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Friday Asia Update: Top Five Stories for the Week of August 8, 2014

by Guest Blogger for Elizabeth C. Economy
August 8, 2014

A visitor walks past a Microsoft booth at a computer software expo in Beijing, on June 2, 2010. Microsoft Corp appears to be the latest U.S. company targeted by China for anti-trust investigation after government officials paid sudden visits to the software firm's Chinese offices on July 28, 2014 (Courtesy: Reuters).


Ashlyn Anderson, Lauren Dickey, Darcie Draudt, Andrew Hill, Will Piekos, and Sharone Tobias look at the top stories in Asia today.

1. China cracks down on U.S. technology companies. Beijing has begun warning Chinese officials to stop buying U.S. information technology, including antivirus defense by Symantec (as well as Russian Kaspersky Lab), Apple products, and Microsoft software, for national security reasons. China’s State Administration for Industry and Commerce conducted surprise inspections of Microsoft’s China offices, saying that it suspected monopolistic practices. The probe now includes consulting firm Accenture, which consults for Microsoft on financial issues. Beijing also banned its officials from buying iPads and other Apple products [Chinese]. China has a long history of tension with Microsoft and other U.S. technology companies, which has been exacerbated since Edward Snowden began releasing information about NSA practices that target China.

2. Maritime disputes between China and its neighbors continue to deepen. China has lodged a protest against Japan after Japanese fighter jets allegedly shadowed Chinese planes in China’s air defense identification zone (ADIZ) over the East China Sea, the latest flare-up between the two neighbors. According to China’s defense ministry (Japan has yet to comment on the incident), a large group of Japanese fighters approached a routine Chinese air patrol in the ADIZ and attempted to shadow the patrol planes. The incident comes on the heels of the release of Japan’s 2014 defense white paper, which highlights Tokyo’s concern over China’s military modernization. Meanwhile, state media reported that China plans to construct five lighthouses in the South China Sea, at least two of which are in waters also claimed by Vietnam. The move contradicts a U.S. call, supported by the Philippines, to freeze all activities that could further stoke tensions.

3. Indonesia bans ISIS, cracks down on radical Islamism. The world’s largest Muslim country condemned the Islamic State of Iraq and Syria (ISIS), the Sunni extremist organization that has taken over large parts of Iraq and Syria and killed thousands of civilians. The country ordered a ban on YouTube videos associated with or endorsing the group. Jakarta believes that there are about thirty Indonesians enlisted in ISIS ranks; a recent video on YouTube showed an Indonesia jihadist encouraging other Indonesians to join the fight. ISIS supporters also held a rally in Jakarta in March and disrupted a carnival in the city of Solo in June. Neighboring Malaysia is also attempting to combat the pull of ISIS; in April, officials arrested a dozen men trying to leave to fight in Syria, but failed to prevent one young man from going to Iraq, where he carried out a suicide attack that killed twenty-five soldiers.

4. Modi moves on economic reforms. On Wednesday, India’s cabinet approved foreign investment in the railway industry and raised the cap on investment in the defense sector. The decision to allow 100 percent foreign direct investment in the railway industry will help modernize the underperforming rail network in India. The Indian government hopes the decision to raise the cap in the defense sector will boost its indigenous defense production, although foreign investors were hoping for at least a 51 percent ceiling. The plan to open both sectors was laid out in the national budget last month with the goal of attracting international capital and expertise.

5. Japan sees record deficit for first half of 2014. Japan’s Ministry of Finance announced on August 8 a current account deficit of about 508 billion yen (US$50 billion), the first time since 1985 that Japan has registered a deficit for the January-to-June period and the largest deficit ever for a half-year term. The deficit has been largely attributed to a drop in exports that has failed to pick up; exports dropped 2 percent from a year earlier and imports rose 8.4 percent. Trade balance, which is included in the current account, has registered a deficit for twelve months straight through June this year. The reported deficit has raised doubts about the efficacy of Prime Minister Shinzo Abe’s strategy for reviving the lagging Japanese economy.

BONUS: Myanmar deports Canadian tourist over Buddha tattoo. After a photo of the tattoos on the tourist’s leg, uploaded by a Myanmar local citizen, went viral on Facebook, local authorities escorted the tourist in Rangoon to the airport. Myanmar faces Buddhist-Muslim conflict and many consider the lower body unclean. Other countries have shown sensitivity to religious tattoos; in 2011, the Thai culture minister considered banning Buddha tattoos from all Thai tattoo parlors.

Post a Comment 1 Comment

  • Posted by George

    It’s not a good sign that China is beginning to promote negative press toward U.S. technology companies. This can mean that they don’t feel like the need anything more from U.S. technologies and have already developed enough of their own, and that they want to promote Chinese made products/technologies. Recent articles regarding iPhones in China, and inspections of Microsoft facilities in China, and news reports regarding China’s view that U.S. companies are now making too much profit in China compared to local Chinese companies. You will see Chinese companies becoming more profitable and they will become more aggressive entering foreign markets such as in the U.S., Latin America, and Europe.

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