Asia Daily: June 24, 2024
News
South China Sea: PLA tests its landing ships amid tension with Philippines over islands. The People’s Liberation Army conducted drills in the South China Sea with landing ships Danxiashan, Laotieshan, and Lushan, focusing on emergency response and coordinated combat capabilities. Training included berthing, rescue practice, air-defense against drones, and smoke cover missions. These exercises come amid rising tensions with the Philippines over disputed islands, particularly the Second Thomas Shoal. Recent confrontations have included physical clashes and accusations of aggression by both sides. Amber Wang, South China Morning Post, June 24
Leader of NATO member Poland visits China, talks to Xi about Ukraine, peace and trade. Polish President Andrzej Duda met Chinese leader Xi Jinping in Beijing to discuss Ukraine, peace, and expanding trade. Duda highlighted Poland’s desire for closer commercial relations, including agricultural exports, under China’s Belt and Road Initiative. They also discussed the Russia-Ukraine conflict and migration pressures from Belarus. Several trade agreements were signed, including on agricultural exports and educational exchanges. Duda announced a visa waiver for Poles traveling to China for up to 15 days. AP News, June 24
Dollar Firms to Near 160 Yen on Receding U.S. Rate Cut Expectations The US dollar strengthened to nearly 160 yen as expectations for a U.S. rate cut decreased. The Federal Reserve's indication that it might keep interest rates higher for longer has influenced this change. Higher interest rates in the U.S. generally attract investment, strengthening the dollar. Conversely, Japan's central bank is maintaining its ultra-loose monetary policy, contributing to the yen's weakness. The exchange rate fluctuation is significant for Japan, impacting its trade and economic strategies. Kyodo News, June 24
MFP slams military budget, questions anti-drone funding. The Move Forward Party (MFP) criticized Thailand's national defense budget, arguing it doesn't address current security challenges. MFP MP Wiroj Lakkhanaadisorn questioned the 540-million-baht allocation for anti-drone systems and criticized the 550 million baht for high-ranking officers' position cars. Wiroj also challenged the increase in the military training budget despite a reduction in conscripts. Defense Minister Sutin Klungsang defended the spending, citing plans to enhance UAV capabilities and establish a cyber-command unit. Aekarach Sattaburuth, Bangkok Post, June 22
Thai foreign affairs minister to visit Cambodia. Thai Foreign Affairs Minister Maris Sangiampongsa will visit Cambodia on June 27 at the invitation of Minister Sok Chenda Sophea. During his visit, Sangiampongsa will meet with Senate president Hun Sen and Prime Minister Hun Manet. The talks aim to strengthen bilateral relations and discuss cooperation in trade, investment, border development, labor, education, and regional issues. Sangiampongsa will also engage with the Thai business community and government agencies in Cambodia. Ry Sochan, Phnom Penh Post, June 24
Yoon calls for firm readiness amid deepening N.K.-Russia defense ties. President Yoon Suk Yeol ordered increased vigilance due to the growing military cooperation between Russia and North Korea. Yoon emphasized the need for robust security and economic preparedness in light of the new defense treaty signed by Pyongyang and Moscow. South Korea is reconsidering its ban on sending lethal weapons to Ukraine. Recent tensions include North Korean troops crossing into the South and building infrastructure in the Demilitarized Zone, prompting warning shots from the South Korean military. Kim Eun-jung, Yonhap News Agency, June 24
Prominent political figure Akbarsho Iskandarov detained in Tajikistan. Akbarsho Iskandarov, the former Chairman of the Supreme Soviet of Tajikistan, has been detained in Dushanbe. He was summoned by the General Prosecutor’s Office for questioning on June 13 and 14 and was not released thereafter. The reasons for his detention are unknown. Iskandarov has previously held positions as Ambassador to Turkmenistan, Kazakhstan, and Mongolia, and worked at the Academy of Sciences. The Times of Central Asia, June 24
Only 10% want PM Kishida to stay as support rate sags. Kyodo poll A Kyodo News poll reveals that only 10% of respondents want Prime Minister Kishida Fumio to remain in office as his support rate declines. The survey highlights growing public dissatisfaction with Kishida's leadership, with a significant portion of the population expressing a desire for new leadership. The decline in support is attributed to various domestic and international issues, including economic challenges and policy criticisms, affecting Kishida's approval rating. Kyodo News, June 24
PM proposes Vietnam-China's upgrade of border gate infrastructure. Prime Minister Phạm Minh Chính proposed that Vietnam and China enhance customs clearance efficiency and upgrade border gate infrastructure, including exploring smart border gates. During talks with Chinese Premier Li Qiang in Dalian, China, Chính emphasized the importance of improving transport infrastructure connections, particularly standard gauge railways, and urged China to open markets for more Vietnamese agricultural products. Vietnam News, June 24
Former PM Suga says calls for Kishida to quit growing louder in LDP. Former Prime Minister Yoshihide Suga has stated that calls for current Prime Minister Fumio Kishida to resign are increasing within the Liberal Democratic Party (LDP). This growing dissent comes amid declining public support for Kishida, influenced by various political and economic challenges. Suga's comments underscore the internal party pressure Kishida faces as he struggles to maintain his leadership and address the concerns of both the public and party members. Kyodo News, June 23
Philippines accuses China of using 'illegal force' to deliberately disrupt resupply mission. The Philippines' Defense Secretary Gilberto Teodoro accused China of using "aggressive and illegal force" to disrupt a resupply mission in the South China Sea, resulting in a sailor's injury from a "high-speed ramming" by the Chinese Coast Guard. Teodoro dismissed claims of misunderstanding, stating it was a deliberate act to prevent the mission. China disputes this, calling their measures lawful. The Philippines will continue resupply missions without publicizing schedules. Neil Jerome Morales and Karen Lema, Reuters, June 24
Kyrgyzstan to build new checkpoint on border with China. Kyrgyzstan plans to establish a new checkpoint named "Bedel" on its border with China. The Cabinet of Ministers submitted a bill to the Jogorku Kenesh (Parliament) for ratifying the intergovernmental agreement. The Bedel checkpoint aims to facilitate border crossings, enhance trade relations, and improve bilateral cooperation. It is expected to reduce delivery times from the Xinjiang region and boost trade turnover with China. The project will cost approximately 77.9 million som ($896,000) from the state budget. The Times of Central Asia, June 24
Marcos must first approve Ayungin resupply missions. President Ferdinand Marcos Jr. must approve any public announcements regarding resupply missions to Filipino troops stationed at the BRP Sierra Madre in Ayungin Shoal. This policy recommendation, clarified by Philippine Coast Guard spokesman Commo. Jay Tarriela, emphasizes the need for presidential approval before announcing routine resupply operations. Executive Secretary Lucas Bersamin highlighted this procedure during a recent briefing. Javier Joe Ismael and Franco Jose C. Baroña, The Manila Times, June 23
President Putin hails Việt Nam talks as constructive, productive. Russian President Vladimir Putin thanked the Vietnamese leadership for their hospitality during his state visit on June 19-20. He described the talks with General Secretary Nguyễn Phú Trọng and President Tô Lâm as constructive and productive, expressing confidence that the bilateral agreements will strengthen the comprehensive strategic partnership. Putin anticipates continued active cooperation on key issues on the bilateral and international agenda. Vietnam News, June 24
Srettha expected to keep PM position. A recent Nida poll reveals that 28% of respondents believe Prime Minister Srettha Thavisin will maintain his position, with another 28% somewhat confident in his stability. The poll, which surveyed 1,310 individuals, comes ahead of the Constitutional Court's ruling on an ethics case involving Srettha’s appointment of Pichit Chuenban, a lawyer for Thaksin Shinawatra, to his cabinet. The court's decision, anticipated on July 10, could impact Srettha's tenure and has garnered significant public and political attention. Bangkok Post, June 23
Canada to start 30-day consultation to impose surtax on Chinese electric vehicles. Canada will begin a 30-day consultation on July 2 to consider imposing a surtax on Chinese-made electric vehicles (EVs). This move aims to address China's oversupply, which Deputy Prime Minister Chrystia Freeland says undermines Canada’s EV sector. The consultation will explore market practices, labor, environmental standards, and potential changes to EV purchase rebates and investment restrictions. The only Chinese-made EVs currently imported into Canada are from Tesla’s Shanghai factory. AP News, June 24
Long Form
Unveiling New Concepts: How is New China Policy Shaping Up? China’s new leadership focuses on innovative governance, focusing on technological advancements, green development, and geopolitical strategies. The policy framework aims at enhancing domestic stability while navigating global tensions, promoting self-reliance, and economic resilience. The approach includes bolstering tech sectors, sustainable practices, and strategic international relations to secure China’s position on the world stage. PEKINGENSIGHT And GAO JIANFEI,
, June 24Mongolia’s Precarious Energy Security. Mongolia's energy security is intertwined with its economy and geopolitical situation. The current energy policy focuses on electricity production but neglects other critical components like agriculture and transportation, risking national security. The government must develop comprehensive energy policies, transform the coal-dependent electricity sector to renewable energy, and attract foreign investment. Mongolia relies heavily on raw material exports, especially coal, to China. Long-term strategies should include diversifying the economy and exploring renewable energy exports to enhance economic and energy security. Telmen Altanshagai, The Diplomat, June 24
Energy at the Crux of Australia-Taiwan Relations. Australia is crucial to Taiwan's semiconductor industry, supplying significant portions of coal and LNG essential for energy. This dynamic, labeled as Taiwan's "Silicon Shield," creates economic interdependence critical for regional stability. However, the shift in Australia's energy exports to China poses risks for Taiwan. The future lies in diversifying energy sources, including potential green hydrogen partnerships. Grant Wyeth, The Diplomat, June 24
India's Congress Party Vows to Fight 'Fascist' Rule of Modi's BJP. The Indian National Congress, part of the opposition alliance INDIA, has pledged to combat what it describes as the "fascist" rule of Prime Minister Narendra Modi's Bharatiya Janata Party (BJP). Following the 2024 general elections, Congress President Mallikarjun Kharge emphasized the alliance's commitment to upholding constitutional values and addressing issues like price rises, unemployment, and corruption. The alliance is exploring potential coalitions with regional parties to challenge the BJP’s governance. Kiran Sharma, Nikkei Asia, June 25
Weakening Yuan Could Be What China Needs but Not What It Wants. China's yuan has faced a large depreciation, dropping to five-month lows and losing 1.9% against the dollar this year. Businesses are hoarding dollars due to higher returns compared to yuan deposits, exacerbating the currency's slide. Analysts suggest that substantial Federal Reserve rate cuts or the yuan hitting a trough could stabilize the situation. However, China's authorities appear to be managing the decline cautiously without aggressive interventions. Echo Wong and Wataru Suzuki, Nikkei Asia, June 24
Asia Needs More Collaboration to Make Food and Drinks Healthier. Greater collaboration among governments, businesses, and communities in Asia is essential to improve the healthiness of food and drink options. Focusing on sustainable practices and clear food labeling can drive healthier consumer choices. The World Economic Forum highlights the need for reimagining retail layouts, subsidizing healthy food, standardizing food labeling, and making healthy food the default option to transform the food system into a more sustainable and equitable one. Innovations in plant-based proteins and functional beverages are key trends for 2024. Matt Kovac, Nikkei Asia, June 24
China's Spilling of Filipino Blood Shows More U.S. Support Needed. Rising tensions in the South China Sea have led to increased conflict between China and the Philippines, with recent incidents involving Chinese Coast Guard vessels using water cannons and engaging in dangerous maneuvers against Philippine supply ships. These actions are indicative of China's aggressive "gray zone" tactics and the potential for escalation. The United States has reaffirmed its commitment to the U.S.-Philippines Mutual Defense Treaty, which could be invoked if Philippine forces are attacked. However, experts argue that the U.S. needs to demonstrate stronger support to deter further Chinese aggression. Richard Heydarian, Nikkei Asia, June 24
Global investors want more climate action from Japan’s megabanks. Global investors are pressuring Japan's top three banks—Mitsubishi UFJ, Sumitomo Mitsui, and Mizuho—to improve their climate action efforts. Activist groups like Market Forces and Kiko Network have filed shareholder resolutions urging these banks to reduce fossil fuel financing. The banks face criticism for relying on unproven technologies such as coal co-firing with ammonia and carbon capture. These resolutions will be voted on at the banks' annual general meetings. William van de Pol, Nikkei Asia, June 24
Malaysia has to find its way to a middle ground on racial privilege. Malaysia faces a complex challenge in balancing racial privilege policies, which have long favored the majority Malay population under the Bumiputera policy. The policy, aimed at reducing economic disparities, has led to significant socio-political debates and calls for reform. Critics argue that while it has uplifted many Malays, it has also marginalized non-Malay communities and hindered national unity. Reforming these policies requires navigating sensitive racial dynamics and finding a middle ground that promotes inclusivity and economic fairness. Saleena Saleem, Nikkei Asia, June 23
Unchaining global trade. Global trade's resilience during crises like COVID-19 and energy disruptions show the importance of international markets. Despite calls for protectionism, flexible supply chains and updated WTO rules are crucial for maintaining trade efficiency. As climate change impacts intensify, diversification in supply sources becomes more essential. Reforming WTO regulations, particularly for digital trade, is imperative for ensuring seamless global trade. Regional coalitions, such as RCEP, should prioritize this agenda to support continuous global commerce. East Asia Forum, June 24
Echoes of the Cold War in Northeast Asia. Russia and North Korea have formed a new strategic partnership, echoing Cold War-era alliances. Meanwhile, the U.S., South Korea, and Japan are strengthening their own trilateral security cooperation. China remains cautious about fully supporting the Russia-North Korea pact but continues to back North Korea. These dynamics highlight the complex geopolitical landscape in Northeast Asia, where historical rivalries and new strategic alliances coexist. Daniel Sneider, East Asia Forum, June 24
Legal moves turn South China Sea public image battleground. The South China Sea dispute is increasingly becoming a battleground for public image and legal maneuvers. The Philippines, supported by its alliance with the US, is taking legal actions against China's expansive claims and activities in the region. This includes filing charges over environmental damage and seeking international support to bolster its maritime claims. Despite these efforts, tangible gains are limited, with China using a range of legal and administrative strategies to consolidate its position. The dispute remains a flashpoint for regional tensions and a test of international maritime law. Nong Hong, South China Morning Post, June 25
How China’s slowdown is shaking Asia’s economic calculus. China's economic slowdown is causing ripple effects across Asia. With weaker consumer demand, an ageing workforce, and a property market downturn, parallels are being drawn with Japan's "lost decades." The slowdown impacts regional currencies, trade, and investment, necessitating reforms and adjustments in economic strategies. Analysts highlight that China's traditional investment-led growth model is losing effectiveness, urging a shift towards consumption-driven growth and structural reforms to sustain long-term economic health. William Pesek, South China Morning Post, June 24
How Modi 3.0 could steer India-China relations. As Prime Minister Narendra Modi embarks on his third term, India's approach to China will be pivotal. Modi's government is expected to balance economic engagement with strategic caution. This involves continuing infrastructure development in border areas, enhancing defense capabilities, and fostering alliances, particularly with the US. Simultaneously, India aims to strengthen economic ties with China, recognizing its significance as a trading partner. This dual strategy seeks to manage tensions while leveraging economic opportunities. Sagina Walyat and Sebastian Contin Trillo-Figueroa, South China Morning Post, June 24