Commentary: Is China’s era of miracle growth over?

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Second, local governments enjoy soft budget constraints. They have easy access to extrabudgetary financial resources, which are essential for them to fund investment projects and accommodate investment hunger.

Although the central government has strengthened its control over local government debts in recent years, soft budget constraints continue since ensuring economic growth remains to be one of the key performance indicators for local governments.

Third, China has a simulated financial market – key financial activities are orchestrated by the government. China’s central and local governments not only own and control most financial institutions, but they also possess the power of appointment and removal of executives.

The simulated financial market is essential to reinforce soft budget constraints and political objectives, so dominant players are not motivated by profit. Credit risks and counterparty risks are difficult to assess because they are strongly influenced by government decisions.

When risks cannot be appropriately assessed, it is difficult for financial products to be reasonably priced.

Furthermore, the heavy control of the government also means that the private sector has very limited access to formal financial resources and must rely mainly on informal channels which increase borrowing costs and uncertainties.

In the 1980s and 1990s, China was able to remove key institutional barriers to establish the goods and services market and the labour market, thereby releasing pent up energy to allow for rapid economic growth over the last 40 years.

China’s economy has also successfully integrated with the global economy under favourable international conditions, especially after its World Trade Organization accession in 2001.

However, China’s economy still has strong Hungarian characteristics, and there is no significant progress in developing the financial market, which is the most essential mechanism in allocating resources productively.

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Commentary: Modi, the Maldives and the battle of the beaches

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BATTLE FOR TOURISTS

India’s outbound tourism is expanding along with its economy, and it was the largest source of visitors to the Maldives last year. So what Modi says – or in the case of Lakshadweep, hints at – matters. 

In the Maldives, officials saw the posts as an attempt to divert tourists from its own beaches. A trio of deputy ministers posted derogatory remarks mocking Modi’s attempts to promote Lakshadweep and demeaning Modi, including for his support of Israel.

The comments created a furore in India, which summoned the Maldivian envoy for a dressing down. The three officials have deleted their posts and been suspended.

Modi’s legions of online supporters rallied, using hashtags such as #BoycottMaldives and #ExploreIndianIslands. Indian business, often keen to curry official favour, chimed in: The Indian Chamber of Commerce’s Aviation and Tourism Committee asked trade groups to stop promoting the Maldives in light of “anti-India feelings” voiced by Maldivian officials. Booking agent EaseMyTrip said it was suspending bookings to the destination and published ads to that effect, with the slogan “Nation First, Business Later”.

The escalating spat has alarmed some Maldivians. “If the intention of the Indian government … was to irritate the Maldives or give a signal that ‘we too have islands and can destroy your tourism’, that’s not how states conduct relations,” says Mohamed Munavvar, a former attorney-general of the Maldives.

Munavvar, a former opposition party head, also criticised Muizzu’s response as “very immature”, adding that “India is a big country and our closest neighbour, to whom we have to turn in emergencies, and they have the right to develop their islands”.

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Commentary: Will the ‘China factor’ become an election issue in Indonesia?

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INDONESIA’S INDUSTRIAL AMBITIONS

On its part, Jokowi’s government maintains a positive view about future bilateral relations with Beijing.

In December 2023, Erick Thohir, as ad interim Coordinating Minister of Maritime Affairs and Investment (during minister Luhut Panjaitan’s spate of ill health), stated at the fourth Indonesia-China Business Partnership meeting in East Nusa Tenggara that the government appreciated the role of Chinese investors who had become industrial pioneers, laying the foundation of the downstream industry and helping to develop remote regions in Indonesia.

Thohir pointed out that under the bilateral strategic partnership that started in 2013, several important achievements, including the Jakarta-Bandung High-Speed Rail and work on Indonesia’s green energy transition, had been made. He added that Indonesia-China cooperation would be lasting, as it was built based on mutual trust and mutual benefit.

During the Jokowi administration, there is no doubt that China’s investment and economic role in Indonesia has grown, which matches Indonesia’s ambitions for a push in its industrialisation through infrastructure and downstreaming industry.

Nevertheless, China’s domination in the nickel industry in Indonesia is a cause for concern. One repercussion in the climate of decoupling has been on access to Western markets. In fact, Indonesia’s nickel products have no access to the US market, partly due to this “China factor”.

It is important to note that Indonesia has been trying to invite larger investments from Western countries but the latter are currently distracted by domestic concerns, the Ukraine war, and the Gaza crisis. Their appetite for open international trade and investment has been weakening.

Conversely and opportunistically, China has won partners and expanded its economic influence, particularly in Africa and Southeast Asia. According to official data, as of the third quarter of 2023, China and Hong Kong were the second and third largest investors in Indonesia after Singapore, with total investment reaching US$3.5 billion.

While the China factor will not likely be a controversial election issue in 2024, Indonesia still needs to carefully manage existing public apprehension concerning China’s growing economic role, especially when Indonesian lives are at stake.

The new administration taking over from Widodo will need to continue diversifying Indonesia’s economic cooperation, including with Australia, Canada, and New Zealand, the Middle East and Africa.

Leo Suryadinata is Visiting Senior Fellow, ISEAS – Yusof Ishak Institute and Adjunct Professor at S Rajaratnam School of International Studies at NTU. Siwage Dharma Negara is Senior Fellow and Co-coordinator of the Indonesia Studies Programme, and the Coordinator of the APEC Study Centre, ISEAS – Yusof Ishak Institute. This commentary first appeared on ISEAS – Yusof Ishak Institute’s blog, Fulcrum.

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Commentary: North Korea ramps up military rhetoric as Kim Jong Un gives up on reunification with South

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PRESTON, England: North Korea’s leader Kim Jong Un is continuing to ramp up his focus on nuclear weapons and taking a more aggressive military stance towards his neighbour South Korea.

In his 2023 year-end speech, in which he outlined his plans for 2024, Kim said inter-Korean relations had become “a relationship between two hostile countries and two belligerents at war”. For years Kim’s policy has been to attempt to reunify the two countries, which were separated in 1953 after the end of the Korean War. A tight military border has made it almost impossible for ordinary people to pass in or out of North Korea.

The North Korean leader also announced a plan to launch three new military spy satellites in 2024, highlighting the country’s continued focus on its space and military programmes.

In the first few days of January, state sources released photographs of his visit to a missile launcher factory, and Kim was reported as saying North Korea needed to “prepare for war”.

In statements that showed Kim’s increasingly aggressive rhetoric, he is reported as saying that he “judged the Republic of Korea clan to be our main enemy” and North Korea must keep “continuously stockpiling unparalleled overwhelming power”, due to growing hostilities with South Korea.

Kim’s new year’s plan was followed a few days later by North Korea firing around 200 artillery shells towards Yeonpyeong island in South Korea. Over the days that followed it fired more shells towards South Korea’s west coast.

During her new year’s greetings to South Korea, Kim’s sister, Kim Yo Jong, who is seen as an increasingly powerful figure, issued a statement which appeared to support the pursuit of further nuclear capabilities.

This has prompted renewed discussions among experts over the possibility of North Korea conducting a seventh nuclear test. The last nuclear test that it conducted was in 2017.

In 2022, North Korea revised its constitution to declare itself a nuclear state, and in 2023, North Korea recorded a record number of nuclear weapons tests, causing concern in South Korea and the United States.

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Commentary: Taiwan’s 2024 election results show China isn’t voters’ biggest concern

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In the run-up to the election on Saturday (Jan 13), China placed restrictions on Taiwan exports of petroleum products to the mainland covered by the cross-strait Economic Cooperation Framework Agreement to increase pressure.

Alongside these developments were continuing Chinese military activity near Taiwan, including the launch of a satellite and at least several surveillance balloons. There was also alleged pressure on tycoon Terry Kuo to withdraw his candidacy in the presidential race to force an electoral alliance between the TPP and KMT, which came on top of alleged efforts to discredit the DPP on social media.

Such activity was a continuation of developments from before the election campaign period. They combined to create a sense that pressure from China is a constant rather than a variable. This normalisation of the challenge from Beijing reduced the electoral effects of pressure from China.

NEUTRALISATION OF CHINA AS AN ISSUE

A third related observation is that the neutralisation of China as an issue in Taiwan’s electoral politics may point to a shift in Taiwan political landscape. The KMT’s performance in the legislative election was led largely by its local factions, which focus on service delivery and constituency issues.

DPP and TPP supporters tend to identify more with Taiwan and feel more distant from China, even if this translates into different substantive policy preferences. Chinese political pressure and economic uncertainty are further accelerating Taiwanese businesses’ relocation and diversification from China, which is consistent with broader global trends.

Taiwan foreign direct investment (FDI) to Southeast Asia has been growing in recent years and outstripped FDI to China in 2023. These trends mean that direct pro-Beijing appeals may be facing a diminishing market in Taiwan politics.

For the KMT, which has been a key bridge to Taiwan for the Chinese Communist Party (CCP), they may need to decide if they want to continue being the Chinese Nationalist Party or a party for Taiwanese.

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Commentary: K-pop without the ‘K’ just won’t pop

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NEW YORK: K-pop is betting that it can reverse its slowing global growth by becoming less Korean. This is a mistake: Without the “K”, the music is plain pop, undistinguishable from – and unable to compete with – the dominant American kind.

There is no question the K-pop wave is waning. Bang Si-hyuk, whose Hybe is behind such acts as BTS and NewJeans, believes the industry is in crisis. South Korean customs data shows that K-pop album exports in 2022 grew just 4.8 per cent to over US$230 million, compared with 62.1 per cent in 2021 and 82.6 per cent in 2020.

This is in no small part because of BTS, far and away the industry’s biggest act, went into hiatus at the end of 2022, to allow the seven band members to fulfil their mandatory military service and pursue solo projects.

At the time, there were fears of a decline in the US market, where BTS accounted for a third of all K-pop sales and streams. The US is K-pop’s second-biggest export market, behind Japan.

But overall album exports in the first half of last year were up a respectable 17 per cent. Jungkook, a BTS member, scored a huge hit with his solo album Golden, and the single Seven garnered a billion streams on Spotify – faster than any song previously.

So Bang’s warnings about a K-pop crisis seem a little premature.

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Commentary: Asian Cup kicks off in Qatar amid rising tensions in Middle East

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WHEN FOOTBALL AND POLITICS MIX

At the 2022 World Cup, Qatar established itself as a reliable host capable of successfully delivering events, a focal point for communicating a vision of Arab unity and a legitimate, trustworthy member of the international community. Officials in Doha will no doubt be seeking to do more of the same, especially given recent turbulence in the Middle East.

Over the last few years, Qatar has engaged in diplomacy between the United States and Taliban government in Afghanistan, arranged a hostage swap involving Iran and the United States, and been instrumental in negotiating the release of Gaza hostages in the Israel-Hamas war.

At the Asian Cup, Qatari officials will need to deploy their soft power and diplomacy to full effect, not least because of several teams that have qualified for the tournament.

The Gaza war has resulted in the deaths of several Palestinian football players and has posed challenges for the national team in preparing for the tournament. In its first match, the Palestinian team will face Iran – the country accused by Israel, the US, and their allies of being behind Hamas attacks, and of supporting Hezbollah in Lebanon.

At the 2022 World Cup, Iran drew the world’s condemnation as at the time women in the country were being arrested and beaten for refusing to cover their heads in public. This issue may resurrect itself once again, though the UAE’s appearance in the same group as the Iranians and Palestinians suggests more prominent issues may arise. Football and politics ideally should not mix, but very often they do.

Throughout the recent conflict, the UAE’s Etihad Airways has been one of the few international airlines that has continued to fly into Tel Aviv. This follows its normalisation of relations, in 2020, with Israel – a process from which several football deals emerged. Tournament host Qatar has always refused to follow suit, while Saudi Arabia has paused plans for normalisation following Israel’s military action in Gaza.

With this year’s Asian Cup taking place against a backdrop of such conflict and uncertainty, Saudi Arabia heads to it trying to establish a more progressive, responsible international reputation.

Nowhere has this been more evident than its investments in football. Five years ago at the Asian Cup, the kingdom came second in its group then exited in the round of 16 – an underwhelming performance compared to its smaller neighbours Qatar and the UAE (which reached the semi-final stage).

This time round, having spent heavily on overseas player acquisitions and its domestic league, Saudi Arabia will be hoping to play well and project a positive image of the country. The Asian Cup will not be a litmus test of the returns on its investment in football, but of how football in the kingdom is developing.

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Commentary: Nothing to see in Malaysia’s alleged ‘Dubai Move’ to topple Anwar government – for now

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IN THE MOOD FOR ANOTHER BACKDOOR GOVERNMENT?

The bigger issue is whether Malaysians (especially the Malays) are in the mood for another backdoor government. Many of them are struggling with the high cost of living, the weak economy and unemployment. But they have not indicated any strong reactions to the Dubai Move speculation.

Yet, if the unity government continues to neglect the anxieties of the people, the momentum may be strong enough that they might endorse a change of government. Within one year since taking power, Anwar’s popularity ratings have plummeted from 68 per cent to 50 per cent. While Malaysians are generally pleased with his handling of the economy, his management of race and religious relations remains wanting.

The Tanjung Piai by-election in 2019 remains fresh in many people’s minds. Barisan Nasional reclaimed the seat from PH with a huge margin. Then, the Mahathir-led PH government was struggling with race and religious issues and the perception of a Chinese-dominant Democratic Action Party (DAP) calling the shots in the government. The election was a precursor to Muhyiddin Yassin pulling Bersatu out from PH, citing the Malays’ declining support, and the Sheraton Move followed.

In addition, the DAP continues to repeat the same mistakes that led to PH’s downfall in March 2020. DAP MP Ngeh Koo Ham has suggested that a non-Muslim legal expert be included in a special committee at the federal level to strengthen the Syariah court system. Earlier, DAP veteran Lim Kit Siang remarked during a dialogue with Malaysian students in the United Kingdom that the Constitution does not exclude non-Malays from becoming prime ministers.

These trip-ups by DAP fall into PN’s playbook, which is bent on exacerbating racial and religious tensions. By doing so, PN, especially Parti Islam Se-Malaysia (PAS), recorded its best electoral performance in the country’s history in the last general and state elections.

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Commentary: How a royal pardon for jailed former PM Najib could rock Malaysia politics

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Whether he goes for the prime ministership or not, his base guarantees him a key role in any new government. When a potential pardon takes effect and how much time it leaves him to manoeuvre will be a strong consideration here.

The most strategic move will likely be for Najib to use his influence to boost his sons’ careers and secure his political legacy, instead of challenging Mr Ahmad Zahid. It would be a win-win for both: It will take time for the sons to rise, so if Najib is willing to wait, why not?

MUSIC TO MUHYIDDIN YASSIN’S EARS

For Mr Muhyiddin, the prospect of Najib making a comeback will be music to his ears. Someone who can split UMNO could precipitate the fall of the unity government.

One complication is bad history between the two men. Mr Muhyiddin will never forget he was sacked from UMNO in 2016 by Najib. But in Malaysian politics, the overriding objective always trumps personal animosity.

My Muhyiddin’s immediate problem is stop his own assemblymen from unofficially defecting to Mr Anwar’s side, so courting Najib to Parti Pribumi Bersatu Malaysia (Bersatu) may change the whole political scene.

However, this is unlikely to happen. Najib will not join Bersatu unless the party can offer him a clear path back into power and that will not happen as long as Mr Muhyiddin still fancies himself a prospective prime minister.

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Commentary: South Korea’s gender imbalance is bad news for men

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A PREFERENCE FOR SONS

There are several reasons why South Korea’s SRB was out of balance for 30 years.

South Korea experienced a rapid fertility decline in a 20- to 30-year period beginning in the 1960s. From six children per woman in 1960, fertility fell to four children in 1972, then to two children in 1984. By 2022, South Korea’s fertility rate had dropped to 0.82 – the lowest fertility rate in the world and far below the rate of 2.1 needed to replace the population.

Yet, South Korea’s long-held cultural preference for sons did not shift as quickly as childbearing declined. Having at least one son was a strong desire influencing fertility preferences in South Korea, especially up through the early years of the 21st century.

And the declining fertility rate posed a problem. When women have many children, the probability that at least one will be a boy is high. With only two children, the probability that neither will be a son is around 25 per cent, and when women have only one child, it is less than 50 per cent.

In order to ensure that families would continue to have boys, many South Koreans turned to readily available techniques to identify the gender of the foetus, such as screening in the early stages of pregnancy. Abortion, which is legal and socially acceptable in South Korea, was then often used to allow families to select the sex of their child.

SEX BY THE NUMBERS

In South Korea, beginning in around 1980 and lasting up to around 2010 or so, many more extra boys were born than girls. When these extra boys reach adulthood and start looking for South Korean girls to marry, many will be unsuccessful.

The extra boys born in the 1980s and 1990s are now of marriage age, and many will be looking to marry and start a family. Many more will be reaching marriage age in the next two decades.

I have calculated that owing to the unbalanced SRBs in South Korea between 1980 and 2010, about 700,000 to 800,000 extra boys were born.

Already this is having an effect in a society where over the centuries virtually everyone was expected to marry, and where marriage was nearly universal. Recent research by Statistics Korea showed that in 2023, only around 36 per cent of South Koreans between the ages of 19 and 34 intended to get married; this is a decline from over 56 per cent in 2012.

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