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Asia Unbound

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

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Japan’s Upper House Election

by Sheila A. Smith
(L-R) Social Democratic Party leader Mizuho Fukushima, People's Life Party leader Ichiro Ozawa, New Komeito's Party Leader Natsuo Yamaguchi, Democratic Party of Japan leader Banri Kaieda, Japan's Prime Minister Shinzo Abe, who is also leader of the ruling Liberal Democratic Party, Japan Restoration Party co-leader Toru Hashimoto, Your Party leader Yoshimi Watanabe, Communist Party Chairman Kazuo Shii, and Green Wind party leader Kuniko Tanioka pose for photos before their debate session ahead of the July 21 Upper house election in Tokyo July 3, 2013. (Toru Hanai/courtesy Reuters) (L-R) Social Democratic Party leader Mizuho Fukushima, People's Life Party leader Ichiro Ozawa, New Komeito's Party Leader Natsuo Yamaguchi, Democratic Party of Japan leader Banri Kaieda, Japan's Prime Minister Shinzo Abe, who is also leader of the ruling Liberal Democratic Party, Japan Restoration Party co-leader Toru Hashimoto, Your Party leader Yoshimi Watanabe, Communist Party Chairman Kazuo Shii, and Green Wind party leader Kuniko Tanioka pose for photos before their debate session ahead of the July 21 Upper house election in Tokyo July 3, 2013. (Toru Hanai/courtesy Reuters)

Last week, campaigning began for this year’s parliamentary election on July 21.  433 candidates have registered to contend for the 121 open slots in Japan’s 242-seat Upper House.  The ruling coalition needs sixty-three seats to gain a majority.  If they can get seventy-two seats, the Liberal Democrats, Prime Minister Abe’s party, could gain a commanding majority on their own, propelling them back into a position of single party dominance in both of Japan’s houses of parliament. Read more »

“Winner Take All”—A China Story?

by Elizabeth C. Economy
A Chinese contractor walks at the site of the Nairobi-Thika highway project, under construction near Kenya's capital Nairobi, on September 23, 2011. A Chinese contractor walks at the site of the Nairobi-Thika highway project, under construction near Kenya's capital Nairobi, on September 23, 2011. (Thomas Mukoya / Courtesy Reuters)

It was with a mix of trepidation and anticipation that I read Dambisa Moyo’s newly-released book, Winner Take All: China’s Race for Resources and What it Means for the World: trepidation because my colleague Michael Levi and I are currently finishing a book on China’s resource quest; and anticipation because it is actually fun to read a book on a topic on which you are writing … as long, of course, as it doesn’t say exactly what you planned to say. Read more »

Hyping U.S.-China Competition

by Elizabeth C. Economy
President, Chairman, and CEO of Dow Chemical Andrew Liveris speaks with Fortune Contributing Editor Marc Gunther at the Fortune Brainstorm GREEN Conference on Wednesday, April 18, 2012. (Courtesy of Fortune Brainstorm Green/Stuart Isett) President, Chairman, and CEO of Dow Chemical Andrew Liveris (left) speaks with Fortune Contributing Editor Marc Gunther at the Fortune Brainstorm GREEN Conference on Wednesday, April 18, 2012. (Courtesy of Fortune Brainstorm Green/Stuart Isett)

Last week I participated in the Fortune Brainstorm GREEN conference, a two-and-a-half day meeting in California that brought together money people, inventors, CEOs, chief sustainability officers, journalists, and policy analysts to talk about what is going on in the world of clean and green tech. The meeting struck me as unusual for a couple of reasons.

First, there was a lot of positive energy—no pun intended—engendered primarily by the inventor types and CEOs (not surprising, I suppose, since they are the ones actually involved in creating things), as well as the sustainability officers who are always thinking about how to make their companies do more with less. Read more »

What South Korea Gains From Hosting the Nuclear Security Summit

by Scott A. Snyder
A view of the KORI nuclear power plant in Busan (Courtesy Reuters) A view of the KORI nuclear power plant in Busan (Courtesy Reuters)

The Nuclear Security Summit will bring more national leaders to Seoul than any other international meeting that South Korea has ever hosted.  Just the logistics for such a meeting are daunting, and South Korean hosts have been preparing for months to ensure no surprises (while the timing of North Korea’s  satellite launch announcement last week suggests that Pyongyang has been working for months on “surprises.”) Read more »

Can China Change Its Growth Model?

by Evan A. Feigenbaum
The Oriental Pearl Tower is pictured through a glass wall as people walking past and the skyline behind are reflected on the wall in the financial district of Pudong. (Aly Song / Courtesy Reuters) The Oriental Pearl Tower is pictured through a glass wall as people walking past and the skyline behind are reflected on the wall in the financial district of Pudong. (Aly Song / Courtesy Reuters)
How many countries with nearly two decades of double-digit growth under their belt would look in the mirror and say, “Hey, it’s just not working anymore?”

I daresay, not many.

But that is precisely what some Chinese leaders appear to be doing.

Read more »

Japan’s Iran Sanctions Dilemma

by Sheila A. Smith
Defense Minister Prince Salman receives a commemorative gift from Japanese Foreign Minister Koichiro Genba following official talks in Riyadh on Sunday. (SPA) Saudi Arabia's defense minister prince Salman bin Abdulaziz receives a commemorative gift from Japanese foreign minister Koichiro Genba following official talks in Riyadh January 8, 2012 (Courtesy SPA).

Cutting off Iranian oil imports has put Tokyo in a difficult position. The United States and its European allies have already agreed to up the ante on sanctions against Iran, but the domestic costs that Japan has to bear in order to cooperate are higher.

Prime Minister Yoshihiko Noda’s government has indicated its desire to cooperate, and last December the Ministry of Foreign Affairs announced new restrictions on the operations of 106 entities as well as one individual with potential links to proliferation-sensitive activities in Iran. But the real effort now is to reduce Japan’s oil imports from Tehran, and to negotiate an exemption from more stringent restrictions on Japanese banks included in the new U.S. sanctions law. Read more »

China’s Game-Changing Water Policies

by Elizabeth C. Economy
A farmer digs a trench to allow water to irrigate his field planted with winter wheat crop near the village of Lidong, located around 217 miles south of Beijing. A farmer digs a trench to allow water to irrigate his field planted with winter wheat crop near the village of Lidong, located around 217 miles south of Beijing. (David Gary / Courtesy of Reuters)

Water is an issue that preoccupies Chinese officials throughout the country, but nowhere perhaps as much as in Beijing. The already water-scarce capital has been suffering a continuous and precipitous decline in water availability over the past decades, as both population size and income levels have grown dramatically. Caixin magazine has a terrific new piece that details not only the current crisis but also the historical challenges Beijing has faced. The piece also explores what the capital should be doing but isn’t. Experts, for example, have been pushing pricing reform, water conservation, and recycling. Some of this is being done, but not enough. Instead, Beijing’s plans center on desalination, exploiting karst resources, and the South-North Water Diversion, each of which, as the article discusses, brings with it additional economic and potentially serious environmental costs. Read more »

ROK Green Growth Quarterly Update: July–September 2011

by Scott A. Snyder
Global Green Growth Institute chairman Han Seung-soo of South Korea delivers a keynote speech during the Global Green Growth Summit 2011 in Seoul June 20, 2011.

Global Green Growth Institute chairman Han Seung-soo of South Korea delivers a keynote speech during the Global Green Growth Summit 2011 in Seoul June 20, 2011 (Courtesy Global Green Growth Institute).

South Korean president Lee Myung-bak has made great strides internationally in propagating an international vision for green growth, especially through the work of the Global Green Growth Institute (GGGI). The Council on Foreign Relations has published a new report on South Korea’s green growth policies by Jill Kosch O’Donnell which describes South Korea’s newly emerging green growth partnerships with Denmark, the UAE, and the World Bank, as well as more mixed progress in implementing green growth strategies domestically. The report can be found here.

Read more »

“Paulson’s Principles” for the United States and China

by Evan A. Feigenbaum
U.S. Treasury Secretary Henry Paulson leaves after making closing statements after the 5th U.S.-China Strategic Economic Dialogue in Beijing, December 5, 2008. (Jason Lee/Courtesy Reuters)

U.S. Treasury Secretary Henry Paulson leaves after making closing statements after the 5th U.S.-China Strategic Economic Dialogue in Beijing, December 5, 2008. (Jason Lee/Courtesy Reuters)

With the glaring exception of Japan, Asian economies are recovering earlier and stronger from the crisis than nearly all others. And China has now cemented its place alongside the United States and Europe as a growth engine.

But China faces large—and intensifying—vulnerabilities.

Readers of Asia Unbound will know that I’ve talked here and written here about some of these challenges.

And so I thought I’d flag for interested readers a major speech delivered this morning in Washington by former Treasury Secretary Hank Paulson (full disclosure: my boss).

He has a deep history with the U.S. and Chinese economies—at Goldman Sachs, and then as the Treasury Secretary. As a banker, he worked on historic but thorny issues in China, like privatizations. And at the Treasury, he established the Strategic Economic Dialogue and played a central role in the creation of the Ten Year Energy and Environment Cooperation Framework.

The basic thrust of his speech is twofold:

First, both countries face growing economic challenges and vulnerabilities. And for its part, it is decidedly in the U.S. interest for China to get ahead of these challenges. As Paulson puts it, “China’s success at sustaining growth, fighting inflation, and transitioning from an economic model too dependent on exports and fixed asset investment is closely connected to our own success.”

Second, “the U.S. and China need to take steps—mostly individually, sometimes together—that will have the mutually beneficial effect of supporting and sustaining economic growth.”

That’s a striking formulation because it’s not focused on “cooperation” for its own sake. Rather, as Paulson argues, the U.S. and China “don’t always need to act jointly.” They can take separate and self-interested steps that, in the bargain, put their two economies onto a more complementary footing.

You can read the entire speech here, or watch it delivered here.

But for the central message, here are his five principles—let’s call them, “Paulson’s Principles”—quoted verbatim from the speech:

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Can India and America Up Their Investment Game?

by Evan A. Feigenbaum
Commuters on a suburban train during the morning rush hour in Mumbai.

Commuters on a suburban train during the morning rush hour in Mumbai.Danish Siddiqui/Courtesy Reuters.

My latest column is out in India’s financial daily, the Business Standard. I used this month’s column to talk a bit about structural impediments hindering U.S. investment in India. These challenges will grow if, as many economists suspect, India’s growth continues to slow from its restored post-crisis clip of 8 to 9 percent a year to something more on the order of 7 to 7.5 percent. And in that context, it’s worth noting that Indian stocks have just completed their worst quarter since 2008. And of course food price inflation remains as stubborn as ever.

Here’s my argument, which reflects in part a perspective from my new perch in Chicago rather than Washington, DC:

Read more »