Asia Daily: November 20, 2023
News
APEC over, Taiwan reports renewed Chinese military activity. After the Asia-Pacific Economic Cooperation (APEC) summit, Taiwan noted a resurgence of Chinese military maneuvers in its vicinity. Taiwan's report on Sunday included nine Chinese aircraft crossing the median line of the Taiwan Strait and naval vessels engaging in combat readiness patrols, signaling ongoing regional tension and highlighting the strategic importance of the Taiwan Strait in cross-strait dynamics. Ben Blanchard, Reuters, November 19
Israel-Gaza war: China to host foreign ministers from Arab and Islamic countries in search for end to conflict. China is preparing to welcome a delegation of foreign ministers from Arab and Islamic nations, aiming to facilitate solutions for the Gaza Strip conflict. Participants include representatives from Palestine, Saudi Arabia, Egypt, Jordan, Indonesia, and the Organisation of Islamic Cooperation. The discussions, scheduled for this week, demonstrate China's increasing involvement in Middle Eastern diplomacy and its role in seeking peace in the region. Zhao Ziwen, South China Morning Post, November 19
North Korea marks missile holiday with silence as Kim absent 29 days. North Korea observed its newly established Missile Industry Day with unexpected silence in state-run media, despite the significant date. The holiday commemorates the launch of the Hwasong-17 intercontinental ballistic missile on November 18 last year, a weapon capable of reaching the United States. The quietness coincides with North Korean leader Kim Jong Un's absence from the public spotlight for nearly a month, diverging from the expected celebrations or missile tests. This unusual silence during a pivotal period raises questions about the current state of affairs in North Korea and Kim Jong Un's whereabouts. Jesse Johnson, The Japan Times, November 19
National Assembly to supervise real estate market management, social housing development. The National Assembly (NA) of Vietnam will conduct supreme supervision over the implementation of policies and laws pertaining to real estate market management and social housing development from 2015 through the end of 2023. This announcement was made during a teleconference held by the NA to review its supervisory agenda for 2023 and to introduce new tasks for 2024. The initiative represents a significant step in overseeing and guiding critical aspects of Vietnam's housing and real estate sector. Vietnam News, November 18
Taiwan opposition talks deadlocked, with no signs of compromise. In Taiwan, the main opposition party and a smaller party remain deadlocked in discussions over a joint presidential ticket, with unresolved disputes over presidential and vice-presidential candidacy. This stalemate reflects the larger political dynamics in Taiwan, particularly in the context of China's territorial claims and heightened military and political pressure. The impasse highlights the complexities of Taiwan's political landscape ahead of the parliamentary and presidential elections on January 13. Channel News Asia, November 19
Philippines' Marcos meets China's Xi to find ways to reduce South China Sea tensions. Philippine President Ferdinand Marcos Jr. and Chinese President Xi Jinping held a meeting focused on reducing tensions in the South China Sea and restoring Filipino fishermen's access to their traditional fishing grounds. This meeting, part of the APEC Summit in San Francisco, underscored the importance of continued communication to maintain peace and open sea lanes. Marcos and Xi concurred that geopolitical problems should not define the bilateral relationship, reflecting Marcos' strategy to balance relations with both the United States and China. Neil Jerome Morales, Reuters, November 18
Japan faces 'friendshoring' dilemma in Asia amid China risks. Amid growing concerns about economic security and China's quest for greater influence, Japan is facing a dilemma in forming like-minded groups within the Asia-Pacific region. The situation challenges Japan's diplomacy and its vision for engagement in the region, especially as it promotes a rules-based, "free and open Indo-Pacific" in counterbalance to China. This underscores the complexities Japan faces in navigating its regional relationships and economic strategies. Noriyuki Suzuki, The Japan Times, November 19
N. Korea may launch spy satellite 'within a week or so': Defense Minister. According to South Korea's Defense Minister Shin Won-sik, North Korea may launch its military spy satellite as early as "within a week or so," indicating heightened surveillance capabilities. This potential launch, observed closely by South Korea and the United States, is anticipated to precede South Korea's own satellite launch on November 30. The North's preparations, including engine movement and liquid fuel injection, suggest rapid progress, reportedly aided by Russia. Kim Seung-yeon, Yonhap News Agency, November 19
Long Form
China's Property Crisis is Stirring Protests Across the Country. China's property sector, a critical component of its economy, is facing a severe crisis, leading to widespread protests. These demonstrations include a diverse group of participants, from unpaid construction workers to individuals who have purchased unfinished homes. The crisis in the property sector, which represents a significant portion of China's economy, has reached an unprecedented level, reflecting deeper economic challenges and social discontent. Kevin Slaten and Ming-tse Hung, Nikkei Asia, November 20
Japanese Bankers Face New Challenge: Learning How to Raise Rates. Japanese bankers, accustomed to a long period of offering low-interest rates, are now facing the challenge of adapting to a potential shift in the Bank of Japan's policy, which could lead to higher rates. For the past 15 years, the lending strategy in Japan's banking sector has been straightforward, focusing on providing loans at increasingly lower rates. However, the prospect of a policy change is prompting bankers to prepare for a new era where they might have to request higher payments for credit from their customers. Mitsuru Obe, Nikkei Asia, November 20
How the ‘Fab 4’ Can Bring Clarity to Semiconductor Supply Chains. The 'Fab 4' alliance, comprising key semiconductor-producing nations, is poised to bring much-needed clarity and stability to the global semiconductor supply chains. Semiconductors have become increasingly vital in the context of the China-U.S. confrontation and the rapid advancement of digital society and artificial intelligence. The United States has been proactive in regulating the semiconductor industry through legal frameworks like the CHIPS and Science Act and export control regulations. These efforts, along with diplomatic and business strategies, aim to align allies and control key chipmakers. The alliance's role is crucial in fostering predictability and stability in this strategically important sector, amidst the ongoing geopolitical tensions and technological advancements. Jaemin Lee, The Diplomat, November 20
China’s Heavy Economic Legacy of State Ownership and Central Planning. China's stagnating economic growth, characterized by waning productivity and declining growth rates, cannot be solely attributed to the pandemic or demographic shifts. It also stems from an unfinished reform agenda, deeply rooted in its history as a centrally planned economy with widespread state ownership. This situation draws a parallel with the transition from communism to capitalism in Eastern Europe and the former Soviet Union. The ongoing tensions between China and the United States further highlight the need to understand the causes of China's economic slowdown, especially considering its unique economic history compared to other market economies in East Asia. Itzhak Goldberg, The Diplomat, November 18
The Power – and Limits – of Xi Jinping. Despite being the most powerful Chinese leader since Mao Zedong, Xi Jinping faces significant constraints in fully implementing his policy preferences. Xi's centralization of power and the development of a personality cult around him have drawn comparisons to Mao. However, unlike Mao, Xi operates within the context of party norms and institutions established in the post-Mao era, designed specifically to prevent the rise of a leader with Maoist personalistic tendencies. This dynamic highlights the complex interplay between individual leadership and institutional structures in contemporary Chinese politics, underscoring the challenges Xi faces in exerting his influence. Zhuoran Li, The Diplomat, November 18
Tomorrowland: India, Multinationals De-risking from China. India is emerging as a key destination for multinationals seeking to diversify their operations away from China. This shift, often referred to as "de-risking," is driven by a range of factors including geopolitical tensions, supply chain disruptions, and the search for new markets. India's growing automotive sector, exemplified by Hyundai's success, highlights the country's potential as an alternative manufacturing hub. The transition, however, is not without challenges, as companies must navigate India's unique business environment and regulatory landscape. This trend underscores a broader realignment in global business strategies, with India poised to play a significant role in the reshaping of international supply chains. Luke Patey, The Wire China, November 19
Why De-Risking Matters. The concept of "de-risking," as discussed by G-7 leaders and German Chancellor Olaf Scholz, emphasizes the importance of economic resilience and security in relations with China. De-risking, a strategy focused on reducing dependence and vulnerabilities, is primarily driven by corporate decisions in free-market economies. Governments, while influential, are not the primary actors in day-to-day economic activities. This approach underlines the need for a balanced strategy that doesn't mimic the interventionist tactics of more centrally controlled economies. The success of Western countries in de-risking will depend on their ability to adapt and respond to the evolving economic landscape, particularly in the context of their complex relations with China. Andrew Cainey, The Wire China, November 19.
India’s Business-as-Usual Will Waste Its Demographic Dividend. India, now the world's most populous country, faces the risk of squandering its demographic dividend due to inadequate policy strategies. Despite its large working-age population and the potential to take over low-cost manufacturing sectors vacated by China, India's economic transformation has been idiosyncratic, focusing more on services than manufacturing. This shift has limited employment opportunities for those with lower education and skills. India's retreat from far-reaching economic reforms, exemplified by its withdrawal from the Regional Comprehensive Economic Partnership, further hinders its potential to become a major manufacturing hub. The country's inward-looking approach, prioritizing local demand over export-oriented growth, contrasts with the successful strategies of other East Asian economies. Without significant structural reforms, India risks missing the opportunity to capitalize on its demographic advantage and achieve its goal of becoming a developed nation by 2047. East Asia Forum, November 19