Unwise and ugly acts

Comments on Titli Basu, IDSA: "Asian Development Bank at 50 and Japan’s puzzle", 11/062017

This is a very interesting post that exposes the foolish, futile and self harm acts by some countries in the attempt to maintain their own and long held positions at the costs of other developing countries, as the author put it: “As the US-led international economic order has failed to reflect the shifting alignments, the ADB must grow in order to respond to the varying needs and ambitions of its developing member countries.”

I share the author’s view contained in the following paragraphs:
“The call for re-evaluating ADB’s voting rights is not new. Critics argue that present international institutions should permit space to developing nations and that failure to do so will hurt the relevance of these institutions. The emerging economies have long argued for representative governance, rationalising operations, easing the ADB’s internal processing time and encouraging public-private partnership investments. Japan must take the lead to facilitate governance reforms against the backdrop of AIIB and other new multilateral development banks. Failure to implement internal reforms will impact the ADB’s influence.
“Developing Asian nations will be the beneficiaries of this race for infrastructure financing. Productive competition will diversify emerging economies’ options to choose the most favourable financing terms. Long-term, this will support the larger purpose of empowering emerging Asian economies to augment national growth and enhance Asia’s ability to compete in the global economy.”
PS: I note the author is from the Institute for Defence Studies and Analyses (IDSA), New Delhi.

Many anti-dumping actions against China unfair and unjust

Comments on Minsoo Lee, ADB “China, the US and anti-dumping actions”,
10/062017

The use of anti-dumping against China by some western countries, as analysed by the author in this post, clearly demonstrate that it is ineffective in protecting the domestic producers and is more likely than not, harmful to both their domestic consumers as well as the overall welfare of those countries.

The main reason why some of those countries still hold China as hostage by refusing to acknowledge the market economy status of China, simply is due to the wish to contain China’s economic rise (or more realistically the pace or speed of that rise) and the strong lobbies by some of their domestic producers to protect their increasingly lost competitiveness as evidenced by changing in comparative advantages internationally.

Strong or stronger leaderships in those countries are badly needed to accept that the use of anti-dumping measures in the currently unfair and unjust international trading system and rules is detrimental to their national interests.

But sadly, politics can often trump rationality in economics in many if not all countries. It is particularly true in the contest where domestic politics is mixed with international politics, especially when China is concerned party.

In this case it is not hard to understand why the pure rational economics is compromised in reality. Economic models aiming at capturing the reality need to reflect this to be more effective and truthful.

I commend the objective analysis of this post by Minsoo Lee and tell what the truth is.

Commending courage in research

Comments on Jean-Pierre Lehmann, IMD: "Phasing out the US (dis)order in the Asia Pacific",

9/06/2017

I highly commend the author for this excellent post with bold and a way that does not necessarily bind to the conventionally political-correct view (presumably the main stream and dominant West view and probably not so West views in many quarters in the world).

It requires courage, wisdom and foresight, as well as true independence in thinking and writing.
I also appreciate the fact that the East Asia Forum allows the post to be presented on its forum.
Imagine how many voices are there for a call to abolish NATO, except for an interesting president of the most powerful country on earth?
Nowadays the phrase ‘pivot to Asia’ is not heard so often as it used to be following the change of the president in the US. Yet calling for ‘the US should phase out its military presence’ is so fresh and rare.

International relations should be based on equality and reciprocity

Comments on James Laurenceson, UTS: “Is China really a threat to maritime trade?", 4/06/2017

I think the point that Stephen Fitzgerald, Australia’s first ambassador to China, made is an important one, that is, that ‘what the US is really about is freedom of navigation for its military ships and aircraft to push hard up against Chinese waters — which it would not countenance near its own waters’.
The US should have a balanced, equal and reciprocal approach to international relations broadly and to the provision of freedom of navigation in particular.
An international order which is not equal but one-sided where the US can do anything to other countries (just like the current US president shows) and does not allow or accept other countries to do the same to it in return, is not just and should be changed.
The US should realise it cannot hold that position forever and sooner and later it has to change.

Having said that, every country, big and small and China included, should uphold the same standards in terms of international relations.

There are more monetary tools available

Comments on Ran Li, Peking University, "Monetary policy and China’s soaring leverage problem", 31 May 2017

While your work in that survey and in your pursuit is interesting and possibly important, one has take a broad and creative approach to what monetary tools can and can’t do. A useful lesson is what the FED did or has done in the aftermath of the Global Financial Crisis (particularly the financial crisis in the US following its subprime bursts.
You stated that: “Trying to maintain both inflation and financial stability would divert the limited power of monetary policy and complicate the evaluation of central bank performance.”
Please have a look at what the FED did, often dubbed as the so called an unconventional approach/method, and you may come to a very different conclusion.
One should not simply take the conventional view of monetary policies and be limited by that. One has to think creatively in dealing with the often complex reality.
I think China has done quite a bit of creative approaches in terms of monetary policies in dealing with banking reserve ratios and non-first home housing lending/loans.
You also argued that “To address the surging leverage issue, the root cause of rising leverage should be addressed through reform. China should adopt and strictly implement macro- and micro-prudential measures to prevent systemic risks. Instead of directly targeting leverage, the PBC should take the spillover effects to financial markets into consideration of all their decisions and closely cooperate with financial regulators. Further financial liberalisation and the removal of special protection for SOEs are also essential.”
Unless your reforms include creative approaches such as what the FED and the Chinese authorities have done, your advocate may be really too conventional and lack of some common sense. One should not be simply following a ‘textbook’ approach because that may be dogmatic.