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Asia Unbound

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

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Showing posts for "Financial Crisis"

China’s Great Rebalancing Act

by Evan A. Feigenbaum

A resident cycles past the Wumen Gate of the Forbidden City in Beijing. Reuters/Jason Lee.

As Vice President Biden meets with Xi Jinping and other Chinese leaders this week, his number one economic talking point is almost certain to be about “rebalancing.”  Nearly all of Washington’s principal economic concerns, from currency valuation to Chinese industrial policy, touch this central issue.  But, quite frankly, rebalancing is not just an American goal.  It is, too, a Chinese objective because Beijing’s existing growth model—predicated on the two pillars of exports and capital-intensive investment—is delivering diminishing returns, and China’s savvy leaders know it.

A major new report from Eurasia Group, China Great Rebalancing Act, explains why.

First, a little truth in advertising:  I’m the head of the Asia practice group at Eurasia Group, so I helped write the report.  But our team’s report is well worth reading because it provides a very comprehensive overview of the forces and dynamics shaping the future of China’s political economy.

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What Will Vice President Biden Find in China? Take Two

by Evan A. Feigenbaum

U.S. Vice President Biden speaks at the U.S.-China Strategic and Economic Dialogue (S&ED) in Washington, DC, May 2011 (Courtesy Reuters/Kevin Lamarque)

In her latest post, my colleague, Liz Economy, asks:  What will Vice President Biden find in China?  I thought I’d try out my own response to this very direct question:

1.  Biden will find a China whose rise depends on economic growth but whose growth model is no longer sustainable.

Bluntly put, China’s leaders know that their capital-intensive, export-oriented approach is delivering diminishing returns and threatens to become a major political vulnerability for the government. The global economic crisis provided clear evidence that China’s export-driven economy is vulnerable to dips in demand in the rest of the world. Meanwhile, its dependence on investment has introduced distortions and imbalances into the Chinese economy.

Why should this matter to Biden and the United States?

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Who Will Win as China’s Economy Changes?

by Evan A. Feigenbaum

A worker stands inside the shell of a wind turbine tower in the assembly workshop of the Guodian United Power Technology Company in Baoding, China. Courtesy Reuters/David Gray.

My latest “DC Diary” column in India’s financial daily, the Business Standard, focuses on Asia’s new geography of manufacturing:

China has unsettled its neighbors with naval displays and diplomatic spats. But could erstwhile Asian strategic rivals end up as big winners from China’s economic success?

In one sense, at least, Asian economies are already winning from Chinese growth: slack global demand has meant that China increasingly powers the growth of nearly every major economy in Asia.

But the question increasingly matters in another sense, as well: Chinese leaders are committed to rebalancing at least some elements of their country’s economy. And while that, in time, will mean a more competitive and powerful China, it will also create new opportunities for those countries in Asia that get manufacturing and investment policies right.

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Asia’s Business in 2010 (and 2011)? Still Business!

by Evan A. Feigenbaum

Shanghai's early-morning skyline. (Nir Elias/Courtesy Reuters)

What was the top Asia story of 2010? My colleagues, Liz and Adam, posted their own “top ten” list last week. I hate to disagree with them, but, for me, the top story—actually, the top three stories—were all about economics.

My latest “DC Diary” column is out in India’s financial newspaper, the Business Standard, and I try to make this case. The column offers a look-back at Asian economies in 2010 with a preview of some of what may be to come in 2011.

My bottom line is this: For two generations, much of Asia relied on global demand to power its growth. But as the world economy claws its way back from crisis, others are looking to Asia to step up and lead.

And that, to my mind, was the top Asia story of 2010.

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Inflation is Political Too …

by Evan A. Feigenbaum

People look at vegetable prices at a local food market in Shanghai. (Carlos Barria/Courtesy Reuters)

Are there many things in Asia more political than inflation?  At a time when governments across the region are wrestling with inflationary pressure, it’s worth asking just how aggressive Asian governments might become and what tools they may pull out of their toolkits to fight it.

On this episode of CNBC’s “Squawk Box,” I discussed the issues with Martin Soong and Karen Tso.  The answer, I think, is that they could become very aggressive, but that we’re not likely to see a uniform response across the region.

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In China, Where You Sit is Where You Stand

by Evan A. Feigenbaum

Over at The New Yorker, Evan Osnos has posted a fun piece on his “Letter from China” blog.  He nicely captures the ambivalence so many in China seem to feel these days about becoming the world’s second-largest economy.

“Why the long face,” Evan asks?  The news “has sent China into a frenzy of self-flagellation, in the hope of reminding people that it is still home to a lot of very poor people.”

Actually, this is hardly the first time we’ve seen China go into this kind of denial:  Back in 2006, China became the world’s number one emitter of greenhouse gases.  And in 2009, according to the International Energy Agency (IEA), it became the world’s largest consumer of energy.   Now, in the second quarter of 2010, China, at $1.33 trillion, became the world’s second-largest economy, surpassing Japan and moving into position to overtake the United States by about 2030.

So … why aren’t they cheering in Beijing?

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The Return of Asian High Growth?

by Joshua Kurlantzick
Searchlights beam off the site of the Marina Bay Sands integrated resort in Singapore

Vivek Prakash/courtesy Reuters

Buried in the business section of the New York Times on Thursday, after pages of encomiums to George Steinbrenner, was a story that should have gotten more attention: Singapore’s economy may expand by as much as fifteen percent this year. Fifteen percent. For those who are counting, that’s about four times the projected growth for the United States, and a rate that Greece’s leaders probably would sell the rights to the Parthenon to attain.

In fact, much of South and East Asia appears to be returning to extraordinary high growth, making it the only engine of the global economy still firing. Indonesia is projected to grow by nearly six percent, while China may grow by 10.5 percent and Taiwan by nearly eight percent, among other examples of the regional trend.

But one must still question whether these growth rates truly show a fundamental shift in Asian economies, a shift informed by the global economic downturn. In many major East and South Asian economies, leaders over the past two years have repeatedly paid lip service to the idea that they must rebalance growth to depend less on exports and more on other drivers, including domestic consumption.

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Incredible India? Complicated India

by Evan A. Feigenbaum

Photo courtesy of REUTERS/Rupak de Chowdhuri

India’s tourist promotion slogan is “Incredible India!” And there’s a lot about that country that’s pretty incredible.

But three stories over the past week caught my attention. They show three (very) different sides of India’s incredible, but very complicated, growth story.

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Korea Inter Pares? — South Korea on the Global Stage

by Evan A. Feigenbaum

Photo courtesy of REUTERS/Jo Yong-Hak

It’s been a long and frustrating (and bloody exhausting … ) seventeen months for American trade policy. But on the margins of last month’s G20 summit, President Obama at last committed to complete the Korea-U.S. Free Trade Agreement (KORUS).

Seoul hosts the next G20 summit in November. So the move—and Obama’s timing—makes a lot of sense. Indeed, as my friend Phil Levy puts it, “the failure to move on KORUS was calling into question U.S. credibility on trade in general and U.S. standing in Asia in particular. It would have been exceedingly awkward to show up in Seoul for the November G20 meeting with nothing to offer.” Or as I put it a bit more bluntly on this blog back in May, “Here’s the thing about trade policy: the United States can’t be a leader in Asia without one.”

The good news is that the President has now instructed U.S. negotiators to wrap things up in time for his November visit to Seoul. And, in the meantime, he’ll have to gird his administration for the coming fight with a bevy of unhappy constituencies: on Capitol Hill, in labor, and ultimately within his own party.

But watching the administration prep the ground on KORUS, I couldn’t help but wonder whether an FTA of this scope would ever have moved forward had the relationship at stake not been with the Republic of Korea.

Why Korea?

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Looking Back: Human Rights in 2009

by Joshua Kurlantzick

Although it was buried amidst the past month’s news of the global financial crisis and Barack Obama’s struggles to maintain any political momentum, the global monitoring group Freedom House released its annual Freedom in the World outlook, which assesses the state of political and civil liberties in each country. For the fourth year in a row, global freedom declined, which Freedom House said was the longest continuous decline in the nearly forty years it has been producing the report. (Disclosure: I participated in some of the Freedom House assessments of countries in Southeast Asia.) Indeed, 2009 was one of the worst years in recent memory for human rights activists, with crackdowns on prominent figures from Liu Xiaobo to Shirin Ebadi, whose Nobel Peace Prize was seized by the Iranian government. (Talk about spite!) Read more »