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Asia won’t beat COVID-19 without international money

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Author: Adam Triggs, ANU

AUD$2.5 trillion (US$1.8 trillion) — that’s how much Asia’s developing economies have spent so far in combating the health and economic impacts of the COVID-19 pandemic. On average they are spending the equivalent of 27 per cent of GDP, about the same as Asia’s developed economies when you add up government spending, tax cuts and central bank initiatives.

A monk withdraws money from an ATM in Vientiane, Laos (Photo: Reuters).

There is one thing that is very different between Asia’s developed and developing economies: where the money is coming from.

While Asia’s developed economies are relying on their central banks and finance ministries, data from the Asian Development Bank (ADB) shows that Asia’s developing economies are relying heavily on international and bilateral money.

This is a problem. Asia won’t beat COVID-19 without sufficient and reliable external finance, and there are plenty of things that need to be done to strengthen access to it.

On average, Asia’s developing economies are getting 49 per cent of their COVID-19 financing from external sources. This is not by choice — Asia’s developing countries rely on external finance because they lack the fiscal and monetary policy space enjoyed by developed economies to deal with the crisis. Shallow and inefficient financial markets make monetary policy less effective. Porous tax systems, foreign-denominated debt and flighty foreign investors reduce fiscal firepower.

Strengthening Asia’s health and economic response to COVID-19 means strengthening Asia’s access to multilateral financial resources. But multilateral resources are not all created equal. The primary international body to help countries facing financial stress is the Washington-based International Monetary Fund (IMF). The IMF is providing financial support to more than 100 countries around the world. Yet, when it comes to Asia the IMF is providing a mere 8 per cent of the total external support.

This is not surprising to those familiar with Asia’s financial history. The IMF’s self-confessed bungling of the Asian financial crisis — giving too little finance with too many (bad) reform conditionalities — means most Asian economies would rather go to the wall than go to Washington.

Asia’s deep disquiet about the IMF saw the creation of a US$240 billion regional alternative — the Chiang Mai Initiative Multilateralization (CMIM) — touted by its officials as being a fully operational alternative to the IMF. COVID-19 suggests otherwise. Despite the serious financial challenges facing Laos, Myanmar and other members, the CMIM has not had a single customer in the 10 years since its creation. With the biggest downturn since the Great Depression, this confirms the concerns of many: the CMIM is unworkable.

So where are Asia’s developing economies getting their money from? According to ADB data, almost 55 per cent is coming from the ADB, 20 per cent from the World Bank, 10 per cent from the Asian Infrastructure Investment Bank (AIIB), 8 per cent from the IMF and 5 per cent from bilateral aid (predominantly from the United States, Japan and Australia). The remainder is coming primarily from the Islamic Development Bank and the United Nations. While some institutions provide long-term development financing, it nevertheless frees up resources for short-term liquidity support and provides vital foreign exchange.

The United States should take note. Asia’s revealed preference is for the China-dominated AIIB over the US-dominated IMF. A rethink of its stubborn refusal to make the IMF’s governance more inclusive of Asia’s developing economies, including India, is in order.

The missing piece of the puzzle is bilateral currency swap lines. This is where one country’s central bank swaps its currency with that of another central bank on pre-agreed terms, providing rapid access to much needed foreign exchange during times of stress. We don’t know the full extent to which these facilities have been used during COVID-19, but we know that the countries that need them don’t have access to them.

Even when you exclude Japan’s unlimited swap line with the US Federal Reserve, more than 55 per cent of the available swap lines in Asia are for developed economies, not developing economies. Much like credit from a bank, the ones that need credit can’t get it.

Improving access to external finance will require reforms at the global, regional and bilateral level.

Globally, Asia’s response to COVID-19 should be a wake-up call to Washington. Making the IMF relevant to Asia means ensuring Asia is represented in the IMF’s governance. Should it eventuate, an incoming Biden administration should substantially increase IMF quotas, disproportionately favouring developing Asian economies while still preserving US dominance.

Regionally, COVID-19 has revealed the CMIM still to be an ineffective institution. Funding amounts are too low, the application process is too complicated and politicised, and any borrowing over 40 per cent of the country’s quota requires an IMF program anyway. If the IMF can’t be made more inclusive of Asia, the CMIM needs to be a credible alternative.

Bilaterally, swap lines are the fastest, easiest way to plug gaps in the global financial safety net. Too many countries who need them don’t have access to them, and many swap lines aren’t available during a crisis. Asia’s developed economies should collaborate. They need to make it clear that swap lines are available during a crisis and ensure countries that need them have them.

The global elimination of COVID-19 is a public good. But it is a weakest-link public good since our ability to eliminate it depends on the weakest links in the chain. Those weak links are the developing economies. Their success is our success, and they won’t succeed without international financial help.

Adam Triggs is Director of Research at the Asian Bureau of Economic Research (ABER), Crawford School of Public Policy, Australian National University, and non-resident fellow of the Global Economy and Development program at the Brookings Institution.

The post Asia won’t beat COVID-19 without international money first appeared on East Asia Forum.



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Modernising the Royal Thai Navy

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Author: Hadrien T Saperstein, Asia Centre, Paris

The Royal Thai Navy’s (RTN) maritime and naval strategic thought has undergone a major shift. In 2008, it moved away from its blue-water navy ambitions — epitomised by the aircraft carrier Chakri Naruebet — towards a comprehensive approach focussed on maritime security cooperation, collective defence and non-traditional security threat management. The RTN adopted the 2015 Network Centric Warfare Plan, published the 2015–2021 National Maritime Security Plan, and reorganised the Thai-Maritime Enforcement Command Centre in 2017.

Royal Thai Navy seamen wave to their colleagues as they depart to the Gulf of Aden in Somalia from the Royal Thai Navy base, in Sattahip, Chonburi province, east of Bangkok, 10 September, 2010 (Reuters/Chaiwat Subprasom).

In the contemporary age of warfare, continental great sea power states located on Thailand’s geopolitical periphery — China, India and the United States — engage in a whole range of militarised and non-militarised maritime activities.These sea powers seek to achieve specific strategic objectives in the amorphous space of grey-zone conflict without ruinous escalation to high-intensity war. This presents a complicated challenge for defence forces beyond strategising to linear rather than multi-dimensional approaches.

The continental great sea power states have already begun the process of converging land and maritime domains through the ‘continentalisation’ or ‘infrastructuralisation’ of the littoral seas. This process effectively brings to bear a land-centric, multi-dimensional approach to strategy and applies it to the maritime domain.

In response a research report on Maritime Security was forwarded in 2016 to the Thai National Assembly. It concluded that the RTN was no longer capable of securing its five maritime interests: sovereignty, security, prosperity, sustainability and honour. It also recommended a more flexible approach to maritime strategy and a more responsive posture in view of real-world circumstances.

Subsequently issued national policy documents, including the 2018–2037 20-Year National Strategy and the 2019–2022 National Security Policy and Plan, point to the same emerging grey-zone security challenges. But in practice, the policies and strategic thought endorsed in these plans essentially preserves the army-dominated status quo.

Michael Handel counsels that warfare in the contemporary age is far too complicated for a single comprehensive strategy or concept of security. Still, the concept of Hybrid Maritime Warfare (HMW) could help the RTN upgrade its doctrines and adjust effectively to its new operating environment.

The HMW concept is likely to be viewed favourably by the Thai government. The departing commander-in-chief of the Royal Thai Army, General Apirat Kongsompong, chose to adopt a similar concept, Land Hybrid Warfare, for the army during his tenure. The RTN’s Commander-in-Chief Admiral Luechai Ruddit leveraged this precedent to ‘stop [with] the past, start [with] the new’, opening the door for the HMW concept. The incoming army and navy leadership — General Narongphan Jitkaewthae and Admiral Chatchai Sriworakhan — will likely continue these efforts.

Retired US Admiral James Stavridis proposes in Maritime Hybrid Warfare is Coming that the HMW concept offers four unique advantages. First, it allows for the destruction of an adversary’s capabilities without attribution, allowing for ‘greater latitude of activity’ to avoid criticism and international sanctions. Second, as the maritime domain is a more fluid environment, ‘it bestows the advantage of surprise’. Third, it gives agents ‘effective control of the tempo and timeline of events, given their inherent ambiguity’. Fourth, ‘it is much less expensive than building the massive and capital expensive platforms needed to conduct conventional littoral warfare’.

Another advantage of HMW is that it helps navies that subsist in a political context where governments lean towards land-centric strategic thought. As Wilfried A Herrmann observed in Naval Modernisation in South-East Asia, ‘the national strategy of Thailand, designed and promoted by the respective [Army-dominated] Royal Thai governments, is not essentially a maritime strategy, but quite continental in its core’.

This land-centric understanding of the national military strategy is anachronistic. Recent technological and political trends point to the convergence of land-centric and maritime strategic concepts in the littoral seas.

The RTN was once prevented from developing a robust sea power capability due to the dominance of the ‘core continental tendencies’, evident in Thailand’s army-formulated national strategy and policy documents. Yet this problem may finally be circumvented through application of the HMW concept. This will enable the RTN to leverage its ‘continental sea power’ identity to achieve its previously outlined maritime interests in the littoral seas, particularly the Gulf of Thailand and the Andaman Sea.

The COVID-19 crisis has accelerated the need for the RTN to adopt the HMW concept. Thailand’s government will be focussed on continental matters for the foreseeable future, seeing that the burgeoning student protests are intensifying the debate over Thailand’s democratisation process. And the threat of a COVID-19 second-wave and an economic crisis loom. These scenarios may thwart any lingering blue-water ambitions expressed through large naval procurement programs, such as the government’s planned procurement of Chinese-built submarines.

Hadrien T Saperstein is a researcher at Asia Centre, Paris.

The post Modernising the Royal Thai Navy first appeared on East Asia Forum.



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China’s new Foreign Investment Law sticks to the script

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Author: Atharva Deshmukh, LSE and Pranav Bafna, ILS Law College Pune

The old Chinese saying to cross the river by feeling the stones offers insight into China’s approach to foreign investment and the global economic system. Ever since the high tide of foreign investors hit China in the late 1980s, China has frequently ‘felt the stones’ of globalisation, adjusting its balance through its regulatory infrastructure, most recently changed with its new Foreign Investment Law.

 

A pedestrian walks past the Shanghai Free Trade Zone(the Shanghai FTZ) in Shanghai, China, 23 March 2019 (Photos:Reuters).

 

The late 1990s were dominated by negotiations over China’s accession to the World Trade Organization (WTO). The Chinese Communist Party’s (CCP) authority became subject to international legal scrutiny. The reformist faction of the CCP led by Jiang Zemin and Zhu Rongji saw the WTO as an opportunity for future reform and rallied to attract foreign investors, carefully retaining Deng Xiaoping’s vision of ‘socialism with Chinese characteristics’.

Chinese regulations evolved in response to this new political reality. The ‘Three Represents doctrine’ finally recognised the ‘productive forces’ of the market. The foundations of a modern commercial legal system were laid down through commercial statutes pertaining to contracts, companies, civil procedures and securities.

These reforms kicked off a legendary era of high growth. Real GDP growth rates were north of 10 per cent for five years. Between 2002 and 2007, exports grew at 30 per cent annually. The real estate market was booming fuelled by rising GNI per capita which grew from US$3500 in 2002 to US$6830 in 2007.

Foreign interest in China also surged. Foreign-owned enterprises accounted for 28 per cent of China’s national industrial output prior to the WTO accession. By 2003, this figure had increased to 36 per cent.

From the get-go, China’s primary objective behind attracting foreign direct investment (FDI) was generating employment. China expected its WTO accession would add roughly 10 million jobs to the Chinese economy if growth expanded by 2.9 per cent annually. Until the promulgation of the Labour Contract Law in 2008, there was bearish pressure on labour costs with firms saving 20–30 per cent on their labour bill by omitting social insurance payments.

A relatively unregulated labour market attracted FDI from the global manufacturing sector, accounting for more than 60 per cent of incoming FDI during this period.

China’s desire to attract and retain foreign technology drove the evolution of its market entry legislation. The Chinese government only recognised certain forms of commercial partnerships such as equity joint ventures, contractual joint ventures and wholly-owned foreign enterprises, with joint ventures (JVs) quickly becoming the mode of choice. These partnerships allowed investors to hedge their risk while benefitting from essential local expertise. By 2006, 49 per cent of foreign investors entered China through JVs.

The geographic spread of FDI has also changed over time. China’s coastal regions, home to its pioneering Special Economic Zones (SEZs), were the first and greatest benefactors of FDI. By 2011, SEZs in coastal areas accounted for 22 per cent of China’s GDP, 45 per cent of FDI and had generated 30 million jobs.

All these achievements adhered to China’s broader political vision — to attract foreign capital by offering lower production costs, and in doing so expand employment and access to technology.

Chinese leaders solidified their belief in the relative superiority of the ‘Chinese model’ by 2008. In 2012, Xi Jinping took over Chinese leadership from Hu Jintao. Xi Jinping has two political streaks: the reformist and the nationalist. The reformist accords great value to higher rates of innovation and technological progress. The nationalist is geared towards restoring China’s lost glory — his ‘Xi Jinping thoughttouts the ‘great rejuvenation’ of China’s economic might and military prowess.

China’s sprawling metropolises became a reflection of China’s progress after 2008. They housed a burgeoning middle class with rapidly rising incomes. Consumer goods sales grew from under US$2 trillion in 2008 to roughly US$5 trillion by 2019. Urban discretionary spending increased by 9 per cent between 2010–2014.

FDI consequently pivoted toward domestic demand as China’s comparative advantage became less entwined with lower production costs. This transformed the sectoral composition of foreign investment as manufacturing declined as a share of FDI, while technology, IT services, aerospace, transportation and financial services rose.

Today, sophisticated and bespoke legislation is needed to woo new kinds of foreign firms. The Shanghai Free Trade Zone experiment in 2013 served as a benchmark for providing a legal environment in sync with international regulatory standards. The revamped Company Law along with the Preferred Share Pilot Program reflected Beijing’s resolve to compete in global financial markets while the 2008 National IP Strategy indicated its determination to foster innovation.

Export-oriented and labour-intensive sectors now face pressure from rising production costs and stricter environmental regulations. As China moves up the value chain, the eastern coastline symbolises its new-found exuberance while the western and central regions have become the front line in the manufacturing value chain.

With saturated FDI growth, China introduced a new set of reforms this year. The 2020 Foreign Investment Law shifts foreign investors from a notional to national pedestal by consolidating three separate foreign investment laws for foreign-owned entities.

It bans forced technology transfers, giving multinational corporations hitherto unknown levels of policy certainty by extending legal safeguards. The changes also feed into China’s ambitions of nurturing innovation by promising intellectual property right protection and flexibility in cross-border restructuring.

In the future, as in the past, China’s investment regulations will respond to the level and nature of FDI, while investors navigate the regulations stipulated by the Chinese government. The Foreign Investment Law goes some way in ensuring this historical relationship continues.

Atharva Deshmukh is a postgraduate student at the London School of Economics.

Pranav Bafna is a graduate of the Indian Law Society Law College, Pune, Maharashtra.

The post China’s new Foreign Investment Law sticks to the script first appeared on East Asia Forum.



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Duterte’s strongman politics exacerbates the Philippines’ COVID-19 crisis

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Author: Alec Regino, McGill University

The strongman playbook was a well-established feature of the Philippine presidency well before Rodrigo Duterte emerged on the national stage in 2016. Despite the initial optimism that accompanied democratisation after Ferdinand Marcos, the executive branch has often flirted with authoritarian fantasies.

President Rodrigo Duterte speaks during a ceremony marking the return of the three Balangiga bells taken by the U.S. military as war booty 117 years ago, at Balangiga, Eastern Samar in central Philippines, 15 December, 2018 (Reuters/Erik De Castro/File Photo).

Former president Fidel Ramos lobbied Congress to pass an Anti-Terrorism Bill in the 1990s, but was rebuffed due to concerns that the bill would lead to martial law. Ramos’ successor Joseph Estrada — the face of Philippine populism pre-Duterte— embraced the tough-guy credo in both his presidential campaign and his war against rebels in the southern Philippines. Gloria Macapagal-Arroyo used a politicised military to thwart anti-government protests and allegedly abet election fraud in Mindanao.

Duterte has taken the tactics central to the strongman persona to the next level, embracing the use of state-approved violence, blatantly disregarding democratic conventions and curtailing press freedoms. Duterte justifies his authoritarian tendencies by assuming the mantle of reluctant people’s representative against an out-of-touch, broken political system. When he was first elected, voters hoped that Duterte would apply his decisive leadership in Davao to address the complex issues that faced the nation — namely drug abuse, oligarchy and corruption.

Yet Duterte’s iron-fisted governance is not the simplistic, one-size-fits-all answer his supporters hoped for. This has never been more apparent as the Philippines endures the economic and social consequences of the COVID-19 pandemic. Large portions of the urban population live in cramped shanty towns and are daily wage earners, so work-from-home arrangements and social distancing are luxuries many simply cannot afford. Despite imposing one of the world’s strictest lockdowns in March, the Philippines has over 345,000 cases — by far the most in Southeast Asia.

According to the Social Weather Stations, an opinion-polling organisation, the percentage of involuntary hunger has doubled to 16.7 per cent since December 2019. Against this backdrop of dire uncertainty, it is not a shocking revelation that Filipinos have gone to the streets to protest the lack of government aid and relief goods to help keep them afloat.

Duterte constructs an ‘us versus them’ narrative to galvanise support for his administration’s policies. In 2016, his rhetoric against drug abuse pitted national security against the nation’s rampant drug problems. He argued then that a better Philippines could be built on the bodies of thousands of dead addicts and dealers.

His heavy-handed disciplinarian approach was supposed to bring order and security. Duterte tapped into the general frustration of voters who saw existing political actors as ineffective in achieving these goals. But as Julio Teehankee has noted, it is difficult to sustain that same adversarial narrative against an existential threat like a virus.

Duterte’s over-reliance on military leadership in creating a response to the pandemic has been a clear illustration of how his authoritarian tendencies fail to deliver. The pervasiveness of the military is apparent in the government’s response to COVID-19. The Enhanced Community Quarantine measures that the government used during lockdown derives from military border checkpoints used to control the movements of insurgent groups in the Philippines. The ‘Chief Implementer’ of the Philippines’ Declared National Policy Against COVID-19 is a retired general of the Armed Forces.

Likewise, when a group of 70 Filipino doctors cautioned against reopening the economy too hastily and urged the government to ‘draw up a consolidated, definitive plan of action’ against the pandemic, Duterte dared the doctors to mount an uprising against him. Duterte’s speech and actions regarding COVID-19 display a stubborn strongman unwilling to heed advice.

Rather than attempt to form any semblance of a national policy regarding COVID-19, Duterte and his allies have expended political capital on targeting their perceived opponents. They have passed the oppressive Anti-Terror Bill to silence dissent, ended media broadcast network ABS-CBN and threatened to seize the assets of the nations’ leading telecommunications companies. More recently, Duterte has threatened to ban Facebook over its removal of fake, pro-government accounts.

It has become increasingly evident that Duterte’s administration is ill-prepared to address the current social and economic realities facing the Philippines. In a national crisis that has already claimed over 6,000 lives, Duterte’s actions are not just tone-deaf — they are potentially fatal.

Duterte’s government has faced heavy criticism for its response to COVID-19. His politics is built around creating an ‘other’ to blame for national woes. Since it is difficult to ‘blame’ a virus, Duterte has instead targeted unruly quarantine violators. In April, he instructed the military and police to ‘shoot them dead’. Outrage over Duterte’s remarks led #OustDuterteNow to trend worldwide on Twitter with almost 500,000 tweets. This backlash occurred in spite of the fact that anyone who criticises the government online can be subpoenaed by the National Bureau of Investigation.

Despite evidence that points towards an increasing sense of frustration among the general population, the pandemic has not impacted Duterte’s approval ratings. Randy David speculates that fear of government retaliation influences respondents’ answers. Regardless, one thing is certain: The Philippines is losing its battle against COVID-19 and President Rodrigo Duterte has no one left to blame but himself.

Alec Regino is a postgraduate student of sociology at McGill University.

This article is part of an EAF special feature series on the novel coronavirus crisis and its impact.

The post Duterte’s strongman politics exacerbates the Philippines’ COVID-19 crisis first appeared on East Asia Forum.



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India’s banking sector: a liability for monetary policy effectiveness?

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Author: Rajeswari Sengupta, IGIDR

The effectiveness of monetary policy depends largely on the stability and soundness of a country’s financial system. In India, banks are the largest financial intermediaries. The banking sector plays a crucial role in transmitting changes in the policy interest rate to the real economy. Lingering problems in the banking sector hamper the smooth transmission of monetary policy, potentially rendering an important macroeconomic stabilisation policy tool impotent. The problem is exacerbated during periods of worsening macroeconomic outlook such as the slowdown triggered by the pandemic.

A worker walks past the logo of Reserve Bank of India (RBI) inside its office in New Delhi, India, 8 July 2019 (Photo: Reuters/Anushree Fadnavis).

Even prior to the pandemic, the link between monetary policy changes and bank credit growth had become tenuous. Since 2015, amid falling economic growth and deteriorating private corporate investment, India’s banks have been struggling to deal with stressed assets on their balance sheets. Their percentage of gross non-performing assets (gross NPAs) is among the highest in the world. Before the pandemic, the ratio of gross NPAs to total assets was 8.3 per cent for the overall banking system and close to 10 per cent for government-owned public sector banks.

The stress in the banking sector was exacerbated by structural weaknesses such as government ownership of 70 per cent of banks and regulations that allow banks to hide and delay problems, among other governance issues.

Years of balance sheet issues made the banks highly risk averse. Combined with the low demand for credit due to the investment slowdown in the private sector, this resulted in dismal credit growth. By the time the pandemic hit India in March 2020, bank credit growth had fallen to 6.14 per cent — the lowest in about six decades.

While the stress in the banking sector has been increasing, India’s GDP growth rate has been declining since 2015–16. The annual growth rate fell from 6.1 per cent in 2018–19 to 4.2 per cent in 2019–20, the lowest since 2008–09.

To stop the growth decline, policymakers implemented standard macroeconomic stabilisation policies. Between February 2019 and February 2020, the Reserve Bank of India (RBI) lowered the short-term monetary policy rate (repo rate) by 135 basis points to 5.15 per cent — the lowest rate in nearly a decade. But bank credit growth continued to decline. The effectiveness of monetary policy was hindered because banks did not pass on rate cuts to borrowers even on loans that were made during this period.

The pandemic compounded the structural problems in the Indian banking sector. To deal with the spread of the coronavirus, the Indian government imposed one of the most stringent lockdowns in the world on 24 March 2020. In the following months, the economy witnessed massive disruptions to supply chains as well as a severe collapse in aggregate demand. In the April–June quarter, India’s GDP contracted by almost 24 per cent, making it the worst performing major economy in the world.

The RBI further lowered the repo rate from 5.15 per cent to 4 per cent in a bid to boost growth. To provide temporary relief to cash-strapped firms, the RBI also imposed a loan moratorium for six months and recused borrowers from making repayments to the banks on outstanding loans as of 1 March 2020. With the end of the moratorium on 31 August, corporate delinquencies will inevitably increase. The balance sheet problem this time is likely to be far more severe than before. The prolonged lockdown has damaged the balance sheets of many firms, large and small. According to the RBI’s latest Financial Stability Report, in a severe stress scenario, the gross NPA ratio of commercial banks is likely to increase to 14.7 per cent by March 2021.

To address the situation, the RBI has initiated a restructuring program, where firms that get restructured will not be declared NPAs. This kind of a forbearance strategy will temporarily avert the severity of the NPA problem by postponing it to the future. The underlying balance sheet stress will not be resolved.

The widespread uncertainty associated with the pandemic combined with the devastating consequences for the economy will heighten the risk aversion of an already fragile banking sector, further impeding the transmission of the persistent rate cuts. It is no surprise that bank credit growth remains stifled.

So far there does not seem to be any coherent strategy for sorting out the banks’ balance sheet problems. The Insolvency and Bankruptcy Code was enacted in 2016 to resolve the NPA crisis but over the past few years the law has been diluted significantly. Operational challenges have also hampered its effective implementation. During the pandemic, the ambit of the law has been curtailed, which may significantly worsen the problem of stressed asset resolution going forward.

The experience of the past few years and the ongoing economic slowdown in India have brought to the fore the limited role that monetary policy can play in reviving growth when there are structural problems in the financial sector. For monetary policy to be effective in addressing growth challenges, first and foremost the banking sector needs to be fixed.

Rajeswari Sengupta is Assistant Professor of Economics at the Indira Gandhi Institute of Development Research (IGIDR), Mumbai.

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Sinology and the rise of China today

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Author: Wang Gungwu, NUS and ANU

The first Sinologists I met in the 1950s were Europeans working in the Orientalist tradition. They had inherited two centuries of scholarship on the languages and cultures of North Africa and Asia but were by this time primarily interested in China. There were very few scholars in the field and some of their work served the needs of European imperial powers. The best of them enriched our knowledge of the Eurasian continent.

A woman wearing a face mask walks on the Qianmen pedestrian street in the morning after the extended Lunar New Year holiday caused by the novel coronavirus outbreak, in Beijing, China 10 February, 2020 (Photo: Reuters/Carlos Garcia Rawlins).

 

During the 19th century, Western admiration for Chinese civilisation gave way to condescension and curiosity about how it became irrelevant so quickly. Most Chinese scholars rejected this Orientalist perspective, maintaining that their heritage was invaluable and that lessons from the past could help them deal with present challenges.

Sinology dominated Western studies of China until shortly after World War II, when a new communist China was seen as an enemy during the Cold War. The United States began providing new funding to encourage US social scientists to collaborate with sinologists, not least to find out how China’s past was relevant to its modernisation ambitions.

Where the European powers saw their modern achievements establish universal standards for civilisation, China’s political elites felt their country’s future still depended on key parts of their distinctive value system. That faith was tested when civil war and Japanese invasion came together to destroy the Nationalist regime. Efforts to develop a modern Chinese scholarship came to nothing. Instead, the past was rewritten to fit a Marxist-Leninist framework and the study of China entered a state of confusion.

Deng Xiaoping’s reforms after 1978 promised a fresh start. The resumption of academic exchanges abroad enabled PRC scholars to explore new methodologies. There was even recognition that the Chinese who had settled abroad could provide alternative perspectives on China and what being Chinese meant.

A more pluralist Sinology began to emerge in the 1980s. During this time scholars in the PRC were given more space to broaden their interests, and conferences in Hong Kong, Taiwan and the mainland on Hanxue–Sinology made it possible to talk about ‘International Sinology’.

Of particular interest was a 1991 conference at the National University of Singapore, when China scholars in a multicultural setting invited scholars from the PRC, Hong Kong and Taiwan to share their experiences with a new kind of Hanxue. The location was neither Western nor Chinese, and the presentations showcased many different ideas about Sinology. Some saw it as an inseparable partner of China studies, while others saw Guoxue, the mainland-Chinese equivalent, as a set of distinctive approaches parallel to the new paths of Sinology.

China is now studied in several different ways: as an ancient civilisation rising again after a spectacular fall, as a rising power that is challenging Western dominance and as an exceptional kind of modernising nation-state ambitious to regain the respect it once enjoyed. These perspectives reflect the pluralism that followed when China studies became increasingly globalised.

There are now at least three levels of cooperative effort that scholars of China can draw on: the best work of generations of Sinologists, modern Guoxue scholarship in China and the new Sinology that includes the work of social scientists.

The first turning point came when Guoxue scholars saw value in the work of sinologists, in particular the archaeological skills they introduced to China.

The second turning point came when Chinese scholars, whose Guoxue heritage was rooted in the jingshi tradition of serving the state, began to see that modern social science represented the Western equivalent of Jingshi knowledge that was directed towards current problems of material progress. This led to the realisation that strict training in modern academic disciplines was also essential for China’s future progress, notably in new subjects like economics, law and administration, sociology, geography and psychology.

When classical scholars within and outside China became familiar with the methodologies of the social sciences, they extended the depth and breadth of China scholarship. This also enabled the modern Chinese state to connect with its past and build on its continuities.

But there is another dimension of this plurality that calls for concern. China is now seen by the United States as a threat to its supremacy. In such a context, the knowledge gathered by pluralist Sinology could serve as a weapon for self-defence or for intelligent offence. Even as international Sinologists try to work together, they are travelling on a road with many danger signs.

Sinologists will have to learn how to wield their knowledge to defend the integrity of their profession and to help put out the fires that are set alight by policy-determined biases. That task will always be difficult. But it remains an unshirkable responsibility for pluralist Sinologists to confront the challenge.

Wang Gungwu AO CBE is Emeritus Professor at the Australian National University and University Professor at the National University of Singapore.

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Securing an ‘Asian NATO’ or destabilising Korea relations?

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Author: Anthony V Rinna, Sino-NK

US Secretary of State Mike Pompeo intended to meet his South Korean counterpart Kang Kyung-wha on 7 October 2020. But the visit was cancelled after US President Donald Trump contracted COVID-19. He was expected to discuss prospects of South Korea deepening its engagement with the Quadrilateral Security Dialogue, or the Quad, consisting of the United States, India, Japan and Australia.

 

Indian Foreign Minister Subrahmanyam Jaishankar, Japan's Foreign Minister Toshimitsu Motegi, Australia's Foreign Minister Marise Payne and U.S. Secretary of State Mike Pompeo pose for a picture prior the Quad ministerial meeting in Tokyo, Japan, 6 October 2020 (Photo: Reuters/Kiyoshi Ota).

 

In recent years talk has emerged of transforming the Quad into a veritable ‘Asian NATO’ positioned to promote a ‘free and open Indo–Pacific’ against China’s rise. Such a development would be a marked contrast with the US’s traditional hub-and-spokes style of alliances in the Indo–Pacific.

Aware that Pompeo would raise the issue of the South Korea’s participation in a ‘Quad-plus’ format, Kang dismissed the idea of the country formally acceding to the Quad. Kang candidly stated that Seoul has no interest in participating in a US-led structural alliance in the Indo–Pacific.

Even in the ostensibly unlikely event that South Korea joins the Quad, such a development may ultimately be detrimental to the US’s North Korea policy. US attempts to entice South Korea into the Quad for the sake of containing China could harden Beijing’s views of the Korean Peninsula as an area critical to its attempts to ward off Washington’s geopolitical encroachment. Pushing South Korea to join the Quad could frustrate inter-Korean reconciliation by making Beijing more inclined to support a divided Korean Peninsula, reinforcing North Korea as a buffer state.

Policy discourse in South Korea has increasingly emphasised its dual position of having a primarily pro-US security orientation while being firmly connected to the Chinese economic sphere. Seoul has pursued a strategy of avoiding conflict with China by limiting its participation in Washington’s ‘free and open Indo-Pacific’ — the Quad being an integral part of US policy.

As Seoul feels increasing pressure to join the United States in a full-fledged anti-China alliance posture, Kang’s downplaying of any real chance South Korea would join the Quad no doubt comes in part from countervailing pressure Beijing has placed on South Korea.

Yang Jiechi, a member of the Political Bureau of the Communist Party of China’s Central Committee, visited South Korea’s Director of the National Security Suh Hoon on 22 August 2020. Yang stated that South Korea should ‘not stand on the US side’ and insisted that peaceful relations between China and the United States were essential for security in Northeast Asia.

For China, North Korea has a dual meaning for stability on the Korean Peninsula. It is critical for Chinese security on a peripheral level, while factoring heavily into Beijing’s power relations with Washington. South Korean accession to the Quad would only amplify North Korea’s geopolitical value for China.

At present, China may be willing to accept Korean unification under a South Korean government not fully aligned with the United States, showing that Beijing is not inextricably wedded to the existence of North Korea as an independent state. Whereas the ROK–US alliance is primarily ensconced in deterring North Korea, absorbing the southern half of the Korean Peninsula into an explicitly anti-China network would conceivably harden Beijing’s position on peaceful Korean unification.

South Korea is a democracy with values and interests that largely align with the United States, like all other Quad members. South Korea’s comparatively more vulnerable position in relation to China, and both countries’ stake on the question of North Korean security means that excessive attempts to rope Seoul into an ‘Asian NATO’ may backfire against US interests.

The official US policy position is that it supports peaceful Korean unification in such a way that the Korean people themselves are the ultimate deciders of their fate. In taking steps that may inhibit peaceful unification, Washington may lose even more of its waning trust with Seoul if it seeks to use the Korean Peninsula as a means to contain China. As China engages in increased diplomatic outreach to South Korea, the United States can ill-afford to give Seoul further doubts about its true intentions.

Washington should therefore restrain itself from pushing Seoul too hard to join the Quad as a full member, leveraging instead its shared interests with Seoul to focus foremost on seeing through an equitable solution to the Korean security crisis. South Korea’s accession to the Quad will complicate Beijing’s ties with Seoul and entrench the Korean Peninsula as an even more explicit geopolitical battleground between China and the United States.

Anthony V Rinna is a senior editor and specialist on Russian foreign policy in East Asia for the Sino-NK research group.

The post Securing an ‘Asian NATO’ or destabilising Korea relations? first appeared on East Asia Forum.



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The rise of lockdown radicalism

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Author: Farooq Yousaf, University of Newcastle

COVID-19 lockdowns throughout the world have aggravated socio-political inequalities, especially in the Global South as governments try to respond to the pandemic. Various terrorist, radical and violent extremist groups, especially the so-called Islamic State, are trying to cash in on these inequalities to propagate hate-filled narratives.

Filipino soldiers are pictured on the site of an explosion in Jolo Island, Sulu province, Philippines, 24 August 2020 (Photo: Reuters/Nickee Butlangan).

In Nigeria, for instance, Boko Haram has called the closure of mosques — a precaution taken in response to COVID-19 — a direct ‘attack on Islam’. Similarly, there remains fear among security experts that as the lockdowns continue to confine people to their homes, radical and violent extremist groups are gaining an opportunity to radicalise ‘younger’ audiences who are spending more unsupervised time on the Internet.

The Australian Security Intelligence Organisation’s (ASIO) Deputy Director-General Heather Cook, speaking at the Australian Parliament’s Joint Intelligence and Security Committee, also warned that the conditions arising out of the pandemic have provided extremist groups, including neo-Nazi organisations, the means to radicalise more people.

In a recent meeting of the UN Security Council on pressing global security issues in August, counter-terrorism experts noted a spike in the so-called Islamic State’s (IS) online activities. Experts also reiterated the importance of repatriating terrorist families stranded in the Middle East to prevent IS from spreading its influence. These concerns indicate that the threat from violent extremist and terrorist groups such as IS remains within both ‘virtual’ (online) and ‘physical’ (family) networks.

In recent months, IS’s online propaganda campaign — unlike its coherent media campaigns during the group’s peak before 2017 — has mushroomed, with supporters all over the world running individual campaigns. According to Michael Krona, much of the IS literature is now propagated by IS supporters through bots on Telegram and other social media platforms. Moreover, in order to avoid detection by law enforcement agencies, IS and its supporters have increased their online activity in recent months through the constant renewal of online hyperlinks and the migration to and from different platforms.

Security agencies in South Asia have also witnessed a spike in IS’s online activity intended to radicalise a younger audience. India’s National Investigation Agency (NIA) reported a rise in online activity from IS supporters, especially in the southern states of Kerala, Telangana, Andhra Pradesh, Karnataka and Tamil Nadu, where 122 accused have so far been arrested. Bangladesh similarly reported a surge in online IS propaganda activities mainly targeting urban, educated youths.

Family terror networks remain a prominent feature of IS’s global operations. These networks, even today, present a major global security threat mostly because of legal, social and privacy concerns that make it challenging to monitor family units and their activities extensively. Several high-profile terrorist attacks under the banner of IS, in recent times, have involved marriage and relatives. In one instance on 24 August, ‘widows’ of two prominent IS militants carried out twin suicide bombings in Jolo town in the Philippines, killing 15. Similarly, this October, security agencies in the Philippines arrested another woman planning a suicide attack in the country. Rezky Fantasya Rullie is believed to be the wife of a militant killed in Sulu in August and possibly the daughter of two suicide bombers who conducted an attack on a Catholic cathedral in Jolo in 2019.

That members of the same family unit are involved in radicalisation activities and terrorist attacks warrants attention from security strategists and policymakers. With lockdowns in place in most of the world and IS supporters increasing their online presence, the probability that traditional conservative families will be targeted by IS for radicalisation is higher. In such families, older male members are generally revered, making it easier to persuade both younger and female members into joining extremist political, religious and violent groups.

There is now a specific focus among extremist groups on recruiting female operatives, especially in Bangladesh, suggesting these groups are increasingly turning to women to radicalise other members of the family. Other groups in South Asia such as Lashkar-e-Taiba — the Pakistani militant group accused of engaging in proxy-warfare in Indian Kashmir — have effectively targeted and used females to convince their sons to wage jihad against India.

The twin threats of virtual and physical recruitment present short and long-term implications for states in the Global South that lack the infrastructure and capabilities to combat radicalisation and terrorism. Although technological advancements enable the monitoring of terrorists on online networks, monitoring and countering physical family networks still presents significant policy challenges.

As witnessed in the well-coordinated 2019 Easter attacks in Sri Lanka — involving members of two families — even though the operational capacity of IS has taken a significant hit in the Middle East, the threat of online and family terror networks, especially in South Asia, cannot be underestimated.

Farooq Yousaf holds a PhD in politics from the University of Newcastle, Australia.

This article is part of an EAF special feature series on the novel coronavirus crisis and its impact.

The post The rise of lockdown radicalism first appeared on East Asia Forum.



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Myanmar’s national unity lost in translation

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Author: Myo Min, Yangon School of Political Science

From the very beginning of Myanmar’s political transition, one of the main challenges has been transforming a country divided by language, culture, territory, and religion into a socially cohesive state. International organisations and newly elected civilian governments have promoted social cohesion in an attempt to overcome these differences. Although many programs have been implemented by the government and local communities since 2010, most emphasise an ‘integrationist’ approach that does not accommodate ethnic minorities.

Students wait for Myanmar's State Counsellor Aung San Suu Kyi to arrive at a school in Kawhmu, Yangon, Myanmar, 18 July, 2019 (Photo: Reuters/Ann Wang).

The Myanmar government still fails to acknowledge the preference for language-based self-determination and greater communal rights among minority communities. And while there is ample coverage of Myanmar’s peace process, the importance of social cohesion policies is often overlooked. A closer look shows that reforming the government’s social cohesion policy is of paramount importance to Myanmar’s future.

The UN Development Program, in partnership with the NGO Search for Common Ground, initiated a country-wide social program titled ‘Social Cohesion for Stronger Communities’ (SC2) in 2015. The program promotes a common public identity which minimises ethnic cleavages without demanding ethno-cultural uniformity in the private sphere.

It stands for a single public identity to be promoted by individuals from all ethnic communities, social mixing in schools and workplaces, and promotion of tolerance of cultural diversity. It stresses the importance of integrating subgroup identities into the mainstream in order to achieve national unity.

But the ‘mainstream’ in Myanmar is construed to apply primarily to the dominant, majority group — the Bamar people speaking the Burmese language. Promoting a single identity is problematic for ethnic minority groups whose most important objective is the right to self-determination — defined by democratic self-rule within a federal system — and the exercise of cultural autonomy.

For ethnic minorities, the concept of self-determination should be minimally articulated so they ‘feel they equally co-own the country’, have the right to freely exercise their culture and can learn and use their own language in their own state. The right of minorities to freely exercise their cultural identity is one of the defining rifts in Myanmar politics.

The government, on the one hand, highlights the importance of social cohesion, while also vetoing provisions that would advance it in a meaningful way. The official government understanding of social cohesion — the assimilation of ethnic minorities to the dominant ethnic group — is also evident in the nationwide program to erect statues of General Aung San, considered an independent hero and the founder of the Myanmar Armed Forces.

The move ignited protests by ethnic minority groups claiming that Aung San, a national hero for the Bamar, is little more than a representative of the ethnic majority.

Although the SC2 framework promotes tolerance and peaceful co-existence towards other minorities and religious communities, the common Burmese translation for the word tolerance has negative connotations and does not match the English meaning.

Tolerance (or to tolerate) is most often translated as thi kan hmu — a term that implies forbearance, or to bear patiently, which has a rather negative connotation. In Myanmar, ‘tolerance’ implies accepting things even though they are unpleasant.

Minority ethnic groups want the government to acknowledge and accommodate the values and norms that are linked to their identities rather than the mere tolerance of non-dominant groups through their ‘inclusion’ in the mainstream. This would minimally require the government to recognise more than one public identity.

Social cohesion is an important basis for a peaceful society. But the definition and conceptualisation of social cohesion must take into account the ethno-cultural divisions that exist in a society like Myanmar — and whether the benefits of social cohesion come at the expense of other social, religious or ethnic groups.

Myanmar’s political history teaches us that the imposition of specific national values as a means of integration has led the country into a perpetual state of conflict. For example, the promotion of a common language and education system ignites fears among many ethnic groups that there is no place for their own distinctive languages, threatening their cultures and ethnic identities.

Social cohesion has to go beyond securing the equal rights of individuals by guaranteeing unique social and cultural protections for all communities. Ethnic groups cannot survive if they lose their identity — just as the state cannot survive without sovereignty. National unity therefore depends on a state’s capacity to uphold the distinct identities of all citizens.

To avoid the risk of new conflict, the government must work collaboratively with minorities to assuage their concerns and secure their rights. The state must promote the identity of ethnic minorities in place of efforts to achieve cultural uniformity in the name of the so called ‘Union Sprit’ — a mantra of former military regimes that is now integrated into the Basic Principles of the 2008 Constitution.

Alongside these efforts, the international community needs to emphasise the empowerment of ethnic languages and the development of ethnic language-based education systems, both of which forge a path towards the right to self-determination.

Soon a new government will set the next milestones for Myanmar’s political development. A review of the country’s approach toward social cohesion should be a top priority.

Myo Min is a junior researcher at the Yangon School of Political Science.

The post Myanmar’s national unity lost in translation first appeared on East Asia Forum.



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What Suga’s election means for democracy in Japan

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Author: Amy Catalinac, NYU

Shinzo Abe resigned as Japan’s prime minister on 28 August 2020 for health reasons. Two weeks later, the Liberal Democratic Party (LDP) elected Yoshihide Suga as its new leader. On 16 September, Suga became Prime Minister in a vote in the Japanese Diet, where the LDP enjoys a majority. The LDP has controlled the Japanese government for all but four of the past 65 years. The LDP is the most successful political party the democratic world has ever seen, by both sheer number of years in office and election victories.

Yoshihide Suga speaks during a news conference following his confirmation as Prime Minister of Japan in Tokyo, Japan, 16 September 2020. (Photo: Reuters/Carl Court)

Historically, LDP politicians have had two main considerations when selecting their leaders. First, whether the candidate has popular support and a profile that can help the party win the next election. Second, what the candidate will do for them and their supporters.

From 1955 until 1993, LDP politicians mostly considered the latter. During this time, Japan had an unusual multi-member district electoral system that meant individual LDP politicians gained fewer advantages from having a popular leader than their counterparts in other industrialised democracies. It also meant posts in the Cabinet, parliament and party were divvied up among the different LDP factions in rough proportion to their strength. LDP politicians even converted the prime ministership into a post many could have a turn at by requiring that the sitting prime minister recontest his seat every two or three years.

In 1993, disagreement within the party culminated in the LDP losing control of government for the first time in its history. The non-LDP coalition government introduced a new electoral system. This was supposed to end LDP dominance by giving opposition parties the incentive to unite into a single party and move toward a moderate ideological platform that would be appealing to the median voter.

After their return to government in 1994, LDP politicians discovered that having a popular leader mattered more under the new electoral system. A popular leader could give them an edge over the opposition party that emerged in 1998, the Democratic Party of Japan (DPJ). They kept the requirement that leaders recontest their seats every few years and used those elections as opportunities to showcase to the Japanese public how seriously their candidates were considering the issues of the day.

In 2012, the DPJ fell apart after governing Japan since 2009. More than a quarter of its members fled in anticipation of the upcoming election, many to newly-created opposition parties. The December 2012 election handed a landslide victory to the LDP in large part because the opposition was so divided.

The DPJ’s disintegration had an immediate effect on how LDP politicians selected their leader. In the September 2012 leadership election, LDP politicians ignored the fact that rank-and-file LDP members — who play a key role as vote mobilisers in elections — favoured Shigeru Ishiba. Instead, they threw their support behind Shinzo Abe who only had half the number of rank-and-file votes Ishiba had.

Under Abe’s almost eight-year reign, the LDP did extraordinarily well. It won all six national elections and walked away with more than 60 per cent of seats in the three Lower House elections held in 2012, 2014 and 2017. Yet these victories were helped by deep divisions in the opposition camp. Multiple attempts at realignment failed. Today, no opposition party has a support rate that is anywhere near the LDP’s, with most languishing in the single digits.

With virtually no chance of being unseated in the next election, LDP politicians have reverted back to pre-1993 means of choosing their leader.

After Abe announced his resignation, polls revealed public support for Ishiba, but several LDP faction heads declared their support for Suga. As recently as June, only 3 per cent of the Japanese public indicated Suga as their preferred choice. After LDP Secretary General Toshihiro Nikai invoked the right to hold a party leadership election without the LDP’s rank-and-file, disenfranchising those more likely to support Ishiba, other LDP politicians jumped on the bandwagon. This makes sense when one considers the spoils Prime Minister Suga has to dole out. Once a front-runner emerges, those who don’t declare their support risk receiving nothing.

Suga was installed as Prime Minister by LDP heavyweights and his authority to govern is derived from them, not from the Japanese public. His constituency are the LDP heavyweights. He has stocked his Cabinet with people who have backed him or the underlings, relatives, or proteges of those who have backed him.

Policy under Suga is likely to look similar to Abe, partly because the constituency that helped install Abe also planted Suga. Being appointed to ministerial posts based on party connections is not usually a recipe for bold new ideas to grapple with the grave challenges facing Japan today.

Suga still has one ace up his sleeve: as Prime Minister he can call a snap election. By calling an election and winning a large majority, Suga can create an alternative constituency for himself — Japanese voters. He can tell his backers that because his supporters voted for the policy platform he ran on, he is duty-bound to fulfil his promises to them and implement this. If he has ambitions beyond doing the bidding of his backers, he could choose this route.

Amy Catalinac is Assistant Professor in the Department of Politics at New York University.

The post What Suga’s election means for democracy in Japan first appeared on East Asia Forum.



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