Asia Daily: December 9, 2024
China vows to ramp up policy stimulus to spur growth in 2025. China will adopt an "appropriately loose" monetary policy for the first time since 2010 and a more proactive fiscal approach in 2025 to boost economic growth, according to the Politburo. The policy shift emphasizes counter-cyclical adjustments, expanding domestic demand, and stabilizing housing and stock markets. The announcement follows a challenging economic year and comes ahead of this week’s Central Economic Work Conference. Economists predict strong fiscal stimulus and rate cuts, as China braces for U.S. tariff threats under President-elect Donald Trump. Kevin Yao and Ellen Zhang, Reuters, December 9
Japan gov't submits draft extra budget to Diet for economic package. Japan's government presented a 13.9 trillion yen ($92.7 billion) supplementary budget to parliament on Monday to fund an economic package addressing inflation's impact. Prime Minister Shigeru Ishiba’s administration faces challenges securing approval, as the ruling coalition lacks a House majority after October's election. The budget will partly rely on 6.7 trillion yen in new bond issuances, raising concerns about Japan’s fiscal health. Opposition parties have pushed for revisions, citing nonurgent allocations and consumer spending pressures. Kyodo News, December 9
South Korea’s President Yoon is banned from traveling abroad after martial law chaos. South Korea’s Justice Ministry has imposed an overseas travel ban on President Yoon Suk Yeol amid investigations into his short-lived martial law declaration on December 3. Yoon’s actions, which deployed troops onto Seoul’s streets, were overturned by parliament within six hours, sparking political turmoil and international concern. While Yoon escaped impeachment on Saturday, opposition parties plan to reintroduce the motion. Authorities have detained former Defense Minister Kim Yong Hyun and suspended three military commanders over their involvement. Hyung-jin Kim and Kim Tong-hyung, AP News, December 9
Kazakhstan, Xinjiang, and Hong Kong forge trilateral partnership to boost trade, investment, and connectivity. Officials from Kazakhstan, China’s Xinjiang autonomous region, and Hong Kong agreed on a cooperation framework during a meeting in Urumqi on December 5. The partnership focuses on finance, energy, agriculture, logistics, and scientific research. Jumangarin proposed forming a Kazakhstan-Xinjiang-Hong Kong Cooperation Council, with its first meeting set for next year in Kazakhstan. The leaders also discussed plans to double trade turnover and develop alternative transportation routes. Sergey Kwan, The Times of Central Asia, December 9
Former protest leader sets deadline for govt to scrap MoU with Cambodia Former yellow-shirt protest leader Sondhi Limthongkul has demanded that the Thai government annul the 2001 Memorandum of Understanding (MoU) which allowed Cambodia to delineate its maritime boundaries within Thai territorial waters, as defined by King Rama IX in 1973. Sondhi argues that upholding the MoU could lead to Thailand's implicit acceptance of Cambodia's maritime claims, resulting in the loss of marine resources rightfully belonging to Thailand. He notes that the MoU established an overlapping claims area in the Gulf of Thailand, primarily benefiting Cambodia. Bangkok Post, December 9
DP proposes bills to investigate Yoon's martial law declaration, first lady allegations. South Korea's Democratic Party (DP) introduced a special counsel bill on Monday to probe President Yoon Suk Yeol's alleged treason linked to his brief martial law declaration. Another bill targets first lady Kim Keon Hee over alleged stock manipulation and election interference. This marks the fourth attempt to investigate the first lady, with a prior bill falling two votes short of overriding Yoon’s veto. Yi Wonju, Yonhap News Agency, December 9
Indonesia to open EU desk to strengthen cooperation. Indonesia's Minister of Investment and Downstreaming, Rosan Roeslani, announced plans to establish a European Union (EU) desk within the ministry to enhance cooperation between Indonesia and the EU. This initiative follows discussions with the European Business Chamber of Commerce (EuroCham) Indonesia. The EU is Indonesia's fifth-largest source of foreign direct investment, with member countries investing approximately $18.7 billion between 2019 and the third quarter of 2024. European Union Ambassador to Indonesia and Brunei, Denis Chaibi, affirmed the EU's commitment to strengthening trade relations. Uyu Septiyati Liman, ANTARA News, December 9
Taiwanese political heavyweight proposes new cross-strait framework. Former Taiwanese legislative speaker Wang Jin-pyng of the Kuomintang (KMT) has proposed a cross-strait framework called “separate governance without division” to reduce tensions between Taiwan and mainland China. The plan advocates coexistence with separate governance while sharing undivided sovereignty, aiming to create peace amid stalled cross-strait relations, but moves away from the controversial 1992 consensus and has garnered mixed reactions. The KMT supports the initiative, but critics from the Democratic Progressive Party argue it undermines Taiwan's independent identity. Lawrence Chung, South China Morning Post, December 9
Taiwan raises alert as China deploys 90 ships in likely exercises. Taiwan heightened its alert on Monday as China deployed nearly 90 naval and coast guard vessels near Taiwan, Japan, and surrounding seas, signaling large-scale military drills. Taiwan's military activated combat readiness and accused China of "grey-zone harassment," as Beijing set up seven temporary airspace zones near Fujian and Zhejiang provinces, though no specific weapons tests were announced. This comes after Taiwanese President Lai Ching-te's Pacific trip, which Beijing opposes. Taiwan's defense ministry warned of risks to Indo-Pacific stability, while the U.S. emphasized maintaining freedom of navigation in the region. Yimou Lee and Ben Blanchard, Reuters, December 9
Deal with Nvidia helps realise Vietnam's plan to become regional tech hub. Vietnam signed an agreement with U.S. chipmaker Nvidia to establish an AI research and development center and expand Viettel Group's AI data center, which uses Nvidia technology. Nvidia also acquired VinBrain, a healthcare startup, and collaborates with over 100 AI startups and 65 universities in Vietnam. Nvidia CEO Jensen Huang highlighted Vietnam’s potential as a regional tech hub, supported by its growing AI ecosystem and government initiatives. Vietnam News, December 9
Bangladesh and India hold talks aimed at defusing escalating tensions. Indian Foreign Secretary Vikram Misri and Bangladeshi counterpart Mohammad Jashim Uddin met in Dhaka Monday to address strained ties following former Bangladeshi premier Sheikh Hasina’s exile to India. Key topics included minority Hindu attacks in Bangladesh, India’s suspension of most visas for Bangladeshis, and violence against diplomatic missions. Arrests of Hindu leaders and retaliatory protests in both countries have fueled tensions, straining the historically close relationship. Julhas Alam, AP News, December 9
Ex-defense minister ordered drone infiltration to Pyongyang in Oct.: lawmaker. Former South Korean Defense Minister Kim Yong-hyun ordered drones flown over Pyongyang in October, allegedly as part of preparations for President Yoon Suk Yeol's martial law declaration, claimed opposition lawmaker Park Beom-kye on Monday. North Korea had warned of retaliation after detecting drones at the time, though the South Korean military refused to confirm the operation. Kim, now under arrest on treason charges related to the martial law case, is accused of attempting to provoke conflict with the North. Former Defense Counterintelligence Commander Yeo In-hyung has also been suspended for involvement. Park Boram, Yonhap News Agency, December 9
Ethnic armed group claims capture of key western Myanmar town near border with Bangladesh. The Arakan Army, an ethnic minority armed group, claims to have seized Myanmar’s last military outpost in Maungdaw, securing full control of the 168-mile border with Bangladesh. This victory completes the group’s control of northern Rakhine state, advancing its bid for autonomy amid Myanmar's ongoing civil war. The group has taken 11 of Rakhine’s 17 townships and one in Chin state, with the strategic Ann military headquarters also under threat. AP News, December 9
Tonga's prime minister resigns ahead of no confidence vote, local media report. Tongan Prime Minister Siaosi Sovaleni resigned on Monday, citing the need to "move Tonga forward," ahead of an anticipated no-confidence vote in parliament. Sovaleni announced his resignation immediately in line with the constitution and will continue serving as a member of parliament. King Tupou VI has accepted the resignation, with parliament set to reconvene on December 24 to nominate a new prime minister. Renju Jose and Kirsty Needham, Reuters, December 9
China launches antitrust probe into US semiconductor giant Nvidia in sign of escalation. China’s antitrust regulator is investigating Nvidia over its $6.9 billion acquisition of Israeli firm Mellanox Technologies, citing potential violations of antimonopoly law. This move follows US chip export restrictions targeting China, with analysts viewing it as a geopolitical countermeasure. Nvidia, whose China market accounts for nearly 18% of its revenue, risks fines or potential reversal of the Mellanox deal. Beijing’s scrutiny comes amid warnings from Chinese industry groups against using U.S. chips and growing domestic alternatives, such as Huawei’s Ascend processors. Xinmei Shen and Che Pan, South China Morning Post, December 9
Nauru agrees to give Australia a veto right over a range of pacts with third nations including China. Australia and Nauru signed a multimillion-dollar treaty granting Australia veto power over Nauru’s agreements with third countries in security, banking, and telecommunications sectors. Australia pledged AU$140 million ($89 million) over five years, including AU$40 million for security enhancements. The treaty mirrors a similar deal with Tuvalu, aiming to counter Chinese influence following China’s 2022 Solomon Islands security pact. Rod McGuirk, AP News, December 9
Yoon’s failed power grab a big blow to South Korea’s international influence. South Korea’s democracy faced a severe test when President Yoon Suk Yeol declared martial law on December 3, 2024, attempting to arrest political opponents and disrupt the National Assembly under claims of countering “pro-North Korean and anti-state forces.” The attempt collapsed due to widespread resistance, internal government opposition, and swift action by the opposition, which overturned the martial law order. Yoon narrowly survived an impeachment vote but faces continued efforts for his removal, with his approval rating plummeting to 13 percent. While South Korea’s democratic institutions demonstrated resilience, the episode undermined the country’s international credibility, weakened its moral authority in regional affairs, and cast doubt on its strategic partnerships, particularly with the United States. Yoon’s likely resignation or impeachment is expected to change South Korea’s foreign policy, complicating relations with Japan and the U.S. while potentially softening its stance on China and North Korea. Arius Derr, East Asia Forum, December 9.
Cooperation on Semiconductor Supply Chains and Technology. The security alliance between the United States and South Korea has evolved to encompass economic security, with a particular focus on semiconductor supply chains and technology. Both nations have recognized the strategic importance of semiconductors in national security and economic competitiveness, leading to collaborative efforts to strengthen and secure these supply chains. This cooperation includes joint research and development initiatives, investment in semiconductor manufacturing capabilities, and alignment of policies to mitigate risks associated with global supply chain disruptions. The partnership aims to improve technological innovation and ensure a stable supply of semiconductors critical to various industries. Soyoung Kwon, Korea Economic Institute of America, December 9
The Hidden Costs of Nepal’s ‘Free Visa, Free Ticket’ Policy. Nepal's "Free Visa, Free Ticket" policy, introduced in 2015, aimed to reduce migration costs for workers heading to Gulf countries and Malaysia by ensuring employers covered recruitment expenses, leaving workers to pay only nominal fees for essentials like medical tests. However, nearly a decade later, many migrant workers still face exorbitant fees ranging from $1,500 to $2,200, far exceeding Nepal's annual GDP per capita of $1,324 as of 2023. This disparity results from weak enforcement and entrenched corruption within the labor recruitment system, with agencies exploiting loopholes and charging for services that employers are legally obligated to fund. Consequently, workers often incur significant debt before departure and encounter misrepresented job positions and withheld wages abroad, perpetuating financial struggles. Oshin Pandey, The Diplomat, December 9.
German Carmakers Are Placing a Risky Bet on China. German automakers Volkswagen, BMW, and Mercedes-Benz are intensifying investments in China, despite facing declining sales and increased competition from local electric vehicle (EV) manufacturers. Volkswagen's sales in China dropped by 25% between 2018 and 2023, with a further 12% decline in the first nine months of 2024, even as the overall Chinese car market grew by approximately 3%. Similarly, BMW and Mercedes-Benz experienced sales downturns after peaking in 2022. In response, these companies have announced substantial investments in their Chinese operations: Volkswagen is investing €2.5 billion in its Hefei innovation hub, BMW is allocating €2.5 billion to its Shenyang production base, and Mercedes-Benz is committing €1.8 billion in collaboration with its joint venture partner BAIC. These moves aim to improve their positions in the world's largest automotive market. However, the rapid advancement of Chinese EV manufacturers and the Chinese government's support for domestic brands present challenges, prompting German carmakers to reassess their strategies in China. Alexander Brown and Andreas Mischer, The Diplomat, December 9
Singapore College of Islamic Studies: Prospects and Challenges. Singapore is set to launch the Singapore College of Islamic Studies (SCIS) by 2028, introducing a four-year degree program that integrates Islamic studies with social sciences. This initiative aims to produce asatizah (religious teachers) capable of contextualizing Islamic teachings within Singapore's diverse, multiracial society. The SCIS seeks to address current educational gaps by promoting critical thinking over rote learning and aligning religious education with local customs and practices. Additionally, it aims to alleviate employment challenges faced by Islamic studies graduates by broadening their career prospects beyond the religious sector. However, the college must navigate potential challenges, including ensuring its curriculum remains relevant to Singapore's secular framework and effectively preparing graduates for diverse professional roles. Mohammed Hasyir Bin Mohd Abdul Hamid, Fulcrum, December 9
Amidst Malaysia’s Rising Polarisation: What More Mandarin-speaking Non-Chinese Malaysians Show. The increasing number of non-Chinese Malaysians, particularly Malays, speaking Mandarin reflects evolving social and economic dynamics in Malaysia. This trend is evident in the surge of non-Chinese enrolment in Chinese vernacular primary schools (SJKCs), which rose from 17,309 in 1989 to over 101,000 in 2020, driven by the economic value of Mandarin due to China's global influence and Malaysia's job market demands. While fostering early interethnic contact and potentially reducing prejudice, the trend also highlights challenges, including the language's complexity and the need for extensive additional support for non-Chinese students. Vernacular schools, central to Malaysia’s multiculturalism, remain politically contentious, as seen in recent constitutional debates. The growing non-Chinese student population in SJKCs may shift the schools' cultural identity and purpose, creating tension within their original mandate of cultural preservation. James Chai, Fulcrum, December 9