• China
    Friday Asia Update: Top Five Stories for the Week of February 13, 2015
    Ashlyn Anderson, Lauren Dickey, Darcie Draudt, William Piekos, Ariella Rotenberg, and Sharone Tobias look at the top stories in Asia today. 1. After nearly a year of president’s rule, the Aam Aadmi Party (AAP) sweeps to power in Delhi state elections. The AAP won sixty-seven out of the seventy legislative seats in the Delhi assembly, a stunning victory that surprised many. The party was founded by Arvind Kejriwal in 2012 and grew out of a protest movement against corruption; it made its debut in the December 2013 Delhi elections when it joined with the Congress party to form the Delhi government—with Kejriwal serving as chief minister. Kejriwal resigned after only forty-nine days due to a lack of support for an anti-corruption bill, even after staging sit-ins and protests in Delhi. He will be sworn in as chief minister of Delhi for the second time on Saturday, ending almost a year of president’s rule. With AAP’s historic win, many are left wondering what this means for the Bharatiya Janata Party (BJP), which holds the majority in India’s national parliament but only won three seats in the Delhi elections. 2. Malaysian court rejects opposition leader’s appeal. Anwar Ibrahim, the charismatic leader of Malaysia’s opposition, will serve a five-year prison sentence for sodomy after his final appeal to the Federal Court was rejected. He was acquitted in January 2012, but the acquittal was overturned in March 2014 after a government appeal. This will be Anwar’s second stint in jail for a sodomy conviction (the first conviction, in 2000, was overturned in 2004). Anwar, at age sixty-seven, will be stripped of his parliamentary seat and banned from running for office for five years after his release, effectively ending his political career. Many analysts see the conviction as politically motivated, as Anwar was the linchpin of an ideologically varied opposition that won the popular vote in 2013 general elections (but failed to gain a majority in parliament). 3. United States files World Trade Organization (WTO) case against China. U.S. Trade Representative Michael Froman announced that the Obama administration was filing a broad case at the WTO, accusing China of providing illegal export subsidies for seven industries ranging from textiles to seafood. The request for formal talks at the WTO focuses on a Chinese program that allows local officials to subsidize smaller exporters through “common service platforms” at nearly 200 “demonstration bases,” or special government-supported industrial clusters. While difficult to quantify the amount of subsidies involved, the WTO case alleges China provided around one billion dollars over three years to suppliers offering discounted or free services to Chinese companies through the common service platforms, thereby undermining fair competition. The Chinese Commerce Ministry has “expressed regret” over the Obama administration’s decision to elevate the case to the WTO, defending its policies as “part of the transformation and upgrade of [Chinese] foreign trade.” 4. Tony Abbott survives recall vote. Lawmakers in Australian Prime Minister Tony Abbott’s Liberal Party voted against a “spill motion," effectively a no-confidence vote, to oust the prime minister and the foreign minister. Abbott said that the “matter is behind us,” and vowed to focus on job, families, and the economy. The vote was initiated because of growing dissatisfaction with the prime minister; the governing party had trouble getting any major initiatives from last year’s budget passed through the senate, and Kate Carnell, the head of the Australian Chamber of Commerce and Industry, said that business confidence had fallen in the country. The opposition Labor Party had twice gotten rid of leaders when in power before losing an election in September 2013, a fate that Abbott has said he wants to avoid. 5. Chinese billionaire given death penalty. Chinese mining tycoon Liu Han was executed this week on orders from the High People’s Court in the central province of Hubei. Liu had been sentenced to death last May for charges of organized crime, gang activity, and murder, “the largest prosecution of a criminal gang by mainland authorities in recent memory.” As chairman of the Hanlong Group, a congolomerate of real estate, mining, and energy businesses, Liu had assets close to $6.4 billion at the time of his arrest. Investigators have linked Liu to the son of Zhou Yongkang, China’s former security chief, whose arrest was one of the highest profile since President Xi Jinping began his effort to root out graft and corruption at all levels of government. BONUS: Japan opens robot-run hotel. The Henn-na Hotel, set open this July in Nagasaki, will be staffed by ten humanoid robots that speak Japanese, Korean, Chinese, and English, and will serve as receptionists, porters, and housekeepers. The seventy-two-room hotel will also feature face recognition technology on doors rather than room keys. The hotel will employ some human staff, but the owning company Huis Ten Bosch’s president aims to have 90 percent of hotel services operated by robots in the future.
  • Australia
    Tony Abbott Lives for Another Day – Now What?
    Important: The views expressed on this blog are my own. The Council on Foreign Relations takes no positions on matters of policy or politics.  Just before New Year’s, I predicted that Australian Prime Minister Tony Abbott would potentially be ousted in 2015 in an internal party battle. Abbott’s leadership in 2014 had been atrocious – he often looked confused or outright deceitful when discussing policy questions. His treasurer, Joe Hockey, seemed staggeringly unconcerned about the major challenges facing Australia’s economy as China’s economy cools and the Australian real estate market returns to earth. Some policy commentators dismissed my predictions, but Abbott just faced down a potential leadership challenge, defeating a motion for leadership challenge ("spill motion") by a 61-to-39 vote even though there was no other candidate declared in the party for prime minister. Abbott defended his policies effectively this week – he is a tough debater – but he is hardly safe. Having (for now) quashed the dissenters in his coalition, he has asked his coalition to give him six months to “reset” his policies and his political style. What will the revolt mean for Abbott as prime minister, and for the direction of his policymaking? Without a doubt, one of the key messages Abbott must take away is that he has to communicate better, both with his own coalition and with the Australian public, if he intends to hold onto his job. Abbott reportedly vowed to members of his coalition to operate in a more consultative way, and we are likely to see Abbott make a similar attempt to be a better listener with the public in general. Abbott also simply will need to gain a better command of the details of policy if he is to avoid another leadership challenge. He needs to drastically revamp his senior staff. He also probably needs to make at least one major sacrifice among the top ministerial positions, such as treasurer. Abbott also may modify some of his more conservative positions that appear to have alienated a swath of the public, including even some supporters of his coalition. Abbott’s social conservatism and staunch monarchism do not go down well even with many conservative Australians. The fact that Abbott did not emphasize monarchism and social issues in his winning electoral campaign, but then focused on these areas once in office, also has proven alienating to many Australians. Meanwhile, Abbott’s position on climate change, though popular with conservatives, is out of step with the majority of the country (let alone with the rest of the world) and is out of step even with more moderate ministers in his government like Malcolm Turnbull. To be honest, though, I do not think Abbott will avoid another challenge to his job. A poll taken this week showed Abbott with a record low approval rating from the Australian public, and also revealed that voters would prefer other coalition leaders, like Turnbull or Foreign Minister Julie Bishop, as prime minister. And even though he survived for now, the win was no great triumph. “No matter how it is sliced and diced though, this [party room vote] was a pretty miserable outcome for Abbott,” wrote Mark Kenny, a political columnist for the Sydney Morning Herald; a significant percentage of Abbott’s backbenchers wanted to get rid of him, even though no other candidate had declared himself or herself for the PM job. And in Australian politics, one challenge, even if defeated, tends to be the equivalent of blood in the water for sharks – commentators and other politicians circle the bloodied leader even more, waiting for another opportunity to pounce. It’s hard to imagine Abbott, who built his reputation as a certain kind of blunt, conservative, monarchist leader, drastically shifting how he operates or actually changing his policy positions on social issues or climate change. His putative opponents within the coalition, like Communications Minister Turnbull, simply will wait for the gaffe-prone prime minister’s next major slip-up. According to the West Australian, “A minister who did not support yesterday’s leadership spill motion offered a brutal assessment: ‘Abbott will last as long as his next big mistake.’”  
  • Australia
    Tony Abbott Has To Go
    Important: The views expressed on this blog are my own. The Council on Foreign Relations takes no positions on matters of policy or politics.  Is Australian Prime Minister Tony Abbott the most incompetent leader of any industrialized democracy? Of course, a leader’s popularity, to some, depends on that leader’s political orientation. Many conservative Republicans think Barack Obama is one of the worst presidents in modern history, while many liberal Spaniards think conservative Prime Minister Mariano Rajoy is one of the worst leaders in Spain’s modern history. But competence and popularity are not necessarily the same things. Even conservative Republicans would admit that Obama has achieved major accomplishments in office – they just do not like those accomplishments at all. And Obama, Rajoy, and other rich world leaders, whatever their problems, usually seem to be making their policy decisions based on advice from a retinue of advisors and after careful consideration of policy options. Even leaders criticized for acting too slowly, and offering uninspired policy ideas, like French President Francois Hollande, appear to be capable of running their countries’ day-to-day policymaking. There are world leaders who appear dangerously unhinged, making policy based on whims, advice from a tiny handful of advisers, or some other highly unscientific formula. Argentina’s president, Christina Fernandez de Kirchner, comes to mind, as does Ecuador President Rafael Correa, North Korea’s Kim Jong-un, or Russia’s Vladimir Putin. But none of these leaders run a rich and powerful democracy. Tony Abbott, however, is in charge of a regional power, a country that is the twelfth largest economy in the world and the only rich world nation to have survived the 2008-9 financial crisis unscathed. Yet in less than two years as prime minister, Abbott has proven shockingly incompetent, which is why other leaders within his ruling coalition, following a set of defeats in state elections, may now scheme to unseat him. They should: Abbott has proven so incapable of clear policy thinking, so unwilling to consult with even his own ministers and advisers, and so poor at communicating that he has to go. Abbott’s policies have been all over the map, and the lack of coherence has often made the prime minister seem ill-informed and incapable of understanding complex policy issues. In press conferences, Abbott has offered mixed public messages about some of the health care reforms that were at the center of his agenda, and sometimes has seemed unsure himself of what health legislation has actually been passed on his watch. He also has seemed unsure of what he promised in the past regarding Australia’s major public broadcaster – he promised not to touch it – before he went ahead and made cuts to it. He also looked completely baffled on climate change issues at the G20 summit in Australia last year. Abbott also does not seem to think it necessary to even discuss policy proposals with his top ministers and other leading members of his conservative coalition. His lack of consultation has made it harder for him to pass some critical legislation. In addition, he appears to have one of the worst senses of public relations of any prime minister in recent Australian history. At major economic summits, he has embarrassed Australia with his coarse rhetoric. He recently decided to give an Australian knighthood to Prince Philip, husband of British Queen Elizabeth II, even though nearly half of Australians would prefer the country to be a republic, and even those who support the monarchy disdain actions that look like Canberra sucking up to the British royals. Australia had not given out its own knighthoods for nearly decades, and even to many monarchists the very idea of Australian knighthoods seemed archaic. And if Abbott was going to give out archaic knighthoods, Prince Philip was a bizarre choice. Even among the conservative supporters of Abbot’s coalition, giving a knighthood to the notoriously gaffe-prone and fusty Prince Philip went down badly. Abbott did not appear to have consulted with most of his top ministers before deciding to give Prince Philip the accolade. I take no position on whether a left or right coalition can govern Australia better – whether Australia needs a revolt from within the ruling coalition or a national election victory by the left. But a country that for decades has punched above its weight on nearly every international issue surely can do much better for a prime minister than Tony Abbott.
  • China
    Friday Asia Update: Top Five Stories for the Week of November 21, 2014
    Ashlyn Anderson, Lauren Dickey, Darcie Draudt, Andrew Hill, Will Piekos, and Sharone Tobias look at the top stories in Asia today. 1. Japan slips into recession, dissolves lower house. New economic data released Monday morning showed that Japan had lapsed into recession, striking yet another serious blow to Prime Minister Shinzo Abe’s vaunted economic recovery policy and leading some to ask if this is the end of Abenomics. In a bid to win popular mandate for his economic policies, Abe announced he would delay a planned increase to the national sales tax and dissolve the lower house of Japan’s parliament. On Friday afternoon, lawmakers in the house of representatives chanted “Banzai!” as they disbanded. Snap elections are expected to take place in mid-December, and while Abe’s ruling Liberal Democratic Party may lose a number of seats, they are overwhelmingly expected to maintain their majority and could potentially increase their power. 2.  In Hong Kong, confrontations lead to questions over the future of protests. Dozens of demonstrators, apparently frustrated with the nonviolent strategy that has guided the Hong Kong pro-democracy protests, used metal barricades to smash doors and windows of Hong Kong’s legislature in an attempt to break in. The police arrested six people for assault of police officers and criminal damage to property, and the leaders of pro-democracy and student groups joined the government in criticizing the violent demonstrators. The incident came hours after the city of Hong Kong cleared out a smaller protest camp with no resistance; thirty court bailiffs enforced an injunction against street barricades at the request of the landlords of neighboring buildings in the area called Admiralty, and a similar injunction was issued for the protest site in Mong Kok. 3. Economic growth and climate change top the agenda at G20 summit.  The 2014 Group of Twenty (G20) summit, the ninth such meeting for the G20 heads of government, was held in Brisbane last weekend. The world leaders laid out a plan comprised a plan of more than 800 measures to boost the global economy by more than $2 trillion. Climate change was also discussed at the meeting, despite Australian Prime Minister Tony Abbott’s resistance to its inclusion in the G20 summit agenda. Also of note, the heads of several member states, including the United States and Canada, threatened further sanctions against Russia if Moscow does not withdraw its troops from Ukraine. 4. Peace process in Myanmar complicated by deadly attack. A critical component of President Thein Sein’s vision of reform, the peace talks between minority groups in Myanmar and the government, have been burdened by the Myanmar army’s shelling of a rebel group’s training facilities in Kachin state near the Chinese border. At least twenty-three rebels from the Kachin Independence Army (KIA) were killed in the incident, casting doubt on the Myanmar military’s resolve for peace talks. The incident marks the deadliest attack since a ceasefire agreement broke down in 2011. The Myanmar army has claimed that the strike was only meant as a warning, but KIA has denied this assertion. 5. Xi Jinping makes official state visit to Australia and New Zealand. In the wake of Asia-Pacific Economic Cooperation (APEC) forum and G20 meetings, Chinese President Xi Jinping visited Canberra, signing a trade agreement with Australian Prime Minister Tony Abbott on Monday. The agreement gives Australia more access to Chinese capital markets, opens Chinese markets to Australian farm and service-sector exports, and eases limits on Chinese investment in resource-rich Australia. While the two sides cemented opportunities for bilateral economic cooperation, Australia failed to get a reduction in tariffs on key commodities—rice, wheat, cotton, sugar—and China was similarly unsuccessful in getting Australia to change its practice on investigating inbound foreign investment. President Xi then flew to Auckland to begin a series of official engagements showcasing the bilateral trade, economic, and cultural links between China and New Zealand. BONUS: The Hunger Games proves too threatening in China and Thailand. The release of the third installment of the franchise, “The Hunger Games: Mockingjay Part 1,” in China was postponed until January, reportedly to balance the 2014 foreign and domestic box office receipt totals. Some commentators have suggested that the move is more political, as the film depicts a dystopian world in which a revolutionary movement attempts to overthrow an authoritarian government. In Thailand, the connection between the film and revolution is much more overt—several student protesters have been detained for using a three-finger salute, a symbol of resistance in the movie. The students, in Thailand’s northeast, were protesting the May 22 military coup that removed the populist Prime Minister Thaksin Shinawatra from power.
  • China
    The Lucky Country Is About to Run out of Luck
    I don’t often write about Australia, partly because Australian politics are so stable and the country such a solid partner for the United States, but also because Australia has for twenty years basically avoided the ups and downs of the world economy. Alone among rich nations, Australia was basically unaffected by the global economic and financial crises of 2008-9 and the country also has not faced the kind of long-term economic slowdown challenges that confront Europe, the United States, and Japan. Unemployment today in Australia is around 6 percent, and earlier this year it was under 6 percent. Most forecasters project that Australia will grow by at least 3 percent in 2014, which is well above projections for most other developed economies. The prolonged boom in Australia has led many Australians, including not a few Australian leaders, to think that the prosperity can go on forever, that Australia has found a way to defy some of the challenges that have slowed other rich economies. Any visitor to Melbourne or Sydney or even Darwin, in northern Australia, can see for themselves the enormous boom in residential and commercial construction, and the skyrocketing prices for even the simplest apartments and houses. When I was in Darwin, a city of about 130,000 people, homes and apartments were going up everywhere; Darwin is the closest city to a group of large liquid natural gas processing plants piping in offshore gas. Twenty years ago, when I visited Darwin, it looked like a tiny, run-down Midwestern American suburb, with the only excitement coming from the markets on the edge of town where immigrants from Papua New Guinea and other Pacific islands sold their wares. But a series of recent commentaries and new books reminded me of what that visit to Darwin sparked in my mind – the idea that Australia’s growth, though impressive, seems a little too close to the frothy, wild, speculative growth that happened in Thailand in the 1990s and the United States in the mid-2000s. A new book by consultant and macroeconomist Lindsay David, Australia: Boom to Bust, argues that Australia’s housing market is wildly overpriced and is going to crash, and that overall Australia’s economic base is too narrow–housing, exports of natural resources to China, and (to some extent) financial services. Bloomberg View columnist William Pesek recently wrote an excellent commentary on the book.  Pesek too notes that Australia is the most dependent of any major economy on China’s growth, which is headed down as China’s economy cools and its own housing market cools. Pesek concurs that, beyond simply being too dependent on China, the Australian economy also has become far too dependent on exporting natural resources and on housing sales. He doesn’t mention another point: Natural resources are not renewable, and dependency on natural resources does little to foster innovation and entrepreneurial activity. Pesek does note that the average price of housing in Sydney as a multiple of average income–a standard metric used to see whether housing is overpriced–now stands at nine. By comparison, the price of housing in Tokyo, hardly a cheap city, as a multiple of income stands at 4.4. Meanwhile, in the past four weeks a series of major Australian companies and financial institutions also have sounded warnings about the Australian economy. Earlier this week, BHP Billiton Mitsubishi Alliance, Australia’s giant coal mining company, cut 7 percent of its work force because of declining demand for coal from China, which takes in over half of all natural resources exports from Australia. (Two decades ago, China took in only about 10 percent of Australian natural resources.) In addition, earlier this week the treasurer of Western Australia, the Australian state producing the majority of the country’s iron and coal and other resources, expressed significant worry at the declining world prices of these commodities, a decline that stems from oversupply and declining demand in China. In addition to that warning, Australia’s own central bank recently warned that the Australian economy was becoming subject to increasing speculation over housing, speculation that could overheat the economy and cause serious imbalances. These forecasts should be a warning to Australian policy-makers as well–and to Australian home buyers, builders, and the Australian population as a whole. But as Pesek notes in his commentary, when he faced down Australian federal treasurer Joe Hockey in an interview, and asked him about whether Australia faced a property bubble, he got little response. The minister dismissed concerns about the Australian economy and projected continued robust growth for the “lucky country.” “It is just an easy mantra for international commentators and for analysts based overseas to say, ‘Well, there’s a bit of a housing bubble emerging in Australia,’” Hockey told Pesek. “That is a rather lazy analysis because fundamentally we don’t have enough supply to meet demand.” Indeed, the entire government of Prime Minister Tony Abbott seems in denial about Australia’s vulnerability to any downturn in Chinese growth, and the country’s overdependence on exporting natural resources to China and overpriced housing sales for its decades-long growth. But at some point, probably quite soon, the lucky country’s luck is going to run out, and Abbott’s government will need a real response.
  • India
    Friday Asia Update: Top Five Stories for the Week of September 5, 2014
    Ashlyn Anderson, Lauren Dickey, Darcie Draudt, Andrew Hill, Will Piekos, and Sharone Tobias look at the top stories in Asia today. 1. Japan reshuffles Cabinet. Japanese prime minister Shinzo Abe reshuffled his inner circle on Wednesday, the first such move since he returned to office nearly two years ago. While key members of the previous cabinet, including Chief Cabinet Secretary Yoshihide Suga, retained their posts, notable new appointments include a new minister of defense and a newly created post of security legislation minister, as well as five new female ministers. Overall, the move seems to have some popularity with voters, who gave the new cabinet 54.9 percent and 64 percent approval ratings in polls conducted by Kyodo News and the Yomiuri Shimbun, respectively. The reshuffle seems especially favorable to female voters, with 63 percent of female respondents in the Yomiuri’s poll having a positive view of the new cabinet, representing an impressive 18 percent jump over the previous incarnation. 2. Beijing reasserts its grip on Hong Kong elections. The Standing Committee of China’s National People’s Congress issued restrictive guidelines this week for the election of Hong Kong’s next chief executive in 2017. While selection of the chief executive will shift from a 1,200-member election committee to popular vote, all presumptive nominees must first be unanimously endorsed by the committee and approved by the Chinese government, ensuring Hong Kong’s leader will meet Beijing’s approval. Critics have called Beijing’s new regulations a “fake democracy” that only gives residents an illusion of choice. Others, including the British government, “welcome” the proposal. 3. Al-Qaeda establishes fifth official branch in India. In a video released this week, al-Qaeda leader Ayman al-Zawahri announced the beginning of a new branch of the terrorist group on the Indian subcontinent. The establishment of the branch, Qaedat al-Jihad, represents al-Qaeda’s efforts to increase support among India’s 170 million Muslims, as well as Muslims in Myanmar and Bangladesh. In the video, Zawahri calls for Muslims to rally for the formation of a caliphate, asserting that the subcontinent was previously Muslim territory before the “infidel army” occupied it. Al-Qaeda is also facing intense competition for support with the Islamic State of Iraq and Syria (ISIS), which has already succeeded in recruiting a number of Indian Muslims to its cause. 4. Australia and India agree to uranium export deal. During a state visit to New Delhi, Australian prime minister Tony Abbott signed an agreement with his Indian counterpart, Narendra Modi, to allow for the export of Australian uranium to India for power generation. The deal is an appropriate marriage of interests: Australia holds over a third of uranium reserves, while India faces chronic power shortages and depends on fossil fuels for 65 percent of its power. However, some critics of the deal are concerned that the uranium could end up in nuclear weapons, as India is not a signatory of the Nuclear Non-proliferation Treaty; Abbott countered that, “India has an absolutely impeccable non-proliferation record… and India has been a model international citizen.” 5. South Korea and United States announce plans to organize combined wartime division. The division would activate during wartime and provide services such as civilian affairs operations in North Korea and seeking and removing nuclear weapons materials. During peacetime, the troops from each country will train together but live at separate bases. It will first be located in Uijeongbu, north of Seoul, until U.S Forces Korea headquarters move to Pyeongtaek in 2016, part of a long-planned relocation of U.S. forces to locations south of the Han River. The commander of the U.S. Second Infantry Division will lead the new combined division, with a South Korean brigadier general serving as deputy. Bonus: Malaysia Airlines scraps unfortunate “bucket list” ad campaign. Malaysia Airlines launched a promotion asking travelers which places were on their “bucket list”—apparently not realizing that the phrase implies making a list of things to do before you die. Malaysia Airlines is still suffering from negative perceptions after the disappearance of flight MH370 from Kuala Lumpur to Beijing in March and a missile brought down flight MH17 while flying over Ukraine in July. The contest was renamed “Win an iPad or Malaysia Airlines flight to Malaysia.”
  • China
    Friday Asia Update: The Top Five Stories for the Week of November 8, 2013
    Sharone Tobias and Will Piekos look at the top five stories in Asia this week. 1. Thailand delays debate on amnesty bill that has sparked mass protests. The Thai senate on Friday delayed debate on a bill that would grant amnesty to almost anyone facing charges arising from Thailand’s political turmoil that took place from 2004 to 2010. Opponents of the bill claim that it is an attempt to bring back former premier Thaksin Shinawatra from self-exile without serving jail time. (His sister, Yingluck Sinawatra, is currently serving as prime minister.) Thousands have taken to the streets in protest of the bill, some wearing yellow shirts to signify their opposition to the former premier, and others wearing red shirts as a call for justice for their comrades who were killed in a crackdown of 2010 political protests. 2. Blasts in Taiyuan, China, kill one and injure eight. Several home-made bombs went off near government buildings in the northern city of Taiyuan early Wednesday morning. According to the Global Times, police detained a 41-year-old ex-convict who wanted to “take revenge on society” and confessed to the details of the crime. The incident comes a week after a car crash and explosion killed five and injured forty in Tiananmen Square. At the same time, the Chinese government condemned an opinion piece in the Wall Street Journal entitled “China’s Desperate ‘Terrorists’,” because it insinuated that human rights abuses in Xinjiang province caused the recent violence. 3. Typhoon Haiyan batters the Philippines. Typhoon Haiyan, one of the strongest typhoons ever recorded, hit the central Philippines on Friday and is expected to hit Vietnam over the weekend. The Philippines News Agency cited unconfirmed reports that roughly twenty people drowned after the storm surge, and close to 720,000 were evacuated from the typhoon’s path. Thanks to evacuations and preparations that included emergency housing for those displaced, as well as less violent winds than previously forecast, the impact of the typhoon was not as severe as expected. 4. China’s Third Plenum starts on Saturday to much fanfare. The third plenary session of the Eighteenth Party Congress begins tomorrow, November 9, and will last until November 12; the meeting will lay out President Xi Jinping’s economic plan for the next decade. Anticipation over the meeting and its outcome has reached a fever pitch, with analysts predicting a wide range of reforms to be announced. As important as they are, though, CFR’s Elizabeth Economy argues that China needs to foster the appropriate policy environment for these reforms to flourish; it will be a few years, not a few days, before we know the real impact of this weekend’s meetings. 5. Indonesia will not take in rescued asylum seekers. Indonesian coordinating minister for security and political affairs, Djoko Suyanto, said that his government will not accept Australia’s call to take in a boat with over fifty asylum seekers. The two countries have engaged in what some have called a "mid-ocean standoff" since the boat made a distress call on Thursday. Some Australians have complained that their government has not released enough information about the event and left citizens in the dark as to what was taking place. Bonus: Jimmy Kimmel’s China "joke" reaches the White House. A petition condemning a tasteless segment by Jimmy Kimmel—host of ABC’s “Jimmy Kimmel Live!”—has reached the White House and will require a response after it received 100,000 signatures within a thirty-day period. On October 16, in response to a question about how to resolve the United States’ trade imbalance with China, a child concluded his answer “Kill everyone in China”; Kimmel proceeds to let the kids debate the merits of doing so. Kimmel has been compared to Hitler for airing the segment, and protesters have picketed outside ABC’s studios.
  • Australia
    A Conversation with Kevin Rudd
    Play
    Join Kevin Rudd as he discusses China's new leadership and its implications for the United States, the West, and the rest. Read his recent Foreign Affairs article Beyond the Pivot: A New Road Map for U.S.-Chinese Relations.
  • Australia
    A Conversation with Kevin Rudd
    Play
    Kevin Rudd, who returned as Australia's prime minister, reviewed U.S. interests in Asia with CFR back in April.
  • Asia
    Next Steps on Clean Energy Trade
    Earlier this week, at a meeting in Russia, the leaders of APEC (Asia Pacific Economic Cooperation) agreed to reduce tariffs on fifty-four different types of environmentally friendly goods.  The countries, which include the United States and China, agreed to specific maximum tariffs and to a deadline for the changes. This is great news. The World Bank has estimated that eliminating barriers to trade in clean energy technologies could boost that trade by fourteen percent.  And as my colleagues and I argued in an in-depth study two years ago, cross-border trade and investment is essential to accelerating not only deployment but also innovation in clean energy. The big question now is what ought to come next. There are three directions – not mutually exclusive – that the United States and others ought to be looking at. Broaden the Scope The APEC countries make up roughly half of the global economy. That makes the announcement important. Extending it to the other half of the world would be a great next step. Bringing in India, Europe, and Brazil, all economic, energy, and (unfortunately) emissions powerhouses would be particularly valuable. This sort of effort could be pursued through the G-20, which includes many APEC members and many of those who were not part of the new announcement. It could also be pursued through the global climate negotiations, though I suspect that might become a technical mess. Other countries could also take the APEC lead and unilaterally reduce tariffs accordingly. The scope could also be broadened to a host of critical clean energy technologies that are not included. Fifty-four types of goods may sound like a lot, but the specifications are narrow, which means that the total is a bit less than one might expect. Liberalized trade in bamboo flooring may be progress but it isn’t going to do anything about climate change. Deepen the Measures The APEC agreement targets tariff barriers – explicit levies on imported products. Many of the biggest barriers to trade and investment, though, are so-called non-tariff barriers (NTBs). These include things like local content requirements that require projects to use local equipment. (Such requirements can effectively function like infinitely high tariffs.) They can also include complex regulations, particularly in the name of quality control, that effectively shut out foreign operators. Extending the APEC measures to appears to be on the agenda for future discussion. Negotiations will not be easy, but the payoff could be big. Stiffen the Rules The commitments made at APEC are important, but there are no penalities to those who do not follow through. For years, the World Trade Organization (WTO) has been engaged in negotiations aimed at lowering barriers to trade in environmental goods and services, all of which would be binding. With the Doha round stalled, the environmental agenda hasn’t gone anywhere, but if negotiations can be unblocked, there’s a big opportunity for gains on clean energy. Working through the WTO would also provide a big opportunity to broaden the scope of the APEC effort.
  • Europe and Eurasia
    Why You Need American Dollars to Mint Australian Ones
    All countries with central banks exercise monetary sovereignty, right?  Nobel economist Paul Krugman certainly thinks so.  “Wow,” he wrote, after reading Benn Steil and Manuel Hinds say otherwise in the Financial Times on May 24, “Have these guys ever talked to anyone in Sweden, which doesn’t need euros to create more kronor?” Fortunately, we have the data, which is better than talk.  Since Mr. Krugman throws Australia into the mix, we will too.  As the figures above illustrate, when the Swedish and Australian central banks expanded credit dramatically during the recent financial crisis their net foreign assets plummeted.  And this is not merely a crisis effect, as the three decades of Australian data show. So it turns out that you do indeed need euros and (American) dollars to create kronor and Australian dollars.  A country that plows on creating credit without them eventually becomes a ward of the IMF. Steil and Hinds: Keynesians are complacent about the dollar Steil: Hayek and the Dangers of Monetary Nationalism Steil and Hinds: Money, Markets, and Sovereignty Hinds: Playing Monopoly with the Devil
  • Elections and Voting
    Gyngell: East Asia Worries about 2008 Democrats’ Trade Rhetoric
    Allan Gyngell, a former Australian diplomat, says there is concern in Australia and East Asia that the next U.S. president might retreat from the United States’ support for free trade.
  • Australia
    Australia’s Security Role in the Pacific
    Australia is assuming a more prominent role in Pacific Rim security affairs, increasingly deploying forces to troubled states in the region in an attempt to stabilize them. While its moves are welcomed by some of its neighbors, others are wary of Canberra’s strong military and its close relationship with Washington.