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For the Pacific Community as a whole, the lesson of 1985 is that too much reliance on the U.S. market is risky. "The U.S. cannot continue to be the only engine of growth in the world economy," said Krause. The economists agreed that the Asian nations will have to develop trade among themselves and raise living standards so that they consume more of their own products. Observed Drysdale: "We need a transition from North American-led growth to Western Pacific-led growth."
At the moment, Japan is in the best position to boost its imports. But its neighbors have had an even tougher time cracking Japan's trade barriers than the U.S. has. "There is a growing resentment in the region about access to the Japanese market," said Drysdale.
In the long run, China could become the most attractive market of all. Already Japan sends more goods to China[*] some $9 billion worth so far this year--than any other country except the U.S. "We see no limit to economic relations with China," said Japan's Yoshino. In addition, China is building trade with less developed Asian countries, buying rubber and pig iron, for example, from Malaysia.
Despite the difficulties of 1985, TIME's economists agreed that the year could be profitable if it encourages the Pacific countries to re-examine their economic strategies. Even the threat of Western import barriers could be helpful if it forces countries to find different trading partners and new ways to grow. Concluded Hong Kong's Chen: "Protectionism can be an early signal to adjust. And only countries that learn to adjust can prosper." --By Charles P. Alexander
Forecasts by TIME's Pacific Board of Economists[*] Time's U.S. Board of Economists