But surprisingly, despite the current anemic growth of the US and the Eurozone, the two regions on which Asia is traditionally dependent, East and South Asian economies have bucked the downward trend of their Western partners. Instead, they seem to be on a roll. The countries that are doing well among this cluster of nations are China, India, Korea, Taiwan and lately Japan. But will it last!

This time however it seems different, new growth dynamics, principally of homegrown nature are out to replace old ones. The traditional engine of export-led prosperity, championed chiefly by US buying power, no longer appears to be the only dominant factor. China instead, is starting to play a growing role in buttressing progress for Asian economies. Intra regional trade in Asia has grown from 2.2 per cent of world trade in 1985 to a respectable 6.5 per cent in 2001 and continues to be on its way up. South Korea, a major exporting nation, has seen its export to China grow by 47 per cent in the first seven months of this year, and also accounts for more than 40 per cent of its overall export. Similarly, Taiwan, Thailand, Singapore and Malaysia has seen a steady increase of trade with China. Japan's recent spurt of economic activity is also partly engineered by the Chinese buying power.

Another indigenous growth engine has been Asia's consumer. Easy monetary policy with low interest rate has led to easy access to consumer credit. This has turned Asians into voracious shoppers. The relatively younger population of Asia are keen to spend.

The government also welcomes and encourages such expansion as it makes the country less dependent on western growth.

Shortage of foreign exchange reserve of some Asian countries, led to en-masse (barring Malaysia) capitulation to the IMF and its concomitant stringent terms. The 1997 Asian financial crisis was a bitter pill to swallow. Asian countries have learned the hard way that when times are tough foreign capital flow retreats quickly without compunction. Credit rating suffers, and shutters rapidly come down on all avenues of raising fresh foreign capital. Countries are left with a depreciating domestic currency and burgeoning existing international debt. Such were the humbling experience during the crisis, and many important lessons were learnt from it. That is why today Asia is hoarding a total foreign exchange reserve of US$1,670 billion, amounting to 60 per cent of global reserve. China is estimated to have a reserve of US$365 billion with Japan in excess of US$500 billion. These are unprecedented big numbers, reflecting financial strength.

Today it is this financial powerhouse that is funding the growing budget deficit of the US. For once, not because it is compelled to, but because it suits Asia to do so. It helps to keep its currency undervalued. Kenneth Rogoff, the departing IMF chief economist, recently commenting on US growth said, perhaps facetiously, "best growth that money can buy," referring to Asian money. This may look win win for both sides but surely there must be an undercurrent of a threat from Asia. Think what can happen if Asia decides to retreat from buying US treasuries (debt obligations). This will have a catastrophic effect on dollar value and US interest rate would have to go shooting up to attract fresh capital for its burgeoning budget and trade deficit. Under such circumstances the tentative growth that we have seen in the US so far, would inevitably suffer.

Colossal Asian reserve is also causing consternation in Western camps particularly in the US. We have recently witnessed how John Snow, US Treasury Secretary, in his Asian trip tried to persuade Japan and China to re-value its currency. We have also seen how the G7 communiqué in Dubai added the word "flexibility" in relation to foreign exchange management by countries. An unprecedented comment over a market that is so sensitive to any signs, let alone explicit words. Sure enough, soon after dollar tumbled and yen appreciated. This was indeed a veiled aspersion over pegged and managed Asian currencies vis-à -vis China, Japan, Korea and few other minor ones. So what is really bugging the US? They are crying foul that China with its peg to US dollar at 8.28 renminbi is undervalued and therefore responsible for hollowing out US manufacturing. Because of the peg, China remains cheap even while dollar depreciates. US is forced to buy Chinese goods over its own, because it is competitive. This US-China tension is really not all to do with the right price for renminbi but more to do with the US election politics. They need to find a bogeyman to blame for their lacklustre economic performance.

Asian habits die hard. Asian's are known for their thrift. Their savings rate is one of the highest in the world, estimated to be in the region of 37 per cent of GDP. China saves at an even higher rate of 40 per cent and Japan at 30 per cent. Compare this to 13 per cent of the US. Admittedly, the absolute numbers may still be in favour of the US given the size of the respective economies. But with wealth rising in Asia these numbers can get very meaningful. High savings help investment and help develop capital markets which channel investments. Asia, other than Japan, still lacks deep financial markets, partly because of lack of infrastructure and maturity in the markets. But with such high savings rate, it is inevitable that over time Asia's financial and capital markets can potentially be one of the biggest in the world.

Outsourcing is the other big happening phenomenon in Asia. China and India have already established their names for being the manufacturing and service backyard of the West. This is a shift of seismic proportion in global economic balance with serious implications on Western economies, where all sorts of numbers are being bandied around in terms of job loss in both manufacturing and service sectors. This East-West partnership is here to stay and global businesses are now inextricably linked with Asia. As long as Asia is able to provide the cost efficiency, its importance can only continue to rise and become more dominant.

With 56 per cent of world population, Asia is still far from making its proportionate contribution to global growth and trade (currently both around 25%). But there are encouraging signs of progress and not all is dependent on the largesse of the West. It is building its own indigenous engines of growth that appear sustainable. The global economic dynamics are shifting in favour of Asia and it is beginning to take root. With growing financial strength Asian ascendancy seems secure.

Ghalib Chaudhuri, a former investment banker, operates an independent consulting practice based in Singapore.