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Economy

What is bad for Asia is bad for America

TOKYO -- Now that the world has come to rely heavily on the Asian economy, countries in the region need to contribute to its stability if they wish to win investor confidence.

     One company acutely aware of this is General Motors. America's largest carmaker will establish an Asian headquarters in Singapore this summer. With a staff of nearly 200, the office will take charge of a broad range of duties, including marketing, product planning, financial management and negotiations with governments.

     GM already has such an office in Shanghai. But now that its business in China is on track, the company wants to bolster its operations in Southeast Asia.

     Decades ago, a top GM executive said, "What is good for the country is good for GM, and vice versa." The arrogant notion that GM is America's symbol and inseparable from the country created a corporate culture that sought government protections rather than self-reform. That approach culminated in the company's bankruptcy in 2009, when it buckled under growing international competition.

Turn to the East

GM has since rebuilt itself by capitalizing on Asia's growth. It now sells more cars there than at home. The automaker has built a research and development center in China. Also, it uses batteries from LG Chem, South Korea's leading chemical company, for its strategic environment-friendly vehicles.

     Perhaps today it can be said that what is good for Asia is good for GM.

     Hit by a massive recall, GM is watching its stock price falter. But the company is still trading above the price it fetched when it relisted in 2010.

     GM's experiences parallel developments in the world economy following the Lehman shock in 2008: The "age of the U.S." ended and the growth engine shifted from the West to the East. America has no choice but to turn to Asia. Some 7.5% of all sales posted by the top 500 U.S companies in 2012 were in Asia. That represented the second straight year of growth and approaches the 9.7% for Europe, America Inc.'s biggest market.

     It could also be said that what is bad for Asia is bad for GM and the U.S. That is evident in the fact that concerns about China's economic instability have sent jitters through Wall Street.

     Japan is expected Tuesday to adopt a new growth strategy -- the so-called third arrow of Prime Minister Shinzo Abe's economic policy mix. The package will include measures to prompt companies to spend their dormant funds as a way of boosting return on equity, which is lower than that of overseas companies. Foreign investors have long been calling for such a shift.

     But Japan's economic policy is not the sole matter of concern for overseas investors. When Japanese market participants meet them nowadays, the subject of the political tension between Japan and China always comes up, because it affects not only the Japanese economy but also the Asian and U.S. economies.

    "We don't want to see a quarrel between the world's second- and third-largest economies," the head of a prominent U.S. investment group said recently in Tokyo. The market clearly wants the Abe government to do more than just promote Abenomics.

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