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

Rethinking our approach to the Korean crisis

Author: Hitoshi Tanaka, Japan Center for International Exchange

North Korea’s calculated military provocations over the past year and its continued nuclear development have raised tensions on the peninsula to dangerously high levels.

Giving extra urgency to this already dangerous scenario is the 2012 problem: next year we will see presidential elections in South Korea and the United States and a leadership change in China. Read more…

On China’s renminbi becoming a world currency

Author: Peter Drysdale, ANU

American authorities have been baying for months about flexing up the renminbi (RMB — the Chinese currency) to help turn around China’s current account surpluses and reduce America’s deficits. Whether a sharp appreciation in the rate of exchange between the RMB and the US dollar should be relied on as the main instrument for effecting that change smoothly is a much debated question.

Appreciation of the RMB is certainly one crucial part of the solution, but there are also more fundamental structural problems that need to be dealt with to cut back China’s net international savings and achieve the reverse in the United States. Read more…

What China is after financially

Author: Barry Eichengreen, Berkeley

The big financial news in the run-up to Chinese President Hu Jintao’s recently concluded visit to the United States was Beijing’s decision to allow the state-controlled Bank of China to offer renminbi-denominated bank accounts and currency conversion services in New York.

Some observers hailed this as an important step in positioning the renminbi to become a true international currency. Others dismissed it as a mere publicity stunt designed to deflect attention away from China’s refusal to let its currency appreciate against the dollar. Read more…

WikiLeaks should propel less secrecy at the top on foreign policy

Author: John McCarthy, AIIA

During the festive season we were entertained by the United States’ diplomatic mail and by Julian Assange’s alleged transgressions under the midnight sun.

As 2011 gets under way, we need to think what WikiLeaks will bequeath us. Read more…

Chinese wages and the turning point in the Chinese economy

Author: Cai Fang and Wang Meiyan, CASS

Migrant worker wages have steadily increased since 2003, the year that significantly witnessed the first labour shortage in Chinese economic development. Not only have the wages in manufacturing and construction increased constantly, reflecting a more general rise in wages, migrant workers’ wages have been catching up to urban wages as well.

Investors fear that inflated migrant wage rates may weaken the comparative advantage of China’s labour-intensive industries and thus harm their commodities’ competitiveness.

Why are migrant worker wages increasing? Read more…

Social security and housing the poor in China

Author: Li Shi, Beijing Normal University

Providing decent housing to poor and low-income groups has been a big challenge for governments in countries all around the world. China is no exception.

The problem is clear: High housing prices drive poor and low-income household owners out of housing markets, ruling out any possibility of improving their conditions. There are no simple solutions to this problem. Read more…

Australia’s floods and farming

Author: Jeff Bennett, ANU

The 2011 floods in Australia have been remarkable for their intensity and geographic spread. Records for depth, frequency and extent have been broken, all due to a La Niña event only exceeded in recorded history by one in 1917–18.

The impact on agriculture has been similarly record-breaking. From tropical north Queensland to western Victoria and across the Murray Darling Basin in the east and in the Gascoyne region around Carnarvon in the west, a wide variety of farm enterprises have been affected. Read more…

What to do about North Korea now?

Author: Tetsuya Endo, JIIA

In the wake of last year’s North Korean military provocations and given recent offers by North Korea to reestablish dialogue, North Korea’s policies warrant consideration from two perspectives: strategic and tactical.

North Korea has four main strategic objectives. Firstly, it will aim to quickly solidify the process of succession to Kim Jong-un, working to glorify Kim Jong-un and strengthen regime legitimacy. Read more…

Fixing legal loopholes in Indonesia’s forest and land use governance

Author: Fitrian Ardiansyah, ANU

As a country with one of the largest areas of rainforest in the world, it is not surprising that Indonesia is also considered a pioneer in the development of REDD+ (Reducing Emission from Deforestation and Forest Degradation).

In early 2007, the Ministry of Forestry (MoF) formed the Indonesia Forest Climate Alliance (IFCA) with the help of various government departments, donor agencies, research institutions and NGOs to initiate the development of REDD+ policies. Read more…

Crooks a blight on India

Author: Vidya Sharma, Melbourne

Besides the economy, corruption is also going gangbusters in India. In September we learned about Commonwealth Games related rorts (between $3–6 billion). In November several scandals exploded including the G2 spectrum scandal: The Comptroller General and Auditor reported that ex-Telecom Minister Raja may have undersold G2 spectrum frequencies and licences by as much as $39 billion.

Corruption is not unique to India. In the last decade Australia has had its own ‘wheat for weapons scandal’. Ex-Queensland minister Gordon Nuttall was convicted of bribery last year. But the scale of corruption is unique to India among liberal democracies. Read more…

Japan, Australia, WikiLeaks and whales

Author: Luke Nottage, University of Sydney

The over-sensationalising of Australia’s alleged ‘Secret Dealing on Whale Hunts’, in Australian media reports last week drawing on documents released by WikiLeaks, has been correctly criticised by Tim Stephens. Yet his contribution has engendered further public debate over whaling, including the case recently initiated by Australia against Japan (with New Zealand also intervening) before the International Court of Justice (ICJ).

The Japanese government appears confident about winning the case, basically because the Whaling Convention was set up to permit (sustainable) whaling. Read more…

China’s J-20: Challenger or pretender?

Author: Ron Huisken, ANU

China recently unveiled a new fighter aircraft with stealth characteristics undergoing runway tests. The following day it flew for about 18 minutes, reportedly its maiden flight.

This was newsworthy for several reasons; for one thing, China is very secretive, especially about weapon systems still under development. For another, this first sighting of the aircraft occurred on the eve of a visit to China by US Secretary of Defence Robert Gates, a visit that heralded the resumption of high-level military dialogue after a hiatus of more than a year. Read more…

Hu visit ends any dream of a US-China duopoly

Author: Amitav Acharya, American University

The US-China relationship is often touted as the most important for the world’s future, but bilateral tensions between the two powers over domestic politics will prevent a US-China duopoly from being a global problem-solver. The silver lining is that this leaves room for others to play a more meaningful international role.

No one should be disappointed by the outcome of the US-China summit in Washington on 19 January, because nothing much was expected from it. Read more…

Waiting till the cows come home: New routes to services reform

Authors: Jane Drake-Brockman, Trade and Environment Solutions, Hong Kong and Christopher Findlay, University of Adelaide

The GATS’ contribution to services reform is ‘negligible.’ This is the assessment by Joe Francois and Bernard Hoekman in a recent paper (‘Services Trade and Policy’, Journal of Economic Literature, September 2010, XLVIII (3)) where they argue most services reform has been unilateral.


Regional agreements appear to have wider coverage than the GATS but their contribution with respect to actual policy change and implementation is difficult to assess. Read more…

North Korean apocalypse avoided?

Author: Peter Drysdale, ANU

The tension on the Korean Peninsula after the sinking of the South Korean corvette Cheonan in March and the shelling of Yeonpyeong in November escalated to dangerous levels as joint American-South Korean naval exercises at the end of 2010 challenged Pyongyang to strike a third time at its peril.

By end year, the opportunity for a limited South Korean tit-for-tat response to either the Cheonan or the Yeonpyeong provocations had long passed, President Lee Myung-bak had called in the US alliance relationship and the US was standing firmly behind him. The conflict internationalised very quickly and added another confrontational element to relations between Washington and Beijing. The tension heightened when China took an unusually strong public stand against the joint naval exercises between the South Korea and the US in the West Sea. The chance of serious military conflict that could have gotten rapidly out of hand was extremely high. Read more…