It is not about stimulus or austerity, but about policies that boost the private sectors confidence With the exception of Japan, stimulus has worked spectacularly for Asia. Successful Asian governments have struck a balance between growth and inflation. The Chinese especially take a very dim view of poverty, because historically it has had so much to go around. Fear of destitution has underpinned the countrys high savings rate, though these days, companies actually account for a bigger share of national savings than households. This also explains why China has consistently focused on growth and poverty alleviation in its economic policies. So goes an old Chinese proverb: He that has no money might as well be buried in a rice tub with his mouth sewn up. No wonder the 'new Chinas respect for the US and Europe has dwindled in recent years. In spite of this zest for growth and employment creation the Chinese like those in many parts of Asia remain wary of debt. In China, a high proportion of cars, and even houses, are paid for in cash. The Chinese officials talk scornfully about the US consumers proclivity to buy now and figure out the consequences later. Ironically, in Pakistan this is a trait commonly attributed these days to governmental spending. Through this prism the Pak economic crisis is being seen by many as a modern morality tale in which reckless governments and decision makers got their comeuppance. To learn from our co-habitants in the continent, the Asian policymakers have been reasonably restrained about shoving this view down western gullets, though at times the temptation has been irresistible. If anyone remembers, after the Lehman Brothers debacle the Chinese went through a phase of lecturing the US on the virtues of frugality. Just as Washington - and for that matter Beijing - was cranking up its mammoth stimulus, Zhou Xiaochuan, Governor of Chinas Central Bank, was urging the US to rein in excess. Over-consumption and a high reliance on credit is the cause of the US financial crisis, he pronounced. The US should take the initiative to adjust its policies, raise its savings ratio appropriately and reduce its trade and fiscal deficits. The question is, Shouldnt we all? Obviously, the US has not been quiet either. They have been severely critical of how the Asian economies still remain largely dependent on exports, however, well they have done in stimulating domestic demand. Interestingly, so far from the Asian side, the message has not only been united, but also consistent that be virtuous. But not quite yet. Sincerely hope that our economic decision makers are listening as well. It was a shame to see the Commerce Ministry revise its export targets by a paltry $2 billion, whereas, the way the commodity prices have escalated globally the revision should have been a minimum of $10 billion. Though Asians, by and large, trumpet the value of parsimony, their governments have been prudently bold in opening the fiscal sluices. One reason is the bitter memory of the 1997 Asian financial crisis when the International Monetary Fund (IMF) imposed fiscal austerity on several Asian countries. Those measures are now almost universally seen as a blunder that unnecessarily exacerbated economic misery. Something we in Pakistan need to watch out for as well Thriving Asian governments have taken this lesson to heart. According to Fitch ratings agency, over the last two years, fiscal stimulus packages as a percentage of gross domestic product amounted to 6.90 percent for Vietnam, 7.70 percent for Thailand, 8 percent for Singapore, 13.50 percent for China, and a whopping 14.60 percent for Japan. Taiwan, with a relatively modest stimulus of a little under 5 percent, gave $100 spending vouchers to each of its 23 million inhabitants, including convicts. The Singaporean government subsidised businesses that retained staff. In China, the mother of all stimulus packages, funnelled $585 billion of spending into the economy, and even more through directing state-controlled banks to increase credit. However, importantly, the context of Asian stimulus has been entirely different from the ones given in the West, and this is what Pakistan needs to learn from. Sensible Asian governments plumped up their fiscal cushions after the 1997 crisis, by pushing exports (at all costs) to build formidable pool of reserves. Such 'prudence meant, rather bizarrely, that poor countries such as China were foregoing spending and investment for quite some time in order to facilitate rich foreigner binge-buying. But, it also meant that when the crunch came, they had the wherewithal to spend. The exception, of course, being Japan, which is physically located in Asia, but economically it is considered to be closer to the West. Economists, who follow Japan closely, maintain that while it would also very much like to follow Europes path of fiscal reduction, it lacks the will to do so. Believe it or not, much like what we experienced in Pakistan even in Japan, Naoto Kans government failed to raise extra revenues through a planned move to enhance sales tax Japan looks like a cautionary tale for the West. Keynesians will argue that Japans fiscal stimulus was not wrong in principle, but badly implemented and undermined by half-hearted policy. Twenty years after its bubble collapsed, Japan has still not crawled from the rubble. For the fiscal hawks, on the other hand, Japan is proof that everlasting stimulus does not work. Its nominal output has hardly budged in two decades, but its gross debt pile now towers at nearly 200 percent of GDP. Unlike in the West, with the exception of Japan, one could say that for the success story of the rest of the Asian countries, there is little debate in Asia itself about how well the stimulus has worked. It has been successful. The Asian output is well above pre-crisis levels. HSBC is predicting growth for Asia ex-Japan of 8.60 percent this year. Rather than contemplating more stimuli, the economies have reached a stage, where the authorities are trying to cool things down. Banks have been raising interest rates for months, China and others have introduced measures to take the heat out of the housing market. Fears about unemployment have given way to concerns about labour shortages and spiralling wage demands. Thus, things have improved, to an extent, where the question in most of Asia is not whether to remove stimulus, but how fast. Asia, we find, is today in orthodox territory, balancing well-trodden trade-offs between growth and inflation. Can Pakistan learn from it? The writer is an entrepre neur and an economic analyst. Email: kamalmannoo@hotmail.com.