Asia Daily: September 16, 2024
News
Chinese cities increase consumer subsidies as weak demand, deflationary pressures weigh on economy. Chinese cities are boosting subsidies on home appliances and electronics to combat weak demand and deflationary pressures. The initiative, part of a national effort to encourage spending, aims to prevent a deflationary spiral by offering rebates and trade-in programs. However, experts argue that the subsidies are too narrow to stimulate broader consumer confidence, which has been hit by slow income growth, poor market performance, and economic uncertainty. Joyce ZK Lim, The Straits Times, September 16
Germany wants trade with Kazakhstan, won't circumvent Russia sanctions, Scholz says. Germany aims to increase trade with Kazakhstan while ensuring it does not bypass EU sanctions on Russia, Chancellor Olaf Scholz stated. Both countries seek to expand cooperation in areas like oil, rare earths, and lithium. Germany values Kazakhstan as a replacement for Russian oil, especially following the Ukraine invasion and sanctions. Scholz met with Kazakh President Kassym-Jomart Tokayev before a broader summit with other Central Asian leaders. Reuters, September 16
North Korea's foreign minister leaves for Russia, embassy in Pyongyang says.
North Korean Foreign Minister Choe Son Hui has traveled to Russia to attend the fourth Eurasian Women's Forum and the BRICS Women's Forum in Saint Petersburg, scheduled for September 18-20. Russian Ambassador Alexander Matsegora saw her off at Pyongyang International Airport. The forum is expected to host delegations from nearly 100 countries. This visit highlights growing ties between Russia and North Korea, amid accusations from the West of arms supplies to Russia for the war in Ukraine, which both nations deny. Reuters, September 16
Philippines to continue to deploy vessels in contested South China Sea shoal.
The Philippines will maintain vessel deployments in the Sabina Shoal in the South China Sea despite China's demands for withdrawal. A Philippine Coast Guard vessel recently returned from a five-month mission monitoring potential Chinese land reclamation in the area. The coast guard affirmed its commitment to maintaining a presence in the shoal, which lies within the Philippines' exclusive economic zone but is also claimed by China. Tensions remain as China continues to assert sovereignty over most of the South China Sea. Reuters, September 16
New Delhi’s chief minister announces resignation two days after he was released on bail. New Delhi's Chief Minister Arvind Kejriwal announced his resignation two days after being released on bail in a bribery case. Kejriwal, a key opposition leader and critic of Prime Minister Narendra Modi, had been arrested on charges of accepting bribes from a liquor distributor but denies the allegations, calling them politically motivated. His Aam Aadmi Party will now decide on his successor as he calls for early elections. AP News, September 16
Papua New Guinea violence leaves between 20 and 50 people dead, UN official says. Ongoing violence among illegal miners in Papua New Guinea's Porgera Valley has left between 20 and 50 people dead, according to U.N. humanitarian adviser Mate Bagossy. Fighting continues despite the deployment of security forces. The violence escalated as tribal disputes and illegal mining activities caused destruction, with homes destroyed and families affected. The region has already suffered from a May landslide that killed thousands, and emergency measures have been enacted. Rod McGuirk, AP News, September 16
Strongest typhoon since 1949 hits Shanghai and knocks out power to some homes. Typhoon Bebinca, the most powerful to strike Shanghai since 1949, caused widespread flooding, knocked out power to hundreds of homes, and injured at least one person. Winds of 151 kph (94 mph) uprooted trees, disrupted travel, and forced over 414,000 people to evacuate. Schools were closed, and emergency responders were deployed to clear debris. The storm also affected nearby provinces with heavy rainfall and flight cancellations, though it weakened as it moved inland. Simina Mistreanu, AP News, September 16
An American pastor detained in China for nearly 20 years has been released.
David Lin, a 68-year-old Christian pastor from California, has been released from a Chinese prison after nearly two decades. Lin, convicted of contract fraud in 2009 while assisting a house church, had been sentenced to life but was freed following U.S. diplomatic efforts. Lin denied the charges, which advocacy groups say are often used to target house church leaders. His release marks the first time he has seen his family since his imprisonment.
Eric Tucker and Didi Tang, AP News, September 16
Mitsubishi Heavy cancels H2A rocket launch for the second time. Mitsubishi Heavy Industries canceled the launch of its H2A rocket for the second time this month due to unsafe upper-level wind conditions. The rocket, carrying the Radar 8 intelligence-gathering satellite, was scheduled to launch from the Tanegashima Space Center. The initial launch was postponed due to a thunderstorm forecast. Jessica Speed, The Japan Times, September 16
Japan's elderly population grows to record 36.25 million. Japan's elderly population reached 36.25 million as of September 2024, accounting for 29.3% of the total population. The number of workers aged 65 and older has also risen for the 20th consecutive year, hitting 9.14 million. As Japan's population continues to age, this group is expected to make up 34.8% by 2040. Jiji, The Japan Times, September 15
Dollar plunges to 139 yen, lowest since July 2023. The U.S. dollar dropped to the 139 yen range in Asian trading on Monday, reaching its lowest level since July 2023. This decline is driven by expectations that the Federal Reserve will cut interest rates by 0.5% in its upcoming meeting. Thin trading, due to a holiday in Japan, also contributed. The Bank of Japan is expected to maintain its rate, potentially narrowing the interest rate gap with the U.S. Kyodo News, September 16
Chinese man captured on a rubber boat. A Chinese man, Wang, was found dehydrated in Taiwan after reaching its coast on an inflatable boat, claiming he fled China to escape debt and seek freedom. The Coast Guard retrieved him near New Taipei City. This is the second such incident in three months, prompting calls for better border security. Taiwan’s authorities are investigating Wang under immigration laws, which carry penalties for unauthorized entry. Chung Li-hua, Huang Tzu-yang, and Esme Yeh, Taipei Times, September 15
Taiwanese officials to go to US to ensure weapon delivery. Taiwan's Ministry of National Defense is sending personnel to the US next year to ensure the timely delivery of 500 FIM-92 Stinger missiles, with an additional 1,985 missiles expected by 2031. The procurement, amid rising Chinese military threats, raises the budget to NT$69 billion. Representatives will oversee contracts and quality. The ministry is also upgrading M60A3 tanks and acquiring new armored vehicles. Aaron Tu and Shelley Shan, Taipei Times, September 16
N. Korea to hold key parliamentary meeting on Oct. 7 to revise constitution.
North Korea will hold a Supreme People's Assembly session on October 7 to revise the constitution, following leader Kim Jong-un's call to define South Korea as the "principal enemy" and adjust territorial boundaries. This could lead to the removal of unification-related clauses. The meeting will also address laws on light industry, external economic affairs, and quality control. An election to choose new SPA deputies is expected soon. Kim Soo-yeon, Yonhap News, September 16
N. Korea launches trash balloons toward S. Korea for 2nd day: JCS. North Korea launched balloons likely carrying household trash toward South Korea for the second consecutive day, according to the Joint Chiefs of Staff. The balloons, carrying paper and plastic waste, were launched in response to anti-Pyongyang leaflets sent by defectors and activists in the South. No hazardous materials were found. In retaliation, South Korea has resumed anti-North loudspeaker broadcasts at the border. Chae Yun-hwan, Yonhap News, September 10
Analysis & Opinion
South Korea’s Pension Crisis Explained. South Korea's pension system faces collapse by 2055 due to demographic challenges, including the world’s lowest fertility rate and declining workforce. President Yoon Suk Yeol has proposed reforms, such as increasing contribution rates and ensuring retirement payments, but these face opposition in Parliament. The government seeks to address both the financial sustainability of pensions and the national security implications of an aging population. Despite efforts, significant revisions are likely before any legislation is passed. Caleb Mills, The Asia Cable, September 15
A step-change to Beijing's "lawfare" in the South China Sea. China is escalating its use of "lawfare" in the South China Sea, increasingly leveraging legal ambiguities to assert control over disputed areas. Recent actions by the China Coast Guard (CCG) around the Second Thomas Shoal, including militaristic behavior and harassment of Philippine vessels, mark a new phase in this strategy. The adoption of CCG Order #3 grants Chinese authorities more power to detain foreign vessels, further challenging international law in the region. Peter Leavy, Lowy Institute, September 17
The Quad should talk about a fair Indo-Pacific. To strengthen its appeal in the Indo-Pacific, the Quad should change its language to emphasize "fairness" alongside a "free and open" order. While many regional countries mistrust China, they also view the current global system as unequal. Adopting fairness-focused rhetoric could align Quad goals with regional priorities, particularly around economic development, without undermining values like democracy and human rights. Gaurav Saini & Dirk van der Kley, Lowy Institute, September 16
North Korean elite defectors on the rise? The number of elite defectors from North Korea to South Korea has risen, partly due to the Yoon Suk-yeol administration's support. South Korea's government is leveraging these high-level defections to criticize North Korea's regime and promote a "freedom-based unification." However, some analysts argue that politicizing defections exaggerates their impact on regime stability, as many defectors may leave due to personal reasons rather than political dissent. Khang Vu, Lowy Institute, September 16
Japan’s faith in US eroded by impolitic election rhetoric. The ongoing US presidential election has unsettled Japan due to remarks from both parties opposing Japan’s Nippon Steel's acquisition of US Steel. Politicians like Biden, Harris, Trump, and others have criticized the deal, raising concerns about national security and economic threats. This rhetoric is causing distrust in Japan, with prominent Japanese leaders questioning America's commitment and fairness in its alliances. Scott Foster, Asia Times, September 16
Why does the US security partnership with Taiwan matter? The U.S.-Taiwan security partnership is vital due to Beijing's military and coercive threats. While China seeks to unify Taiwan with the PRC, the U.S. supports Taiwan's defense capabilities, focusing on asymmetric defense strategies. Taiwan's vulnerabilities include possible military aggression and coercion without violence, making U.S. support crucial for deterrence. The 2024 U.S. elections could impact this partnership depending on future policy directions. Richard C. Bush, Brookings, September 16
The US-Philippines alliance and the 2024 US elections. The U.S.-Philippines alliance, rooted in the 1951 Mutual Defense Treaty, is a key component of U.S. strategy in the Indo-Pacific. As the 2024 U.S. elections approach, the alliance's future will depend on the next administration’s foreign policy. A Harris administration may reinforce ties, focusing on human rights, while a Trump administration could adopt a transactional approach. Both scenarios could impact the U.S. commitment to counter China's actions in the South China Sea. Lynn Kuok, Brookings, September 16
Winning the economic game in Asia. The U.S. aims to renew its leadership in Asia through economic statecraft, addressing challenges from China's rise. The next U.S. administration must focus on building advanced manufacturing, safeguarding supply chains, and balancing security concerns with economic cooperation. U.S. engagement in the region, including trade agreements like IPEF, will be shaped by the 2024 election outcome, with different strategies under Harris or Trump administrations. Consistent, calibrated policies are needed to secure America's role in the Indo-Pacific. Mireya Solís, Brookings, September 16
The Next Generation of China’s Outbound Investment. Chinese companies are expanding overseas, but with different goals than in previous years. The new wave focuses on organic internationalization by mature firms, greenfield projects, and investment in emerging markets, especially in Asia. This poses new opportunities and risks for businesses and policymakers, who will need to update regulations and strategies to manage economic security and competition challenges arising from China’s evolving investment patterns. Thilo Hanemann, Armand Meyer, Danielle Goh, China Cross-Border Monitor, September 16
Srettha's fisheries approach exposes broader policy failures. Thailand's Prime Minister Srettha Thavisin faces criticism for his fisheries policies, which highlight larger governance issues. His administration’s lack of progress on economic reforms and failure to balance local industry interests with international commitments, like those to the EU, expose deeper structural problems. The fisheries approach reflects Thailand's struggle to modernize key sectors while managing domestic and international pressures, demonstrating the challenges his government faces in addressing broader economic and political shortcomings. Mark Cogan, East Asia Forum, September 16
ASEAN's economic diplomacy as the crucial lynchpin in East Asian security. ASEAN's economic diplomacy plays a key role in maintaining East Asia's security by promoting multilateralism and robust trade frameworks. As geopolitical tensions rise, ASEAN's commitment to an open economic order is essential for addressing regional challenges like economic inequality, climate change, and human security. Strengthening these diplomatic efforts will be crucial for the region’s stability, especially in balancing the relationship between economic and political security. Shiro Armstrong, East Asia Forum, September 16
Smelters squeeze Indonesia’s nickel ore supply. Indonesia’s nickel downstreaming policy, aimed at boosting domestic processing and EV production, is creating tensions in the supply chain. Most of the country's nickel is suited for stainless steel rather than battery production, leading to overinvestment in stainless steel smelting. To balance this, the government has implemented export taxes on ferronickel. Despite efforts to tap into the EV market, environmental concerns and competition from imports pose challenges to building a domestic EV industry. Krisna Gupta, East Asia Forum, September 14
Breaking the Circuit: US-China Semiconductor Controls. U.S. export controls on advanced semiconductors have disrupted China's chip industry but revealed loopholes, particularly in cloud computing, allow China to bypass some restrictions. China’s dominance in rare earth elements and mature node chips poses a long-term risk to global supply chains. While controls have damaged China's semiconductor capabilities, they may accelerate China's push for semiconductor independence, challenging U.S. policymakers to adapt strategies as technology evolves.
Catherine Tan, FPRI, September 16
Explaining China’s Diffusion Deficit. China faces a "diffusion deficit," where its ability to innovate outpaces its capacity to broadly adopt and integrate these innovations across industries. This gap undermines the country's technological rise, with slower adoption of key technologies like AI and ICT. This mirrors the Soviet Union's experience, suggesting China's potential as a technological superpower may be overstated. The U.S. should focus less on China’s innovation breakthroughs and more on the risks of China’s economic slowdown. Jeffrey Ding, FPRI, September 16
Normalizing Abnormalities: Life in Myanmar’s Liberated Zone. In Myanmar's Karen National Union-controlled jungle, resistance soldiers, activists, and internally displaced civilians adapt to a life where resistance and routine coexist. Amid scarce resources and ongoing conflict, they form close-knit communities, sharing food, shelter, and mutual support. Despite the daily dangers, including brutal military crackdowns, they maintain hope for a better future, rebuilding their lives through collective survival and resilience. Helen Li, The Diplomat, September 16
Japan's LNG Future: Balancing Energy Security With Sustainability Commitments. Japan's energy strategy faces a dilemma as it seeks to advance sustainability while maintaining reliance on liquefied natural gas (LNG). Despite efforts to reduce carbon emissions and transition to clean energy, Japan remains dependent on LNG for energy security. The country's efforts to secure flexible LNG contracts and explore new markets, especially in Asia, show the difficulties in meeting energy needs while also meeting sustainability goals. John Calabrese, The Diplomat, September 14
A Novel Solution to Southeast Asia’s Coming Demographic Crisis. Southeast Asia faces a looming demographic crisis as the working-age population shrinks. Countries like Thailand are seeing declining birth rates, which could strain both production and consumption. Governments need to think creatively, including exploring tax reforms like a "lifetime income tax" to encourage spending among younger workers. As Southeast Asia ages, these structural challenges will have significant social and economic implications, necessitating urgent policy innovation. David Hutt, The Diplomat, September 16
Central Asians Continue to Face Crocus Retaliation in Russia. Following a deadly terrorist attack linked to Central Asians in March 2024, Russia has ramped up harassment, detention, and deportation of Central Asian migrants. New migration laws target non-Slavic workers, further complicating their legal status. Xenophobic incidents, evictions, and employment bans are rising, while many migrants fear forced conscription into the Russian military. Despite these challenges, many Central Asians rely on Russia for work due to their lack of other options. Andrew Gundal, Vlast, September 15
The Battle for Sabah: Key Players, Critical Issues and Potential Scenarios. Sabah’s political landscape remains fluid, with key challenges including economic disparities, infrastructure development, and the Malaysia Agreement 1963 debate. As the 2025 state election approaches, the ruling Gabungan Rakyat Sabah (GRS) faces competition from parties like UMNO and Warisan. Issues such as political stability and Sabah's autonomy will dominate voter concerns. The election outcome will likely influence Sabah's governance, with various coalition possibilities shaping its future trajectory.
Arnold Puyok, Fulcrum, September 16
Barisan Nasional's Win in Nenggiri: A Tactical Victory. Barisan Nasional (BN) secured a notable win in Nenggiri, Kelantan, through strong local campaigning that addressed voters' desires for rural development. Despite the region being dominated by PAS, BN leveraged UMNO’s local influence, focusing on economic recovery and rural infrastructure. Their response to PAS’s racially charged tactics further solidified BN's position. This tactical success highlights both BN’s ability to win regional elections and the broader challenges facing Malaysia’s politics. Amrita Malhi, Fulcrum, September 16