The death of Kim Jong-il, though not entirely unexpected given the state of his health following a debilitating stroke in August 2008, has had a powerful psychological impact both domestically and globally.

His death leaves a huge vacuum not only in the North Korean psyche, but in the system that he embodied.

As North Korea comes to grips with his death, the new government headed by Kim Jong-un — Kim Jong-il’s youngest son and successor — must begin navigating the grave challenges that North Korea faces at home and abroad.

The Kim Jong-un regime now stands at a crossroads, and the country’s future depends on whether it looks to the past or to the future in searching for the solutions to its enormous and pressing problems.

Perhaps the most serious challenge facing the new regime is the ongoing, deep-rooted economic problems that have led to chronic energy and food shortages. While North Korea rebounded from economic collapse in the late 1990s, its economy continues to be grossly insufficient in meeting the people’s basic needs. With a quarter of its population starving, the regime presides over a country where the lives of ordinary people are consumed by an ongoing struggle for subsistence.

Private markets sprang up during the 1990s as a mechanism to cope with the food shortage caused by the collapse of the Public Distribution System, and were it not for these markets, the suffering of the people would be even worse today. To make up for the shortfall of its moribund economy, North Korea is still dependent on external food and energy aid, of which China remains the majority provider.

The North Korean regime can continue to muddle through by restricting private markets and foreign investment while relying on external aid to keep the economy afloat. Or it can address the root cause of the economic problems by fundamentally changing its system through reform and opening up to foreign trade and investment. As this is the only way the regime can resolve its economic problems over the long term, the policy of muddling through will exacerbate the suffering and continue to erode the regime’s legitimacy.

The second challenge is the ongoing nuclear conflict. In the face of growing external pressure to abandon its nuclear program, North Korea has upped the ante over the past few years by engaging in ever-more serious provocations. These include conducting nuclear and missile tests in 2009; the sinking of a South Korean warship, Cheonan, in March 2010 (killing 46); and the artillery shelling of Yeonpyeong Island in November 2010 (killing four including two civilians).

These provocations are intended to escalate tension in order to break the deadlock pervading the Six-Party Talks, as well as to bolster the legitimacy of the regime and the leadership succession. But they have led to growing confrontation among all parties to the talks, and this, in turn, has increased the danger of the situation spiralling out of control into a wider conflict on the Korean Peninsula.

As such, the North Korean regime is faced with another stark choice. It can continue to muddle through by fostering conflict and tension in order to neutralise external pressure on North Korea to abandon its nuclear program, thus raising the stakes on the Korean Peninsula to an intolerably dangerous level. Or it can make a strategic choice to give up its nuclear program in return for economic aid, diplomatic ties and security guarantees, laying a solid foundation for creating a viable and secure North Korean state.

Lastly, the regime is faced with the North Korean people’s increased exposure to the outside world. Through a variety of channels — such as cross-border traffic with China, foreign radio broadcasts, expatriate North Korean communities, increasing access to mobile phones and a greater availability of foreign DVDs — the once hermetically sealed society is slowly being pried open. As North Koreans become more knowledgeable about the outside world, the more dissatisfied they will become with their own lives and the North Korean state. The regime can continue its futile effort to control information, or it can harness the increasing flow of information to help develop the country as part of a broader effort to open up North Korean society to the outside world.

While the death of an important historical figure usually marks the end of one era and the beginning of a new one, the death of Kim Jong-il has only increased the urgent need for his successor to make difficult choices. Either the regime must be willing to take the country in a new and bold direction or it must suffer the consequences of maintaining an unsustainable status quo.

Steven Kim is Professor at the Asia-Pacific Center for Security Studies, Honolulu.

1. North Korea: Kim Jong-il snubs Jimmy Carter in lead up to succession
2. North Korea: strategic thinking, strategic response
3. North Korea’s succession gets twisted

Since China’s reform and opening-up policies began in the 1970s, the country’s average annual economic growth rate has hovered around 10 per cent.

Currently, China’s gross domestic product is second only to the United States; it is the world’s largest exporter and importer and the largest holder of foreign exchange reserves. Along with China’s remarkable economic rise comes an increase in China’s role in both regional and global development and governance.

With the economies of the US, the EU and Japan reeling from weak growth and burdensome debt levels, China is a key driver of global economic growth, contributing, along with other major emerging economies, nearly two-thirds of new global economic output. According to many projections, China will surpass the US as the largest economy in the world by 2030.

As its power emerges China will naturally become a more important player in shaping regional and global development and governance. Likewise, with its economy moving into a new phase through steady technological innovation and an explosion of domestic demand, China will play a bigger role as a major market and capital resource for regional and global economic growth.

China’s economy is highly integrated into the global market, so the country should participate actively in initiatives to reform the international economic system. While a stable and evolutionary reform process is important to China, the desired outcome should see structural changes that produce a new, more effective international system.

China is active in promoting efforts to improve regional governance through various forums involving the Asia Pacific region as a whole, East Asia, Central Asia and Northeast Asia. The goal is clear: to help create a favourable environment for economic cooperation, enhanced political trust and regional security.

It is significant that China’s strategy is focused broadly, encompassing more than just economic issues. An important part of these efforts are free trade agreements, whether bilateral or sub-regional, such as the FTA between China and the Association of Southeast Asian Nations (ASEAN). They are different from market-driven integration, because in addition to being compliant with the rules of the World Trade Organization, they provide a broader framework for cooperation among governments of different countries. Experience shows that FTAs can have a profound impact on improving governance in individual economies and regional systems.

In the past decade, China took the initiative to establish the China-ASEAN Free Trade Agreement (CAFTA) and played a leading role in the feasibility study for the East Asia Free Trade Agreement. China also actively sought to promote trilateral cooperation with Japan and South Korea. For China, CAFTA is more than just a trade agreement. It helps to provide a comprehensive framework for cooperation between China and the ASEAN countries. China is now the largest market for ASEAN exports, but relations go well beyond trade to include infrastructure, connectivity and capacity building for human development.

Although China participates in all regional arrangements, it views ASEAN +1 as its core regional relationship followed by ASEAN+3. China worries that the recent enlargement of the EAS from ASEAN+6 to include the US and Russia may weaken the cooperative spirit of East Asia because of different strategic interests.

Recently, the Trans-Pacific Partnership (TPP) led by the United States has received a lot of attention. Although China is the second-largest economy in this region, it is excluded from the TPP negotiations. China’s view is that the Asia Pacific Economic Cooperation (APEC) forum is the more appropriate for regional issues of the kind envisioned for the TPP.

While the United States is touting the TPP as a kind of high-level FTA for the 21st century, it will fundamentally change the nature of the APEC approach to regional relations. It can also be seen as a move by the United States to weaken East Asian integration and co-operation. This should worry ASEAN for two reasons. First, many member states aren’t included in the TPP. And second, it could have a negative impact on ASEAN’s central role in building an East Asian community.

In this context, a great concern is how China manages its relations with the US. That relationship today encompasses both economic prosperity and political security. By focusing on common goals such as global growth and prosperity, China and the US can establish and promote a partnership that will benefit both countries, as well as the rest of the world.

But promoting economic interdependence requires creating common interests and reducing incentives for conflict or instability. This is difficult in the current climate, where structural trade imbalances between China and the US are fuelling tensions. The US is pushing hard for China to allow the renminbi to appreciate quickly, while China is insisting on a gradual appreciation of the currency. With the US now part of the East Asia Summit, hopefully the two countries can use this framework to manage their interests and relations in a collaborative way.

The rise of China will end the current Western-dominated world order, but it will not end the Western world, as some alarmists in the West fear. In a highly interdependent world, human society’s future rests on true co-operation from all sides.

Zhang Yunling is Professor of International Economics, and Director of International Studies, Chinese Academy of Social Sciences.

1. Asia’s global responsibilities: Delivering through global and regional arrangements
2. A regional solution to global imbalances: We need a Beijing Accord
3. China’s Soft Power v America’s Smart Power

On 14 January, Taiwan’s incumbent president, Ma Ying-jeou, won a second term in office, obtaining 51.6 per cent of the popular vote while Tsai Ing-wen, his Democratic Progressive Party (DPP) opponent, managed 45.6 per cent.

Ma’s party, the Kuomintang (KMT), thus retained control of the Legislative Yuan, securing 64 of the 113 seats. Based on the numbers, President Ma will be able to govern with both a clear majority of popular support and legislative freedom over the next four years. Beijing and Washington were also visibly relieved by the KMT’s success, as Tsai’s appointment may have created a new source of instability in East Asia that neither the US nor China was keen to face — given the current state of their own domestic politics. In autumn 2012, China will undergo a leadership succession during the 18th Party Congress, and in November, the US will face its own presidential elections.

The election campaign and results in Taiwan highlight two emerging dynamics. First, figures from Taiwan’s Central Election Commission reveal that although President Ma won, the total number of votes he received dropped by more than 767,000 compared to 2008, when he received 58.45 per cent of the total vote. Conversely, votes for the DPP’s presidential candidate increased by 648,000, a growth of 4.05 per cent. The KMT coalition also lost 18 seats in the Legislative Yuan, a significant portion of its majority, while the opposition DPP coalition gained 16 seats. These gains signify that the KMT’s second term may not be as smooth as the first; President Ma will likely be constrained by increased opposition in the legislature, and this is likely to limit how much he can offer Beijing in enhanced cross-strait relations.

Second, the voting landscape looks to be evolving beyond the generational colour-coded political divisions, which have traditionally divided Taiwanese society into Pan-Blue (pro-unification) and Pan-Green (pro-independence) camps. This was illustrated by the addition of James Soong’s orange-coloured People First Party, which focused on campaigning in the ‘neglected’ central provinces and to Taiwan’s rapidly aging population. Moreover, socio-economic concerns dominated the campaign more so than in previous elections. Consequently, the issue of cross-strait relations became inseparable from the question of Taiwan’s economic security.

Ma’s economic policies — in particular the 2010 signing of the Economic Cooperation Framework Agreement — were juxtaposed with Taiwan’s slow economic growth, regressive taxation system, declining public investment, reduced job opportunities for new graduates, and a widening income gap between rich and poor. On the one hand, Ma argued that Taiwan’s future prosperity and greater regional stability both required a reduction in cross-strait tensions — and this would be achieved by promoting pragmatic economic and socio-cultural ties with the mainland. On the other hand, Tsai argued that further integration should be approached with caution; that it will lead Taiwan down the path of becoming a Chinese ‘special administrative zone’ and threaten its de facto independence.

As such, Ma’s slipping popularity and the increased public concern over his cross-strait economic policies suggest that many Taiwanese remain suspicious of Ma’s ties with mainland China. So while the election may not have reconfigured cross-strait relations, the risk remains that Beijing could become impatient with its limited influence over Taiwan’s democratic government, especially with the re-election of a pro-China KMT-dominant legislature.

Ma’s victory has almost certainly raised Beijing’s expectations; China’s leaders may pressure Ma to begin formally discussing Taiwan’s political future, and among other measures, Beijing may call upon Taiwan to halt the purchase of arms from the US and phase out its military ties with Washington. Rather than stabilising the cross-strait status quo, the KMT’s election victory may usher in a new period of instability — not one in which Taiwan calls for de jure independence and recognition as a sovereign nation — but one in which China may intensify its demands on Taiwan.

Sheryn Lee is Project Officer and Research Assistant at the Languages of Security in the Asia-Pacific project, and Research Assistant at the Strategic and Defence Studies Centre, Australian National University.

1. Taiwan and Hu Jintao’s end-year overtures
2. Taiwan, China, and the WHO
3. Taiwan: The Democratic Progress Party’s ‘China Syndrome’

High-level political contacts between India and Japan since the year 2000 have produced a multitude of political documents.

And as Japanese Prime Minister Yoshihiko Noda wrapped up his official visit to India on 27–29 December, following the annual meeting between the Indian and Japanese prime ministers, the countries’ respective policy establishments unveiled the Vision for the Enhancement of India-Japan Strategic and Global Partnership. The document marks the 60th anniversary of the establishment of diplomatic relations between India and Japan.

Documents like this are an indication of progress in bilateral relations. From a bilateral standpoint the most noteworthy and tangible improvement in India-Japan relations is in the economic sphere; with Japan’s domestic economy in distress, India’s economy has continued to grow, and this reality has provided the former with a strong imperative to engage with the latter in a substantial manner. Noda’s recent visit reaffirmed this view.

The key announcements during the visit included a revised bilateral currency swap arrangement from US$3 billion to US$15 billion, and Japan’s intention to make available funding for Delhi-Mumbai Industrial Corridor (DMIC) projects — a major initiative to enhance infrastructure and industry between the two cities. The Japanese government pledged public and private finance totalling US$4.5 billion over the next five years for this initiative. The DMIC project also forms an integral part of India’s recently announced National Manufacturing Policy, which aims to create 100 million jobs within a decade and increase the share of manufacturing in the country’s GDP to 25 per cent by 2022.

This development is especially important given that many Japanese companies have concerns about inadequate infrastructure in India. The joint statement on enhanced relations also singled out infrastructure development between Chennai and Bengaluru in India’s south, where an increasing number of Japanese companies have established their presence. Additionally, Prime Minister Noda conveyed Japan’s intention to extend financial and technical support to the preparation of India’s Comprehensive Integrated Master Plan. This support will allow for the expeditious development of infrastructure — such as ports, industrial parks and their surrounding facilities — in Ennore, Chennai and the adjoining areas.

Total trade between the two countries in 2010–11 amounted to US$13.8 billion, and cumulative FDI inflows from Japan between April 2000 and April 2011 totalled around US$5.5 billion — 4 per cent of total inflows to India. These figures are not very impressive when India’s share in Japan’s total global trade and investment is considered. Total trade between the two countries is only about 1 per cent of Japan’s global trade. In contrast, trade with China, Japan’s top partner, totalled US$163.2 billion in the first half of 2011, setting a new record on a first half-year basis. Also, Japanese FDI inflows to China in 2010 alone topped US$22 billion.

Still, total trade between India and Japan had already reached US$13.2 billion during the first nine months of 2011, indicating an increase of 23.9 per cent over the same period in 2010. Japan’s exports to India also witnessed an increase of 26.1 per cent between January and September 2010, reaching US$8.11 billion, while its imports from India rose by 20.6 per cent to US$5.09 billion.

Further, the number of Japanese companies with business operations in India has doubled in three years. As of October 2011, 812 Japanese companies were operating in India, with 1422 establishments across the country. The automobile and electrical equipment industries, trading, the services sector (financial and nonfinancial), and telecommunications are all attracting Japanese investment. India has also been the largest recipient of Japanese official development assistance loans for seven consecutive years since 2003.

Many factors have contributed to the changing Japanese perception of the Indian economy. These include India’s economic growth through the global downturn; the vast potential of domestic demand; the projected expansion of India’s working population over the long term; and India’s geographically strategic position, which should allow it to develop as a production and export base for growing markets in the Middle East and Africa — not to mention its growing ties with other East Asian economies.

The Comprehensive Economic Partnership Agreement, which came into effect in August 2011, also provides an institutional framework to further accelerate and consolidate business activities between India and Japan. As part of the agreement, India will eliminate tariffs on 90 per cent of its imports from Japan, and Japan will remove tariffs on 97 per cent of Indian imports on a trade-value basis within 10 years. With tariffs slashed on more than 8000 products — including generic drugs, apparel, agricultural products and machinery — bilateral trade between both countries is expected to reach US$25 billion by 2014.

What does not help is the slow pace of progress in high-visibility flagship projects like the DMIC. The 60th anniversary of the establishment of diplomatic relations between India and Japan would be an apt opportunity for the Indian policy establishment to visibly show its resolve to enlist Japan as an important partner in India’s long-term growth strategy.

Sanjana Joshi is a Consultant at the Japan Project, Indian Council for Research on International Economic Relations, New Delhi.

1. India-Japan closer economic partnership
2. How the earthquake strengthened the Japan-US alliance
3. India and Japan: poised to enter a new era

The year 2011 proved fascinating for Asia, with the region consolidating its role as the essential player driving global economic recovery.

But 2012 promises to be more fraught as domestic politics take command amid new challenges to growth. A number of risks, opportunities and emerging patterns will shape Asia during the next 12 months and beyond.

One lesson of Europe’s current struggles is that politics matters deeply to choices about the EU’s economic and financial future. Asia is not Europe, of course, but its politics will matter greatly in 2012. Electoral outcomes and succession arrangements are likely to roil markets, bring to power governments more (or less) committed to institutional, regulatory and trade-related reforms, and possibly yield greater international tension. Three elections — in the US, South Korea and recently in Taiwan — feature candidates and parties with distinct policies and priorities. China will also complete a scheduled leadership change. And North Korea’s elite, whose members aim above all to preserve their own power, must now navigate an earlier-than-expected transition that could yet produce infighting and vast new challenges for Pyongyang’s neighbours.

Thailand also bears watching, as former Prime Minister Thaksin Shinawatra looks to return from exile. Such political risks will likely intensify well into 2014, when India and Indonesia hold elections. A possible return to Golkar rule in Indonesia, in particular, could slow institutional and policy reforms there. The year 2012 should be another rough time for Afghanistan, Central Asia and Pakistan. War, terrorism, narcotics and weak political institutions continue to steal headlines. But the region’s future will depend as much on whether governments improve their poor macro- and microeconomic fundamentals and expand opportunity, although economic change will remain elusive unless these states better cooperate in 2012. Meanwhile, Pakistan’s economy has considerable potential. But the country lacks a credible growth strategy. Islamabad will remain burdened by a high debt-to-GDP ratio that crossed 60 percent in 2010, painful debt service obligations to its creditors, a large fiscal deficit, double-digit inflation, a depreciating rupee and a trade deficit worsened by high global commodity prices. These economic realities will compound intensifying political risks in Pakistan.

Much was made in 2011 of Washington’s supposed strategic ‘pivot’ to Asia. A bigger issue for Washington’s partners in Asia is that the US, for all its strengths, still does not have its economic act together. Thus the principal strategic issue for most in Asia is whether America restores its economy and addresses its fiscal deficit and growth outlook. The weaker America’s fiscal and economic position becomes in 2012, the less relevant the US will be to Asia’s future.

Asia even managed to sustain robust growth amid austerity in Europe and sluggish growth in the US. But new challenges are emerging for the region’s most export-dependent economies. The markets will watch China especially closely — along with the US and the EU — because the world economy can hardly afford to have its three principal growth engines facing a crisis simultaneously. Beijing’s landmark Twelfth Five-Year Plan deliberately aims to achieve slower but more balanced growth. But such structural adjustments will come only gradually, and, in the meantime, China’s economy continues to rely on exports and investment in fixed assets. Others, such as South Korea, will also be vulnerable in 2012. They have relied, in part, on Chinese demand to power their economies, so even a modest slowdown in China will have contagion effects elsewhere in Asia.

India will grow robustly, but more slowly, in 2012. This is only one of many sources of gloom. Tax, pension and FDI reforms have all stalled, and parliamentary business has been tied up in knots as the leading national and regional parties squabble. Mumbai’s SENSEX stock index was the world’s worst major performer in 2011, declining from 20,561.05 on 3 January to 15,175.08 on 19 December. And bellwether state elections, especially in Uttar Pradesh, are almost certain to make the major parties even more cautious when considering any major reforms. Similarly, slow progress on economic reform may limit other countries in Asia in 2012. In Vietnam and Indonesia, FDI, regulatory or financial reforms have largely stalled and show little sign of revival. Still, one bright spot in 2012 may be Malaysia, which has begun to shed elements of its 1970s-era ‘New Economic Policy’.

By far the biggest question mark about reform though is China, with resistance to change anchored in interest group politics. Chinese leaders, as cautious technocrats, tend to split the difference between competing groups in China’s increasingly pluralistic polity. The result has been a strong bias toward incremental policy change rather than bold reforms. We will also learn much more in 2012 about the sincerity of reforms in Burma. Another question mark will be ASEAN’s response to Burma’s apparent change of direction. Balancing the role of great powers to the north — China and Japan — has long provided an impetus to ASEAN community building, with founding members hoping for a cohesive force to help balance China in particular. But Burma has stubbornly resisted ASEAN ways. With Naypyidaw now scheduled to assume the ASEAN chairmanship in 2014, regional heavyweights will face tough decisions about how hard to push the regime.

In recent years, Preferential Trade Agreements (PTAs) have proliferated in Asia. The US entered the trade fray in 2011 by more fully embracing the Trans-Pacific Partnership (TPP). In my view, the TPP has considerable potential. Beijing has criticised the TPP as part of a US strategy to ‘contain’ China. Yet it has also promoted its own brand of PTAs across the region — with ASEAN, Pakistan, Singapore and others.

While protectionist pressures will likely rise in 2012, so too will the tolerance for trade conflict, particularly in Washington and Beijing. China has grown more comfortable with the WTO’s dispute-resolution procedures. And, having learnt to leverage the system to its own advantage, Beijing is vigorously fighting US suits in many areas. For their part, US political and business elites are certain to complain ever more loudly about Chinese currency, intellectual property, procurement and cyber-related practices. Most in Asia will watch warily, fearing greater protectionism. But some will jump on the bandwagon: India has already initiated 149 anti-dumping cases against China.

Politics, economics and security are increasingly in collision in Asia. The US continues to provide Asia’s principal security-related public goods through its forward-deployed military presence and role as a strategic balancer. But Asian economies will increasingly provide one another with their principal economic-related public good — namely, the demand that can provide a pathway to sustained economic growth. This collision between economics and security may well intensify in 2012.

Evan A. Feigenbaum is Adjunct Senior Fellow for East, Central and South Asia at the Council on Foreign Relations.

A version of this article was first published here on the Council on Foreign Relations Asia Unbound blog.

1. Will Asia step up to the global challenges of 2012?
2. Asia, Europe and regional cooperation in 2012
3. Russia in the Asia Pacific: a bleak outlook

Vietnam is arguably the most ‘sinicised’ country in Southeast Asia, a distinctive result of more than 2000 years of intense interaction between Vietnam and China.

But the Vietnamese absorption of Chinese culture is neither a straightforward process nor an inescapable outcome of geographical proximity; it is much more nuanced. China’s cultural influence forms only one layer of Vietnam’s cultural identity. The most important and substantial element still rests with indigenous norms, customs and practices, while Vietnam’s cultural borrowings from Southeast Asia and the West form yet another layer.

Two distinct features characterise the Vietnamese absorption of Chinese cultural elements over the past 2000 years. First, Vietnam has been willing to borrow culturally from China as long as it is a voluntary, internal process rather than a forceful imposition from the north. Second, Vietnam’s borrowing from China is a selective process — most Chinese influences are filtered and adapted to fit local needs. So the ‘sinicisation’ of Vietnam could also be understood as the ‘Vietnamisation’ of Chinese elements. At the core of Vietnamese society and culture is still the overwhelming presence of its indigenous cultural and social values and norms, which shape Vietnam’s national identity and guide its perception of, and relations with, China.

One particular example is the spread of Confucianism into Vietnam. Confucianism was introduced during the Chinese-domination era that lasted more than 1000 years. But it could not gain a foothold in Vietnamese society until the country won its independence from China and began to treat Confucianism as a tool of nation building rather than a cultural legacy imposed by the north. Accordingly, the Ly dynasty built the Temple of Literature in 1070 to worship Confucius and established the Imperial Academy six years later to educate Vietnamese nobles and bureaucrats along Confucian lines. By the time the Lê dynasty came to power, Confucianism had been enthusiastically embraced as the ideological framework on which the Vietnamese state and society operated.

The Vietnamese also made a number of significant modifications to the imported ideology. For example, contrary to the Chinese Confucian tradition, Vietnamese society had a much greater recognition of women’s rights and accorded them a higher social status, and while Chinese Confucianism emphasises loyalty to rulers only, Vietnamese Confucianism stresses both loyalty to rulers and a sense of patriotism.

China’s historical cultural influence on Vietnam began to dwindle in the late 19th century, and the sinicisation of Vietnam symbolically faded away in 1918. This occurred with the abolition of all civil service examinations which had tested candidates’ knowledge of Confucian classics, and skills in prose and poetry using both Han and Nom characters. But more than 2000 years of interaction with China has left Vietnam with a multitude of Chinese cultural influences that cannot be undone overnight.

More recently, with the resurgence of China as a global power, Vietnam has been subject to a Chinese ‘charm offensive’, as the country seeks to spread its soft power worldwide. Since the early 1990s, Vietnam has been engulfed in a Chinese ‘cultural tsunami’ brought about by the overwhelming success of Chinese historical television series, music, movies and kung-fu novels. The popularity of Chinese cultural products in Vietnam — while partly explainable by the dearth of comparable Vietnamese products — can also be attributed to their quality, which has earned them a positive reception from Vietnamese audiences.

But this excessive Chinese cultural influence seems to have alarmed the government and Vietnamese Communist Party ideologists. Some critics have even complained that popular Chinese television series have made Vietnamese people more familiar with Chinese history than their own national history. This has triggered a number of reactions from the Vietnamese government, including a government-issued decree that ordered Vietnamese movies and television series to account for at least 30 to 50 per cent of the allotted time for movies on any Vietnamese television station.

Despite the apparent success of Chinese popular culture with Vietnamese audiences, resistance to unwarranted Chinese cultural influence still seems to become stronger when China makes purposeful, self-interested attempts to impress its cultural values. For example, the Confucius Institute initiative, one of the major components of China’s global soft power project, has made little headway in Vietnam despite its global success.

The Chinese ‘charm offensive’ is likely to expand globally, but may encounter major setbacks in Vietnam. While voluntary borrowings from China have formed a substantial layer of the country’s culture, Vietnam is also a country where memories of a millennium of forceful Chinese cultural assimilation are still alive today. Consequently, Chinese attempts to spread its soft power into Vietnam are likely to be limited by the country’s over-familiarity with Chinese culture. Vietnam’s traditional resistance to unwarranted Chinese cultural influence now stands as yet another obvious challenge that China must overcome if its ‘charm offensive’ is to ever succeed in this particular southern neighbour.

Le Hong Hiep is Lecturer at the Faculty of International Relations, Vietnam National University, Ho Chi Minh City, and is currently a PhD candidate at the University of New South Wales, Australian Defence Force Academy, Canberra.

1. China’s new media charm offensive
2. Japan eyes North Korea’s charm offensive
3. Vietnam: back from the brink?

The World Bank recently published a valuable research paper (World Bank Policy Research Working Paper 5940 by Justin Yifu Lin and Doerte Doemeland) which presents the evidence needed to justify a globally coordinated initiative in carefully selected infrastructure investment.

A G20 initiative in 2012 could make this happen. G20 leaders have the opportunity to launch a concerted effort to remove the policy and market failures causing serious infrastructure bottlenecks to growth, especially in developing economies. The prospect of a new sustainable source of effective demand could counter the current drift toward a ‘lost decade’ — an extended period of high unemployment, high risks and low returns on investment leading to continued weak growth,high unemployment and debt.

There is no prospect of repeating the coordinated 2009 Keynesian stimulus of increased government spending. Some countries have run out of fiscal space, while others have opted for needless short-term austerity. Consequently, the World Bank paper advocates a new form of fiscal stimulus that is not simply a boost to public consumption, but an investment in future productivity.This form of stimulus would catalyse parallel private investment and serve as a globally coordinated investment initiative, rather than an attempt to stimulate individual economies.

Such a global Keynesian initiative would remove constraints to growth in developing economies, and create new demand in developed economies suffering from high unemployment and excess capacity. Investment in infrastructure can thus generate a virtuous cycle of higher demand, productivity and growth that isconsistent with long-term deleveraging.

The proposal, based on extensive research, argues for the need to find a way out of the current situation, when monetary stimulus is proving inadequate, and when structural adjustment can only be expected to gain traction when demand is revived. Governments need to support demand and employment without adding further to debt levels in the medium run. Providing capital for potentially self-financing infrastructure investment to remove logistic and other constraints to growth would be the best way of doing this.

The report also cites evidence that such a stimulus does not risk crowding out private spending, but can be expected to contribute significantly to employment and growth. The authors demonstrate the potential for profitable infrastructure investment in all economies, while noting that the highest needs and potential returns are in developing economies.

By learning from experience, including the disappointing experience of Japan in the 1990s, it is possible to select the right kind of investment in infrastructure. The paper draws attention to initiatives that support good project selection and design, such as the Infrastructure Action Plan — drawn up in 2011 as part of the G20’s contribution to the development of low-income countries — and the Infrastructure Finance Center of Excellence, which aims at leveraging Singapore’s expertise in urban development and financing.

The G20’s ongoing effort to improve infrastructure in low-income economies should be extended to all economies. Recent estimates of annual requirements for investment and available financing for infrastructure identify a financing gap in the range of US$400 billion to US$650 billion per year. Narrowing this gap would have a significant global macroeconomic effect. The paper discusses numerous options for mobilising additional finance, ranging from domestic revenue raising to local and international bond issuance, and public-private partnerships. These are just some of the ways to steer more of the available global savings toward productivity-boosting infrastructure.

The potential contribution of infrastructure investment to promoting global economic recovery has been discussed for a while. And at a time of deficient global demand, the huge savings of emerging economies — most of which are generated in Asia — are intermediated chiefly in the financial markets of New York and London. Rather than financing productive infrastructure, much of the world’s savings are financing the deficits of already heavily indebted developed economies. The time has come to deal with this massive global financial market failure. Asian members of the G20 have put the infrastructure opportunity on the G20’s growth agenda. This well-researched World Bank paper should ensure it rises to the top of that agenda.

It will take time and creative thinking to meet the financing needs for infrastructure.  A High-Level Panel on Infrastructure appointed by G20 leaders delivered a useful report at the 2011 Cannes Summit. That report contains recommendations for improving the institutional and enabling environment for investment in infrastructure, and ideas for financing infrastructure projects with significant but delayed returns to investors and how to manage project risks.  But the Panel focused only on much-needed infrastructure in the world’s most difficult investment environments, especially sub-Saharan Africa.

The issues of institutional capacity, innovative financing and risk management need attention everywhere and need to be addressed if investment in infrastructure is to provide a globally significant boost to effective demand.  G20 leaders should now challenge their officials, financial-sector managers, and international financial institutions to find ways to intermediate savings to finance more investment in infrastructure.  These ideas can be directed to financing both public and private investment in commercially-viable investment in infrastructure wherever it is needed.  A high-level conference of the world’s leading experts on these issues, which might be organised by the World Bank could be a useful first step in that direction.

Dr Andrew Elek is Research Associate at the Crawford School of Economics and Government, Australian National University. He was the inaugural Chair of APEC Senior Officials in 1989.

1. How can Asia help fix the global economy?
2. Global imbalances and the paradox of thrift
3. APEC’s new ‘financial inclusion’ initiative

The whirlwind visit of President Barack Obama to Australia on the way to the East Asia Summit in Indonesia last November, many believe, forever changed the Asia Pacific strategic landscape with a re-assertion of American primacy and power in Asia.

What was the thinking behind the moves that Obama announced in Canberra and how will it shape Southeast Asia’s strategic future?

American power is already well entrenched in Asia and the Pacific. A modest elevation of American troop presence on rotation and training in northern Australia — one concrete outcome of the visit — will have at most a marginal impact on the immediate strategic landscape. But Mr Obama’s visit, and in particular his declaration to Australia’s Parliament that America is ‘all in’ in Asia and the Pacific, changed the tone of the contest for influence between America and China in the region and cast it in more confrontational terms.

In this week’s lead Geoffrey Wade suggests that ‘the Darwin deployment is only one part of a much larger regional strategy, placing US forces far enough from Chinese missiles to be comfortable, but still sufficiently near to maritime Southeast Asian allies to swiftly engage if necessary. The proposed stationing of the US Navy’s newest littoral combat ships in Singapore and the growing American naval and air force cooperation with Indonesia serve a similar function’.

Wade sees these moves as the beginning of a major increment to US-led East Asian security architecture, involving the creation of a Southeast sector to the ‘Offshore Asia’ security zone. He says that the Northeast American security zone is already entrenched, with US bases and facilities in mainland Japan, Okinawa, South Korea and Guam being equipped with over 80,000 service personnel and some of the world’s most advanced defence hardware. The concept of a maritime security umbrella in the Southeast sector of ‘Offshore Asia’ (including the maritime ASEAN states, Australia, New Zealand, Papua New Guinea and some of the Pacific states) is now seen in Washington as key to maintaining a balance of power in East Asia, and achieving the US’s stated aim of preventing the emergence of a regional hegemon.

It might seem puzzling that the US would seek to create a security shield just for ‘Offshore Asia’ — the maritime Southeast Asian states and Australasia. One rationale, according to Wade, is that sea lanes in this region are vital to East Asian economic security, a critical choke point in the flow of Middle Eastern oil and Australian resources to Japan, Korea, and also to China. Maritime routes need to be kept open, ‘especially while the South China Sea disputes continues to fester and demand attention’. More straightforwardly, Wade claims, this new strategy is built on the reality that the US and its allies currently have overwhelming superiority in terms of maritime power. The US Pacific Fleet alone comprises 180 ships, nearly 2000 aircraft and 125,000 service personnel. If the US is to maintain influence and allies in East Asia then it needs to provide these countries with some persuasive evidence of its defence commitment and capacities. The ‘Offshore Asia’ security shield — utilising US ‘Air-Sea Battle’ forces — is a low-cost posture that might convince.

There is related hype among the region’s security community about Australia’s integration into a forward American military hub in Southeast Asia. It is, for the moment, just that: hype and hyperbole. That the Australian base has the advantage of having direct access to the Indian Ocean and, therefore, together with the substantial US naval, air and communications facilities in Diego Garcia, provides the US and its allies with unrivalled access to, and surveillance of, Indian Ocean maritime routes is one dimension of this hype. The reports that B-52 long-range strategic bombers, F/A-18 fighters, C-17 transport aircraft and aerial refuelling aircraft will be stationed at the Royal Australian Air Force Base at Tindal, about 320 kilometres southeast of Darwin is another. At another level altogether are reports suggesting that as part of the increased collaboration, Australia is preparing to purchase or lease Virginia-class nuclear submarines from the US. The antidote to this hype is to take a Bex and have a good lie down. Dreams for the so-called American pivot towards Asia need to be based on firmer fiscal and political stuff.

The mainland Southeast Asian states, as Wade argues, are increasingly embedded in tighter developmental and economic relations with China. In all of that the US is a big player. This is no Chinese imperial plot, as the incautious readers of Wade might conclude: it’s simply the product of the weight of Chinese economic growth interacting with the growth and development ambitions of the Southeast Asian mainland states. It is no different in fact from what is occurring with Japan, Korea, Indonesia or for that matter Australia. In mainland Southeast Asia, it has been promoted with the help of the Asian Development Bank (driven more by Japanese than Chinese agendas), through the creation of a Greater Mekong Subregion linking China and mainland Southeast Asia through economic corridors, which include a Chinese high-speed rail network linking mainland Southeast Asian capitals directly to Yunnan.

Unravelling these economic-security interests from political-security postures is not as easy as it might seem to the economically untutored defence strategist. Put simply, in this theatre, Chinese maritime security interests are legitimately and fundamentally interwoven with East Asian and all our economic security interests.

The complexity is reflected in the caution of Indonesian Foreign Minister Marty Natalegawa about the Canberra declaration, lest ‘these developments were to provoke reaction and counter reaction … a vicious circle or tensions and mistrust or distrust’, even the ‘innocent’ Indonesian suggestion that China might well be invited to join joint exercises at the Australian base. At APEC earlier in November Indonesia’s President, Susilo Bambang Yudhoyono, observed that, while he welcomed America’s regional presence, it was no longer desirable for the region to be dominated by a sole superpower. ‘New power centres are growing rapidly and power relationships are changing and becoming fluid’, he said, calling for what he called a ‘dynamic equilibrium’.

Therein lies the crux of it. Playing one hand into ‘Offshore Asia’ security might be a reasonable first move. But it is certainly not a viable long-term security strategy. Whether that hand will serve the preservation of peace or contribute to future tensions in East Asia will assuredly depend also on whether another hand can be extended to China, one that provides reassurance of its role and interests in regional security.

Peter Drysdale is the Editor of the East Asia Forum.

1. The emergence of ‘Offshore Asia’ as a security concept
2. Southeast Asia: Patterns of security cooperation
3. ASEAN divides

The conflict between Cambodia and Thailand has made headlines around the world over the past few years.

The latest dispute was precipitated by Thailand’s failed effort to block Cambodia from unilaterally nominating Preah Vihear Temple — an ancient Khmer temple located within a disputed border area — as a World Heritage site.

But this latest dispute is the result of much broader tensions between the two neighbours, rooted in an historical legacy of hostility and mistrust. It is also the result of divergent constructions of history by today’s Cambodian and Thai elites, each of which has tried to promote a sense of national identity based on the concepts of defined territorial sovereignty, a glorified past, and cultural and ethnic superiority. And given half the chance, Cambodian and Thai politicians retreat back into this narrative rallying people around the idea of territorial defence — or ancient temples — to provoke nationalist sentiment and marshal popular support.

There have been several phases to the conflict. From 2008 to mid-2011, relations between the two neighbours deteriorated greatly. Both countries recalled their respective ambassadors; Cambodian and Thai leaders engaged in harsh verbal attacks; people were arrested and accused of spying; the Thai government revoked the 2000 Memorandum of Understanding after Cambodia appointed former Thai prime minister Thaksin Shinawatra as an economic advisor to Cambodian Prime Minister Hun Sen; the Thai Deputy Prime Minister, Suthep Thaugsuban, threatened to close the Cambodian-Thai border; and both countries reinforced their military presence in contested border areas. This led to a major outbreak of fighting, most seriously over several days in February and April 2011, causing many casualties, destroying houses, and sending tens of thousands of people living near the combat zones into evacuation centres.

The border dispute escalated as Thailand’s domestic politics became increasingly polarised between those who supported Thaksin (the red shirts) and those who opposed him (the yellow shirts, who are also supported by the Democrats, the military and the palace). After UNESCO endorsed Preah Vihear Temple as a World Heritage Site under the sole management of Cambodia in 2008, the yellow shirts, unhappy with the decision, launched protests in Bangkok and in the border province of Sisaket. Three protesters also gained access to Preah Vihear Temple and subsequently refused to leave, at which point Thailand stationed troops in the temple’s surrounding area — under the pretext of ensuring the protesters’ safety.

The Cambodian and Thai governments held meetings at different levels in an effort to reduce the tension, but these attempts failed. Prime Minister Hun Sen also sought assistance from ASEAN before proceeding to the UN Security Council in February 2011 when the situation degenerated further. In its decision, the Security Council allowed Indonesia, as chair of ASEAN, to mediate the dispute. Consequently, Indonesia was expected to send 30 unarmed observers to the disputed border area. While both governments agreed to the plan, the Thai military defiantly opposed any such deployment, claiming it could threaten Thai security. Hence, on 28 April 2011, as the fighting escalated once more, Cambodia’s government filed an application with the International Court of Justice (ICJ) to have the international judicial body interpret its decision of 15 June 1962 about the ownership of Preah Vihear Temple and the land surrounding it. While the judges deliberated, Cambodia also asked the ICJ to order the withdrawal of Thai troops and an end to all military activity in the temple’s vicinity. The ICJ issued its decision on 18 July 2011, ordering both countries to withdraw troops immediately from the temple and the contested surrounding areas. The ICJ’s decision included a map which flagged a provisional demilitarised zone. The court asked both sides to cooperate with ASEAN, in particular by allowing Indonesian observers into the demilitarised zone.

Relations between the two countries have improved significantly since Yingluck Shinawatra — Thaksin’s sister — and her Pheu Thai Party won the July 2011 elections. Yingluck and her foreign and defence ministers made various trips to Phnom Penh in September, and leaders from both countries have promised to allow observers into the demilitarised zone and to honour the ICJ’s ruling. The Regional Border Committee meeting, chaired by commanders from Thailand’s Second Army Region and Cambodia’s Fourth Army Region, resumed on 23–24 August 2011 in Thailand’s Nakhon Ratchasima Province. The General Border Committee meeting, chaired by defence ministers from both countries, has been delayed by the flood crisis in Thailand.

The general tone of relations between Cambodia and Thailand is improving. But the underlying roots of the conflict continue to threaten neighbourly ties, and have not yet been addressed. The historical legacy of hostility, different constructions of history, and the coupling of domestic politics with the defence of sovereignty, territory and ancient temples all need to be dealt with. Otherwise, the potential for future conflict remains.

Kimly Ngoun recently completed a Masters degree in Southeast Asian studies at Chulalongkorn University, Bangkok, and is currently a PhD student in political science at ANU. 

This article appeared in the most recent edition of the East Asia Forum Quarterly, ‘Where is Thailand Headed?‘

1. Thai-Cambodian conflict: an obstacle to the ASEAN Community 2015?
2. ASEAN and the Cambodia-Thailand Conflict
3. Domestic determinants of the Thai–Cambodian dispute

After the death of Kim Jong-il in December, Kim Jong-un has officially become the supreme leader of North Korea and the supreme commander of the Korean People’s Army.

This is in addition to his position as the Vice Chairman of the Central Military Commission of the Korean Workers’ Party, which was announced in September 2010. These appointments demonstrate that the succession system, with Kim Jong-un as the core person, has been stabilised.

Currently, there are three major powers that are adjuvant to the Kim Jong-un regime in North Korea.

First is the Kim family system, which is now headed by Kim Jong-un’s uncle, Jang Sung-taek, and aunt, Kim Kyong-hui. Jang serves as the Vice Chairman of the National Defence Commission, and as a Chief Minister of the Party Central Committee. Together they control the major power of the Korean Workers’ Party, the government and the military — and have established a broad political power base within the Korean government and military systems.

Second are the old-guard politicians. They could be represented by Kim Yong-nam, the chairman of the Supreme People’s Assembly Committee. They have been trusted by the three generations of leaders (Kim Il-sung, Kim Jong-il and Kim Jong-un), and they also have high national prestige. They will continue to support the Kim Jong-un regime.

Third are the military forces, which could be represented by the chief of staff, Ri Yong-ho, and the Minister of the People’s Armed Forces, Kim Yong-chun. They have all shown loyalty to the Kim Jong-un regime. After the death of Kim Jong-il, Kim Jong-un publicly issued his ‘first orders’ as supreme commander, proving his actual control over the army.

The support of the above three powers will help guarantee the smooth transition of power to the Kim Jong-un regime.

However, Kim Jong-un still faces a series of challenges.

First, Kim Jong-un has to build his own team. This will potentially enable a group of young politicians to enter the power centre. But this will also conflict with the old political system.

Second, the Kim Jong-un regime will initially continue the ‘military-first’ politics of the Kim Jong-il regime. Yet, once the Kim Jong-un regime gains stability, it will have to face up to economic development pressures, improving people’s livelihoods and opening up foreign economic cooperation, which may force the regime to modify the ‘military-first politics’ line, and weaken the military’s power. This will inevitably lead to a backlash and challenges from the armed forces.

Third, after the Kim Jong-un regime fully consolidates its grip on power, it might adjust the power structure of the Korean government and military. That is, the Kim Jong-un regime may strengthen the core of the Korean Workers’ Party’s leadership system and shift emphasis to the political path of the ‘party leader’ in order to gradually replace the ‘military-first’ politics. Therefore, if Kim Jong-un takes on the position of chairman of the Korean Workers’ Party Central Military Commission, there is a possibility that he will manoeuvre to replace the powers of the National Defence Commission with the Central Military Commission. He also might not install anybody as chairman of the National Defence Commission.

However, the current situation in North Korea will not necessarily trigger significant changes. After all, Kim Jong-un suffers from a lack of experience in governance, military leadership and political power. If Kim Jong-un attempts to make changes too quickly, to further the implementation of domestic and foreign policy adjustment — such as restructuring North Korea’s military and political power system and shifting from the ‘military-first’ politics to a ‘party leader’ political line — he will inevitably invite conflict or power struggle into the restructuring process.

With regard to the role of outside powers, China and US share common strategic interests in avoiding chaos and maintaining peace and stability on the Korean Peninsula. After the death of Kim Jong-il, ROK-US summit telephone talks declared that the US has no intention to interfere in the succession process. This indicates that the US will not put pressure on North Korea to promote its collapse and hopes to avoid conflict on the peninsula and to achieve peace and stability.

The US Assistant Secretary of State for East Asian and Pacific Affairs, Kurt Campbell, visited China recently in order to further exchange views with China concerning the situation in the DPRK and to coordinate policies toward North Korea. China’s strategy has been to maintain peace and stability on the peninsula, and to build a harmonious and stable strategic environment in Northeast Asia conducive to national development. Kim’s death has not changed the basic strategy of China toward the Korean Peninsula. The main basis of China’s Korean Peninsula policy is to comprehensively strengthen and support Kim Jong-un’s new North Korean regime. The main purpose of the US’ ‘return to Asia’ strategy is to strengthen its strategic influence in the Asia Pacific region, including the Korean Peninsula. It also includes preventing military provocation or possible war in the East Asia region through the strengthening of US-ROK, US-Japan and US-Australia military alliances, both bilaterally and multilaterally.

Therefore, China and the US have common strategic interests on the Korean Peninsula issue. They do not want chaos in the North Korean situation, the collapse of the regime, or a large-scale military conflict between the North and South. In resolving the North Korean nuclear crisis, the missile crisis and other issues, there is a wide range of cooperative space that China and the US can utilise. The two parties should strengthen their strategic coordination and communication with the DPRK in order to cope with any future crises and deal with the current challenges concerning the Korean Peninsula, and act to safeguard the peace and stability of the Korean Peninsula.

Wei Zhijiang is Professor and Director of the Institute of South Korea Studies at the School of Asia-Pacific Studies, Sun Yat-sen University.

1. Kim Jong-il’s visit to China: What should we expect?
2. Kim Jong-il dead: apocalypse now or a new dawn?
3. Death of Kim Jong-il: the rise of the Party