What Is the Asian Century?
The Asian Century refers to the dominant role that Asia is expected to play in the 21st century because of its burgeoning economy and its increasingly wealthy middle class. The concept of the Asian Century has gained credence following the rapid economic growth of China and India since the 1980s, which has propelled them to the ranks of the world's largest economies.
Understanding Asian Century
The term "Asian Century" emerged in the 1980s, and it continued to gain traction as a concept following the release of a report by the Asian Development Bank (ADB) in August 2011 predicting continued massive growth in the region. While many believe that the 19th century belonged to the United Kingdom, and the 20th century to the United States, many market experts and analysts are speculating that the 21st century will become the “Asian Century,” dominated by Indonesia, India and China.
Asia's Expected Economic Expansion
According to the ADB's report, if Asia continues on its current growth trajectory, the region's per capita income could increase six times in purchasing power parity. Purchasing power parity is a theory whereby the exchange rates between two nations are equal when the price of a fixed basket of goods and services are the same. Moreover, the ADB states that Asia's per capita income could reach the present income levels of Europe by 2050. This rise in income would enable an additional three billion Asians to enjoy affluent living standards. The ADB report also states that with Asia on track to double its share of global GDP to 52% by 2050, the continent will regain the dominant economic position it held 300 years ago.
China and India's expansion has been dramatic over the past half-century. According to Fortune, in 1970, neither China and India owned a significant share of world gross domestic product (GDP). However, as of June of this year, China represented more than 15% of global GDP, and India represented over 3%.
Asia's Middle Class
Asia's middle class will continue to benefit from the Asia Century, if it occurs. In 2015, Credit Suisse reported that the size of China's middle class had exceeded that of the United States. The size of China's middle class was 109 million compared to the United States at 92 million. If economic expansion continues as expected in Asia countries, the middle class will see their incomes and living standards rise along with the demand for durable goods such as luxury goods and automobiles.