ASIA will lead the world out of the economic morass, but the journey will be long and uncertain, a business school don warned on Friday. The worst of the global recession might be over, but a full recovery is not likely until after next year, said Professor Bernard Yeung, dean of the National University of Singapore (NUS) Business School.

And he believes a new global economic order will surface, dominated by Asia with China at its centre.

'This is not over. We may have reached a bottom, but it is not a recovery,' he said at a breakfast talk on the crisis, held at the Four Seasons hotel. 'The green shoots tell us we are not dropping further. But instead of heading south, we are going east.'

He noted that no recession lasts forever and that clearer signs of a recovery would appear in Asia, probably next year. But he felt a full-fledged global recovery would not come till after next year.

He spoke more bullishly about Asia, which has seen exports fall sharply but still has sound fundamentals, in his view. Furthermore, Asian nations have been rolling out unprecedented fiscal stimulus plans centred on expenditure rather than tax cuts, to build up infrastructure. These investments should help offset the fall in exports, said Prof Yeung.

Still, for now, the key to a recovery lies with the United States, he said. He believes the US must find ways to boost productivity in areas such as biotechnology.

Over the long term, however, the world's economic centre will shift to Asia, with China growing far more significant as a global consumption market, he said. This means Asian manufacturers will be producing for consumers in Asia as well as the US and Europe. 'It's going to be a very different type of world,' said Prof Yeung. He added that India and Japan would be serious players in the new order.

He believes China's influence will be felt sharply as a new monetary order is created as well, with the yuan as a vehicle currency - one used widely in international trade transactions.

He noted that Hong Kong firms can already use the yuan to settle China trades in five major Chinese cities. In addition, China's currency swap agreements with countries such as Russia and India make it possible for people to bypass the greenback and trade in yuan instead.

'The volume is still small, but small steps pave the way for big steps,' Prof Yeung said. 'There is a push to make the yuan like the US dollar... In 10 years, they will try for a yuan-backed Treasury bill.'

Please read the full story in Saturday's edition of The Straits Times

chanckr@sph.com.sg