Aug. 31 (Bloomberg) -- The old adage “you can’t judge a book by its cover” doesn’t apply to Stephen Roach’s “The Next Asia.”

It bears a photo of the interior of the Grand Hyatt Shanghai. For anyone who’s been there, it screams of vertigo. You walk out of your hotel room on say, the 85th floor, and you’re confronted with a circular 33-story atrium that seems as much optical illusion as architectural masterpiece.

It’s an apt metaphor for the dizzying experience that lies ahead for Asia -- one fleshed out with great nuance by Roach, Morgan Stanley’s Hong Kong-based Asia chairman.

This column isn’t a book review. Yet Roach is sure to do something we need more of in Asia: Ruffle the feathers of a few billion people. The conventional wisdom that the 21st Century belongs to the fastest-growing region isn’t wrong. Just have no illusions that it’s a given. Asia will need to work hard at it.

For Asia’s billions, inertia is not an option as the fallout from the global crisis spreads. The hope is that China’s 7.9 percent growth will remove the need to retool economies. Or that President Barack Obama’s stimulus efforts will soon put U.S. consumers back in shopping-binge mode. Don’t bet on it.

Asia isn’t doing remotely enough to achieve better economic balance. China is a case in point, and an important one; it may just prove to be a microcosm of what Asia will experience in the years ahead.

Global Crisis

Here, Chinese Premier Wen Jiabao’s “four uns” are worth considering. Two years ago, Wen pointed out that Asia’s second- biggest economy was increasingly “unbalanced, unstable, uncoordinated and unsustainable.” The crisis oozing around the globe was a mere glimmer in the eyes of Asian officials in March 2007 when Wen made that comment.

And yet here we are: The U.S., Japan and Europe are limping along. The developing world didn’t really plan for such a scenario. Its powerful snapback from the 1997 Asian crisis was largely thanks to a U.S. consumer flush from rapid growth and roaring asset values. Asia exported its way to returning growth and never looked back.

No such locomotive exists today. Hence the roughly $2.2 trillion of stimulus governments have poured into the global financial system. It will only go so far, though. The canard that Asia had decoupled from the U.S. is dying a hard death as governments brace for an extended period of U.S. thrift.

Good Luck

By Roach’s calculations, Americans account for about 4.5 percent of the world’s population and its consumers spent about $10 trillion in 2008. China and India, which account for roughly 40 percent of the world’s population, consumed about $2.5 trillion. Good luck living without the U.S.

The risk is that U.S. households are embarking on a multiyear retrenchment. If so, Asia’s unbalanced, export- dependent economies are in for a more difficult few years than many believe.

Rebalancing Asia’s economies would be a daunting task amid strong global growth. It’s even more difficult in this recessionary environment. One challenge is culture. Asians are savers and good luck getting them to consume more when they fear they may be jobless in a year. Another challenge is softening the blow such a transition might deal to growth in the short run.

Much of Asia lacks political will. One can hope that’s about to change in Japan, where polls indicated half a century of nearly uninterrupted rule by the Liberal Democratic Party would come to an end in yesterday’s election. The Democratic Party of Japan will need to work fast to boost competitiveness. It must waste no time in improving ties with China, a far less- developed economy from which Japan could gain great efficiencies though outsourcing and freer trade.

Common Story

There are important exceptions. In Indonesia, President Susilo Bambang Yudhoyono is reducing corruption and raising living standards. Indian Prime Minister Manmohan Singh’s recent re-election could be a boon for investors hoping for major upgrades to Asia’s other nascent economic superpower.

The more common story is one of leaders taking the path of least resistance and avoiding bold changes. The status quo won’t morph Asia into a consumer-led, more egalitarian or environmentally stable region. It won’t increase cooperation in an economic area that enjoys painfully little. Nor will it give Asia the bigger voice it deserves in debates about the direction of the global economy.

Bold changes are needed. Last week, for example, China said it’s studying curbs on overcapacity in industries like steel and cement to rein in investment growth fueled by a record credit expansion. It’s a reminder of the extraordinary amount of fine- tuning China is doing these days.

The real story here, though, is how difficult it is to foster an open-market economy within a centrally controlled system. It’s creating some big challenges, and a more balanced economy is the best way out for China. That goes for Asia, too.

Great things can and should be expected from Asia in the decades ahead as it takes on a more dominant role in the global economy. There are no guarantees, though, and complacency isn’t an option for the region’s leaders.

(William Pesek is a Bloomberg News columnist. The opinions expressed are his own.)

To contact the writer of this column: William Pesek in Tokyo at wpesek@bloomberg.net

Last Updated: August 30, 2009 15:00 EDT