Author: Rajendra Abhyankar, The Asia Foundation

Defence Secretary Robert Gates’ three-day visit to New Delhi last month not only bolstered India’s role in promoting security and stability in Afghanistan and the region, but also boosted bilateral defence cooperation and trade. His visit helps pave the way for President Barack Obama, who is expected to visit India this summer, and helps answer an important question the two countries have asked each other since India’s Prime Minister Manmohan Singh’s visit to Washington last year – Do we take a ‘strategic pause’ to heal some rising negativity brewing in the relationship, or do we look for the ‘next big idea’ to keep up the momentum?

In a clear push for closer bilateral military cooperation in the face of what Secretary Gates called the ‘greatest common challenge of terrorism,’ Gates’ visit highlighted the potential influence the defence sector can have on future bilateral relations. Read more…

Author: Aurelia George Mulgan, UNSW@ADFA

The Hatoyama government has reversed or partially reversed some of the key spending commitments in the DPJ’s 2009 election manifesto:

• - abolishing or reducing surtaxes on gasoline and car purchases etc. from fiscal 2010
• - eliminating tolls on major highways across Japan from fiscal 2010
• - paying families a monthly ¥26,000 child allowance from fiscal 2011

The surtax on gasoline, car purchases, et cetera was left in place when Prime Minister Hatoyama changed his position on the issue as a result of pressure from his own party, reportedly channelled through the Ozawa office. Read more…

Author: Tobias Harris, MIT

As Ozawa Ichiro waited for the Tokyo Public Prosecutors Office to decide whether it would indict him along with his former secretaries, the DPJ secretary-general was busy meeting with Kurt Campbell, U.S. assistant secretary of state for East Asian and Pacific affairs, who stopped in Japan last week along with Wallace ‘Chip’ Gregson, assistant secretary of defense for Asia-Pacific affairs, for discussions with Foreign Minister Okada Katsuya and Defense Minister Kitazawa Toshimi.

Campbell and Ozawa spoke for an hour last Tuesday, with U.S. Ambassador John Roos also in attendance. Read more…

Author: Mohamed Ariff, University of Malaya

There is no need to belabour the point that flexible prices play a key role in correcting imbalances, be they between supply and demand for products, or between saving and investment or, for that matter, global imbalances of international capital or trade flows.

This is simply the magic of the price mechanism in text books. Read more…

Author: Claude Barfield, AEI

Recently, my American Enterprise Institute colleague Philip Levy and I published an International Economic Outlook, entitled ‘Tales of the South Pacific: President Obama and the Transpacific Partnership.’ In this analysis, we made the case for the Obama administration to move with dispatch in asserting U.S. leadership in the construction of a new Asian economic architecture that would be broad and inclusive. And we argued that the Trans-Pacific Strategic Economic Partnership (TPP) agreement was an ideal vehicle through which to achieve this goal.

Since then, bolder moves by the People’s Republic of China (PRC) have increased the urgency for the Obama administration to advance a strategic vision of the U.S. role in a nascent Asian economic architecture. Read more…

Author: Ran Tao, Renmin University

‘Hukou reform’ is now becoming a catchphrase in the Chinese media and in China’s policy making circles. Chinese Premier Wen Jiabao, in an exclusive interview with the Xinhua News Agency on December 27, 2009, said that China will steadily advance the reform of its decades-long household registration system in order to ensure migrant workers have the same rights as city dwellers.

The importance attached to hukou reform is also reflected in the Chinese Communist Party’s ‘No. 1 Central Committee Document’, promulgated at the end of January 2010. Read more…

Author: Tobias Harris, MIT

Ozawa Ichiro has escaped indictment by the Tokyo Public Prosecutors Office again. Once again, his former secretaries were not quite so lucky, with three, including sitting Diet member Ishikawa Tomohiro, being indicted for political funds violations.

Michael Cucek rightly points to the gross misconduct of the PPO in its Ahab-like pursuit of Ozawa — and perhaps the more egregious campaign by the media to paint Ozawa as the conniving, monstrous puppet master of the Hatoyama government. Read more…

Author: Michael Cucek

In the first book of the Hitchhiker’s Guide to the Galaxy, protagonist Arthur Dent escapes Earth as the unwelcome guest of the Vogons – a race of nasty-tempered, ugly-minded, hideous-looking space-faring bureaucrats infamous for being the third worst poets in the Universe. ‘On no account should you allow a Vogon to read poetry to you,’ warns the Guide.

Vogons, it seems, have nothing on Hatoyama Yukio’s speechwriters. Read more…

Author: Peter Drysdale

This week we publish the fourth issue of East Asia Forum Quarterly (EAFQ) (volume 2 Issue 1). EAFQ is published online and in hard copy by ANU E Press four times a year on a theme of major importance to the Asian region. You can support EAF by subscribing to EAFQ for A$30.00 annually.

As Richard Rigby says in the lead essay posted this week, the word ‘challenge . . . carries a heavy burden of nuance’. It can convey a sense of threat. But challenges can also be an inspiration, an offer of hope. Challenges always pose questions –often difficult ones, as Rigby also suggests. Read more…

Author: Richard Rigby, ANU

Challenge is a word that carries a heavy burden of nuance: it can convey a sense of threat, it can be an inspiration, it poses questions – often difficult ones – and it can also be double-edged, in that the challenge frequently applies as much to the alleged challenger as it does to those on the receiving end. Where China is concerned, the word is appropriate in every sense; but an important part of the challenge is precisely to decide which aspect is of the greatest importance. Only having done this can we attempt to frame policies, or at least provide the best possible advice to the policymakers, which will enable us to meet the challenge that today’s — and tomorrow’s — China poses to us, and to itself.

If there is a single word that should be applied to China, whether speaking of its international impact or its domestic situation, it should be ‘complexity’. Read more…

Author: Peter Yuan Cai, ANU

The Hollywood blockbuster Avatar is breaking box-office records in China and cinemagoers have been treated to a visual feast from the Shangrila-like moon of Pandora. At the same time, the savagery depicted in the film about the demolition of the natives’ home has also resonated with the Chinese. A young literary commentator wrote that ‘For audiences from other places, barbaric eviction is something they simply can’t imagine – it is the sort of thing that could only happen in outer space and China.’

Much like the Na’vi people from Pandora, forcibly evicted Chinese residents have fought back literally, with bows and arrows and Molotov cocktails against camouflaged hired thugs from real estate developers. Read more…

Author: Rajiv Kumar, ICRIER

As expected, the Reserve Bank of India (RBI) signalled a tightening of its policy stance on 29 January. Given the huge liquidity overhang, the cash reserve ratio was raised by 75 basis points. The repo and the reverse repo rates were left unchanged.

With the Wholesale Price Index threatening to get into double digits, RBI was justified to act decisively to prevent inflationary expectations from becoming entrenched. Read more…

Author: Pravakar Sahoo, IEG and Nisha Taneja, ICRIER

China has been taking an increasingly active interest in South Asian countries over the past few years, seeking to rally friendship and support in order to surpass India’s dominance in the region. When the South Asia Association for Regional Cooperation (SAARC) was formed in 1985, they expected leadership from India, but India has yet to assume this role. Now China, India’s main political rival, is entering its neighbouring markets more aggressively through both trade and investment.

China has been the fastest growing economy in the region for the last decade and has surpassed India in terms of growth, world trade share, price competitiveness in product manufacturing and winning oil deals. Read more…

Author: Ann Kent, ANU

Over the last six months, Australia has been undergoing a sharp learning curve in its relations with China. This has come about courtesy of China’s detention on 5 July 2009 of Rio Tinto executive, former Chinese national, and now Australian citizen, Stern Hu, together with his three colleagues, Liu Caikui, Ge Minqiang and Wang Yong, all Chinese nationals. Aside from the shock the Hu case has represented to most Australians — accustomed since the 1980s to viewing China as a relatively benign presence in our region — the main lesson has been that China’s version of the rule of law is quite different from Australia’s and that that version may also, in times of stress, impact on our own society.

The first and most important part of this unwelcome lesson has been that China’s is not so much a rule of law as a rule by law. Read more…

Authors: Peter Drysdale and Shiro Armstrong, ANU

Yang Yao, Deputy Dean of the National School of Development and the Director of the China Center for Economic Research at Peking University, argues in the upcoming issue of Foreign Affairs that a radical shift in gear on China’s political reform is now necessary to maintaining growth with social harmony.

‘Beijing’s ongoing efforts to promote GDP growth’, he argues, ‘will inevitably result in infringements on people’s economic and political rights. For example, arbitrary land acquisitions are still prevalent in some cities, the government closely monitors the Internet, labour unions are suppressed, and workers have to endure long hours and unsafe conditions. Chinese citizens will not remain silent in the face of these infringements, and their discontent will inevitably lead to periodic resistance. Before long, some form of explicit political transition that allows ordinary citizens to take part in the political process will be necessary.’

Read more…