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

China-Japan trawler incident: Japan’s unwise — and borderline illegal — detention of the Chinese skipper

Author: Sourabh Gupta, Samuels International

In the inflamed commentary that has followed the Chinese skipper’s collision with Japanese coast guard vessels in the East China Sea, there has perhaps been no more flawed a characterisation than portrayal of the incident exclusively through the lens of territoriality. In fact, considering the location of the clash — in coastal waters abutting the disputed Senkaku Islands — and the prior existence of mutually agreed disciplines (Sino-Japanese Fisheries Agreement of 1997) that seek to functionally quarantine Senkaku-related bilateral fisheries disputes from the charged accompanying issue of territorial title, portrayals of the incident have ranged from the naïve to the disingenuous.

This failure of analysis has not been limited exclusively to Western observers. Read more…

India’s Games and its national reputation

Author: Mahendra Ved, New Delhi

India’s national reputation was on the precipice last week, earning the odium for its delayed and botched up preparations for the XIX Commonwealth Games in New Delhi, due to commence on October 3.

The crisis is ironic in that there was no political or economic emergency, nor a natural disaster, nor a military threat. At stake is the organisation of a major sports event with which prestige, credibility and profits are attached. Read more…

China and the world

Author: Tommy Koh, NUS

The simultaneous rise of China and India is the biggest growth story of the 21st century. It has the potential to change the power and civilisational balance of the world. The rise of China has inspired both admiration and fear.

I believe that if we want to understand China’s worldview, we must begin by understanding China’s history. A country’s past often provides a key to interpreting its present and predicting its future. And China’s long history of invasion is strikingly relevant to its modern preoccupations. Read more…

China’s Nationalism?

Author: Neil J. Diamant, Dickinson College

The recent flare-up over the Diaoyu Islands—a Chinese fishing boat captain was arrested by the Japanese Coast Guard—has followed a well-worn script. An international incident, say, the publication of a Japanese textbook, the bombing of a Chinese Embassy or pro-Tibet protests in France or even a disputed football match, quickly leads to protests in China, which are quickly defined as ‘nationalist’.

The international press duly reports on outraged citizens shouting slogans, bearing flags, threatening boycotts and some form of retaliation against those who have dared to offend China (The New York Times article of September 19, 2010 features a photograph of a bellicose bare-chested man with a tattoo of the national flag). Read more…

A sea of trouble in Sino-Japanese relations

Author: Aurelia George Mulgan, ADFA@UNSW

The dispute over Japan’s temporary detention of a Chinese fishing boat captain accused of colliding with two Japanese coastguard vessels in the territorial waters of the Senkaku Islands reveals the very shallow level of goodwill between China and Japan.

China’s official response to Japan’s actions was initially confined to action in diplomatic, cultural and economic realms, but the Chinese also threatened additional retaliatory measures if the Chinese fishing boat captain was not released immediately and unconditionally. Now that the release has occurred, China’s next move is unclear. Read more…

Ohio’s outsourcing ban – an ominous canary

Author: Jacob Kirkegaard, PIIE, Washington

Ohio recently implemented a ban on the outsourcing of state government IT and back-office projects to offshore locations. This is a worrying election season reminder of the precarious political support free trade and global engagement currently enjoys in an America plagued by low growth and high unemployment.

Anti-outsourcing sentiment at the level of the US states is nothing new, with hundreds of similar legislative proposals put forward in state capitals after 2003. Read more…

China’s control over world resources?

Author: Peter Drysdale, ANU

Chinese investment abroad has grown dramatically in the few years since Chinese enterprises were let off the leash to go global. At around US$48 billion in 2009, the annual outflow now more or less matches the large annual inflow of foreign investment into China itself, and China is already the sixth largest direct foreign investor globally. In financial year 2008/9, the most recent period for which annual data are available, the flow of Chinese direct investment into Australia alone amounted to over US$25 billion, most of it into the resource sector.

The motivation for Chinese foreign direct investment (FDI) is twofold. Read more…

Is Chinese dominance distorting natural resource markets?

Author: Theodore Moran, Georgetown University and PIIE, Washington

When Chinese companies take an equity stake in African oil fields, extend loans to mining and petroleum investors in Latin America, and write long-term procurement contracts for minerals and LNG from Australia, do these activities cut off other buyers from access to world supplies? Or, might Chinese investments, loans, and long-term contracts constitute a positive influence for non-Chinese buyers, helping to multiply suppliers and open up new sources of raw materials?

On the demand side, Chinese appetite for vast amounts of energy and minerals puts tremendous strain on the international natural resource sector. Read more…

As India ‘Looks East’, a little problem of economics

Author: Evan A. Feigenbaum, CFR

As its profile in East Asia rises, India would do well to heed America’s recent experience in a changing Asia.  Economics, not security, still defines the essential strategic reality of Asia today:  China is fast becoming the central player in a new economic regionalism. The United States and India are each enhancing their political and security profiles—albeit for different reasons and in different ways.  Yet both risk being left out as Asian economic integration tightens.

The United States has endured decades of loose talk about American ‘decline’ in Asia.  But in the months since North Korea torpedoed a South Korean naval corvette in March, America’s security role has been strongly reinforced.  Read more…

A portrait of deforestation in East Kalimantan, Indonesia

Author: Maria Monica Wihardja, CSIS

Indonesia has one of the highest rates of deforestation in the world. Illegal deforestation is currently rife, and the loss of government revenue associated with this illegality has been estimated at $US 100 million in East Kalimantan alone.

Deforestation is caused, in part, by land use changes resulting from cash-crop plantations and mining, particularly for coal in East Kalimantan. Recent increases in the rates of deforestation have occurred in three stages, and have been exacerbated by a number of policy developments and reforms. Read more…

Indonesia’s economy continues to surprise

Author: Thee Kian Wie, Indonesian Institute of Sciences

The Indonesian economy continues to surprise with its very healthy growth rate through the period of global financial crisis. The growth rate, driven by consumer spending, investment, and exports, has surpassed most predictions at 6.2 per cent during the second quarter of 2010. Domestic consumption is robust, investment figures are encouraging and exports are expanding at least as fast as global growth. While monetary policy and financial regulatory concerns remain, Indonesia is well-positioned for broad-based economic growth.

Perception indicators increasingly support the view that Indonesia’s economy is on an upswing. The Japan Credit Rating Agency has upgraded Indonesia’s investment grade from BB+ to BBB; the first in 13 years. Read more…

India and the scourge of relentless inflation

Authors: Raghbendra Jha and Raghav Gaiha, ANU

Inflation has been in the news for some time. Recent media reports have stated that the Reserve Bank of India (RBI) deems current inflation to be a scourge. This inflation has also been relentless.

There seems to be broad consensus among analysts that the current spate of inflation had its roots in food price inflation. Last year’s drought led to steep rises in retail food prices followed by hikes in procurement prices for farmers. Read more…

Chinese hubris boosts Japan-US relations

Author: Christopher Pokarier, Waseda University

China’s tough stance towards Japan over its detention of the captain of a fishing vessel is a serious tactical miscalculation. It speaks of worrying hubris in Beijing, and shows a poor understanding of internal Japanese politics.

The initial dispute arose following the collision of a Chinese fishing vessel with two Japan Coast Guard vessels near the disputed Senkaku Islands on September 7th. Read more…

Does China still welcome foreign investment?

Author: Dong Dong Zhang, Canberra

General Electric (GE) CEO Jeffrey Immelt’s speech to the Shanghai World Expo (2 June 2010) caused a media sensation when he reportedly spoke about the deteriorating business environment faced by foreign firms in China. In fact, the media fuss was misleading; it would not have made sense for Immelt to mark his company’s sponsorship of the Shanghai World Expo with a speech castigating his hosts.

However, by the time Immelt travelled to Rome, he evidently felt less constrained. Read more…

Japanese globalisation stalls

Author: David McNeill, Sophia University and Japan Focus

As Japan watchers warn that the island nation is becoming more insular, the government’s newest bid to internationalise Japan’s stuffy higher-education system, the misnamed Global 30, is off to a wobbly start.

The goal was to recruit 30 universities and support their internationalisation efforts. Beginning last year on a 3.2 billion yen, or about US $38 million, budget, the project aims to significantly increase the number of foreign students in the country and Japanese students studying abroad. Read more…