Author: Vo Tri Thanh, CIEM, Hanoi

There is still a great deal of uncertainty about how the world will come through the current financial and economic crisis. All countries formulated strategies to cushion the effects of the crisis and implemented national and cooperative measures to stabilize their financial systems. And we are grasping for a paradigm for the world economy that will sustain growth and development after the crisis.

The world economy has changed radically since the turn of the century. It was shaken by a series of major ‘virtual’ crises – the dot com crisis, the energy and food crises and non-traditional security issues like terrorism and SARS – that created an undercurrent of uncertainty, teetering on instability, before the present crisis hit . Economic and financial risks also increased due to global macro-imbalances, which are in turn associated with the process of deepening globalization and integration, and the emergence of a number of big new developing players such as China, India, and Brazil.

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Author: Tobias Harris

In the wake of North Korea’s Unha-2 launch Sunday, the Japanese establishment and public have uniformly reacted with a sense of outrage and a desire for an vigorous Japanese and international response to the test.

With substantial public support — 78% of respondents in a Yomiuri poll — the government is investigating tightening sanctions and plans to secure a cabinet decision authorizing further sanctions on 10 April. The Aso government is also working with the US and South Korean governments to secure a new UN Security Council resolution condemning North Korea’s actions over Chinese and Russian doubts. Sankei reports that in its work to assemble a coalition in support of the resolution, the foreign ministry is not looking for new sanctions to be included in the UN resolution, as a means of making the resolution more attractive to China and Russia.

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Author: Hitoshi Tanaka, JCIE

Nearly six decades after its creation, the US-Japan alliance once again stands at a crossroads. The relative decline of US global influence, the gradual redistribution of power in East Asia, and the global economic crisis have led pundits on both sides of the Pacific to question the alliance’s continued viability and relevance. It is incumbent upon Japanese leaders to sit down with the Obama administration to discuss how the US-Japan partnership should evolve to tackle existing challenges and map out a long-term vision for the alliance’s future.

Going forward, the broad objectives of the alliance should be to maximize opportunities for economic and security cooperation among states in the region and to minimize the risk that existing traditional and nontraditional security threats could upset regional stability and economic growth.

The two states must reinvigorate the bilateral security alliance, lead efforts to reform and strengthen global governance, and work with regional partners to actively ensure the peace, stability, and prosperity of East Asia. The partnership between Japan and the United States must evolve into a more inclusive and comprehensive force for peace, stability, cooperation, and prosperity throughout the Asia Pacific region and the world.

This article is part of the ‘East Asia Insights‘ series, produced by the Japan Center for International Exchange, Tokyo, and can be found here.

Author: Ligang Song, Crawford School, ANU

For the first time in modern economic history there is a joint effort underway among major economies in the world to stimulate economic growth through fiscal means in the middle of the global economic downturn. China’s stimulus package is equivalent to 3.2 per cent of GDP in 2009, well above the 2 per cent of GDP recommended by the International Monetary Fund.

This is not so much because China’s fiscal fundamentals are relatively sound and enable China to do more than others, but rather because too much is at stake for China to maintain a reasonably high growth rate against the backdrop of steeply falling exports and an abrupt easing of domestic economic activities. Read more…

Author: Tobias Harris

April is here, the new fiscal year has begun, and Prime Minister Aso Taro has been in London for the G20 summit.

For once, he left behind a favourable domestic situation. After months of bad news, with his approval ratings skirting single digits, the press is full of reports about how Aso and DPJ President Ozawa Ichiro have traded places; Ozawa’s leadership under threat from members of his own party, at the same time that LDP members have all but conceded that Aso will lead the LDP into the next election.

The prime minister should not be too cheerful, despite the early arrival of cherry blossoms and the bump in the polls.

As Claus Vistesen notes at considerable length, the best one can say about the Japanese economy is ‘while indicators are still on the decline they are now declining less rapidly’. The great adjustment is under way. The pain continues to be felt among Japan’s irregular workers, as 192,061 have already been laid off in the period beginning in October 2008 and continuing until June, compared with 12,502 regular employees who were laid off by April. The unemployment rate rose to 4.4 per cent, and not surprisingly the number of new hires has dropped off substantially. 4.4 per cent, then, is only the beginning. Read more…

Authors: Hadi Soesastro and Peter Drysdale

Now that the dust has begun to settle, it’s time to assess British PM, Gordon Brown’s claim that the G20 Summit saw the creation of a new world economic order.

This was a remarkable event. In less than a year the leaders of a representative group of twenty the largest or most important economies in the world met for a second time to address the challenges of global economic crisis. They and their advisers have crafted a coherent set of strategies to turn the international economy around and to deal with the structural frailties that sent world markets into free-fall.

The crisis bears sobering witness to the interconnectedness of the global economy today. Open trade and open capital markets and the break-neck speed of the flow of ideas and technologies have delivered huge benefits through globalisation and lifted millions of people, especially in Asia, from poverty to relative prosperity on a scale of which there is no historical precedent. But, as we now see more clearly, this was also a global economy fraught with system risk, without institutions and structures of governance that gave proper attention to the global impact and repercussion of national policy strategies and market failures.

There are three major achievements out of London.

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Author: Tobias Harris

While Japan waited anxiously Saturday to see whether North Korea would launch its rocket, the day ended up being notable for the defence ministry’s mistakenly informing the public not once but twice that launch had occurred.

Yomiuri has the details on how the public came to be misinformed. The first mistake, which occurred around 10am Saturday, resulted from a computer glitch at the GSDF command centre in Tokyo, which resulted in some 900 JSDF personnel receiving emails announcing that a launch had been detected, including one GSDF officer in Akita, who proceeded to inform local authorities of the launch. The second mistake, at around noon, was the result of a misunderstanding by the Air Self-Defence Forces officer responsible for missile defence, who thought that a report received from air defence command in Tokyo was based on information from US early warning satellites, when in fact it came from a J/FPS-5 radar station in Chiba that had detected ‘some kind of wake’. The ASDF officer informed the Kantei’s crisis management centre, which then informed the media and some local governments via its M-net system.

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Author: Yoichi Funabashi

The U.S.—Europe—Japan triad, representing the world’s three largest economies, is in simultaneous recession for the first time in the post-World War II era. China, meanwhile, is suddenly seeing its 30-year economic dynamism lose steam, with its mighty export machine not just stalling but actually slipping into reverse.

This tangle only promises to tighten.

In this Washington Quarterly, I examine the current crisis and the challenges that we shall face on a grander scale. The crisis demands greater procedural vision, rather than an entirely new structural vision. The G7 and G20 desperately need to be strengthened, and, as power shifts eastwards, a robust Asia-Pacific strategy is necessary, with U.S.-China-Japan trilateral cooperation at its centre.

For the full article, please see here [.pdf].

Author: Tobias Harris

Yomiuri has released the results of its annual poll on constitution revision and has found that once again a majority — a slight one, 51.6 per cent — favours revising Japan’s constitution. This marks a nine-point increase over last year’s poll. Opposition to revision fell from 43.1 per cent to 36.5 per cent.

Interestingly, majorities among both self-described LDP supporters and DPJ supporters supported revision, 54 per cent and 53 per cent respectively.

Among respondents who support revision, 49 per cent said that the international contributions are impossible because the current constitution didn’t anticipate new challenges. Asked specifically about Article 9, 38 per cent of respondents (up from last year’s 31 per cent) said that Japan has reached the limit to what it can squeeze out of Article 9 via interpretation and manipulation, and so it should revise it, 33 per cent (down from 36 per cent) said that there is still room for interpretation and manipulation, and 21 per cent (down from 24 per cent) argued that Article 9 should be strictly protected.

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Author: Ben Hillman

My last piece on Tibet brought a comment from Huw Slater. Huw is right about the need to differentiate among exiles (there are many different groups and views), but what we are talking about here is the exile government’s position—the position they take to ‘negotiations’ with Beijing with the support of a majority of exiles.

That position is clearly outlined in the document I referred to which is accessible, not on the exile government’s website as I incorrectly indicated in my first post, but on the web site of the Office of Tibet—the official agency of the Dalai Lama in London (www.tibet.com). The position is also summarized on the Office of His Holiness the Dalai Lama’s website. But this is beside the point. The exile government’s official position and the Dalai Lama’s position are the same. Regardless of when the document on the Dalai Lam’s London Office’s website was first penned, the recent ‘Memorandum on Genuine Autonomy for the Tibetan People’, which is viewable on the Central Tibetan Administration’s (Tibetan exile government’s) website shows that the position has not substantially changed.

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Author: Ryan Manuel

Amongst the flood of articles arguing whether we are now Keynesians or otherwise, the Chinese stimulus package unveiled in response to the economic downturn has not gone unnoticed.

As Meng notes, the current economic crisis may even have a positive effect on health care in China. The government may see the health sector as conducive for supporting economic recovery and invest more accordingly.

A recent argument outlined that:

there is a lot that expansionary fiscal policy in China could achieve, through stimulating domestic demand. Especially if it included a good fix on Chinese health care and the insurance industry in general.

There is no doubt that getting a ‘good fix’ on health care in China would be a considerable boon to China’s farmers. Recent surveys of attitudes in the countryside towards China’s development have all focused on health care as the primary source of dissatisfaction.
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Author: Tobias Harris

The Taepodong-2 rocket — because, as Jun Okumura rightly notes, it is not a missile unless it is used a weapon — North Korea claims will deliver a satellite into orbit is on the launch site, awaiting a launch that will reportedly occur between 6 and 8 April. Japan is in a state of alarm.

The Aso government and the LDP have used the prospective launch to show its decisiveness. In anticipation of the launch, a joint session of the LDP Policy Research Council’s defense division, national security investigative committee, and base countermeasures ad hoc committee recommended on 24 March that Japan prepare to intercept debris from the rocket falling on Japan with either seaborne SM-3 interceptors or, failing that, land-based PAC-3 interceptors.

That same day the LDP-Komeito North Korean missile problem countermeasures headquarters reviewed the government’s options in responding to the launch, stressing cooperation at the UN Security Council and commitment to the Six-Party talks as well as the possibility of more sanctions on North Korea, while preparing Japan’s missile defenses and opening lines of communication with localities in advance of the missile launch.

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Author: Lex Rieffel

Five Asian countries will participate in the G20 London Summit: China, India, Indonesia, Japan, and South Korea. The United States will undoubtedly be the most important player in the meeting, but there is a strong case to be made for Asia being the second most important. A deal for the IMF is likely to be extremely difficult. But a deal without the full support of Japan, China, and India will probably not provide the fillip to confidence that the London Summit must deliver to put the world firmly on the road to recovery.

In this article, I look at Asia’s perspective on the summit meeting and the global financial crisis, noting the core issues surrounding agreement on increasing resources for the IMF.

This article is part of the Brookings Institution‘s series on the G20, entitled ‘The G-20 London Summit 2009: Recommendations for Global Policy Coordination‘, and may be found here.

Author: Ann Marie Murphy, Whitehead School of Diplomacy, Columbia University

Hillary Clinton deserves credit for making Indonesia the second country she visited as Secretary of State. Indonesia may be the world’s fourth most populous country, third largest democracy, and home to the world’s largest community of Muslims, but it is also the most important country Americans know virtually nothing about. Clinton’s visit sends an early signal to Jakarta that Washington recognizes Indonesia’s growing international clout and builds a firm foundation for future cooperation.

Clinton’s trip had multiple goals: to highlight the example Indonesia’s transition to democracy sets for the broader Muslim world; to reinforce US interest in Southeast Asia by visiting the Secretariat of the Association of Southeast Asian Nations (ASEAN) and to lay the foundation for a strategic partnership with Indonesia. Indonesian officials welcomed US attention to their country and recognition of its achievements over the past decade.

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