When Morgan Stanley Asia chairman Stephen Roach talks, people listen: his opinions on the global economy have been known to shape policy from Beijing to Washington. For years, as the bank's chief economist, he was one of the Cassandras of the global economy, warning boom-day investors to be wary of the imbalances that eventually led to the financial crisis. Now, as its top executive in Asia, he's got a new book, The Next Asia, out this month. The warning this time: while Asia is rising, the coming power shift from West to East won't be as easy as everyone thinks. "It's a myth that the baton of economic leadership is being seamlessly passed to the BRICs, in particular China. My premise is there is still a lot of work to be done," says Roach.
Indeed, The Next Asia lays out in forensic detail the breadth and depth of Asia's economic imbalances, as well as the dangers of the continent's huge dependence on Western consumers. In a series of essays and diarylike entries, he tracks the highs and lows of the global economy from 2006 to the postcrisis period of 2009, and the possibility that it may all lead to a future U.S.-Chinese trade war. The book is sprinkled with insider detail from VIP events like Davos and the National People's Congress in China, where in 2007 Roach sat next to senior Chinese officials "who gasped" when Premier Wen Jiabao pronounced that his country's economy was "unbalanced, unstable, uncoordinated, and unsustainable."
Despite something of a reputation for gloom, Roach ultimately comes across as an optimist, and a humanist. His long-term view on Asia remains bullish. And the book's dedication to those Asians still living on $2 a day—"the 1.8 billion who remain on the outside looking in"—is a reminder of just how high the stakes are.