A Year of New Allies, New Economies in Asia : Trends: The region’s top stories for 1992 include recession in Japan, a disastrous visit by President Bush and all-out capitalism in China.

Epic themes sounded throughout Asia in 1992. Decades-old enmities transformed into new alliances. Decrepit national economies merged with lightning speed into pan-national markets.

China’s communist leaders officially embraced the notion of a “socialist market economy,” normalized relations with South Korea and forged closer ties with Taiwan. The East Asian economies boomed. The Japanese economy faltered while it established itself as the successor to the United States as both engine and anchor for the world’s fastest-growing region.

These trends were starkly symbolized in January by two nearly simultaneous events. In a visit to Tokyo, President Bush drew criticism for dictating terms to a nation that is now the economic equal of the United States in many ways--and he fainted before TV cameras in the process. Meanwhile, in China, 88-year-old senior leader Deng Xiaoping succeeded in unleashing latent entrepreneurial energies that resulted in 10.3% growth for China for the year.

Asia’s boom in 1992 was not without disturbing portents, especially a spiraling arms race that threatens to sap the region’s economic growth, if not throw it into war. The immediate problems seem to stem from combustive development and growth. The top 10 Asian stories in 1992:

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1. Bush Takes Calamitous Trip to Japan. The January trip produced perhaps the most unfortunate metaphor ever for America’s declining global economic competitiveness: President Bush, at a state dinner with Japanese Prime Minister Kiichi Miyazawa, became suddenly ill and toppled unconscious into Miyazawa’s lap.

Bush’s demands that Japan open its markets to more U.S. imports struck both Japanese and American audiences as unseemly and even unsporting--a loser demanding that the rules of the game be changed. Japan begrudgingly signed an agreement to increase U.S. car and auto imports over a three-year period. But that only unleashed more bitter rhetoric that further damaged Japan-U.S. relations, most notably when Japanese Diet member Yoshio Sakurauchi stated that American workers “don’t work hard” and that a third of them “can’t read.”

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2. Deng Xiaoping Visits Southern China. A frail old man in a golf cart pushed China down the road to free markets. Chinese senior leader Deng Xiaoping’s visit in January to Shenzhen, a booming “special economic zone,” gave full and final sanction to all-out capitalist enterprise in China and set the stage for a year of spectacular growth.

Foreign investment poured into China at higher levels than before the disastrous Tian An Men Square incident of 1989--$30.66 billion for the first nine months of the year. Stock markets boomed in Shanghai and Shenzhen, where hopeful investors stampeded for new issues. China even softened on its old archenemy, Taiwan, allowing a record-breaking $2.5-billion Taiwanese investment in China in 1992. Total economic growth for the year was a breathtaking 10.3%.

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3. Japanese Economy Goes Into Recession. In 1992, the Japanese economy did what it does not, by reputation, ever do: It got much worse.

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4. Nikkei 225 Average Plummets, Twice. The Tokyo stock market, both a symbol and a vital part of the Japanese economy, went into free fall twice, plunging through psychological barriers like a brick through glass. On March 16, the Nikkei Average broke the 20,000 level, and on Aug. 10 it dived below the 15,000 mark.

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5. China and South Korea Bury the Hatchet. A bitter Cold War enmity dissolved after 42 years when China and South Korea agreed to normalize relations. The pact opened the way to vastly increased trade between the two nations: $5.8 billion in trade in 1991 was expected to double for 1992 and leap to $20 billion by 1995.

The agreement set off stinging rebukes of Seoul by Taiwan, South Korea’s previous main ally against China. It also raised many complex questions about the new balance of power between South Korea and North Korea, which may be developing nuclear weapons, as well as with other nations throughout Asia.

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6. Taiwan Buys 150 F-16 Fighters. The sale of 150 F-16s by the United States will give Taiwan one of the world’s most advanced air forces and is symbolic of a new arms buildup throughout Asia. China has been the most active in that respect, making plans to activate advanced fighters in the Pacific region and building a navy in the South China Sea.

Taiwan’s purchase of the F-16s was a response to this buildup, and is likely to goad further Chinese militarization. On a smaller scale, similar purchases of advanced weapons are occurring in Singapore, Malaysia, Thailand, Brunei and the Philippines.

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7. Wrangling Over Hong Kong’s Future. Hong Kong’s new British colonial governor, Chris Patten, enjoyed a few months of cordial relations with China, which resumes control over Hong Kong in 1997. But Patten’s maiden speech to Hong Kong’s Parliament on Oct. 7, in which he detailed proposals to increase democratic reforms, ended the honeymoon. China exploded with condemnation of the plan and with threats of trade-blocking measures.

The row ebbed and flared the remainder of the year, carrying the Hong Kong stock market along for a roller-coaster ride. In one bad patch from mid-November to mid-December, the Hang Seng index of leading stocks dropped 17%.

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8. Thailand Survives Political Crisis. The promise of Thailand as a leader of Asia’s political and economic development was badly tarnished in May, when self-appointed military government forces put down pro-democracy demonstrators, killing at least several dozen and perhaps more than 100 of them.

The demonstrators were a symbol of how far Thailand has come in its development--they were a broad middle class of old and young, students and workers and housewives. A photograph crystallized a turning point in the crisis: The military-backed prime minister, Suchinda Krapayoon, and the leader of the opposition, Chamlong Srimaung, stood on their knees before Thailand’s King Bhumipol Adulyadeh, who scolded them like children.

The tongue-lashing worked. Suchinda resigned in haste, paving the way for an interim government of five months, and free elections were held in September.

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9. East Asia Booms Despite Recession. Rapid economic growth for Asian countries outside Japan was strikingly visible on economists’ charts--and in strolls down the traffic-choked main streets of Kuala Lumpur, Bangkok, Taipei and Hanoi. While the developed nations of the West floundered in recession, the nations of East Asia grew, from a minimum of 4.7% in Hong Kong to a whopping 10.3% in China, according to the Nomura Research Institute.

They will likely grow 6.9% on average next year, Nomura says.

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10. Bloody Riots Erupt in India. A 450-year-old religious gripe erupted in bloody Hindu-Muslim rioting in India in December that left more than 1,000 people dead and India’s fragile democracy shaken to the core. The flash point was the northern Indian city of Ayodyah, where a mob of Hindu zealots destroyed a mosque that was built in 1528 and which they claimed desecrated a holy Hindu site.

Rioting spread to hundreds of Indian villages and districts. The Bombay stock market plunged 8.1% in the week after the Ayodyah riots, a wide range of government and corporate bond issues were indefinitely delayed, and a package of economic liberalization measures sponsored by Prime Minister P. V. Narasimha Rao is now held up indefinitely.