Which Asian Economies Have the Most Sustainable Trade Policies?
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Which Asian Economies Have the Most Sustainable Trade Policies?

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Hinrich Foundation 2020 STI

Hinrich Foundation STI

Which Asian Economies Have the Most Sustainable Trade Policies?

To say that Asia has benefited from international trade is an understatement. By opening its economies to the rest of the world, the region has become a leading exporter in many of today’s most important industries.

Trade has also improved Asia’s quality of life, lifting over one billion people out of poverty since 1990. Without the proper controls, however, such rapid growth could have harmful effects on Asia’s environment and society.

In this infographic from The Hinrich Foundation, we break down the results of their 2020 Sustainable Trade Index (STI). Since 2016, this index has ranked 19 Asian economies and the U.S. across three categories of trade sustainability: economic, social, and environmental.

What Exactly is Sustainable Trade?

International trade is an important source of economic growth, enabling domestic businesses to expand, reach new customers, and gain exposure to foreign markets.

At the same time, countries that focus too heavily on exports put themselves at greater long-term risk. For example, an aggressive expansion into manufacturing is likely to impair the quality of a country’s air, while overdependence on a single product or sector can create an economy that is susceptible to demand shocks.

“The primary principle which underpins sustainable trade is balance. Trade cannot be pursued solely for economic gains, without considering environmental and social outcomes.”
– Merle A. Hinrich

Thus, sustainable trade supports not only economic growth, but also environmental protection and strengthened social capital. It involves finding a balance between short-term incentives and long-term resilience.

Measuring Sustainable Trade

The Sustainable Trade Index (STI) is based on three underlying pillars of trade sustainability. Every economy in the STI receives a score between 0 and 100 for each pillar.

PillarNumber of IndicatorsExamples of Indicators
Economic pillar21
  • Use of trade tariffs
  • Logistics performance
  • Growth in labor force
Social pillar12
  • Level of economic inequality
  • Presence of child labor
  • Educational attainment
Environmental pillar14
  • Level of air pollution
  • Reliance on natural resources
  • Environmental standards

The economic pillar measures a country’s ability to to grow its economy through trade, while the social pillar measures a population’s tolerance for trade expansion, given the costs and benefits of economic growth.

Last but not least, the environmental pillar measures a country’s proficiency at managing climate-related risks. Individual pillar scores are then aggregated to arrive at an overall ranking, which also has a maximum possible score of 100.

The Sustainable Trade Index 2020: Overall Rankings

For the first time in the STI’s history, Japan and South Korea have tied for first place. Both countries have placed in the top five previously, but 2020 marks the first time for either to take the top spot.

RankEconomyOverall Score
1 (tied)🇯🇵 Japan75.1
1 (tied)🇰🇷 South Korea75.1
3🇸🇬 Singapore70.2
4🇭🇰 Hong Kong68.3
5🇹🇼 Taiwan67.0
6🇺🇸 U.S.66.2
7🇨🇳 China56.5
8🇵🇭 Philippines55.9
🌏 Average55.1
9🇹🇭 Thailand50.5
10🇱🇰 Sri Lanka50.4
11🇲🇾 Malaysia49.5
12🇧🇩 Bangladesh49.4
13🇧🇳 Brunei48.5
14🇰🇭 Cambodia47.8
15 (tied)🇮🇳 India46.9
15 (tied)🇻🇳 Vietnam46.9
17🇮🇩 Indonesia46.3
18🇱🇦 Laos46.1
19🇵🇰 Pakistan43.9
20🇲🇲 Myanmar40.3

Advanced economies like Singapore, Hong Kong, and Taiwan were also strong performers, each scoring in the high 60s. At the other end of the spectrum, developing countries such as India and Vietnam were tightly packed within the 40 to 50 range.

To learn more, here’s how each country performed in the three underlying pillars.

1. Economic Pillar Rankings

Hong Kong topped the economic pillar for the first time thanks to its low trade costs and well-developed financial sector. Financial services have increased their contribution to Hong Kong’s GDP from 13% in 2004 to 20% in 2018.

The region’s recently initiated national security law—which has resulted in greater political instability—may have a negative effect on future rankings.

RankEconomyEconomic Score
1🇭🇰 Hong Kong69.6
2🇸🇬 Singapore68.7
3🇨🇳 China64.9
4🇰🇷 South Korea63.3
5 (tied)🇲🇾 Malaysia61.2
5 (tied)🇺🇸 U.S.61.2
7🇹🇼 Taiwan60.3
8🇧🇳 Brunei59.3
9 (tied)🇯🇵 Japan58.6
9 (tied)🇵🇭 Philippines58.6
🌏 Average56.9
11🇧🇩 Bangladesh56.3
12🇰🇭 Cambodia56
13🇱🇰 Sri Lanka54.7
14🇻🇳 Vietnam53.9
15🇮🇩 Indonesia52.1
16🇮🇳 India51.4
17🇲🇲 Myanmar49.5
18🇹🇭 Thailand47.4
19🇵🇰 Pakistan46.9
20🇱🇦 Laos44.0 

China was also a strong performer, climbing to third for the first time. Asia’s largest economy benefits from a well-diversified group of trading partners, meaning it doesn’t rely too heavily on a single market.

The bottom five countries—India (16th), Myanmar (17th), Thailand (18th), Pakistan (19th) and Laos (20th)—suffered from issues such as payment risk, which is measured as the difficulty of getting money in and out of a country. This risk is especially damaging to trade because it discourages foreign direct investment.

2. Social Pillar Rankings

The social pillar features the highest average score, but also the largest gap from top to bottom. This gap has expanded over recent years, growing from 43.9 points in 2018 to 52.3 in 2020.

RankEconomySocial Score
1🇹🇼 Taiwan88
2🇯🇵 Japan87.3
3🇰🇷 South Korea86.9
4🇺🇸 U.S.83.1
5🇸🇬 Singapore63.1
6🇵🇭 Philippines62.4
7🇹🇭 Thailand60.9
🌏 Average59.1
8🇭🇰 Hong Kong57.8
9🇧🇩 Bangladesh55.8
10🇲🇾 Malaysia53.6
11🇱🇦 Laos53.0
12🇮🇳 India52.5
13🇮🇩 Indonesia52.4
14🇧🇳 Brunei51.6
15🇻🇳 Vietnam50.4
16🇨🇳 China50.2
17🇰🇭 Cambodia46.2
18🇱🇰 Sri Lanka46.1
19🇵🇰 Pakistan45.6
20🇲🇲 Myanmar35.7

Taiwan claimed the top spot for the second time, solidifying its reputation as Asia’s leader in human capital development. It performed well in the educational attainment indicator, with 93.6% of its population receiving a tertiary education.

China, despite its success in other pillars, only managed 16th. This was partly due to the effects of its now defunct one-child policy, which has been responsible for creating gender imbalances and a shrinking population.

3. Environmental Pillar Rankings

The environmental pillar has the lowest average score of the three. Japan, Singapore, Hong Kong, and South Korea were the only countries to score above 75.

RankEconomyEnvironmental Score
1🇯🇵 Japan80.0
2🇸🇬 Singapore78.7
3🇭🇰 Hong Kong77.4
4🇰🇷 South Korea75.2
5🇨🇳 China54.5
6🇺🇸 U.S.54.3
7🇹🇼 Taiwan52.8
8🇱🇰 Sri Lanka50.4
🌏 Average49.1
9🇵🇭 Philippines46.6
10🇹🇭 Thailand43.2
11🇰🇭 Cambodia41.2
12🇱🇦 Laos41.1
13🇵🇰 Pakistan39.3
14🇮🇳 India36.7
15🇻🇳 Vietnam36.3
16🇧🇩 Bangladesh36.0
17🇲🇲 Myanmar35.6
18🇧🇳 Brunei34.6
19🇮🇩 Indonesia34.3
20🇲🇾 Malaysia33.8

The top four performed well in areas such as air quality and water pollution, and with the exception of Hong Kong, have all introduced carbon pricing schemes in the past decade. This doesn’t mean these countries are without their flaws, however.

Land-constrained Singapore, for instance, ranked 16th in the deforestation indicator. The city-state is one of the densest population centers in the world, and has cut down forests to clear space for further settlement and urbanization.

Building Back Better From COVID-19

Despite the damage that COVID-19 has caused, there are some silver linings. This includes the environmental benefits experienced by China, where lockdowns reduced carbon emissions by 200 million tonnes in a single month. It’s been estimated that after two months, China’s reduced pollution levels saved the lives of 77,000 people.

These temporary improvements are an explicit reminder of the environmental and social costs associated with economic growth. In response, governments in Asia are taking steps to ensure the long-term sustainability of their nations. Japan and South Korea both announced their commitments to achieving carbon neutrality by 2050, while China set a similar goal for 2060.

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How the Top Cryptocurrencies Performed in 2021

Cryptocurrencies had a breakout year in 2021, providing plenty of volatility and strong returns across crypto’s various sectors.

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The Returns of Top Cryptocurrencies in 2021

2021 saw the crypto markets boom and mature, with different sectors flourishing and largely outperforming the market leader, bitcoin.

While bitcoin only managed to return 59.8% last year, the crypto sector’s total market cap grew by 187.5%, with many of the top coins offering four and even five-digit percentage returns.

2021 Crypto Market Roundup

Last year wasn’t just a breakout year for crypto in terms of returns, but also the growing infrastructure’s maturity and resulting decorrelation of individual crypto industries and coins.

Crypto’s infrastructure has developed significantly, and there are now many more onramps for people to buy altcoins that don’t require purchasing and using bitcoin in the process. As a result, many cryptocurrency prices were more dictated by the value and functionality of their protocol and applications rather than their correlation to bitcoin.

CryptocurrencyCategory2021 Returns
BitcoinCryptocurrency59.8%
EthereumSmart Contract Platform399.2%
Binance CoinExchange Token1,268.9%
SolanaSmart Contract Platform11,177.8%
CardanoSmart Contract Platform621.3%
XRPCryptocurrency277.8%
TerraSmart Contract Platform12,967.3%
AvalancheSmart Contract Platform3,334.8%
PolkadotSmart Contract Platform187.9%
DogecoinMeme Coin3,546.0%

Sources: TradingView, Binance, Uniswap, FTX, Bittrex

Bitcoin wasn’t the only cryptocurrency that didn’t manage to reach triple-digit returns in 2021. Litecoin and Bitcoin Cash also provided meagre double-digit percentage returns, as payment-focused cryptocurrencies were largely ignored for projects with smart contract capabilities.

Other older projects like Stellar Lumens (109%) and XRP (278%) provided triple-digit returns, with Cardano (621%) being the best performer of the old guard despite not managing to ship its smart contract functionality last year.

The Rise of the Ethereum Competitors

Ethereum greatly outpaced bitcoin in 2021, returning 399.2% as the popularity boom of NFTs and creation of DeFi 2.0 protocols like Olympus (OHM) expanded possible use-cases.

But with the rise of network activity, a 50% increase in transfers in 2021, Ethereum gas fees surged. From minimums of $20 for a single transaction, to NFT mint prices starting around $40 and going into the hundreds on congested network days, crypto’s retail crowd migrated to other smart contract platforms with lower fees.

Alternative budding smart contract platforms like Solana (11,178%), Avalanche (3,335%), and Fantom (13,207%) all had 4-5 digit percentage returns, as these protocols built out their own decentralized finance ecosystems and NFT markets.

With Ethereum set to merge onto the beacon chain this year, which uses proof of stake instead of proof of work, we’ll see if 2022 brings lower gas fees and retail’s return to Ethereum if the merge is successful.

Dog Coins Meme their Way to the Top

While many new cryptocurrencies with strong functionality and unique use-cases were rewarded with strong returns, it was memes that powered the greatest returns in cryptocurrencies this past year.

Dogecoin’s surge after Elon Musk’s “adoption” saw many other dog coins follow, with SHIB benefitting the most and returning an astounding 19.85 million percent.

But ever since Dogecoin’s run from $0.07 to a high of $0.74 in Q2 of last year, the original meme coin’s price has slowly bled -77% down to $0.17 at the time of writing. After the roller coaster ride of last year, 2022 started with a positive catalyst for Dogecoin holders as Elon Musk announced DOGE can be used to purchase Tesla merchandise.

Gamifying the Crypto Industry

The intersection between crypto, games, and the metaverse became more than just a pipe dream in 2021. Axie Infinity was the first crypto native game to successfully establish a play to earn structure that combines its native token (AXS) and in-game NFTs, becoming a sensation and source of income for many in the Philippines.

Other crypto gaming projects like Defi Kingdoms are putting recognizable game interfaces on decentralized finance applications, with the decentralized exchange becoming the town’s “marketplace” and yield farms being the “gardens” where yield is harvested. This fantasy aesthetic is more than just a new coat of paint, as the project with $1.04B of total value locked is developing an underlying play-to-earn game.

Along with gamification, 2021 saw crypto native and non-crypto developers put a big emphasis on the digital worlds or metaverses users will inhabit. Facebook’s name change to Meta resulted in the two prominent metaverse projects The Sandbox (SAND) and Decentraland (MANA) surge another few hundred percent to finish off the year at 16,261% and 4,104% returns respectively.

With so many eyes on the crypto sector after the 2021’s breakout year, we’ll see how developing U.S. regulation and changing macro conditions affect cryptocurrencies in 2022.

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The Periodic Table of Commodity Returns (2012-2021)

Energy fuels led the way as commodity prices surged in 2021, with only precious metals providing negative returns.

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The Periodic Table of Commodity Returns (2022 Edition)

For investors, 2021 was a year in which nearly every asset class finished in the green, with commodities providing some of the best returns.

The S&P Goldman Sachs Commodity Index (GSCI) was the third best-performing asset class in 2021, returning 37.1% and beating out real estate and all major equity indices.

This graphic from U.S. Global Investors tracks individual commodity returns over the past decade, ranking them based on their individual performance each year.

Commodity Prices Surge in 2021

After a strong performance from commodities (metals especially) in the year prior, 2021 was all about energy commodities.

The top three performers for 2021 were energy fuels, with coal providing the single best annual return of any commodity over the past 10 years at 160.6%. According to U.S. Global Investors, coal was also the least volatile commodity of 2021, meaning investors had a smooth ride as the fossil fuel surged in price.

Commodity2021 Returns
Coal160.61%
Crude Oil55.01%
Gas46.91%
Aluminum42.18%
Zinc31.53%
Nickel26.14%
Copper25.70%
Corn22.57%
Wheat20.34%
Lead18.32%
Gold-3.64%
Platinum-9.64%
Silver-11.72%
Palladium-22.21%

Source: U.S. Global Investors

The only commodities in the red this year were precious metals, which failed to stay positive despite rising inflation across goods and asset prices. Gold and silver had returns of -3.6% and -11.7% respectively, with platinum returning -9.6% and palladium, the worst performing commodity of 2021, at -22.2%.

Aside from the precious metals, every other commodity managed double-digit positive returns, with four commodities (crude oil, coal, aluminum, and wheat) having their best single-year performances of the past decade.

Energy Commodities Outperform as the World Reopens

The partial resumption of travel and the reopening of businesses in 2021 were both powerful catalysts that fueled the price rise of energy commodities.

After crude oil’s dip into negative prices in April 2020, black gold had a strong comeback in 2021 as it returned 55.01% while being the most volatile commodity of the year.

Natural gas prices also rose significantly (46.91%), with the UK and Europe’s natural gas prices rising even more as supply constraints came up against the winter demand surge.

Energy commodity returns 2021

Despite being the second worst performer of 2020 with the clean energy transition on the horizon, coal was 2021’s best commodity.

High electricity demand saw coal return in style, especially in China which accounts for one-third of global coal consumption.

Base Metals Beat out Precious Metals

2021 was a tale of two metals, as precious metals and base metals had opposing returns.

Copper, nickel, zinc, aluminum, and lead, all essential for the clean energy transition, kept up last year’s positive returns as the EV batteries and renewable energy technologies caught investors’ attention.

Demand for these energy metals looks set to continue in 2022, with Tesla having already signed a $1.5 billion deal for 75,000 tonnes of nickel with Talon Metals.

Metals price performance 2021

On the other end of the spectrum, precious metals simply sunk like a rock last year.

Investors turned to equities, real estate, and even cryptocurrencies to preserve and grow their investments, rather than the traditionally favorable gold (-3.64%) and silver (-11.72%). Platinum and palladium also lagged behind other commodities, only returning -9.64% and -22.21% respectively.

Grains Bring Steady Gains

In a year of over and underperformers, grains kept up their steady track record and notched their fifth year in a row of positive returns.

Both corn and wheat provided double-digit returns, with corn reaching eight-year highs and wheat reaching prices not seen in over nine years. Overall, these two grains followed 2021’s trend of increasing food prices, as the UN Food and Agriculture Organization’s food price index reached a 10-year high, rising by 17.8% over the course of the year.

Grains price performance 2021

As inflation across commodities, assets, and consumer goods surged in 2021, investors will now be keeping a sharp eye for a pullback in 2022. We’ll have to wait and see whether or not the Fed’s plans to increase rates and taper asset purchases will manage to provide price stability in commodities.

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