China, India poised to become new world power centres

WASHINGTON: As China and India restore their 18th century positions, a rising Asia is poised to become power centre of a world beset with
terrorism and proliferation threats across an "arc of instability," according to US intelligence agencies.

"China and India are restoring the positions they held in the eighteenth century when China produced approximately 30 percent and India 15 percent of the world's wealth," the director of national intelligence (DNI), Admiral Dennis Blair, told US Congress Thursday

"These two countries are likely to surpass the GDP of all other economies except the United States and Japan by 2025, although the current financial crisis may somewhat slow the momentum," he said in his annual threat assessment report.

"As the terrorism and proliferation threats persist across the 'arc of instability,' East and South Asia are poised to become the long-term power centre of the world," said the report representing the findings of all 16 US intelligence agencies.

It serves as a leading security reference for policymakers and Congress. Besides reviewing adversaries, it also considered this year the security impact of issues including climate change and the economy.

The global economic crisis has become the biggest near-term US security concern, sowing instability in a quarter of the world's countries and threatening destructive trade wars, the report said.

"The financial crisis and global recession are likely to produce a wave of economic crises in emerging market nations over the next year," said the report. A wave of "destructive protectionism" was possible as countries find they cannot export their way out of the slump.

Japan remains the second largest global economy and a strong US ally in the region, but the global economic slowdown is exacting a heavy toll on Japan's
economy, it said. "To realize its aspirations to play increased regional and global roles will require strong leadership and politically difficult decisions."

All together - Japan, the "tiger" economies like South Korea and Taiwan as well as the rising giants of China and India point to the "rise of Asia" as a defining characteristic of the 21st century, the DNI report said.

China's re-emergence as a major power with global impact is especially affecting the regional balance of power, it said.

"Industrialised countries are already in recession, and growth in emerging market countries, previously thought to be immune from an industrialised country financial crisis, has also faltered, and many are in recession as well.

"Even China and India have seen their dynamic growth engines take a hit as they grapple with falling demand for their exports and a slowdown in foreign direct and portfolio investments," it noted.

"Time is our greatest threat. The longer it takes for the recovery to begin, the greater the likelihood of serious damage to US strategic interests," the report said.