Publication in Economics, Politics and Public Policy in East Asia and the Pacific

Afghanistan: what way forward?

Author: Professor Amin Saikal, Centre for Arab and Islamic Studies at the Australian National University

The US and several of its main NATO allies have now called for the lowering of any expectation of victory against the Taliban in Afghanistan. Despite Washington’s public opposition to negotiation with the Taliban as a terrorist group, Britain, France, Germany, the Netherlands and Canada, which also have sizable troop deployments in Afghanistan, have openly supported a negotiated settlement with the militia and backed President Hamid Karzai’s efforts in this respect as the best way to end the Afghan conflict. The Taliban have so far rejected Karzai’s overtures and demanded the departure of foreign forces as a precondition for any peace talks. However, there can be no meaningful negotiation with the Taliban unless first the Karzai government and its international backers reduce their vulnerabilities to the militia, especially in three areas.
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A New Consumer Agency for Japan? Consumer Redress, Contracts and Product Safety

Author: Luke Nottage

The Kyoto Shimbun reported last Wednesday the first de facto victory by a consumer representative group in injunction proceedings regarding unfair contract terms. The same page mentioned the Education Ministry’s response to the recent death of a sixth-year elementary student, who choked on some bread provided in school lunches – basically, ‘chew well’! By contrast, Japan’s largest manufacturer of konnyaku (konjac) jelly snacks, MannanLife, halted all production after a one-year-old boy choked to death on 29 July.

Not so sweet... From

But that situation is rather different. It also more directly highlights when and how a new Consumer Agency (shohisha-cho) might emerge in Japan. Ex-PM Fukuda’s Cabinet approved a Bill, but it then resigned without putting it through. It is unclear when and how PM Aso will submit a new Bill, and what line the opposition DPJ will now take, especially given the uncertainty about a possible early general election.

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The milkman versus the spaceman: China’s dilemma

Author: Ryan Manuel

A brief skim of Chinese newspapers recently would give the casual reader a fairly good idea that China managed to have a man walk in space. Woe betide this same reader should they then reach for a skim milk though. Not that you would know from a casual scan of the Renmin Ribao.

Yet, for us, juxtaposing the recent space crisis with the powdered milk incident provides a valuable perspective of the nature of modern China.

Look at me kids! Now drink your milk... (from

In the red corner, we had Colonel Zhai wearing his 265-pound, US$4 million, Chinese-made “Feitian” space-suit for a jaunty space stroll, the success of which has sent Chinese propaganda “hitmen” such as Yu Feihong into a frenzy.

An editorial run in major newspapers said the success of the Olympics and other such “nation-building feats” demonstrated the superiority of the Chinese political system to the democratic West’s “corrupt, divisive and inept policy-making”. “Its advantages are increasingly evident,” it said. “Western countries are mired in low growth, and the United States’ recent severe financial crisis is a manifestation of the dead-end of liberalism.”

At the same time contaminated milk powder, laced with the industrial chemical melamine in order to make it appear more “full of protein” for Chinese consumers, has been blamed for causing the deaths of four infants and sickening more than 54,000 others. Chinese authorities stated that dairy farmers added melamine, usually used in plastics, paint and adhesives, to watered-down milk. The practice was apparently widespread in the industry, with government investigations finding 37 Chinese dairy companies, including the most reputable brands, had sold tainted products.

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New Zealand: foreign policy and the election

Author: Professor Gary Hawke, New Zealand Institute of Economic Research and Victoria University of Wellington

As in most countries, including the United States, foreign policy is not a major issue in the current New Zealand election campaign. A contest among various forms of populism has little scope for looking overseas even if the more important longer-term influences on the prosperity of the various coalitions of voters being wooed are to be found abroad rather than locally.

Indeed, foreign policy has probably come closest to surfacing through the peculiarities of New Zealand’s electoral system. In the last three years, few outside New Zealand could understand how we came to have a Minister of Foreign Affairs, Winston Peters, who was not a member of Cabinet. His party, New Zealand First, provided assurance to the government on issues of confidence and supply but remained less than wholly part of a coalition government. In attempting to position himself as a significant force in the election campaign, he won a major boost to the funding of the Ministry of Foreign Affairs and Trade. Now that the government’s fiscal position has worsened dramatically, that funding must come into question by whoever forms the next government. Current polls suggest that New Zealand First is unlikely to be able to defend its trophy.

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Making China’s coal clean?

Author: Huw Slater

The trajectory of greenhouse gas (GHG) emissions in China has emerged as a critical factor in determining future climate change. In 1997 the Kyoto Protocol was established, committing developed countries to specific GHG reduction targets. The agreement focused on developed countries that were clearly responsible for most GHG emissions to that point. While there continues to be good reason for developed countries to take the lead in reducing GHG emissions, many are suggesting that it is impossible to ignore China’s meteoric rise to the top of the list of the world’s polluters and the effect that it may have on future climate change.

It is widely acknowledged that China’s low level of per-capita emissions and the need for economic development for China’s poor must be taken into consideration with regard to climate change mitigation. It seems inescapable however, that the fate of any global attempt to contain GHG emissions will depend very much on the capacity, and indeed willingness, of China to achieve a level of sustainable development.

It is especially interesting to see what contributions China’s up-and-comers have to make to the climate change debate, and China’s role within it. It is in this context that I discuss a recent paper by Xunpeng Shi, recently presented to the China Update 2008, which asks the question: “Can China’s coal industry be reconciled with the environment?

The central thesis of Shi’s paper is that, due to a decreasing trend of “pollution emissions’ per unit of coal in China, the coal industry can ‘harmonise with the environment”. This seems to suggest that due to the improving emission intensity of China’s coal industry, there will eventually come a point where its emissions are not damaging to the environment.

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Financial crisis an opportunity to move on climate change

Author: Shiro Armstrong

The current global economic crisis presents an opportunity for reaching a global agreement on climate change next year in Copenhagen, according to Nicholas Stern, author of the Stern Report.  The global financial crisis has highlighted the risks of ignoring problems in the financial system over the past two decades. The longer you ignore the risks the greater the problems. If we ignore the risks of climate change for three or four decades we face consequences from which there will be no recovery.

Stern and Ross Garnaut joined Cai Fang (China Academy of Social Sciences) and Qin Dahe (Chinese Academy of Sciences) at a major forum on the Economic Consequences of Climate Change and Its Policy Implications organised by the ANU’s China Economy and Business Program, with CASS in Beijing on Friday.

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Political dynasties in Japan, the US, Australia … but not NZ?

Author: Luke Nottage

I was hoping to share some views on Japan’s general election for its all-important Lower House, as a counterpoint both to the US presidential election scheduled for 4 November, and the distinctly less widely publicised general election called for 8 November in New Zealand. But Japan’s new Prime Minister Taro Aso now seems unlikely to call an election very soon. So instead I share some comparative observations on the prevalence – even, perhaps, the intensification – of family dynasties in Japanese politics. Read more…

Tea leaves still shine for Grandpa Wen

Author: Ryan Manuel

A recent report in the Sunday Times argued that “Wen Jiabao, the prime minister [of China], has become a target for Communist party hardliners and could be forced from office.”

Kaifang (Open) has said that “rivalries inside the party have broken out behind the facade of unity erected for the Olympic Games… hardliners in the party’s propaganda department and at the People’s Daily newspaper had orchestrated a campaign of abuse directed at Wen’s supposed support for universal values such as democracy and human rights.”

“China’s ship of reform is on the rocks and risks sinking,” Kaifang said in its analysis. “The party needs to find a scapegoat.”

So, if you need to find a scapegoat for having insufficient reform, why do you sack a noted reformer? Very little of this article seems to match with common sense.

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Managing the Japan-US alliance

Author: Koji Murata, Doshisha University, Kyoto

On October 11, the Bush Administration finally removed North Korea from its list of state sponsors of terrorism. This pre-planned move reflects the frustration of the Bush Administration in its efforts to achieve a diplomatic success before it completely loses influence following the November 4 presidential election. The fact that it was only 30 minutes before the official announcement that US President George W. Bush actually picked up the phone to notify Japanese Prime Minister Taro Aso reminds me of how Richard Nixon let Prime Minister Eisaku Sato know about his visit to Beijing 37 years ago (the latter notification was made only three minutes before the official announcement).

Let me repeat that this US move was long anticipated. Much more important now is the next administration’s policy toward North Korea. For the time being, Barack Obama or John McCain, whichever is elected, will be preoccupied with handling the financial crisis. There is a simple dichotomy in Japan in which Republicans are seen as pro-Japanese while the Democrats are regarded as pro-China. However, given McCain’s age – even if elected, he could be a one-term president – a McCain administration would have less time to develop a robust North Korea policy and could have its time eaten up by Pyongyang’s continuous bluff-calling.

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Canada and China: Beyond Engagement

Author: Paul Evans, Institute of Asian Research, University of British Columbia

The fundamentals of Canada’s approach to the PRC were put in place by the government of Pierre Trudeau after recognition in 1970.  They engendered a durable consensus that lasted for a generation.  Successive Liberal and Progressive Conservative governments all made China a priority, established political contacts at the highest levels, encouraged as many connections with China as possible, and calculated that despite major differences in values and interests Canada could play a positive role in China’s constructive emergence in the international community.

The consensus was never complete but at senior political levels it was never seriously challenged, save for a brief period following Tiananmen Square in 1989.  It reached its high water mark in Prime Minister Martin and President Hu’s announcement of the “strategic partnership” in September 2005.

Four months later, a new Conservative minority government was elected. It took power with a special sympathy for democratic Taiwan, little actual contact with China or foreign affairs, and an ideological mindset on China more consonant with American neo-conservatism than traditional Canadian conservatism.  More than one Conservative MP characterized China as a “godless totalitarian country with nuclear weapons aimed at us.” Read more…

Financial crisis driving emissions up or down?

Author: Frank Jotzo

“Crisis may cut greenhouse emissions”, AAP says after asking me about it. Well up to a point – and quite possibly the opposite in the longer term.

Recession in the US slows energy demand, think of people travelling less, demand for manufactured goods dropping and housing construction on ice. A similar story will play out elsewhere depending on how strong the effect of financial market turmoil is on the real economy. But it is likely to be a short-term dip in growth rates, with levels of annual emissions not changing much.

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Aso’s overdue trip to China

Author: Shiro Armstrong

Taro Aso is scheduled to visit Beijing on October 24 and 25 for the the Asia-Europe Meeting (ASEM) but the focus of the trip will be in his planned meeting with President Hu Jintao and Premier Wen Jiabao.

Aso was foreign minister from October 2005 until August 2007 but did not visit China once. It would have been difficult for him to do so during Koizumi’s time (which doesn’t mean that he shouldn’t have) but it is surprising he didn’t during Abe’s leadership which started in October 2006.

While Abe was breaking the ice, Wen Jiabao was melting the ice, Hu Jintao was playing ping pong and Fukuda was warming ties, Aso was making random noises in the background and staying away from China. Read more…

China: The paradox of ‘greener plants and grayer skies’

Guest Author: Edward Steinfield, Richard Lester and Edward Cunningham, Industrial Performance Center, MIT

To a significant degree, our planet’s energy and environmental future is now being written in China.  Consequential energy decisions are currently being made throughout this rapidly transforming nation.  In no domain, however, are these decisions more crucial and the linkages to the global environment more direct than in electric power.

Despite much current attention to alternative energy technologies such as wind and solar power, fuel cells, biomass, and nuclear power, the likelihood is that coal will remain the world’s largest source of electricity for decades to come. Thus the most important questions for the earth’s environmental future, at least over the coming decades, concern how coal will be utilized.  Will it be used cleanly or destructively?  Will it be used efficiently or inefficiently?  And will its pollutant byproducts be dealt with effectively or effectively ignored?  These questions matter wherever coal is being used, but they matter most where coal is being used most extensively; China.  And within China, coal is being used most extensively in the power sector. Read more…

Monetary policy running off the rails in Indonesia

Author: Ross McLeod, ANU Indonesia Project

Along with the monetary authorities in many other countries, Bank Indonesia and the government are now acting to increase liquidity in the Indonesian economy, in the hope that this will protect against the possibility of a recession.

It would be possible to increase liquidity simply by reducing the quantity of SBIs (central bank certificates) outstanding. Although BI signalled this as a possibility last week (i.e. increasing liquidity through open market operations), more recently it has announced an alternative policy of reducing the minimum reserve requirement, which determines the amount of funds the commercial banks need to place at the central bank. Until now, calculation of minimum reserves has been absurdly complex, depending on both the size of the bank (four different categories) and its loan to deposit ratio (LDR) (six different categories). Theoretically, the ratio of reserves to deposits could be anywhere in the range 5 to 13%. The average level is currently about 9.1%, and BI has announced that the new reserve ratio will be a flat 7.5%, with no adjustment for bank size or LDRs.

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Garnaut and keeping up with the science of climate change

Author: Will Steffen

The Garnaut Review has done a superb job of laying out the climate change dilemma in all its complexities as well as pointing the way forward. To those focused on finding solutions – costing climate change and its avoidance, developing an Australian emissions trading scheme, working towards global agreement and enhancing global collaboration, transforming energy systems, and much more – there is complexity enough. But the climate science itself, which provides an underpinning knowledge base on the nature of climate change, is also providing complexities of a rapidly changing nature.

Although the IPCC’s Fourth Assessment Report (AR4) provides an excellent scientific base for the climate change issue, the scientific landscape is changing more rapidly than we thought possible. One of my colleagues has stated that “…the Earth is moving faster than the science…”, and I could add that the science is now moving faster than policy development. The most recent research on the stability of the large polar ice sheets and on the dynamics of the natural carbon cycle illustrates this phenomenon. Read more…