Author: Peter Drysdale, Editor, East Asia Forum

One of the more momentous changes in Asia that heralded in the New Year was the sudden death of North Korean leader, Kim Jong-il, and the succession by his son, Kim Jong-un.

Kim Jong-il’s death had long been seen by some outside observers as portent for the collapse of the North Korean regime and the announcement encouraged much comment that reflected these forebodings, including calls for calm from political leaders who should have been in the know. Read more…

Author: Peter Drysdale, ANU

Through 2005 to 2007, diplomatic flirtation with the idea that a new quadrilateral alliance in Asia and the Pacific centred on India’s anchor role, with the United States, Japan and Australia, in a soft, ‘values-based’ containment initiative (Quad Initiative) directed at its strategic encirclement of China blossomed briefly and faded from public view.

As Sourabh Gupta reminds us in his thoughtful essay reviewing the state of the China-India relationship this week, in the northern summer of 2007, joint naval exercises conducted ostentatiously in the Bay of Bengal by the four Quad powers plus Singapore, allegedly under NATO operational procedures and with facilitated access (for India) to the American military satellite system, added to irritation in the relationship between Asia’s two great emerging powers. Read more…

Author: Peter Drysdale, ANU

China’s economy is still on a high growth roll. In the third quarter of this year, the economy grew at 9.6 per cent compared with the same quarter the year before. This represented a modest slowdown compared with the 10.3 per cent growth recorded in the previous quarter. According to some estimations, the seasonally adjusted growth rate in the third quarter did not fall but actually increased quite sharply over the last six months. Whatever the case, China still appears the bull element in the world economy and its strong growth is especially good news for the economies of East Asia, including Australia, where it has buoyed external demand throughout the region.

But there are now worrying signs of overheating in the Chinese economy not only in real estate but also reflected in the upward pressure on the prices basic goods and services. Read more…

Author: Peter Drysdale

This week Kyung-tae Lee urges that regional leaders stop the talking and get on with establishing an East Asian Community (EAC). While doing so might be a little more complicated than it sounds, it does appear that the momentum is gathering to take the next steps in the evolution of Asian and Pacific regional architecture.

On Wednesday in Tokyo at a high-powered Japanese Ministry of Foreign Affairs sponsored meeting, Japanese Prime Minister, Yukio Hatoyama, spoke of his determination to re-position Japanese policy towards open and strategic engagement in building an EAC. Read more…

Author: Peter Drysdale

Could it be that domestic pressures in the DPRK — in consequence of a costly stumble backwards along the tortuous North Korea road to economic reform — and coordinated negotiating pressure from the other parties to the six-party talks are opening the opportunity for progress towards a settlement with North Korea? Some are now arguing that the time to move forward again may have come. And a number of analysts are now focused on the retreat on retrogressive economic policies and the prospect of a North Korean leadership visit to China as signs that a moment of decision may be bearing down on Pyongyang. It is difficult to know what all this means, as Scott Snyder suggests.

We have gathered the best of the latest analysis to try to get a handle on what’s been going on and what it might mean. Read more…

Author: Peter Drsydale

The flurry of leaders’ visits — by Indonesia’s President Susilo Bambang Yudhoyono to Canberra this week and American President Barack Obama to Canberra and Jakarta a little over a week later — signals an elevation in the triangular relationship between the United States, Indonesia and Australia, not merely the growing depth of their bilateral relations. Indonesia is one of the world’s newest democracies, a secular state with a predominantly Muslim population, of immense importance to Australia and America in securing Southeast Asian stability and openness. Indonesia and Australia are members of the new G20 group and have deep and common interests in working with America to entrench the G20 as the pre-eminent and enduring forum for global economic governance. Indonesia, with its pivotal role in ASEAN, and Australia, an anchor in trans-Pacific security, are close confidants on America’s re-engagement with Asia under the Obama administration.

American conceptions of security in Asia and the Pacific do not routinely comprehend Southeast Asia. Read more…

Author: Peter Drysdale

The global financial crisis has brought with it big changes in the international economic system. The response to the crisis has seen the emergence of the G20 as the main locus of international economic governance and a cession of authority from America and the old industrial powers (the G7 economies) to the emerging powers in Asia and elsewhere. The role of the US dollar as the world’s primary international currency is also under question, as the growth of US deficits that are necessary to sustain that role has begun to corrode confidence in the value of the dollar.

As the big new kid on the block, China plays into everyone’s thinking about what to do next. Read more…

Author: Peter Drysdale

Next month Mr Obama will visit Australia for the first time as President of the United States. His schedule is still shrouded in secrecy but he is scheduled to address both houses of the Australian parliament in Canberra, following the precedents set by his predecessor, George W Bush, and President Hu Jintao of China. By any yardstick, this is among the most important events in Australia’s diplomatic calendar. Though the going might be a little rough for him at home right now, Obama is bound to be welcomed very warmly in this country.

But what is at stake on the visit? This week Hugh White reviews Australia’s relationship with America over the past few Presidents and Australian prime ministers and nails what he believes is the central question that the President and Australian Prime Minister Rudd must deal with. Read more…

Author: Peter Drysdale

From what one can judge from commentary of serious Chinese analysts, there is a sense of genuine optimism about the state of the Sino-American relationship. In his essay for EAF Quarterly, Jin Canrong, Professor of International Studies at Renmin University in Beijing, sets out why there may indeed be ‘Reason for Optimism in Sino-American Relations’.

In his assessment, the Obama visit at the end of last year was a significant success. Its success reflects at least two things. 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…

Last week Japan Airlines went into receivership. JAL is the stately matron of Asian flag carriers so while its struggles with high costs and overheads were familiar news to the heavily business-class patrons of the old dear, it came as a shock to most of us who had loyally racked up JAL Mileage Bank points over the years – even if they did evaporate if you did not use them rather quickly!

JAL may be a leader of sorts – a prototypical example of what’s wrong with the major established international airlines today – but what’s wrong with JAL is not untypical with the challenges facing a bunch of the majors all over the world. British Airways is in trouble and other European majors have already succumbed. As Christopher Findlay explains in this week’s lead, the international system of air transport regulation might have tried to suppress the highly competitive forces that have been shaping huge adjustments in the business, but that was a loser’s game. Read more…

Author: Peter Drysdale

A few months back, distinguished Chinese economist Yu Yongding, of the Institute of World Economics and Politics at CASS in Beijing, delivered the annual Richard Snape Lecture to the Australian Productivity Commission.

This week’s essay is a digest of the lecture in which he provided a challenging critique of important elements of Chinese economic policy strategy in response to the global financial crisis. Yu’s argument is not only about how China should be handling the impact of the global financial crisis. It raises more fundamental questions about the structure of the Chinese growth model and whether it is doomed to fall over in a heap unless there are deep structural reforms in the economy. Yu’s lecture was engaging and, especially for an Australian audience whose economy is hitched so closely to China’s growth performance, a little disconcerting. It was illustrated by powerful images of eight lane highways going to nowhere absent of traffic, indulgent local government offices and other developments unrelated to unmet human need.
Read more…

Author: Peter Drysdale

The global financial crisis has seen China’s star shining ever more brightly in the international economic firmament. But with heightened concerns about inflation and moves to rein in the loose monetary policy which, together with a massive fiscal stimulus, had seen growth in China surge through 2009, will all that change?

As Yiping Huang cautioned last week, worries about the housing market and signs of an asset bubble were likely to encourage the Chinese monetary authorities to go into reverse, having recently removed preferential treatment for housing investment. India is the other emerging economy that has sailed fairly smoothly through the global financial crisis, with a 7.9 per cent growth rate in the third quarter of 2009. Read more…

Author: Peter Drysdale

The Chinese economy is leading the rest of the East Asian, if not the world, economy out of the global financial crisis. The strong performance of Australia and Korea through the crisis, and the recent signs of recovery from the sharpest drop in Japan’s GDP for over half a century, all owe something to how well China has come through the crisis.

In this week’s lead, Yiping Huang chances his arm on what the fortunes of the Chinese economy might be over the coming year. Like Huang, a number of analysts of the Chinese economy who have contributed to the commentary on this site over the past year and a half, foretold the rapid rebound. There were two main reasons for this. The first, which Huang cites, was the Chinese government’s ability to mobilise resources from a strong fiscal base and direct them to a massive stimulus program. Read more…

Author: Peter Drysdale

The Obama administration brought high expectations in Asia of a new era in America relations with Asia and for America’s global standing. Obama’s victory was a triumph of hope in America’s future and hope for America’s positive role in world affairs. Much has changed through 2009, with Secretary of State, Clinton’s historic inaugural visit to Asia (not to Europe) and Obama’s trip to Japan, APEC in Singapore, China and Korea in November. Clinton’s signing of the ASEAN Treaty of Amity and Cooperation set the stage for Obama’s dialogue with ASEAN leaders around the APEC Summit and a new direction in American engagement in the region. But through the year the reality had set in. The lukewarm press on Obama’s Asian trip back home was less a product of what the President had achieved on his travels and what markers he had laid down for the future of America’s Asian engagements than it was a measure of how the Obama administration was travelling at home.

This week Wendy Dobson, in her review of America’s Asian initiatives, reminds us what difficult a job the Obama administration still faces at home in managing the exit from the global financial crisis. Read more…