Author: Norichika Kanie, Tokyo Institute of Technology

The international order in the 21st century is likely to revolve around the climate change issue. This explains why countries and regions have been jockeying for a leadership position on this in recent years. Handling this issue requires a shift away from the conventional concept of an international order that revolves around military might.

Climate change is, by itself, an enormous threat to human society. Read the rest of this entry »

Author: Suman Bery, NCAER

The budget season in India, with its unique hoopla and hype, is over. One of the last substantive events on the Budget was a seminar which brought together heads of the five leading Delhi-based think tanks to comment on the Budget’s impact on India’s economic and political prospects. While the quality of this year’s seminar was certainly comparable internationally, unlike previous years, there was a lack of unanimity among the panelists on the quality of the Budget.

The Budget drew acclaim for showing the Indian government’s commitment to fiscal rectitude and for making subsidies more transparent by not treating them as off-budget items in future. Read the rest of this entry »

Author: Ronald I. McKinnon, Stanford University

In the debate on whether China should appreciate its currency or keep it stable as I argue, it’s worth going back to some basics to clear things up.

For a ‘home’ country, consider the identity from the national income accounts:

X – M = S – I = Trade (Saving) Surplus

where X is exports and M is imports (both broadly defined), and S is gross national saving and I is gross domestic investment. Read the rest of this entry »

Author: Jeffrey Frankel, Harvard

Most observers judged as a failure the December meeting in Copenhagen of the Conference of Parties of the UN Framework Convention on Climate Change (UNFCCC). But then the usual way of judging such meetings is to look for a communiqué that voices sweeping aspirations, such as the G7 ‘decision’ at L’Aquila last summer to limit global warming to 2 degrees centigrade. In reality, without any evidence of countries agreeing what is each one’s share of the burden, such proclamations are worthless. Better tiny steps on the ground than giant flights of rhetoric.

Is there any sign of progress, even tiny steps? Read the rest of this entry »

Author: Aurelia George Mulgan, UNSW@ADFA

The Hatoyama administration has approved a fiscal 2010 budget containing ¥561.8 billion in expenditure on a new ‘individual household income compensation system’ (kobetsu shotoku hoshō seido) for farmers, to be launched in April. This income subsidy will compensate farming households for losses incurred as a result of higher production costs and lower market prices. The scheme will begin with a ‘model project’ targeting rice farms nationally.

The process undertaken in determining the budget for the policy illustrates how little has changed in agricultural policymaking under the Democratic Party of Japan (DPJ) compared to the Liberal Democratic Party (LDP). Read the rest of this entry »

Author: Kyoung-Hee Moon, Changwon National University

With the number of foreign residents in South Korea exceeding one million as of May 2009, many scholars, journalists, and bureaucrats claim that Korea has become a multiethnic or multicultural society. This idea needs to be put in proper perspective. The total number of foreign residents in Korea, the majority of whom are temporarily visiting migrants or students, accounts for only 2.2 per cent of the country’s total population. In addition, Chinese residents represent, at 57 per cent, the highest share of these foreign residents, and about half of these Chinese residents have Korean ancestry. Korean society is still largely ethnically homogeneous and racially distinctive, and the term ‘multiethnic Korea’ remains an unconvincing descriptor.

In addition, many Koreans are yet to accept that Korea is in the midst of a demographic shift. Read the rest of this entry »

Author: Peter Yuan Cai, ANU

China has been criticised in some quarters as the party-spoiler at last year’s Copenhagen Climate Change Summit. Its steadfast refusal to allow international monitoring of its emission level led to a collapse in reaching a meaningful international agreement. The earlier euphoria over China’s far-reaching announcement on emission reduction targets had all but disappeared. It seems that many commentators believe that China is pursuing an economic development strategy at all costs.

But there are also voices emanating from China that strongly urge Beijing to take this historic opportunity to tackle the challenge of climate change and assert China’s global leadership in green and renewable technologies. One of the leading voices from the chorus is Hu Angang of Tsinghua University. Read the rest of this entry »

Author: Greg Lopez, ANU

The persistent decline in Malaysia’s economic performance since the East Asian Financial Crisis (EAFC) of 1997/98 and the government’s mishandling of the global shocks that preceded the Global Financial Crisis (GFC) were a key reason for the ‘political tsunami’ that hit Barisan Nasional (BN) at the 12th General Election (12GE) on 8th March, 2008. Two years on the economy remains in the mud due to a sluggish global economy, ineffective stimulus plans to address the GFC and most importantly, a lack of political will to put through bold reforms to get the economy back on track.

Like many economies in East Asia, Malaysia evaded the direct impact of the sub-prime crisis but was caught in the after effects – its main export markets collapsed, suffering the worst decline since the EAFC. Read the rest of this entry »

Author: Suman Bery, NCAER

In his Budget speech on February 26, India’s finance minister articulated the three important challenges confronting him in preparing this year’s Budget.

These were to restore growth (to 9 per cent, ideally higher); to use this growth to make development more inclusive, particularly by strengthening rural infrastructure; and to address bottlenecks in public delivery mechanisms and institutions. Read the rest of this entry »

Author: Ronald I. McKinnon, Stanford University

Speculation is rife about when, not just if, China should exit from its policy of stabilising the yuan/dollar rate. Investment banks and hedge funds are making their usual one-way bets. Chinese officials are being closely quizzed for possible hints as to when the great event is going to happen. Governor Zhou Xiaochuan of the People’s Bank of China (PBC) is playing the role of Hamlet. Recently he told a press conference that the currency peg was a ‘special measure’ to help China weather the financial crisis. ‘These policies sooner or later will be withdrawn’. In seeming contrast, Premier Wen Jiabao declaimed on March 5, ‘We will continue to improve the mechanism for setting the renminbi and keep it basically stable at an appropriate and balanced level’.

But must China ever appreciate? Read the rest of this entry »

Author: Jonathan Bonnitcha, ANU and University of Oxford

Over the past three decades countries have signed a great number of international investment treaties (IITs). There are now close to three thousand such treaties worldwide. While most IITs are bilateral there are some multilateral IITs, such as the Energy Charter Treaty to which Australia and fifty other states are signatories. Common IIT provisions are also contained in investment chapters within some trade agreements, within NAFTA and the US-Australia FTA for example.

Many IITs include dispute settlement provisions that allow foreign investors to bring claims against host states before international arbitral tribunals, relying on the rights contained in the relevant treaty. If successful, the investor-claimant is entitled to a monetary award of damages. Read the rest of this entry »

Author: Ernest Bower, CSIS

While the United States is unquestionably a Pacific power, it lacks a comprehensive Asia strategy. In fact, the US approach to Asia has focused primarily on Northeast Asia – Japan, China and South and North Korea. Appropriately, significant focus has also been given to India in the last five years.

But since the end of the Vietnam War, American focus on Southeast Asia has been episodic and crisis driven. While the US has a substantial reservoir of strength in the region, US policy has failed to connect the dots and develop them into a rational and well articulated strategy. Read the rest of this entry »

Author: Yoichi Funabashi

I was in Washington, DC recently while congressional hearings were held into the massive recalls announced by Toyota Motor Corp. I sensed that public sentiment in the United States was rapidly becoming critical of the auto giant, which is now a synonym with lemons.

An article published in the New York Times on February 21 under the headline, ‘Doubts raised on book’s tale of atom bomb’, drove home the point to me. The newspaper noted that the author of ‘The Last Train From Hiroshima,’ Charles Pelegrino, used quotes from an individual who falsely claimed he was a last-minute substitute on an observation plane that accompanied the Enola Gay on its mission to destroy Hiroshima by atomic bombing. An expert is quoted in the article as saying, ‘This book is a Toyota. The publisher should recall it, issue an apology and fix the parts that endanger the historical record.’ Read the rest of this entry »

Author: Peter Drysdale

Over the horizon, a storm in US-China relations is gathering around the question of whether China is deliberately undervaluing its currency, the renminbi, against the US dollar, giving it an unfair competitive edge in US markets and causing high levels of American unemployment and current account surpluses. Most economists would accept that there was some measure of undervaluation of the Chinese currency (how much is a more difficult question on which to get agreement). But few would argue that appreciation of the Chinese currency would solve the American woes of which it is supposed to be the cause.

In the feature essay today on this question, Yiping Huang argues that appreciation of the renminbi is certainly on the Chinese economic policy agenda, but he warns, for a number of reasons, that sharp and sudden Chinese appreciation is likely to do more harm to America and the global economy than it would do good, and that it certainly would not alone solve the problems in America that it is supposed to be causing. Read the rest of this entry »

Author: Yiping Huang, Peking University and ANU

Paul Krugman is one of the international economists I most respect. He is a towering figure in the study of international trade. But his understanding of some international economic policy issues is, to put it generously, naïve. In fact, were the Obama administration to follow his policy advice, the world economy could encounter more serious difficulties, if not another recession, in the years ahead.

In the year 2010, Krugman suddenly found a new and passionate interest in China’s exchange rate policy. Read the rest of this entry »