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2017-07-26

US–China cooperation on North Korea remains critical?


Comments on Brendan Taylor, ANU “US–China cooperation on North Korea remains critical”, 26/07/2017
This is a useful and interesting post. I have some comments on it.

Firstly, the statement that the "Australian Prime Minister Malcolm Turnbull is in lockstep with Washington, asserting at last month’s Shangri-La Dialogue in Singapore that ‘China has the capacity and responsibility to bring North Korea to its senses’", describes the PM's either lack of or superficial understanding of the real situation in terms of China's influence on NK, or his simply grandiose political standing to show to both his domestic audience and his US ally how 'strong' and 'principled' he is. It is likely to be political hypocrisy to the extreme but preformed very poorly.

The PM way think it is so simple, logical and elegant to blame China for having not exerted enough pressure on NK, but is it really like that? Is it that impressive or effective? I am not sure how impressed Chinese leaders are by that performance.

Secondly, the use of the phrase "the so-called middle and hermit kingdoms" in the paragraph, "Yet ties between the so-called middle and hermit kingdoms have drifted over the past quarter century, deteriorating sharply under the reign of the current North Korean leader, the young and reckless dictator Kim Jong-un", is unfortunate and misleading. China is by no means a kingdom, far from it! The use reflects some sort of unwarranted stereotype of China in the west.

Thirdly, in addition to the few reasons (I don't necessarily share or agree with all of them, because there is no mention of any humanitarian concerns or motivations at all but only self-interests) that the author uses to explain why "Beijing’s unwillingness to exert greater economic pressure against Pyongyang ", is another one. That is, the US and Korea have frequently or regularly been conducting military exercises, of which some of them obviously very intimidating not only to the NK, but seriously affecting regional peace and stability.

It is no use and no good to just only mention one side of the NK nuclear and missile issues while ignoring the other contributing side. Aren't people saying that what occurred to the former Libyan leader Gaddafi and Iraqi leader Saddam Hussein provided some examples that partially motivated NK's leader for NK's programs?
Fourthly, “the recent chill in US–China relations does not auger well” in terms of successful resolving the issues, as the author puts it. In addition to those factors the author mentioned as contributing factors, it should not be to anyone’s surprise that it would not be easy to work with the current US president, whether it is for people from within the US or outside the US. He wants to do things his own way, let him do it. The ball is in his court and let’s see how best he can play with it.

2017-07-22

Growth potential out of regional disparity in income?


Comments on Yang Yao and Mengqi Wang, Peking University, “Maximising China’s growth potential”, 21/07/2017



While I agree with the general point of this post, it should be pointed out that the statement that "Analysis shows that a region should grow more slowly at high levels of GDP per capita and more quickly at low levels" should be properly interpreted as a possibility to present a potential rather than inevitability or definite. Otherwise the world would not have the developed and developing regions/countries.

To realise that potential, there is a lot of hard and intelligent work involved. Such as those proposed by the authors, to be adopted and implemented by those involved and work hard for many years to come.

What assumptions are required for the follow statement: "the lower GDP per capita — but higher growth rate — of the inland provinces could actually increase China’s growth rate of GDP per capita by 11.7 per cent in the next 15 years." Alternatively, what would be the base case scenario?

The numbers presented in the following statements are or appear to be quite large: "Specifically, the central and western regions would respectively grow 4.7 and 4.8 per cent faster on average in the coming 15 years, leading to an average of 2.6 per cent increase in the national growth rate forecasted for 2016–30." Undoubtedly, technological will need to play a key role to realise those numbers as the author argued.

The Chinese exchange rate regime


Comments on Yu Yongding, CASS “Backpedalling or a step forward in renminbi reform?” 20-22/07/2017

There are a few interesting points arose from this post. Firstly, it is a case of whether one views that as "half bottle empty" or "half bottle full" as far as the case of the equal weights being given to both previous day's close and the ‘theoretical RMB exchange rate’ in setting the renminbi central parity rate against the US dollar, although the author appears to be taking on the side of half bottle empty and possibly more negative than that. Yes, there might be a question of whether it is worthy to do such the way may be a little fiddling, but any negatives could also be viewed as positively through the lens of half empty to half full analogue.

Secondly, while free exchange may be viewed as a market way to sort out the exchange rate and may be a preferred way, it is by no means free of problems and often big and significant problems. For example, there can be big swings in the exchange rate that are exacerbated by speculative traders. Just as assets bubbles can arise and cause or have the potential to cause huge damages to the economy, bubbles can also arise in the foreign exchange markets. That is not to mention the so called overshooting phenomemon.

Maybe a simple question should be asked: why should a nation or nations suffer/incur the costs because of exchange bubbles caused by currency speculators?

It seems there is a point to have a stable exchange rate regime, given the role exchange rate plays as the relative prices of one country's goods and services as well as capital against another country, and particularly the tendency of instability of the foreign exchange market in light of speculative trading (as opposed to the real needs to buy foreign currency).

Governments would have greater difficulty in management/regulate asset prices even they would like to (some governments may not want to). On the other hand, it may be a little easier for governments to manage/regulate foreign exchange rate.

I think there is a case for economists to revisit the case of free versus fixed exchange rate regimes, or a combination of the two, even though the author appears to be in favour of a free exchange rate regime.
Any fixed exchange rate regime also needs some appropriate adjustment mechanisms to achieve longer term balance.

2017-07-06

Elegant wording and stuff!

Comments on Gary Hawke, VUW, "Is the TPP a sleeping beauty or an organ donor?" 26/06/2017

The use of sleeping beauty and organ donor aiming to best characterise the real situation and to provide a very vivid description is itself beautiful!
I appreciate the analysis and share its logic conclusion.
The last two paragraphs sum up them so elegantly!

A peace regime on the Korean Peninsula may require more to be done

Comments on Stephan Haggard, University of California San Diego, "A peace regime on the Korean Peninsula?" 28/06/2017

It seems that the Chinese proposal represents a good compromise that may provide a solid and acceptable method to advance and resolve the nuclear and peace issues on the Korean peninsula. Both North Korea and the US should make and need to make some compromises and it is in their respective interests as well as that of the region and the world as a whole.
A peace agreement may need also to bring into the picture of Russia at least and possibly Japan, given North Korea’s reliance on Russia and its opportunistic gaming in using China and Russia. The North may be more willing to have Russia on its side for a peace agreement with the US, one would think.
And arguably, Russia would make a peace agreement more effective because it can provide much more weight in preventing the US into unilateral military actions, or a threat of such actions. China does not have and will not be able to provide such a deterrence.

Time for Trump to hit back at China’s new cybersecurity law?

Comments on Claude Barfield, AEI "Time for Trump to hit back at China’s new cybersecurity law", 1/07/2017

Hasn’t the US, and for that matter Australia too, shut some Chinese firms out from participating in their projects? For example, Huawei has been shut out from Australia’s NBN work, even though Huawei is allowed in Europe.
Given the dubious reasons for shutting out Huawei and other Chinese firms by the US and Australia governments, what could China do to institute such similar reciprocal actions as the author argued here, leaving aside whether those arguments are sensible or not?
The Trump Administration has threatened a lot of trade measures against quite a number of countries, some of its allies included; aren’t they enough? Isn’t it enough, enough?
Is there any country in the world that is more unreasonable than the current posturing and rhetoric in the US, like asking Mexico to pay for the wall the US is to build along its border?
Is the world going insane?

Strategic vision and subtle diplomacy requried now to unite the world for good causes

Comments on Adam Triggs, ANU "Divided G7 an opportunity for Asia and the G20" 3/07/2017

It appears that the G20 meeting may make some real progress in terms of climate change and some other global and international issues, but it may be unlikely to be reflected in the meeting communique or documents, if the US is to veto or pressure others not to have those reflected in their wording.
It may require extremely high level of creativity in both diplomacy and wording to achieve a highly satisfactory meeting outcome.
But opportunities do exist for making some real achievements as the author suggested, given the needs for almost all other countries apart from the US (perhaps) to prevent the world from getting from bad to worse in the current very threating environment, even though they may take some time to show.
One should aim for some real progress.

Achieving real results: Balanced versus one sided approaches to nuclear and missile issues on Korean Penisula

Comments on Hitoshi Tanaka, JCIE: "Breaking the impasse with North Korea", 6/07/2017

While this post contains some good analysis of and proposals for resolving the nuclear issue on the Korea peninsula, I am afraid it still runs the risk that it remains in the realm of largely one-sided western thinking.
There are at least two areas to support such a conclusion. One is that it argues that China is able to apply much harsher sanctions but it has so far not done so. This may prove to be quite false. One could argue that that simply ignores the huge effort that China has made and is probably a handy excuse to use China as a scapegoat and for the US to take measures against china at will. Do people really think that North Korea will yield to harsh sanctions and gives up its nuclear and missile programs?
Further, is it right to ignore the effects on the ordinary people in North Korea of a complete cut off of trade by the international community that may starve the people and harden the resolve of the North Korean regime but may not be able to stop its programs?
Secondly, it only asks the North Korea to change but does not ask the side that the North Korea would argue and think to threaten or post threats to its security and existence to justify the development of its nuclear and missile programs as a response.
In comparison, it seems the joint proposal by China and Russia that demands both North Korea and the US/South Korea to make some compromise is more balanced and superior.
It is illogical and possibly irrational to only ask one side to compromise aimed at seeking a real solution, because that is unlikely to be a real solution and that may only prolong the resolution.
While we can argue that North Korea has been at fault for illegally developing its nuclear and missile programs, we run the risk of ignoring that continuing the same and one-sided approach may have been a significant factor that has so far prevented a successful resolution that we have been trying to achieve!