CFR Presents

Asia Unbound

CFR experts give their take on the cutting-edge issues emerging in Asia today.

Friday Asia Update: Top Five Stories for the Week of August 30, 2013

by Guest Blogger for Elizabeth C. Economy Friday, August 30, 2013
The JP Morgan sign is pictured at its Beijing office, in this picture taken December 13, 2010. A federal bribery investigation into whether JPMorgan Chase & Co. hired the children of key Chinese officials to help it win business is just the latest in a series of legal and regulatory headaches. (Jason Lee/Courtesy Reuters) The JP Morgan sign is pictured at its Beijing office, in this picture taken December 13, 2010. A federal bribery investigation into whether JPMorgan Chase & Co. hired the children of key Chinese officials to help it win business is just the latest in a series of legal and regulatory headaches. (Jason Lee/Courtesy Reuters)

Will Piekos and Sharone Tobias look at the top stories in Asia this week.

1. The SEC probes JPMorgan amid allegations that it hired Chinese princelings. The U.S. Justice Department and Securities and Exchange Commission (SEC) has begun an investigation into whether JPMorgan Chase hired the children of senior Chinese officials to help secure business in a now-defunct program called “Sons and Daughters.” The scrutiny began in Hong Kong and now has spread through the bank’s Asia offices; the bank has flagged more than 200 hires for review. JPMorgan has not yet been accused of any illegal acts, but they might have violated the U.S. Foreign Corrupt Practices Act, which forbids granting personal favors to government officials in exchange for business. One example included the son of Tang Shuangning, chairman of a state-run financial conglomerate, who was hired and retained even after other employees questioned his financial expertise. Read more »

Is Myanmar’s Kachin Conflict Really Over?

by Joshua Kurlantzick Friday, August 30, 2013
UN special Vijay Nambiar takes pictures of burnt houses in Meikhtila on March 24, 2013. (Soe Zeya Tun/Courtesy Reuters) UN special Vijay Nambiar takes pictures of burnt houses in Meikhtila on March 24, 2013. (Soe Zeya Tun/Courtesy Reuters)

The visit on Wednesday by the United Nations’ special envoy to Myanmar, Vijay Nambiar, to Laiza, the headquarters of the Kachin Independence Organization, is a positive sign that the conflict in Kachin state might really be over. [Asia Times has a fine summary of Nambiar’s visit.] The peace deal between the KIO and the Myanmar government, signed in the spring, was obviously a major step forward to ending the decades-long conflict, but it did not provide real closure—it was not a final ceasefire. Read more »

Emerging Markets’ Currency Crunch

by Joshua Kurlantzick Tuesday, August 27, 2013
A money changer (facing camera) helps a customer convert Indonesian rupiah in Jakarta on August 20, 2013. Asian emerging market currencies extended losses on Tuesday, with the rupiah hitting a fresh four year low. (Beawiharta Beawiharta/Courtesy Reuters) A money changer (facing camera) helps a customer convert Indonesian rupiah in Jakarta on August 20, 2013. Asian emerging market currencies extended losses on Tuesday, with the rupiah hitting a fresh four year low. (Beawiharta Beawiharta/Courtesy Reuters)

Over the past few weeks, investors have been bailing out of the major markets in Asia faster than Jimmy Connors’ tenure as a tennis coach. As Thailand released its 2013 second quarter growth figures, which revealed the country had fallen into a technical recession, investors have been selling off Thai bonds and getting out of the Bangkok stock exchange. In India, the rupee has hit new record lows against other currencies as the country has been reporting enormous current account deficits. In Indonesia, Vietnam, and even more stable Asian economies like Singapore and Malaysia, similar outflows of capital are mounting, exacerbated by the U.S. Federal Reserve’s hints that it may slowly end the period of quantitative easing, marking the worldwide end of cheap credit. Read more »

In China, Foreigners Come First

by Elizabeth C. Economy Monday, August 26, 2013
A flag (L) bearing the logo of GlaxoSmithKline (GSK) flutters next to a Chinese national flag outside a GlaxoSmithKline office building in Shanghai on July 12, 2013. GlaxoSmithKline executives in China have confessed to bribery and tax violations during one of a string of investigations into foreign firms. (Aly Song/Courtesy Reuters) A flag (L) bearing the logo of GlaxoSmithKline (GSK) flutters next to a Chinese national flag outside a GlaxoSmithKline office building in Shanghai on July 12, 2013. GlaxoSmithKline executives in China have confessed to bribery and tax violations during one of a string of investigations into foreign firms. (Aly Song/Courtesy Reuters)

Chinese often complain that foreigners come first. During the early years of reform, foreign companies received special incentives for investing in China, and the few nice hotels in the country were reserved for foreign visitors with their foreign currency—no ordinary Chinese allowed. Even today, if a crime is committed, many Chinese will argue that the police are more likely to take action if a foreigner is the victim than a Chinese. Foreigners also may come first however, when Beijing needs a scapegoat for the ills of the country. Read more »

Friday Asia Update: Top Five Stories for the Week of August 23, 2013

by Guest Blogger for Elizabeth C. Economy Friday, August 23, 2013
Disgraced Chinese politician Bo Xilai stands trial inside the court in Jinan, Shandong province, on August 22, 2013. (Jinan Intermediate People's Court/Courtesy Reuters) Disgraced Chinese politician Bo Xilai stands trial inside the court in Jinan, Shandong province, on August 22, 2013. (Jinan Intermediate People's Court/Courtesy Reuters)

Will Piekos and Sharone Tobias look at the top stories in Asia this week.

1. Bo Xilai defiant in trial. Standing trial on charges of bribery, embezzlement, and abuse of power, former Communist Party official Bo Xilai was surprisingly defiant during his two days in court. The trial, which began on Thursday, was expected to be simply another piece of scripted Chinese political theater—albeit one with much more press and its own official microblog—but Bo put on a spirited defense, refuting testimony and casting doubt on his wife’s mental state. Some analysts have postulated that Bo might have agreed to a predetermined prison sentence in exchange for the opportunity to express himself at the trial. Read more »

Is Southeast Asia Headed for a Repeat of the Late 1990s Financial Crisis?

by Joshua Kurlantzick Wednesday, August 21, 2013
A money changer holds stacks of Indonesian rupiah notes in Jakarta on August 20, 2013. Asian emerging market currencies extended losses on Tuesday, with the rupiah hitting a fresh four year low. (Beawiharta Beawiharta/Courtesy Reuters) A money changer holds stacks of Indonesian rupiah notes in Jakarta on August 20, 2013. Asian emerging market currencies extended losses on Tuesday, with the rupiah hitting a fresh four year low. (Beawiharta Beawiharta/Courtesy Reuters)

Quarterly growth reports released in recent weeks for the major economies in Southeast Asia have been pretty grim. This week, Thailand surprised investors and analysts by reporting that its economy had contracted in the second quarter of 2013, falling into a technical recession. In Indonesia, second quarter growth came in below forecasts, while in Taiwan, although the second quarter produced strong growth, the government reduced its forecast for 2013 overall. Meanwhile, Malaysia’s economy grew at a slower-than-expected rate in the second quarter, and the government slashed its forecast for 2013 as a whole. Read more »

Dagny Dukach: The Wary Partnership Between China and Russia

by Guest Blogger for Elizabeth C. Economy Monday, August 19, 2013
Russia's President Vladimir Putin (R) exchanges documents with his Chinese counterpart Xi Jinping during a signing ceremony at the Kremlin in Moscow on March 22, 2013. Russia's President Vladimir Putin (R) exchanges documents with his Chinese counterpart Xi Jinping during a signing ceremony at the Kremlin in Moscow on March 22, 2013. (Sergei Karpukhin/Courtesy Reuters)

Dagny Dukach is an intern for Asia Studies at the Council on Foreign Relations.

Sino-Russian cooperation has grown considerably over the past few months, with the most notable example of this being China and Russia’s joint naval exercise in July. Against the backdrop of Obama’s pivot to Asia and rhetoric from Russian and Chinese leaders extolling their renewed cooperative spirit, some Western observers have suggested that improved relations between the two powers threaten U.S. interests. Read more »

Why is There a Military Build-up in Phnom Penh?

by Joshua Kurlantzick Monday, August 19, 2013
U.S. President Barack Obama toasts with Cambodia's Prime Minister Hun Sen as they participate in an East Asia Summit dinner in Phnom Penh on November 19, 2012. (Jason Reed/Courtesy Reuters) U.S. President Barack Obama toasts with Cambodia's Prime Minister Hun Sen as they participate in an East Asia Summit dinner in Phnom Penh on November 19, 2012. (Jason Reed/Courtesy Reuters)

Over the weekend, tanks, armored personnel carriers and other heavy weaponry appeared in the Phnom Penh area, according to reports in the Cambodian press and in Asia Sentinel. Only a few weeks after Cambodia’s national elections, which the ruling Cambodian People’s Party (CPP) allegedly won in a squeaker and the opposition claims was fraudulent, why are tanks and APCs rolling into Phnom Penh? Cambodia has no battles in the capital; even its border skirmishes with Thailand over the disputed Preah Vihear Temple have calmed down in the past two years. No, the show of force is designed to intimidate opposition supporters, who tend to live in urban areas. Defense Minister Tea Banh of the CPP didn’t mince words. According to the Cambodia Daily, he said, “You don’t have to wonder, they [the weapons] will be used to protect the country, and crack down on anyone who tries to destroy the nation.Read more »

Friday Asia Update: Top Five Stories for the Week of August 16, 2013

by Guest Blogger for Elizabeth C. Economy Friday, August 16, 2013
Protesters comprising of South Korean employers and employees working at factories in the Kaesong Industrial Complex (KIC) inside North Korea chant slogans during a rally at the Imjingak pavilion near the demilitarized zone which separates the two Koreas, in Paju, north of Seoul on August 7, 2013. (Courtesy Reuters/Kim Hong-ji) Protesters comprising of South Korean employers and employees working at factories in the Kaesong Industrial Complex inside North Korea chant slogans during a rally near Seoul on August 7, 2013. (Courtesy Reuters/Kim Hong-ji)

Will Piekos and Sharone Tobias look at the top stories in Asia this week.

1. North and South Korea agree to reopen Kaesong complex. After seven rounds of negotiations, the shuttered Kaesong complex, closed for months following a period of particularly high tensions, is set to be reopened, though there is no timetable yet. The complex was a major source of hard currency and jobs for North Korea until it was shut down, and it is one of the few symbols of cooperation between the two Koreas. The agreement includes a pledge from both sides to prevent any future shutdowns, an agreement to try to attract foreign companies to the complex, and permission for South Korean managers to use the Internet and mobile phones. Read more »

Salvaging of Kaesong: A Potential “Reset” for Inter-Korean Relations

by Scott A. Snyder Wednesday, August 14, 2013
North Korean workers make shoes at a factory of a South Korean shoes company in the Kaesong Industrial Complex. (Lee Jin-man/courtesy Reuters) North Korean workers make shoes at a factory of a South Korean shoes company in the Kaesong Industrial Complex. (Lee Jin-man/courtesy Reuters)

Following seven rounds of arduous working-level negotiations stretching over the last six weeks that involved plenty of stubbornness and brinkmanship on both sides, North and South Korea announced a joint agreement today that establishes a new framework for reopening and jointly managing the Kaesong Industrial Complex (KIC). The complex has remained shuttered and immobilized since North Korea pulled its workers from the complex on April 9. The agreement paves the way for the resumption of operations at the complex, but more importantly it constitutes a potential “reset” both for how the complex is managed and helps to stabilizeinter-Korean relations. Read more »