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41. At the Crossroads: The TPP, AIIB, and Japan's Foreign Economic Strategy

Author:
Saori N. Katada
Publication Date:
05-2016
Content Type:
Working Paper
Institution:
East-West Center
Abstract:
In 2015, two mega-initiatives took shape that will affect economic relations in the Asia-Pacific region: the US-promoted Trans-Pacific Partnership (TPP) trade agreement and the China-led Asian Infrastructure Investment Bank (AIIB). Although they address different needs, both are expected to have profound effects on Asia's economic governance in the near future, and will shape economic norms in the Asia Pacific and beyond. Japan has joined the TPP but stayed out of the AIIB, decisions that might seem counterintuitive considering its history of resisting trade liberalization and of promoting infrastructure investment. Is Japan simply favoring its US ally over rival China? Or is it that Japan's position on the TPP and AIIB aligns with its own economic priorities, and enhances its geo-economic advantage? With a US-China competition over economic ideas and regional strategies, Japan occupies a unique position that may allow it to influence the direction of Asia-Pacific economic governance, which is now being battled out by the two "titans."
Topic:
Economics, International Trade and Finance, Political Economy, and Treaties and Agreements
Political Geography:
China and Asia

42. S-Japan Relations and Southeast Asia: Meeting Regional Demands

Author:
Saul P. Limaye and Tsutomu Kikuchi
Publication Date:
01-2016
Content Type:
Working Paper
Institution:
East-West Center
Abstract:
Until recently, Southeast Asia had not been a region of sustained focus for the US-Japan relationship. But the situation is changing. The international relations of the Asia-Pacific is becoming more "multipolarized." This requires the US and Japan to think about the future of the region beyond the issue of US-China relations, which has preoccupied past discussions. A number of nations and institutions in the Asia-Pacific region will substantially affect the region's future. Southeast Asian nations and the Association of Southeast Asian Nations (ASEAN) are among them. A new era of more coordinated, sustained, and combined commercial and security involvement by the US and Japan in Southeast Asia may be at hand. In light of these changes, the East-West Center in Washington (EWCW), in collaboration with the Japan Institute of International Affairs (JIIA), and through the support of the Sasakawa Peace Foundation (SPF), initiated a dialogue with Southeast Asians about their perspectives on how the US-Japan relationship and alliance could or should approach cooperation with the region.
Topic:
Security, Economics, Markets, and Peacekeeping
Political Geography:
United States, Japan, China, and Asia-Pacific

43. From Catching Up to Forging Ahead in Advanced Manufacturing—Reflections on China’s Future of Jobshina's Evolving Role in Latin America: Can it Be a Win-Win?

Author:
Dieter Ernst
Publication Date:
03-2016
Content Type:
Working Paper
Institution:
East-West Center
Abstract:
This paper explores what we know about possible employment effects of the 10-year plan, issued by the State Council on May 19, 2015, entitled Made in China 2025. MIC2025 was designed to address China’s emerging labor shortage challenge. To achieve this goal, the plan seeks to boost labor productivity through an increased use of robots and through network-based upgrading of the entire industrial value chain and related services. How might the projected increase in labor productivity affect the creation and quality of jobs in China? Will China’s push into advanced manufacturing now move the country’s manufacturing employment closer to the pattern of “employment de-industrialization” observed in the US and other industrialized countries? How China will cope with the advanced manufacturing challenge for employment will have major implications not only for the US and other industrialized countries, but also for emerging economies and, most importantly for the majority of developing countries that are still struggling as latecomers to labor-intensive industrial manufacturing. The paper lays out objectives of the MIC 2025 plan and highlights a failure of Chinese policy makers to take into account employment effects and other labor market issues when they design their grand visions of industrial policy. The paper finds that until 2014, manufacturing has acted as an employment absorber in China. However new data on unemployment, labor force participation and income inequality signal that China may now be moving towards an “employment de-industrialization” pattern, unless enough knowledge-intensive service jobs will be created in China’s growing information economy. The paper concludes with implications for policy and further research.
Topic:
Economics, International Political Economy, Markets, and Labor Issues
Political Geography:
China

44. Beyond Manufacturing: Developing the Service Sector to Drive Growth in the PRC

Author:
Wei Wang, Gemma Estrada, Jurgen Conrad, Sang-Hyo Lee, and Donghyun Park
Publication Date:
05-2016
Content Type:
Policy Brief
Institution:
East-West Center
Abstract:
As demand from global markets declines, slowing exports of manufactured goods from the People's Republic of China means the country must increasingly rely on domestic markets for growth. Unlike manufactured goods, services—those "intangible" products that include everything from transportation to scientific research to real estate services—are geared more toward domestic markets. Services, then, will be key to the rebalancing process. However, while the service sector has grown rapidly in the PRC, it continues to lag behind other countries at similar stages of development. In addition, the sector is dominated by traditional low-end types of services, rather than knowledge-intensive services. Heavy regulatory burdens, barriers to trade in services, and an unfavorable policy environment have been major obstacles to upgrading the sector and improving its competitiveness. Policy reform should focus on strengthening competition to raise productivity, with the goal of increasing not only the number of jobs and contribution to GDP, but also of positioning the service sector to compete internationally and spur export growth.
Topic:
Economics, Markets, Reform, and GDP
Political Geography:
China

45. The North Korea Crisis and Regional Responses

Author:
Ching-Chang Chen, Denny Roy, and Utpal Vyas
Publication Date:
04-2015
Content Type:
Book
Institution:
East-West Center
Abstract:
The Kim Jong Un (KJU) regime, since its inception, has ratcheted up tension on the Korean Peninsula. His decision to dishonor what he had agreed to—a moratorium on nuclear tests and long-range missile launches as well as the return of IAEA (International Atomic Energy Agency) inspectors to Yongbyon—at several rounds of bilateral talks with the United States in February 2012 confirmed the belief that North Korea is a historically unpredictable and unreliable actor. Because the new North Korean leadership needed to fulfill its promise that North Korea would enter an “era of being a strong and prosperous nation ( gangseongdaeguk ),” pursuing economic recovery by easing tension through reconciliation with the international community, including the United States, was of significance. North Korea could have obtained nutritional assistance including corn, soy beans, vegetable oils, and ready-to-eat therapeutic food, but instead it initiated a string of provocations and hostile threats, which brought China's patience to the limits, strengthened UN sanctions, and consolidated the US position not to engage with North Korea before Pyongyang shows concrete steps for denuclearization. Hence, for the international observers, North Korea's gamble seemed to be a grave mistake.
Topic:
Economics
Political Geography:
China and North Korea

46. China’s Hidden Obstacles to Socioeconomic Rebalancing

Author:
Boy Lüthje and Christopher A. McNally
Publication Date:
10-2015
Content Type:
Policy Brief
Institution:
East-West Center
Abstract:
The global financial crisis of 2008-09 led to a policy consensus in China that its socioeconomic development model needed rebalancing. China's rapid development has been based on extensive growth reliant on exports, low wages, environmental exploitation, and the manufacturing of cheap products. China's current plans identify paths to economic rebalancing through intensive growth driven by rising investment in new technologies and manufacturing processes, improved wages and skills, and improved worker and environmental protections. Two industries, automotive and information technology, demonstrate the experience of and opportunities for rebalancing. Both offer improved employment conditions with better wages, but continue to incorporate large swaths of low-wage employment with little protection for workers' health and the environment. Economic rebalancing in China, therefore, has so far only appeared in pockets. Institutional safeguards for wages and labor standards remain constrained by powerful alliances among multinational corporations, Chinese state-owned/private enterprises, and the Chinese state.
Topic:
Economics, Political Economy, Labor Issues, and Financial Crisis
Political Geography:
China

47. From Catching Up to Forging Ahead: China’s Policies for Semiconductors

Publication Date:
01-2015
Content Type:
Working Paper
Institution:
East-West Center
Abstract:
China, the world's leading exporter of electronic products, faces a fundamental dilemma. It is the largest and fastest-growing market for semiconductors, the core component of those electronics products. Yet, at least 80 percent of the semiconductors used in China's electronics products must be imported. As a result, China's trade deficit in semiconductors has more than doubled since 2005 and now exceeds the huge amount it spends on crude oil imports. To correct this unsustainable imbalance, China's new strategy to upgrade its semiconductor industry seeks to move from catching up to forging ahead in semiconductors. The strategy calls for simultaneously strengthening advanced manufacturing and innovation capabilities in China's integrated circuit (IC) design industry and its domestic IC fabrication, primarily through foundry services. Drawing on policy documents and interviews with China-based industry experts, this study takes a close look at the objectives, strategy, and implementation policies of China's new push in semiconductors and examines what this implies for China's prospects in this industry. The study shows that China's new policy resorts to private equity investment rather than subsidy as the tool of industrial policy. The government participates in equity investment and claims it will do so without intervening in management decisions. This policy is expected to reduce the cost of investment funds for a selected group of firms, which is to form a "national team" in the semiconductor industry. China's new policy to upgrade its semiconductor industry through innovation does not represent a radical break with its deeply embedded statist tradition. Within these boundaries, however, the study detects important changes in the direction of a bottom-up, market-led approach to industrial policy. In response to the rising complexity and uncertainty of today's semiconductor industry, the government seems more open to experimentation with new approaches to investment finance and flexible, bottom-up policy implementation, based on multilayered industrial dialogues with private firms. China's policies to forge ahead in semiconductors, thus, provide an interesting example of its current efforts to move from investment-driven catching up to an innovation-driven development model.
Topic:
Economics, International Trade and Finance, Oil, Science and Technology, and Financial Markets
Political Geography:
China

48. The ASEAN Economic Community: What Stands in the Way?

Author:
Jon Dorsch
Publication Date:
09-2015
Content Type:
Policy Brief
Institution:
East-West Center
Abstract:
At the end of 2015 the Association of Southeast Asian Nations (ASEAN) will announce the establishment of the ASEAN Economic Community (AEC). In theory, this agreement should produce an association-wide economic integration. However, following the announcement, and for the foreseeable future, ASEAN member states will continue in significantly less than full regional economic integration. Why? Some observers believe that the AEC plans involve an "overly ambitious timeline and too many ill-thought-out initiatives." Others point to ASEAN's traditional aversion to legally binding agreements. While progress has been made in reducing or eliminating intra-ASEAN trade tariffs, substantial non-tariff barriers to trade persist. However, for most member states, the ASEAN market is relatively small while external markets, especially China, are growing rapidly. Given this outward-orientation for ASEAN trade, is the lack of an unhindered regional market really a problem?
Topic:
Economics, International Trade and Finance, and Markets
Political Geography:
China and Asia

49. China’s Hidden Obstacles to Socioeconomic Rebalancing

Author:
Christopher McNally and Boy Lüthje
Publication Date:
09-2015
Content Type:
Working Paper
Institution:
East-West Center
Abstract:
The global financial crisis of 2008-09 led to a policy consensus in China that its socioeconomic development model needed rebalancing. China's rapid development has been based on extensive growth reliant on exports, low wages, environmental exploitation, and the manufacturing of cheap products. China's current plans identify paths to economic rebalancing through intensive growth driven by rising investment in new technologies and manufacturing processes, improved wages and skills, and improved worker and environmental protections. Two industries, automotive and information technology, demonstrate the experience of and opportunities for rebalancing. Both offer improved employment conditions with better wages, but continue to incorporate large swaths of low-wage employment with little protection for workers' health and the environment. Economic rebalancing in China, therefore, has so far only appeared in pockets. Institutional safeguards for wages and labor standards remain constrained by powerful alliances among multinational corporations, Chinese state-owned/private enterprises, and the Chinese state.
Topic:
Economics, Markets, Science and Technology, Labor Issues, and Financial Crisis
Political Geography:
China

50. From Catching Up to Forging Ahead? China's Prospects in Semiconductors

Author:
Dieter Ernst
Publication Date:
10-2014
Content Type:
Working Paper
Institution:
East-West Center
Abstract:
China's new strategy to upgrade its semiconductor industry (outlined in the "Guidelines to Promote National Integrated Circuit Industry Development," June 24, 2014), seeks to move from catching-up to forging ahead in semiconductors, by strengthening simultaneously China's integrated circuit (IC) design industry and domestic IC foundry services.
Topic:
Economics, Globalization, Industrial Policy, Markets, and Science and Technology
Political Geography:
China and Asia

51. Ethnic Policy in China: Is Reform Inevitable?

Author:
James Leibold
Publication Date:
09-2013
Content Type:
Policy Brief
Institution:
East-West Center
Abstract:
Balancing ethnocultural diversity and dignity with national integration and interethnic cohesion has been a constant challenge for Chinese policymakers. With a sizeable ethnic minority population, China has long been engaged in this delicate balancing act. Despite episodic conflict, it could be argued that the Communist Party of China (CPC) has, especially since the 1976 death of Mao Zedong, done a relatively competent job of containing ethnic tensions.
Topic:
Ethnic Conflict, Human Rights, Human Welfare, and Governance
Political Geography:
China and Israel

52. Global Technology Sourcing in China's Integrated Circuit Design Industry: A Conceptual Framework and Preliminary Findings

Author:
Barry Naughton and Dieter Ernst
Publication Date:
08-2012
Content Type:
Working Paper
Institution:
East-West Center
Abstract:
The paper examines the role of global technology sourcing, and its drivers and impacts in China's integrated circuit (IC) design industry. IC design is one of the priority targets of China's innovation policy, as codified especially in the ―Strategic Emerging Industries‖ initiative. At the same time, however, China's IC design industry is deeply integrated into the vertically disintegrated global semiconductor industry, through markets, investment and technology. The paper highlights a fundamental challenge for China's innovation strategy: How can China reconcile its primary objective of strengthening indigenous innovation with the benefits that it could reap from its deep integration into international trade and into global networks of production and innovation?
Topic:
Economics, Industrial Policy, International Trade and Finance, and Science and Technology
Political Geography:
China and Israel

53. America's Voluntary Standards System--A "Best Practice" Model for Innovation Policy?

Author:
Dieter Ernst
Publication Date:
02-2012
Content Type:
Working Paper
Institution:
East-West Center
Abstract:
For its proponents, America's voluntary standards system is a "best practice" model for innovation policy. Foreign observers however are concerned about possible drawbacks of a standards system that is largely driven by the private sector. There are doubts, especially in Europe and China, whether the American system can balance public and private interests in times of extraordinary national and global challenges to innovation.
Topic:
Development, Globalization, Industrial Policy, International Trade and Finance, Science and Technology, Intellectual Property/Copyright, and Governance
Political Geography:
China, America, and Europe

54. Rising Tensions Over China's Monopoly on Rare Earths?

Author:
Jane Nakano
Publication Date:
05-2012
Content Type:
Policy Brief
Institution:
East-West Center
Abstract:
The United States, Japan, and the European Union—the three key consumers of Chinese rare earth materials—formally complained to the World Trade Organization (WTO) in March about Chinese restrictions on its rare earth exports. Several weeks later, China announced the establishment of a 150-plus member association with the official aim of promoting sustainable development within this sector. Some analysts wonder if this is part of a Chinese plan to circumvent international complaints by instituting an oligopolistic arrangement to control its rare earth exports. Others ask if this could be another step in an escalating dispute with China over the global supply of rare earth materials.
Topic:
International Relations, Development, International Trade and Finance, Markets, and Natural Resources
Political Geography:
United States, Japan, China, and Europe

55. Reluctant India, Rising China and Alliance Politics in the Asia-Pacific

Author:
Yogesh Joshi
Publication Date:
04-2012
Content Type:
Policy Brief
Institution:
East-West Center
Abstract:
US President Barack Obama used his 2012 State of the Union speech to explain that evolving geopolitical realities continue to make the United States indispensable in global politics. In the Asia-Pacific this indispensability emanates, in part, from the waves caused by the rise of China. Consequently, demands for an increased US presence echo around the region. In response, the United States has renewed its commitments to Japan, South Korea and Australia, stepped up its relations with Southeast Asia, and reasserted itself as an important player in multilateral institutions including the East Asia Summit, APEC, and ASEAN. Clearly, in the 21st century, US strategic focus has shifted from the Atlantic Ocean to the Pacific and Indian Oceans.
Topic:
Foreign Policy, Defense Policy, International Security, and Power Politics
Political Geography:
United States, Japan, China, India, South Korea, Australia, and Southeast Asia

56. False Hopes for Chinese Economic "Integration"

Author:
John Lee
Publication Date:
04-2012
Content Type:
Policy Brief
Institution:
East-West Center
Abstract:
In a recent online article in Foreignpolicy.com, regular columnist and head of the Economic Strategy Institute, Clyde Prestowitz, argued that the next president of the World Bank should be Zhou Xiaochuan, Chairman of the People's Bank of China. For Prestowitz, it was not just Zhou's excellent credentials that made him ideal for the position, but also the fact that he is Chinese. China is accurately accused of “gaming” the global economic liberal order through its currency policies, restricted market access for outside firms and governments, and internal intervention in the economy to the detriment of foreign firms. But Prestowitz believes that such an appointment would significantly encourage China to behave as a “responsible stakeholder.” Behind this thinking is the argument that the more power, prestige, and authority China accumulates within the existing order, the more liberal Chinese economic policies will become.
Topic:
Democratization, Economics, International Trade and Finance, Markets, and Monetary Policy
Political Geography:
China

57. China-North Korea: Renewal of the "Blood Alliance"

Author:
Masako Ikegami
Publication Date:
04-2012
Content Type:
Policy Brief
Institution:
East-West Center
Abstract:
As North Korea's latest rocket-missile launch approaches, there is speculation whether Beijing can halt Pyongyang's missile ambitions. In my view, Beijing will turn a blind eye towards North Korea's latest provocation, while simultaneously calling for restraint by all parties. Recently, the China-North Korea “blood alliance,” a concept of allies that originated during the Korean War, has been renewed, and it is in China's interests that North Korea consolidates its “absolute deterrence” capability to deter US forces in the region.
Topic:
Foreign Policy, Defense Policy, Arms Control and Proliferation, Nuclear Weapons, and Bilateral Relations
Political Geography:
United States, China, and North Korea

58. US Agricultural Exports to ASEAN Grow - But Face Competition

Author:
Michael McConnell
Publication Date:
03-2012
Content Type:
Policy Brief
Institution:
East-West Center
Abstract:
ASEAN countries have long been an important international market for US agricultural exports. The United States, in 2011, exported almost $9.6 billion of agricultural products to ASEAN, making it the sixth-largest export destination for US farmers, ranchers, and agribusinesses—behind Japan ($14 billion) and just behind the European Union ($9.6 billion), but well ahead of South Korea ($7 billion). Moreover, the value of agricultural trade between the United States and ASEAN almost doubled between 2007 and 2011, with the top four ASEAN markets in 2011 for the United States being Indonesia ($2.8 billion), the Philippines ($2.1 billion), Vietnam ($1.7 billion), and Thailand ($1.3 billion). With a population of 614 million and strong economic growth, it is expected that ASEAN will continue to be an important market for US agricultural products. However, the United States is likely to face increasing competition, particularly from China, Australia, and New Zealand, all of which have free trade agreements (FTAs) with ASEAN.
Topic:
Agriculture, Demographics, Economics, International Trade and Finance, Markets, and Food
Political Geography:
United States, China, Europe, East Asia, South Korea, Australia, Southeast Asia, and New Zealand

59. "Linsanity," Social Media and US-Asia Relations

Author:
Elina Noor
Publication Date:
03-2012
Content Type:
Policy Brief
Institution:
East-West Center
Abstract:
Jeremy Lin, the New York Knicks' former benchwarmer and now worldwide basketball sensation, is the new Cinderella Man or “Linderella” of basketball, and maybe even more. As the National Basketball Association's (NBA) first American-born player of Chinese-Taiwanese descent, Lin has notched impressive game statistics, sparked new “Lin-go” around his name, and enraptured fans from Queens to the Bay Area, Zhejiang to Taipei, and Jakarta to Kuala Lumpur.
Topic:
Mass Media and Youth Culture
Political Geography:
United States, China, New York, East Asia, Asia, Australia/Pacific, and Kuala Lumpur

60. Syria: What China Has Learned From its Libya Experience

Author:
Yun Sun
Publication Date:
02-2012
Content Type:
Policy Brief
Institution:
East-West Center
Abstract:
China's joint veto along with Russia of the UN Security Council Resolution (UNSCR) on Syria has provoked fierce international criticism. Labeled as “responsible for Syria's genocide,” Beijing's international image has struck a new low. China's decision to cast the unpopular vote was apparently well thought-out, as evidenced by its consistent diplomatic rhetoric and actions, both before and after the veto. However, in analyzing China's motivation, many analysts seemed to have missed an important point. That is, China's experience concerning Libya in 2011 had a direct impact on its actions regarding Syria this time around.
Topic:
International Relations, Foreign Policy, Insurgency, and Popular Revolt
Political Geography:
China, Middle East, Arabia, United Nations, and Syria