges in achieving sustained economic growth, addressing social and economic disparities, and integrating with China and ASEAN. He emphasizes the need for India to focus on education, increase exports, reform employment and land acquisition laws, and take advantage of its untapped potential.
China's economic growth has slowed but has not collapsed, and while there are concerns about financial risks and a potential property crisis, there are also bright spots such as the growth of the new energy and technology sectors that could boost the economy.
With the right reforms, India has the potential to become the next engine of global growth, benefiting from major economic re-alignments caused by China's slowdown and the US diversifying its supply chains. Major corporations are already investing in India, recognizing its potential. However, India needs to overcome challenges such as high tariffs, infrastructure improvements, and regional cooperation to fully realize its manufacturing potential and attract foreign investment.
The emergence of a new era of Asian commerce is reshaping the continent's economic and political future, as greater regional trade and investment within Asia leads to a shift away from the previous model of producing goods for American and European consumers.
China sees Southeast Asia as geopolitically important and will prioritize investments in the region to counter U.S. influence, despite slowing domestic growth, according to economists. Additionally, Southeast Asia is a crucial source of critical minerals for China's green technology and electric vehicle ambitions.
Asian economies are increasingly investing in their own region, leading to greater trade integration and financial flows within Asia, as well as significant investments in infrastructure and development finance, with implications for the global economic and political landscape.
Tensions between the West and China are impacting global markets, leading to potential inflation and higher interest rates, while presenting opportunities for emerging nations and tech giants; strategies such as bringing manufacturing home and "friendshoring" are being pursued, with India viewed as a strong competitor to China in manufacturing; the clash between China and the West also has implications for sectors such as semiconductors, luxury goods, and investment in China; investors are divided on how to approach the Chinese market.
Asia's competitive advantage has shifted from cheap labor to industrial services, including logistics, waste management, and data centers, according to a report by KKR's heads of global and Asia macro, who believe that the demand for infrastructure and logistics in countries like India, China, Japan, and others will continue to accelerate. Japan, in particular, is experiencing a capex cycle and corporate reform that is boosting shareholder returns, making it an attractive investment opportunity. Meanwhile, India is witnessing significant growth in infrastructure investment and exports, leading to increased productivity and economic growth. China's economy is undergoing a transition, with a growing digital economy and emphasis on decarbonization.
Rising debt levels in seemingly healthy countries in Asia could lead to lower growth rates in the region, according to World Bank Chief Economist Indermit Gill. The increased borrowing by governments will limit credit available to private firms, resulting in a lack of investment and potential economic stagnation.
China's weak economic recovery and the risks associated with its property crisis are likely to impact Asia's economic prospects, according to the International Monetary Fund (IMF), leading to a cloudier outlook for the region and potential spillover effects on commodity-exporting countries with close trade links to China. The IMF revised its growth estimate for Asia down to 4.2% for 2024, and emphasized the need for central banks in the region to exercise caution in cutting interest rates due to sticky core inflation and other global factors such as the Middle East conflict. Additionally, the IMF warned that Japan's normalization of monetary policy could have significant global implications.
