Asia in 2022: China’s reopening after Omicron, elections in the Philippines, inflation and climate change
- With 2021 drawing to a close, what will the new year bring? Wang Xiangwei points to hopes that China will lift border restrictions by next summer at the earliest
- Rana Mitter says Beijing and Washington have a lot to prove to the region; Neil Newman is expecting high inflation rates and Zuraidah Ibrahim asks if the Great Resignation will play out in Asia
What does 2022 hold in store for Asia? Seven commentators give their take on everything from the ongoing great power rivalry between the United States and China, to climate concerns, inflation worries and, inevitably, the pandemic.
Rinse and repeat?
2022 will be an important year for Asia as it faces the prospect of elections shaking up the status quo in the Philippines, South Korea and, very likely, Malaysia.
This time, the backdrop of geopolitical tensions between China and the US will feature prominently in the election campaigns, especially in the Philippines where talk of a so-called Manchurian candidate – a puppet of either big power, but most likely China – is rife. The animus between the two rival powers will only worsen with Taiwan remaining a flashpoint, sparking repercussions for the rest of Asia.
After hosting a summit ostensibly on democracy, but in effect a thinly-disguised attempt to mobilise a coalition against China and Russia, the US now wants an alliance on trade and tech, or an economic deal, with Asia that would cover such areas as coordination on supply chains, export controls and standards for artificial intelligence. Just how this will pan out is unclear, given that the Americans will be distracted in 2022 with midterm congressional elections, but it is obvious China will be left out. What is also clear is the pressure on Asian countries to take sides is likely to deepen.
As in the previous two years, 2022 will bring another round of pandemic uncertainty and fatigue, as we continue to battle the coronavirus and its hydra-like mutations. The see-sawing between lockdowns and living with the virus will continue as new variants emerge to threaten us. The issue of vaccine equity will also cause more friction in Asia, many parts of which continue to struggle for access to the shots.
With the Great Resignation playing out in the West, especially in the US and Britain, as many leave their jobs for better options, a question Asian employers should be watching out for is whether this phenomenon will spill over into their turf. Theories abound as to whether workers are just quitting because they can job-hop, with labour being scarce, or they are holding out for a higher sense of purpose in making a living. Either way, a rebalancing between the power of labour and capital will be at play.
Overall though, with the pandemic and all of its still debilitating effects on all aspects of our lives, 2022 is looking very much like it will be a year of rinse and repeat.
– Zuraidah Ibrahim, SCMP Executive Managing Editor
According to Chinese astrology, we will enter the Year of the Tiger in February 2022. The zodiac sign of the tiger symbolises determination, strength, braveness, and exorcising evil – all traits we will definitely need to confront the challenges of next year.
A top priority must be a more united international community to exorcise the evils of the coronavirus pandemic, which has ravaged the world for the past two years. The newly emerged Omicron variant may have brought a new wave of concern and panic across the globe, but amid rising vaccination rates and the wider availability of vaccines, one has to be hopeful that the pandemic will finally be brought under control in 2022.
In China, about 90 per cent of the 1.4 billion population are expected to be vaccinated with at least two doses by the first quarter of 2022, which will raise hopes that Beijing will consider lifting border and travel restrictions next summer at the earliest.
Following the summit between Chinese President Xi Jinping and his American counterpart Joe Biden in November, the evolving and complex bilateral ties of the world’s two largest economies have entered into a period of stability as both sides have emphasised the need to avert conflict or confrontation. But the acrimonious attacks and counter-attacks along ideological lines are expected to continue from time to time, particularly as China and the US enter their own political cycles.
Xi is to seek a historical third term as party chief at the Communist Party’s 20th congress, most likely in October or November. This means China cannot afford to look weak. The US, meanwhile, will have its midterm elections in November, the outcomes of which will not only affect Biden’s domestic agenda but also his policies towards China as the two major powers continue to compete.
– Wang Xiangwei, Former SCMP Editor-In-Chief
Sustainability’s precarious moment
In 2021, we saw extraordinary momentum from the private sector on environmental, social, and governance (ESG) commitments, and this brought excitement that the mainstream is waking up to the crisis we face – this is a good thing. In 2022, however, we’ll see less accolades for declarations and more scrutiny on the “how”.
This means more accusations of “greenwashing” and more precautionary tales of good sustainable intentions leading to unintended negative consequences. It’s a precarious moment in the transition. We need momentum. In fact, we need significantly more momentum.
Current commitments do not yet put us on a trajectory to stay below 1.5 degrees Celsius of warming, the level that has been determined poses an acceptable amount of risk to our well-being. But in our urgency to act, we could re-entrench the extractive and socially exploitative business models that got us into this mess in the first place.
Leaders in Asia and elsewhere will need to lean into the messy complexity of figuring out what genuine transformation to just and regenerative models means. Doing so will require collaboration across the public, private and civil society sectors. Next year will be another step into an age of transition. We need to design and build new systems, while learning to sunset others. We need to come to terms with what we can no longer change, but raise our ambitions for what we can.
– Ariel Muller, Managing Director at Asia Forum for the Future
The price of the peg
We are likely to see the return of high rates of inflation next year across all the major economies, possibly to levels we have not seen in Hong Kong since 1983 – the year the Hong Kong-US dollar peg was introduced.
Already tracking upwards in 2021, particularly in the US, Asian consumers are feeling inflation in the rising cost of food, fuel and a multitude of daily household consumables.
Economists are unsure of what exactly is driving inflation currently and this presents a major challenge in 2022. Could it just be a temporary blip caused by supply chain disruption? Or is it a more long-term problem possibly born of the enormous amounts of Covid economic stimulus? Without knowing the cause, central banks can only treat the symptoms.
So, what could happen? If inflation spikes the US Federal Reserve will raise interest rates and Britain and the European Union will follow. The surprise would cause everyone to worry about debt and paying their mortgage. In Hong Kong, this would put the Monetary Authority in a position to urgently reconsider the suitability of the US dollar peg as inflation pressure in the US starts to directly and unreasonably hurt Hong Kong homeowners.
In the Year of the Tiger, will the HKMA catch a tiger by its tail and de-peg? Or peg to a different currency or basket? If US dollar rates surge, the risk to Hong Kong will be too great to ignore, but it might bite back triggering a regional currency crisis, as we saw when Thailand de-pegged the baht from the US dollar in 1997.
Hong Kong inflation has reached 18 per cent historically, and interest rates of 15.5 per cent mauled homeowners in the 1980s. Is 2022 the year we pay the price of the peg and see rates rocket higher?
– Neil Newman, Thematic Portfolio Strategist Focused on Pan-Asian Equity Markets
A Covid-19, climate reckoning
Pandemic accountability, inflation and the COP27 climate summit in Sharm el-Shaikh are the three things I believe will be in focus in 2022.
Across the Asia-Pacific, hundreds of millions of voters from India to Australia will go to the polls in what are likely to be de facto referendums on incumbents’ track records as “wartime” leaders in the two years since the Covid-19 pandemic began.
In India, we will see Prime Minister Narendra Modi’s top lieutenant Yogi Adityanath, seen as a potential successor to the Indian leader, lead the ruling Bharatiya Janata Party’s (BJP) bid to retain power in the country’s most populous state of Uttar Pradesh.
The state assembly vote is one of several regional elections happening in India next year, but Adityanath’s fate in particular could offer insights on what voters think of the BJP’s muddled handling of Covid-19. Pundits so far believe predominantly Hindu voters will continue to back the prime minister’s Hindu-nationalist agenda, instead of punishing his party for this year’s mistakes.
In Malaysia, too, I am eager to see how – and if – voters keep their leaders accountable. After two years of roller-coaster politics, a general election seems inevitable sometime next year.
There are signs that voters are ready to look past the scandals haunting ex-prime minister Najib Razak to hand his party power once again. On the economic front, my bet is that all eyes will be on central bankers and what they do to curb inflation.
Some central banks are sticking to their belief that the current price surge is “transitory”, but their critics say stimulus taps must be turned off to avoid runaway inflation that cannot be dealt with swiftly through subsequent policy action.
In the tail-end of 2022, meanwhile, I reckon the US midterm elections will have to share at least some of the limelight with the climate summit in the Red Sea resort of Sharm el-Shaikh. Countries were asked at this year’s summit to upgrade their 2030 emissions targets by the end of next year. We will get a clearer picture in Egypt of which governments are serious about their pledges and which of them are simply making empty promises.
– Bhavan Jaipragas, Chief Asia Correspondent
Changing economic, security landscapes
With Covid-19 infections surging and amid heightened geopolitical uncertainties, 2022 is looking like a real mixed bag for Asia.
Low vaccine roll-outs in Southeast Asia’s less developed economies and uncertainties surrounding the epidemiological path of the virus are likely to dampen growth, alongside possible disruptions to supply chains and the looming impact of the energy crisis.
Lockdown measures are expected to be less stringent compared to 2020, however, and governments are likely to offer greater policy support for companies and households. Travel and tourism, which suffered heavily from pandemic restrictions, are also expected to rebound – especially with the greater codification of vaccine passport norms.
With major world powers increasingly seeking to counter what they see as a more assertive China, many more foreign navies are expected to make their presence felt in the region’s waterways, especially the South and East China Seas.
Measures to exert greater influence in the region are likely to solidify next year when Japan hosts the Quadrilateral Security Dialogue, which also includes the US, Australia and India.
Whether using the Quad as a vehicle or on its own, Washington is expected to strengthen bilateral security alliances with Japan, South Korea, the Philippines, Thailand and Vietnam, likely altering the region’s security landscape.
All eyes will also be on the two major presidential elections in South Korea and the Philippines where contenders will be closely scrutinised on their postures towards the US, China and regional tensions.
Watch out too for Japan’s likely revision in late 2022 of its National Security Strategy, which set out medium- to long-term guidelines for its defence and foreign policies.
– Maria Siow, Senior Asia Correspondent
Next year, China and the US will be looking inward, as Chinese President Xi Jinping undoubtedly secures a third term and Joe Biden looks to midterm elections that will shape the rest of his presidency. But Asia will not stand still and both Beijing and Washington have a lot to prove to the region. The US has to show that it has the capacity to be a lasting ally to its traditional partners in the Asia-Pacific, as they look nervously at the possibility of a new isolationist president being elected in 2024 – or indeed an old one coming back.
Biden also needs to show that the US-led Build Back Better World initiative has substance to it, and provide a serious economic as well as a security offer to the region. China’s economic role isn’t in doubt, but its capacity to invest needs to be matched by a wider sense of mission, as Beijing’s “Community of Common Destiny” too often seems to serve a Chinese agenda that fails to understand sensitivities in Japan, Southeast Asia and India.
And next year, if all goes well, Britain should join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. This is a rare occasion – a European state which has left its neighbours in the European Union and wants to play a role in shaping trade in Asia. It might sound unlikely, but if Britain accedes to the CPTPP, it would be the second largest economy in the grouping after Japan. It would also then be part of the negotiations with two other applicants: China and Taiwan. Trade discussions in 2022 should be fascinating.
– Rana Mitter, Professor of the History and Politics of Modern China at the University of Oxford