Expert View: To ride the tiger, the US must first show it respect

Extraordinarily, many US pension funds have no Asian investments
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Doing business in Asia requires a little - shall we say - finesse. Last week in Bangkok, my host led me into a room dedicated to "the harmonising effect of the monarchy". He suddenly dropped to the floor, kowtowing to a photograph of his king. I knelt respectfully, while my American rival remained rigid. Only on being asked to "Please, show a little respect", did she grudgingly lie on the floor - unfortunately with her feet pointing straight at his majesty. This, east of Eden, is the equivalent of spitting at him.

Before his trip to Asia last week, President Bush warned that we should not expect any "deliverables". Well, he was right there. Rumsfeld did his usual diplomatic best, talking of the "need for democratisation in China and Asia", while the President himself rammed home the message, both with a high-profile trip to a church in Beijing, and in a speech contrasting the "robust democracy" in Taiwan. Hint, hint.

In its dealings with Asia, this US regime seems incredibly cack-handed. As one expert pointed out, the Chinese were given the usual request for some detainees to be released. Instead of complying, this time they arrested more, sending a pretty clear signal that Bush's "constant harping on about democracy and ... religious freedom is wearing thin". That was China. The South-east Asian capitals were not even on the itinerary.

Meanwhile, whatever shortcomings they have in American eyes, Asian societies are steadily catching up with the States. In its report published on Thursday, Credit Suisse First Boston predicts that Asia outside Japan will grow by 7.5 per cent this year, and close to 8 per cent next (twice the US growth rate and five times that of Europe). This comes through in Asian companies' earnings, with most predicted to grow in double digits next year, and some (like Taiwan and Indonesia) by over 20 per cent. It should be noted that, even given recent upgrades, earnings for European stocks are still forecast to grow only 9.5 per cent.

The Asian tigers are once more roaring. If US politicians are slow to understand this, then so are US investors. Most US pension funds are hopelessly underexposed to Asia with, typically, only 1 or 2 per cent of their money there. Many funds have nothing, an extraordinary defiance of the economic and financial writing on the wall.

In a fortnight's time the first East Asia summit will be held in Kuala Lumpur. Once more, the US is missing a trick. Other countries and their companies - noticeably European and Indian - have been busy lobbying ahead of this event. Asian leaders have reciprocated in reaching out; Singapore's premier was one of the first to call on Germany's newly appointed Chancellor, Angela Merkel.

A central problem in the US perception of Asia, whether political or financial, appears to be its misfounded belief that the region is just gagging to adopt the American political system straight off the shelf, and cannot succeed otherwise. This is enshrined in that influential organisation in Washington, the Society for the American Century. It makes no bones about its intention to see that the 21st century remains firmly in American hands and to keep the new economies in their place. Bush Snr opined that "the US and China are not necessarily fated to be enemies".

In boasting of the strength of US political systems, little if any attempt is made to understand the myriad complex societies and cultures which make up the region. In its human rights agenda, the US is highly selective in whom it chooses to chastise, and its approach simply does not bear results.

I finished my trip with a meeting in Kuala Lumpur. As we rounded the corner, we came across a photograph of Malaysia's reigning monarch. I braced myself, but to my relief, this time my host remained upright.

"Has he reigned long?"

"No, we rotate our constitutional monarchy every five years, between eight different families."

Well, if it works for them, George.