Hedging, alliance and dynamic developments

Comments on Darren J. Lim, ANU and Zack Cooper "Are East Asian states really hedging between the US and China?" 1/02/2016

The main argument or conclusion in this is likely to depend on the relative dynamic development of China and the US in terms of political, economic and military strengths. The argument may be currently valid, but can be problematic if the growth of China’s military strengths follows the same path of its economic development of the last three decades, particularly the last two decades.

Just as few had imagined or foreseen the rise of China economically three decades ago, it is difficult to predict what China’s military strengths will be in two to three decades into the future.

Another is whether China will maintain its current and long held policy of non alignment. Arguably, China could have options in that respect.

Should China, either alone or with reliable partners, have stronger or at least the same military strengths, the argument in this post could be significantly discounted.

Some rational choice now could be changed when the circumstances and assumptions change.

Further, the US, though strongly committed to its alliance partners now, at least apparently, will also need to calculate the costs of a direct war against a rising power.

During the cold war, the threat of mutual destruction made the US and the former Soviet avoid direct war. Arguably, the US may have had superiority in conventional weapons. The Soviet invaded Afghanistan, though eventually it had to withdrawal or it was defeated there.

The point is that few countries will go to war without considering the costs it would incur, particularly it is to fight for a partner country.

Beeson's bizarre comparison of China with Japan's military past

Comments on Mark Beeson "What China did and should learn from Japan", 30/01/2016

This article, though probably good in economics, is unfortunately overblown in terms of comparing China’s current military stance, or even its or approach in the South China Sea or East China Sea, with that of Imperial Japan in the second half of the 19th century and the first half of the 20th century. Japan was then a militarised country, expansionary and aggressor, invaded quite a number of countries in Asia.

It is hard to understand the author could get the comparison so wrong. Even in economic and developmental aspects, it is doubtful that the China model is similar to the Japan model.

In terms of development stage, China is now far from the stage of 1990 Japan. As a result, there is still a long way for China to go to ‘exhaust’ the role of state in maintain rapid growth, if the argument of the different roles of state (institution reforms) needs to evolve.

PS: That piece by Beenson, shows some economists may get very strange perspective when they apply their economics knowledge to something new to them, even though I am an economist too.

Model citizens required of middle powers to step up

Comments on Gareth Evans "Time for the middle powers to step up", 21/07/2015

There will be justifiable places for the middle powers in Asia or Asia Pacific to play their rightful roles in building and managing regional security and other useful regional institutions.

It, however, requires the middle powers to be creative and truly independent, at least when acting to play such roles. Otherwise, some middle powers may be quite biased and may act with some outdated historical links or allies, that may be perceived by some non allied regional members as doing harmful things to them.

Perhaps that is the challenge for some middle powers, do they really act in the interests of all the regional members or do they work for their allies, one may ask?

Certainly, some and possibly lot of actions by some middle powers have either an overt or covert agenda, such as the so called “The not-quite-quadrilateral: Australia, Japan and India” posted by David Lang on the Australian Policy Online, may point to some of those. That seems to aim squarely at containing China, if judged from what the Japanese official was saying. That would unlikely make China happy and warm to ideas like that.

Middle income trap for China and other newly emerging East Asian economies?

Comments on Peter Drysdale "Will Asia’s growth fizzle out?" 1/06/2015

It is interesting to note that there is a strong regional difference in terms of transition from middle to high income, namely Latin America and East Asia. There is a cluster of countries of successful transition in East Asia, while many Latin American countries fell into the so called middle income trap.

What that reflects is the similarities of some of the key components conducive to economic growth shared by and within a region.

China’s prospect of completing such a successful transition appears to be stronger, given its geographical location in East Asia.

While the absolute level quality of China’s institutions may be low and it is a fact that it is a authoritarian state, continued reforms in China are likely to enable its successful transition from a middle to a high income country.

America and power games in Asia

Comments on Yang Razali Kassim “East Asia Summit 2012: Asia’s power game unfolds”, 12/12/2012, http://www.eastasiaforum.org/2012/12/12/east-asia-summit-2012-asias-power-game-unfolds/

It appears that the third layer game has far reaching implications for the power play in East Asia, given it is out of the desire of ASEAN for its centrality purpose. RCEP seems to suggest that it will be difficult for any power to unilaterally act to attempt to purposefully exclude any important regional players. This is particularly noteworthy given the proceedings of other economic negotiations, particularly with some exclusivity.

The regional economic links and further integration is likely to be a central feature of future development in the region that will shape the eventual regional institutions and the attitudes of individual countries towards some difficult issues, including disputes among countries.

Comments on Hironori Fushita "Putin, Russia’s eastward pivot and prospects for Japan", June 15th, 2012, http://www.eastasiaforum.org/2012/06/15/26925/

I think regional cooperation should be the right approach to best developing Siberia and Far East.

New and creative thinking is needed.
Maybe some special economic development zones could be established where foreign firms and nationals be allowed to reside, work and do business there, but subject a special land tax in addition to other Russian taxes (excluding their other normal land taxes).
Those regions are vast in land size with scarce population.
A win-win situation/outcome could be created for Russia and other regional countries.

The US should not try to corner China

Comments on Aileen S.P. Baviera “Territorial disputes in East Asia: Proxies for China-US strategic competition?” 29/11/2010, http://www.eastasiaforum.org/2010/11/27/territorial-disputes-in-east-asia-proxies-for-china-us-strategic-competition/
It appears two relevant and important points may require consideration and analysis.

First, many commentators tend to conveniently adopt the lines of argument that used in this post, namely, "China’s growing territorial assertiveness may also be a consequence of pressure politics from nationalists within the PLA-Navy. Other compounding factors that could lead to an increase in Chinese territorial activism in the coming years include leadership succession in the Communist Party by 2012, and improving cross-Straits relations under a KMT government in Taiwan."

However, it may ignore the mass sentiment in China that it has been seriously bullied and insulted by the US and some of its allies, like the spying planes near China's border and coastlines, the bombing of Chinese embassy in Serbia and harassments of its ships in open seas. Many Chinese may think China has often been humiliated by the US.

The public assurance of the Diaoyu Islands by the US is unlikely to dampen but further fan that sentiment. Neither is the US intention to be involved in some disputed territories where China is a part.

The second point is how China will respond in near, mediate and longer terms to the US resistance and hostilities to the rise of China perceived by the Chinese public and some of its allies trying to take short term advantages from that.

It could be that China may show its strengths by firstly resolving issues with a hot and weak spot.

The US has got too much at hands!

Comments on Donald Emmerson “China’s ‘frown diplomacy’ in Southeast Asia”, 8/10/2010, http://www.eastasiaforum.org/2010/10/08/chinas-frown-diplomacy-in-southeast-asia/
The US has many things to be concerned or worry about, such as the wars in Iraq and Afghanistan, the middle east, its economy in terms of slow recovery, high unemployment and big deficits.

The book of Obama's Wars reflects part of the problems the US has been having: its military still thinks it is invincible and can win the Afghanistan war to a decent standard, but its political master has to consider its costs in both short and long terms and has to take a different direction.

In that context and with implications for the Southeast Asia region, the following from the post is interesting to note:

"As for the divergence of Southeast Asian and American perspectives on China, suffice it to recall this remark by a high-ranking official in an ASEAN country: ‘Remember,’ he told me, ‘for us in Asia, the US is geopolitical, but China is geographical.’ In other words: Faraway friends are welcome and helpful, but the local landscape is a permanent fact. One has to adapt to it — and to the seascape — to survive."

East Asia likely to be another pillar

Comments on Amy King “China and the lessons of the past”, 29/07/2010, http://www.eastasiaforum.org/2010/07/29/china-and-the-lessons-of-the-past/
While obviously it is Japan that determines and will continue to determine its foreign policy, how China behaves will also be an important factor that may have a bearing on Japan's choice.

It is in every country's interest that the Northeast Asian countries, namely China, Japan and Korea become the cornerstone of a successful East Asian community, given the sizes of their economies.

If China can't get the Northeast Asian countries close to a successful regional community, how can it become an effective and responsible global leader in the future? It has to consider what the best long term strategy should be for its position as a world leader to be consistent with its growing economy.

The idea of zero sum game by any of the key players will be unhelpful to the interests of the Northeast Asian countries.

Closer relations and further economic integration of the region is likely to become another pillar to complement the North America and Europe Union as the three most important pillars in global affairs in the 21st century.

PS: I have suggested in the past that a federation model for the reunification China and Taiwan under which each would choose its own political system. Hong Kong and Macau could be given special status under that federation. The federation's role is to strengthen the common interests of all members as a federation by coordinating matters related to national defence, external security and foreign affairs, but leave its members to run virtually almost all its internal affairs.
The model for East Asia regional organisation could be between those of the United Nations and the European Union. The European model seems to have an undesirable feature in terms of another layer of bureaucracy.

Consistency is needed!

Comments on K Kesavapany “ASEAN+8 – A recipe for a new regional architecture”, 8/05/2010, http://www.eastasiaforum.org/2010/05/08/asean8-a-recipe-for-a-new-regional-architecture/

K Kesavapany states correctly that "as the international centre of economic gravity moves towards East Asia, the challenge for the region is to develop a new architecture commensurate with its growing role in world affairs."

K Kesavapany argues that although "East Asia countries are well-represented in the Group of 20, the G20 is not, and cannot by its nature be envisaged as, an East Asian organisation. The Asian voices are matched, if not overwhelmed, by those of the United States; Canada, Brazil, Mexico and Argentina from the Americas; the European Union; the individual European countries of Germany, France, the United Kingdom and Italy; the great Eurasian power called Russia; Turkey, another Eurasian country; Saudi Arabia, the leader of the oil-producing world; and South Africa.

The G20 is a global organisation that seeks to reflect the existing balance of economic power. It is certainly necessary, but it is difficult to see how it could reflect the aspirations and responsibilities of an ascendant East Asia."

Those are obviously correct and excellent analyses that I would agree.

K Kesavapany then seems to have made a sudden yet smooth enough 180 degree turn, turning the back to the East Asia Summit concept and embracing to the ASEAN+8 concept.

Many people may be confused by the different ideas or proposals in East Asia, ASEAN+3, ASEAN+6, Asia Pacific Community, now ASEAN+8.

Let's remind people what ASEAN+8 and EAS mean:

ASEAN+8 = ASEAN, Australia, China, Japan, India, New Zealand, Russia, South Korea the United States.

SAS = members from East Asian countries.

I am not sure that people are now totally confused by the logic and rationale K Kesavapany uses.

If continuing K Kesavapany's earlier arguments, one would certainly expect that the EAS, as opposed to ASEAN+8 would be chosen by K Kesavapany to represent the voice of East Asia, but that is not so.

One would probably feel some inherent inconsistency in the development of K Kesavapany's arguments and conclusion.

It would be helpful if that inconsistency could be avoided.

Northeast Asia, East Asia and Asia

Comments on Donald Emmerson “ASEAN and American engagement in East Asia”, http://www.eastasiaforum.org/2010/04/25/asean-and-american-engagement-in-east-asia/

An important element in the East Asia region is north East Asia including China, Japan and Korea, though it has been dragged by some historical issues.

Once the three nations sort out their issues, they are likely to have much stronger influences in East Asia and Asia.

How long it will take for the three to become a more effective regional body depends on how quickly their leaders and governments will be mature enough to look into and focus on the future of their common interests as opposed to looking back at historical and being unforgiving for the past.

I think both economic and political development over the past two years are likely to promote them being embarking on a new path for much closer cooperation among themselves and then being an effective leader in Asia for Asian affairs.

North East Asia is likely to become the core of a closer and fast Asia integration and that day may come sooner than expected.

Asian integration is likely to be different from both America and Europe. It is likely to be more equal than the America model but with no monetary union as the Euro zone for a long time, given the current Greece fiscal problems.

Meaning of being open and inclusive

Comments on Tommy Koh “Building fraternity amongst East Asian states”, 8/04/2010, http://www.eastasiaforum.org/2010/04/08/building-fraternity-amongst-east-asian-states/

Tommy Koh's idea of focusing on the future and letting go of the past is excellent.

The idea of open and inclusiveness is interesting and needs better definition.

Being open and inclusive does not equate to that the East Asian Community can be the United Nations.

One needs to be practical and work with a well defined concept, rather than being confused or attempting too much in the name of open and inclusiveness.

That is not the right approach.

Common versus diverging regional intersts

Comments on Ezra Vogel “Regionalism in Asia: Why we should stick with existing structures”, 30/03/2010, http://www.eastasiaforum.org/2010/03/30/regionalism-in-asia-why-we-should-stick-with-existing-structures/

The author's view clearly reflects more of the interests of the US in the region, as well as its role in the region of Asia Pacific.

However, it remains to be seen if there are interests of Asian or East Asian countries that may go beyond those of the US interests.

For example, they may have their intra Asian regional affairs that have little to do with the US.

If those interests do not interest the US and the US has no desire or capacity to contribute to those intra Asian regional affairs, why shouldn't be an Asian regional body be set up to look after their own interests?

Understandably, there are common as well as diverging interests between Asia and the US.

Why should the US have a say on such a body?

Contrast to the view of the author, I see the need for both the current bodies and other regional bodies, with region properly defined.

Academia ideal and political reality

Comments on Joel Rathus “Japan’s early moves on the East Asian Community”, http://www.eastasiaforum.org/2010/03/21/japans-early-moves-on-the-east-asian-community/

I assume that the first meeting has not finished, but the second one has and got its consensus already.

It would be equally interesting to see what comes from the first meeting and what kind of consensus it may reach.

It may be expected that it would be easier to start with what those key members in common, that is, a common denominator, given the lack of progress for so long, irrespective consensus or lack of consensus, among academia or officials.

Academia may have very nice ideas, but sometimes those ideas lacks practical support, or in another word, impractical.

There seems a need for a balance between ideal and practical.

Don't be distracted by others

Comments on Kyung-Tae Lee “Where is the East Asian Community going?” 21/03/2010, http://www.eastasiaforum.org/2010/03/21/where-is-the-east-asian-community-going/

While some of the proposals may on their own have some merits, some of them may have acted as distractions and have the effect to hinder the progress of establishing an East Asia community.

East Asian countries need to unite and have in mind a common regional interest that assists its members' interests.

They need to look forward, as opposed to look backward.

Some issues should be left as bygone as bygone, and people should be focused on the common interest that will be better for every member from Pareto efficiency point of view, if I can borrow a jargon.

It may be easier to start with a common denominator to establish the core, and then keep the community open to legitimate members, as long as they share the chart for the community.

Asain affairs are for Asians to decide

Comments on Peter Drysdale “Japan and the East Asian Community – Weekly editorial”, 22/03/2010, http://www.eastasiaforum.org/2010/03/22/japan-and-the-east-asian-community-weekly-editorial/

With all respect, Asia and East Asia do not need to be US centric.

They can live by their own as a region.

They have enough weight and strength to be equal with EU or the US.

They need to think and act as a region, not a handicap.

It is interesting but not always helpful to naturally link to the US when people discuss about Asia, or East Asia.

People should not always live in the past. They need to look into the future.

Further, it is especially unhelpful for outsiders to tell Asia or East Asia what they should do for their own affairs.

Whether the US wishes to be everywhere and stay in Asia or East Asia's affairs should not be a key issue for Asians to consider their future.

Who will benefit from regional leadership rivalries?

Comments on Aurelia George-Mulgan “Hatoyama’s East Asia Community and regional leadership rivalries”, 13/10/2009, http://www.eastasiaforum.org/2009/10/13/hatoyamas-east-asia-community/

A couple of comments.
First, it is interesting that why an East Asian community should include non-East Asian nations to begin with. If it is open regionalism, why should it be called East Asian as opposed to Asian community?
Second, from a strategic point of view, it would be interesting to see which, Japan or China, will benefit from delaying an East Asian Community. This is especially pertinent in the context of the so called G2 potentially. In that context, there is no middle powers represented.

I am optimistic about an East Asia Community

Comments on Joel Rathus “East Asia Community: Little chance of a breakthrough at the Trilateral Summit”, 11/10/2009, http://www.eastasiaforum.org/2009/10/11/east-asia-community-little-chance-of-a-breakthrough-at-the-trilateral-summit/comment-page-1/#comment-66931

From the article one gets a sense that although the processes are slow, it is progressing and it will not be surprising that East Asia Community comes to shape in the not too distant future, although the author appears to be pessimistic and dismissive.

Let's look at the three reasons Rathus used for the pessimism.

"Firstly, at the global level, movement towards an EAC must be understood as game played between the great powers, China and the US. Japan and Korea are better understood as middle powers, allied with the US but with an option to exit in favour of a China-led regional order under the EAC. With the US demonstrating a greater desire to take Asia seriously and on its own terms (signing of the TAC), it seems unlikely that Japan and Korea will do any more than explore with China the ‘exit’ option."

It is noted that China is half of the G2 and is more willing to endorse the EAC. So the picture is really different from what Rathus sees.

"Secondly, at the regional level, the Trilateral Summit looks inward, rather than outward, focusing on coordination and cooperation amongst themselves rather than joint-leadership of a wider East Asia, and, even here, successes have been shallow. Agreements reached at the Summit thus far have been in the fields of environmental protection, health and cultural exchange – i.e. of a ‘low-hanging fruit’ variety. Whereas agreement on substantive matters such as deeper economic integration has so far been elusive, with the three-party Free Trade Agreement proposed, studied (then studied again) but resulting in no further action."

It is a natural process for the big three among the potential EAC members to be in sync themselves before they can launch a bigger community, isn't it? That is not necessarily "inward looking". So the implications are also different from what Rathus got.

"Thirdly, domestic forces within at least two of the three parties still conspire against a ‘European moment in East Asia’."

Let's talk about Japan first. Rathus sees A FTA with China may present a problem at the moment. But the question is that is a Japan-China FTA a precondition for an EAC? It is likely to be not. Second, an EAC is broader than the three themselves, and EAC integration does not necessarily mean an immediate FTA. So there is no implication of FTA for the EAC, at least at the moment if that is what Rathus is concerned with. What Rathus sees as obstacles is in fact no obstacle at all.

Now let's turn to Korea, the other member that Rathus mention. Rathus says: "In fact, despite its own rhetoric, Korea’s position is very similar to Japan – regional community is a limited interest at best." We have shown that it is not a problem for Japan, so naturally it will not be a problem for Korea either.

To conclude, the same facts, there are quite different implications that can be drawn. I have derived quite different implications based on Rathus' argued reasons.I won't cast a judgement whose are correct, for now.

East Asian arrangements need clarity

Comments on Peter Drysdale “Japan in the spotlight in the lead-up to APEC”, 11/10/2009, http://www.eastasiaforum.org/2009/10/11/japan-in-the-spotlight-in-the-lead-up-to-apec/

It is understandable the idea to include India in either APEC or APC, for the reason that it is an Asian country.
It is a little bit puzzling why India should be included in any East Asian arrangements, though.
It does not sound right. Either the name should be changed to reflect its real content, or it should not be included.
Why are people doing some things as such, incoherent and self contradictory?

Rethink international imbalances and the East Asian model

Comments on Mohamed Ariff “US-East Asia trade: Is East Asia ready for a rebalance?” 16/09/2009, http://www.eastasiaforum.org/2009/09/16/us-east-asia-trade-is-east-asia-ready-for-a-rebalance/

I had also thought the existing model would not be able to continue until a short while ago after I had read this article and had another thought about this.

It does not appear to me that the existing model needs to change.

When thinking and talking about the existing model in the wake of the financial and economic crises, most thought and argued that the international imbalance is unsustainable. While that is obviously true for the long run. But what is the "long run"? Until that is well defined, then one can get easily confused by "short term" inequilibrium and the needs for long run balancing.

Further, the existing model can continue when assets and trade in them are taken into account, e.g. the US households trade some of their assets for consumption. In that way, current account imbalance can last for a very very long time. That should and need not be a problem.

It is all too easy for one to blame international trade imbalance for any problems, whether it is the cause or not, or the real cause or not.

Comprehensive and solid analyses are needed to understand the implications of the "international imbalances". Partial analysis does not help to address the perceived problems and are very likely to be highly misleading to wrong policies with huge economic costs.

Economists should not just simply follow what a layman or some politicians say. They need to apply serious and rigorous economic thinking.