Ishiba’s election setback raises red investor flags over Japan – Asia Times

By:
On:
In: Asia

Japan’s ruling Liberal Democratic Party (LDP) has suffered a substantial political setback, leaving Prime Minister Shigeru Ishiba with a fractured mandate after failing to secure a majority in the lower house election on October 27. 

For global investors, this outcome adds yet another layer of uncertainty in a world already grappling with economic volatility, inflationary pressures, geopolitical tensions and a highly uncertain US election.

Although Ishiba will likely manage to pull together some form of coalition government, the fragility of such an arrangement casts doubt on Japan’s ability to maintain a coherent economic policy. 

Investors will be particularly cautious as a weakened government often struggles to implement long-term reforms, let alone respond decisively to sudden economic shifts.

The question now is not just whether Ishiba can secure enough support to govern but also whether he can deliver the stability and consistency that investors need to feel confident in Japan’s economic trajectory.

Without a clear majority, the LDP’s agenda for economic reform will be at the mercy of coalition partners with potentially divergent priorities. 

For investors, this spells potential paralysis on issues like tax reform, trade policy and fiscal stimulus—all critical levers that affect business confidence and capital flows.

The country’s aging population and sluggish growth have long posed structural challenges and any sign of policy gridlock could deter foreign investment at a time when Japan needs it most.

The post-election environment likely means more negotiation, more compromise and less ability for Ishiba to push through the bold initiatives that would attract more foreign capital. 

Market participants will be watching closely to see whether the coalition, if and when formed, signals a willingness to tackle these deep-seated issues or merely focuses on short-term political survival.

In either scenario, Ishiba’s government will need to work hard to reassure both domestic and international markets that Japan remains committed to economic stability and growth.

Japan’s hot geopolitical environment, with tensions on the rise with China, adds another layer of urgency. Rising regional tensions—particularly with China—place the country in a critical position within global supply chains. 

Ishiba’s ability to manage these relations while maintaining domestic political harmony will be closely scrutinized by investors, who are weighing the potential for and implications of a more unstable Asia-Pacific region.

A weakened Japanese government unable to present a unified front may find itself vulnerable and weak in diplomatic negotiations with key actors, complicating potential trade and investment deals.

As Japan faces 30 days of coalition negotiations, markets will rightly be on high alert. Ishiba’s capacity to negotiate and his willingness to compromise will set the tone for Japan’s economic outlook.

If he emerges from the process with a reasonably stable coalition, it may be enough to restore investor confidence. 

If the resulting government appears highly fragmented or indecisive, investors may start pricing in increased risk premiums, affecting the yen, equity markets and Japan’s credit ratings.

Continue Reading

South Korea eyes a rich BRICS road to the Global South – Asia Times

By:
On:
In: Asia

In 2024, the BRICS nations continue to consolidate their influence in the global arena, collectively accounting for over 40% of the world’s population and approximately 30% of global GDP in purchasing power parity terms.

According to recent IMF projections, BRICS countries are set to contribute over 50% of global GDP growth in the coming years, underscoring their increasing weight in the international economic landscape.

China and India, in particular, remain the principal economic engines of the group, each maintaining robust trajectories fueled by China’s Belt and Road Initiative (BRI) and India’s ascendancy as a prominent manufacturing hub.

Complementing these giants, Russia leverages its vast energy resources, Brazil capitalizes on its agricultural and natural wealth and South Africa anchors the coalition’s outreach on the African continent. This strategic diversity enables BRICS to wield considerable influence in shaping global economic and political agendas.

Today, the BRICS is positioning itself as a counterweight to traditional Western-led financial institutions like the IMF and World Bank, aiming to restore balance and justice in the emerging global economic order.

Central to this effort is the New Development Bank (NDB), which began with an initial capital of US$100 billion to fund infrastructure and sustainable projects, extending beyond the BRICS members to other emerging economies.

This initiative, combined with efforts to promote trade in local currencies, reflects a strategy to reduce reliance on dollar-based systems and challenge Western dominance in global financial governance.

Moreover, BRICS has increasingly positioned itself as a representative of the Global South, advocating for principles of non-interference and mutual development.

The 2024 BRICS summit in Russia reinforced this by welcoming Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the UAE, highlighting its ambition to form a more inclusive grouping with greater global influence.

Today, BRICS is not merely an economic grouping; it represents the desire of the Global South for a shift toward a multipolar global order, with the grouping increasingly diverging from Western narratives on critical geopolitical issues.

This rising influence is reflected in efforts to reshape the international financial architecture, promote new development models, and challenge the dominance of Western-led institutions in international politics.

The group’s coherence in advancing the interests of the Global South and its proactive pursuit of economic sovereignty and technological self-reliance is pivotal to its vision of a new world order.

Strategic Seoul positioning

South Korea’s rise as a major economic and technological player has positioned it as an influential actor in global geopolitics. As a significant member of the G20 and an active participant in multilateral forums, South Korea has consistently advocated for greater representation of emerging economies in global governance institutions.

Despite its non-membership in BRICS, South Korea shares many of the coalition’s aspirations, particularly in diversifying economic partnerships and reducing dependence on a Western-centric international order.

South Korea’s strategic policies, such as the New Southern Policy (NSP), emphasize greater engagement with emerging economies in South and Southeast Asia, regions where BRICS nations, particularly India, hold considerable sway.

Furthermore, South Korea’s Indo-Pacific strategy aligns with BRICS interests, particularly in fostering connectivity and infrastructure development, providing fertile ground for deeper engagement on both bilateral and multilateral platforms.

For South Korea, closer cooperation with BRICS offers numerous benefits. By actively engaging with BRICS-led initiatives such as the NDB, South Korea can gain a foothold in emerging financial frameworks, reducing its reliance on traditional Western financial systems and broadening its influence in global economic governance.

This involvement also positions South Korea as a neutral partner that bridges traditional Western alliances with emerging powers in BRICS, enhancing its diplomatic leverage and strategic flexibility in an increasingly multipolar world.

The diversification of its export markets, supply chains, and diplomatic engagements through partnerships with BRICS nations will be essential for maintaining competitiveness and securing long-term interests.

Collaborating with BRICS institutions also provides South Korea the opportunity to access emerging markets and participate in the growing regional integration efforts among BRICS members and their allies.

India-South Korea in BRICS embrace

India and South Korea are already strong strategic and economic partners. However, as BRICS expands its influence in the global arena with India as a key player, it presents a unique opportunity for South Korea to enhance its global status by strengthening its bilateral ties and collaborating more closely on global security and strategic issues.

Both nations possess complementary strengths and shared interests, making cooperation increasingly beneficial amid shifting global dynamics. India and South Korea have established a robust economic partnership, but there is still significant potential to deepen trade and investment ties.

In the wake of BRICS’ rise, the two countries could focus on expanding the Comprehensive Economic Partnership Agreement (CEPA) to include areas such as digital trade, intellectual property rights, and services. This would not only provide preferential market access and boost bilateral trade volumes but also help South Korea strengthen its ties with the Global South.

Additionally, South Korea can leverage India as an alternative manufacturing hub amid shifting global supply chains, particularly in electronics, semiconductors and automotive manufacturing.

Participation in India’s ambitious infrastructure projects, such as the National Infrastructure Pipeline (NIP) and the Smart Cities Mission, presents further opportunities for Korean firms to expand their influence and capitalize on India’s rapid growth trajectory, reinforcing South Korea’s engagement with BRICS countries.

The evolving geopolitical landscape demands stronger strategic ties between South Korea and the Global South. Closer cooperation with India in maintaining a free and inclusive Indo-Pacific region, enhancing naval coordination, and strengthening joint efforts in counter-piracy and counterterrorism operations will bolster regional security and stability, enhancing South Korea’s role as a net security provider.

Moreover, the defense industries of both countries offer scope for collaboration in areas such as co-production of defense systems and joint development of critical technologies like missile defense, drones, and cybersecurity, reducing the Global South’s dependence on Western defense industries for national defense capabilities.

Both India and South Korea are leaders in innovation and technology, and collaboration in emerging fields such as artificial intelligence, renewable energy, quantum computing, and green technologies can yield substantial benefits not only for their national economies but also for the wider region and the Global South.

South Korea’s leadership in semiconductors can further support India’s ambitions to build a robust semiconductor ecosystem through joint investments and technology transfers, thereby boosting India’s position within the Global South.

Strengthening cultural ties and enhancing people-to-people exchanges are essential for sustaining deeper collaboration. By deepening academic exchanges, providing scholarships, establishing joint research centers, and promoting cultural collaborations in areas such as film, music, and cuisine, South Korea can enhance mutual understanding and support broader partnerships with India.

This cultural engagement can serve as a gateway for South Korea to connect with BRICS nations and the Global South, which has been a challenge due to its close ties with the United States and Western-dominated institutions. Developing deeper cultural relations with India can correct this diplomatic anomaly and allow South Korea to extend its engagement beyond the US and the West.

India and South Korea share common values of democracy, development and international cooperation. With the rise of BRICS, India can act as a bridge, bringing South Korean perspectives into multilateral dialogues. Joint efforts in platforms like the G20, UN, and ASEAN can enhance diplomatic influence and promote shared interests, including global governance reforms, climate action and cybersecurity.

Sustainability remains a key concern for South Korea. Collaborative projects with India and BRICS member countries in renewable energy infrastructure, smart grids, electric mobility, and autonomous transportation systems can contribute to mutual energy security and support a sustainable future while integrating South Korea’s economy more deeply with the rising Global South. By focusing on green technologies, India and South Korea can play a pivotal role in the global energy transition.

South Korea’s engagement with BRICS, especially through its strengthened partnership with India, offers a strategic pathway for enhancing its global influence and securing its long-term interests in an evolving multipolar world.

A robust partnership for a new era

As a member of the US-led security order in Northeast Asia and heavily dependent on the United States for its security and economic prosperity, it may not be easy for South Korea to become a member of BRICS in the near future.

However, as the global order evolves with the rise of BRICS, South Korea is uniquely positioned to enhance its cooperation and engage in BRICS initiatives. The rise of BRICS signifies a shift towards a multipolar global order, wherein traditional power dynamics are being redefined, and emerging economies are asserting their influence on the world stage.

By proactively engaging with BRICS, South Korea can secure strategic advantages, reduce dependency on traditional Western institutions, and expand its economic and geopolitical reach.

South Korea’s strategic positioning as an intermediary between Western alliances and BRICS nations presents an opportunity to shape regional and global dialogues, ensuring that its voice remains influential amidst shifting power structures.

By focusing on strategic, economic, and technological collaboration with India and engaging with the broader BRICS coalition, South Korea can protect its interests, seize new opportunities and bolster its status in an increasingly multipolar world.

The foundation of South Korea’s partnership with India rests on shared values, mutual trust, and complementary strengths, making their cooperation pivotal for navigating the uncertainties of a changing global landscape.

Actively engaging with BRICS allows South Korea to align itself with a coalition that is reshaping the global order, securing its position as a key player in the evolving multipolar landscape, and expanding its influence on the global stage.

This proactive engagement not only enhances South Korea’s diplomatic and economic leverage but also solidifies its role as a dynamic actor in a redefined global order, positioning itself as a bridge between emerging powers and established global players.

It is time for South Korea to adjust its diplomatic strategy to claim its due place in the emerging new order in the region.

Continue Reading

Russia blurring lines between physical and cyber war on the West – Asia Times

By:
On:
In: Asia

Over the past few years, Russia-affiliated hackers have conducted attacks against critical American and European infrastructure networks and disrupted hospital operations across the US. The scope and boldness of these attacks have increased as Russia seeks to expand its war against Ukraine and its supporters on multiple fronts.

In recent years, Russia has not only focused on waging cyber war on Western states but has attempted to infiltrate the heart of the internet through open-source software. The heads of MI6 and the CIA made a joint statement highlighting that Russian intelligence has been conducting a “reckless campaign of sabotage throughout Europe.”

In January 2024, Russian hackers targeted a water facility in rural Texas, causing a water tower to overflow. Similar malicious activities were detected in other towns in north Texas. In March 2024, President Biden’s administration warned US governors about escalating cyberattacks on water and wastewater systems. Further cyberattacks occurred in Indiana and targeted healthcare provider Ascension in May.

Russia’s cyberattacks are not limited to the US. In March, Russian hackers mistakenly targeted a mill in France, believing it to be a hydroelectric dam. They also attacked Poland’s water infrastructure due to its strong support for Ukraine. Poland called out Russian state-sponsored hackers for targeting its government networks in May 2024.

The cybersecurity vulnerability of critical infrastructure, especially in small towns with limited resources, makes it an easy target for hackers. Healthcare organizations are prime targets, with attacks capable of disabling medical equipment and diverting ambulances.

In June 2024, Russian hackers were responsible for a ransomware attack on several major London hospitals, affecting blood transfusions and test results and leading to canceled operations and diverted emergency patients. Hundreds of operations and appointments continued to be canceled after the June 3, 2024, cyberattack on NHS provider Synnovis.

In the first week following the attack, doctors were forced to delay 800 planned operations and 700 outpatient appointments. They had to revert to using handwritten records due to the system disruptions. Additionally, one hospital even had to solicit blood donations from its clinical staff to manage the crisis caused by the hack.

As Russia faces challenges on the battlefield in Ukraine, its cyber activity will continue to evolve to support espionage and battlefield enablement. Countries leading aid efforts for Ukraine, such as the UK and the US, remain prime targets of Russian cyber aggression.

Anne Keast-Butler, director of the UK’s Intelligence, Cyber and Security Agency, has expressed concern about Russian intelligence collaborating with proxy groups to conduct cyberattacks.

Unit 29155 of Russia’s GRU military intelligence agency, previously blamed for coup attempts, assassinations and bombings, now also runs a hacking group called Cadet Blizzard, which targets Ukraine, the US and Europe.

The group has been linked to cyberattacks such as the WhisperGate malware, which hit Ukrainian organizations ahead of Russia’s 2022 invasion. According to Western intelligence, Unit 29155 is blurring the lines between physical and cyber warfare, using both traditional sabotage tactics and disruptive cyber operations.

Ukraine served as a testing ground for Russian cyber weapons through the initial invasion in 2014 and the 2022 full-scale invasion. Ukraine has significantly hardened its defenses with Western support.

However, Russia has learned from its initial mistakes, launching one of its most disruptive cyber-attacks in December 2023 on Ukraine’s largest telecom operator, Kyivstar, leaving millions without mobile and internet service for days.

Factory sabotage

Russia has also resorted to recruiting criminals to sabotage Western factories supplying arms to Ukraine. On March 21, 2024, a London warehouse containing aid shipments to Ukraine was destroyed in a fire.

Then, in mid-April, an American artillery shell factory, which supplies some of its products to Ukraine, also went up in flames. Just two days later, on April 17 an explosion occurred at the Welsh factory of BAE Systems, a British defense contractor that manufactures weapons for Ukraine.

Russia has also conducted electronic warfare against Western aviation in the Baltic region. This has led to incidents like GPS jamming, which caused Finnair to suspend flights from Finland to Tartu, Estonia. Russia has also made thousands of attempts to disrupt European rail networks as part of a broader campaign to destabilize the EU and sabotage critical infrastructure, according to the Czech Republic’s transport minister.

In April 2024, two German-Russian nationals were arrested in Germany on suspicion of plotting sabotage attacks, including targeting US military facilities. The suspects are believed to have been planning these attacks as part of a broader strategy to disrupt aid flows to Ukraine.

In July 2024, CNN reported that earlier this year US intelligence uncovered Russian government plans to assassinate the CEO of a prominent German arms manufacturer that has been producing artillery shells and military vehicles for Ukraine. The assassination plot was part of a broader Russian strategy to target defense industry executives across Europe who are supporting Ukraine’s war effort.

Ukrainian law enforcement agencies also dismantled a Russian-run network planning arson attacks in Ukraine and the EU, targeting shopping centers, gas stations, pharmacies, and markets in July 2024. The group, consisting of 19 people from various Ukrainian regions, was acting on Russian intelligence services’ instructions and aimed to sow social instability and undermine support for Ukraine.

The goal of Russia’s hybrid warfare is not only to punish the West for supporting Ukraine but also to divert Western resources and attention away from aiding Kyiv. Moscow’s strategy hinges on the belief that targeting critical infrastructure and intensifying attacks on Western nations, can strain their financial and operational capacities.

The Kremlin anticipates that if European citizens begin to feel the direct impact of the war on their daily lives, they will pressure their governments to push for a peace settlement – one that would favor Russia and allow Vladimir Putin to claim victory.

This piece is an excerpt from a report presented by the author at the UK Parliament on October 9, on behalf of the Henry Jackson Society, titled “Military Lessons for NATO from the Russia-Ukraine War: Preparing for the Wars of Tomorrow.”

Read the original report, which includes extensive footnotes to show the sourcing of facts and quotations. Asia Times is republishing this excerpt with permission.

Continue Reading

Transforming digital finance

By:
On:
In: South-East Asia

Ascend Money chief Monsinee Nakapanant keen to untap the potential of the region’s underserved markets

Ms Monsinee
Ms Monsinee

Leading fintech company Ascend Money, under the leadership of co-president Monsinee Nakapanant, has played a key role in promoting financial inclusion and transforming the digital finance landscape in Southeast Asia.

The fintech arm of Charoen Pokphand Group became Thailand’s first fintech unicorn in 2021. It is now aiming to list on the Nasdaq stock market, according to its founder and chairman Suphachai Chearavanont.

Now, the company has around 32 million active customers in Thailand.

“I am incredibly proud of leading Ascend Money’s journey towards financial inclusion and transforming the digital finance landscape in Southeast Asia,” Ms Monsinee said.

“One of my proudest milestones is reaching over 32 million users in Thailand, which reflects our ability to deliver inclusive financial services to underserved populations nationwide.”

Another key moment for the company was expanding the presence of its TrueMoney application across six countries — Myanmar, Cambodia, Vietnam, the Philippines, Indonesia, and Malaysia — and establishing Ascend Money as a leading regional fintech company, she said.

“Bringing essential financial services to previously unserved populations and witnessing the positive impact on their quality of life is one of my greatest achievements,” Ms Monsinee added.

The TrueMoney app began as a payment platform for those with limited access to traditional financial services. The app’s users can make payments and transfers from their mobile phones at any time.

TrueMoney has transformed into a digital financial super app, offering offline and online payments, high-interest savings accounts, retirement savings, mutual funds, gold investments, microcredit, and personal loans.

“I am especially proud of how our platform has improved the lives of migrant workers in Thailand, particularly from Myanmar and Cambodia, enabling them to make cashless purchases and transfer money home quickly, safely, and affordably,” Ms Monsinee said.

She said the continued support from the firm’s investors and partners is a testament to the trust they place in the company and its mission.

Ms Monsinee said that in the early days of the Thai fintech industry, overcoming challenges required innovative thinking, strong teamwork, and a commitment to the company’s mission.

Key to the company’s success was prioritising customer needs. By understanding the pain points of underserved populations, Ascend Money developed groundbreaking digital financial products. This customer-first approach led to tangible benefits, such as micro-insurance and accessible investment options, empowering individuals to secure their financial futures.

“Innovation is woven into our DNA, and we cultivate a culture of continuous learning and experimentation. Our strong startup spirit encourages us to push boundaries and respond urgently to market changes, ensuring we stay ahead in the fast-evolving digital economy,” Ms Monsinee said.

This mindset has led to initiatives like the company’s rapid loan processing and buy-now-pay-later solutions, providing accessible credit to those without traditional income records and ensuring they can secure financial assistance responsibly.

The company also prioritises a harmonious team culture rooted in clear communication and collaboration without hierarchy. It also promotes the team’s analytical thinking to drive continuous improvement in customer service and product innovation.

Ms Monsinee said Thailand’s fintech sector is poised for significant growth over the next two years, thanks to ongoing digital transformation and rising demand for cashless solutions.

“We are at the forefront of a revolution in financial services. The rise of virtual banking, embedded finance, and AI-driven solutions will play pivotal roles in shaping the future of how people interact with financial institutions,” Ms Monsinee added.

She said that Ascend Money sees tremendous opportunities to further expand financial inclusion. It will focus on enhancing digital payments, providing more credit solutions, and leveraging alternative data to empower unserved and underserved segments, particularly micro and small enterprises.

“We also recognise that financial literacy is crucial for ensuring sustainable growth, and we will continue to invest in initiatives that help individuals better manage their finances,” Ms Monsinee said.

In terms of challenges, the rapid pace of technological advancements and regulatory changes will require agility and collaboration. Cybersecurity will remain a top priority as more people engage with digital financial services.

“We will focus on leveraging AI and machine learning to personalise financial solutions and offer targeted services. We will continue working closely with regulators and stakeholders to foster innovation while safeguarding consumer interests,” Ms Monsinee said.

Monsinee Nakapanant

Co-president of Ascend Money Group

Continue Reading

The case for tariffs in an unsettled world – Asia Times

By:
On:
In: Asia

In the October 18 summary of the Wall Street Journal’s “Weekend Interview between the Journals’ editors and Donald Trump,” James Taranto notes disagreement about tariffs – the Journal editors being against them, as have been several recent op-eds including one by Phil Gramm and Donald Boudreaux published October 16.

Economics textbook models, assuming no military threats, no taxation, no volatile exchange rates and no restrictions on the movement of people across borders, show that whereas the introduction of tariffs improves the situation of a protected sector, the damage to the rest of society is greater than the benefit.

However, once we discard the assumptions, the case against tariffs disappears.

The Gramm and Boudreaux employment of 19th century data about the peaceful US to make the case against tariffs is irrelevant  now since that century (a.) was on the gold standard and (b.) was characterized by especially free movement of people, millions coming to the “swim or sink” US’s model of society at the time.      

These are not new observations. Adam Smith wrote similarly in his Wealth of Nations: Governments must impose tariffs “when some particular sort of industry is necessary for the defense of the country.” He thus justified the Navigation Act, which, among other restrictions, allowed only English ships to bring goods into England.

Another case “in which it will generally be advantageous to lay some burden upon foreign [countries] for the encouragement of domestic industry is when some tax is imposed at home upon the produce of the latter.  In this case, it seems reasonable that an equal tax should be imposed on the like produce of the former.”

Academic and nationalist jargons can distort these arguments and suggest that governments must then protect boot-makers, farmers and steel makers since the army needs boots, steel and food to march, fly and eat – patriotism used as a political tool to rationalize every tariffs. However, this reservation is just a reminder of being skeptical of all generalizations.      

Still, in his influential Capitalism and Freedom published in 1962, Milton Friedman wrote that “it would be far better to move to free trade unilaterally, as Britain did in the 19th century when it repealed the Corn Laws in 1846.” He believed that, but presented no evidence. What happened in Europe then was something different.

During the first half of the 19th century, France’s average tariffs stood at roughly 20%, whereas England’s was in the 50-65% range – yet the Industrial Revolution was taking place in England. France’s did not start until the second half of that century – and used British engineers to build the railways.

True, by 1850 English average tariffs dropped to the 25% range. However, Napoleon II’s promotion led to the 1860 Treaty of Commerce between France and England, following which the average level of tariffs dropped in both countries to the 10% range, other countries joining the treaty.

The coordinated drop came with other changes. Whereas England was under the gold standard since the early 18th century, by 1870 and until 1914, Europe and much of the world came to be on the gold standard, a period accompanied by relatively free movement of people and capital – not replicated since.

The1930s analyses of the impact of reducing the Smoot-Hawley tariffs are no better. They neglect the sequence of events preceding  the reduction. President Franklin Roosevelt confiscated gold in 1933, and promptly did a 59 percent devaluation of the dollar (in terms of gold).

Subsequently, in 1934, FDR got the unprecedented right to renegotiate trade agreements (the Congress delegating authority to the executive branch with the reciprocal trade agreement). Devaluation has impacts similar to tariffs. Both encourage domestic production (both at a cost – in an ideal world).  The devaluation diminished the American need of tariffs, and gave greater negotiating powers with European countries that did not devalue relative to gold (Britain and France).

None of these conditions exists these days, particularly the “sink or swim” feature. Floating exchange rates and heavy regulations on the movement of people have severe consequences. Tariffs – second bests – mitigate compounding mistaken exchange rate and other policies and atavistic models in the world.

Consider the impact of floating exchange rates. We negotiate prices of goods, services, longer-term contracts, financial ones in particular to ensure their purchasing power in global trade. The 19th century gold standard assured such stability. These days most contracts are priced in dollars or euros, which, however, fluctuate one relative to the other and relative to other currencies in the 50-100% or even more over short periods.

In the present floating exchange rates system, this volatility brought about the multi-trillion-dollar trade in notional derivatives, their main role being to approximate stable values of contract. Their use does not come cheap and requires deep financial domestic markets that most countries do not have.

In the countries lacking markets, companies’ access to financing becomes more expensive or even prohibitive, preventing them from growing – although these countries experience rapidly increasing young population. In an “ideal world,” capital would flow from aging societies to younger ones – as the former are savers, and the latter are the future. However, at present, the aging societies have the institutions that secure values of capital flows.

The younger, even well skilled cohorts in the developing countries, having limited access to capital, stay under-employed, under-paid and live under atavistic institutions, with limited options to migrate.

One consequence of immobilizing employees is have them produce goods and services at far lower prices than in Western welfare states, where employees pay taxes for sustaining their welfare model of society.  This is exactly the situation that Adam Smith considered exceptional as justifying tariffs.  Depending on the execution, and if combined with different migration policies, tariffs could not only protect the nation’s employees, but also be so structured as to attract investments and properly channel the migration flow.

Are such tariffs the “ideal” way to deal with the present global upheaval?

Are there better alternatives?  In principle, yes. On the horizon – no. 

An alternative would be to go back to clauses in the original Bretton Woods agreement to stabilize exchange rates.  During the negotiations, John Maynard Keynes worried that fixed exchange rates there would lead to chronic balance of payments problems, some countries experiencing constantly rising dollar reserves.  To sustain stable exchange rates, the latter countries had to “commit” to expand domestically and liberalize imports. To achieve such commitment, Keynes suggested penalizing these countries with prolonged trade surpluses, limiting purchases of their exports. This clause was never enforced.

In a recent WSJ op-ed, Greg Ip, though not mentioning exchange rates, paraphrases Michael Pettis offering a solution other than tariffs to achieve this: He writes that Pettis “believes that taxing surplus countries’ purchases of US assets would stop the inflow of their savings [and would] aid US-based manufacturers’ competitiveness and reduce the trade deficit.” Capital taxes “target surplus countries directly.”

The problem with this solution is that countries building up reserves pursue centralized models of society – while deepening financial markets by deploying savings domestically disperses power, which those in charge are reluctant to do.

Briefly: Western welfare states face now such centralized states, wherein dwell the majority of the (immobilized) youth (in the now 8 billion population, up from 1 billion a century ago) – a massively dis-equilibrated world. As of now, all these states pursue a mistaken exchange rate policy, too.

Tariffs – on the movement of people, too – are a way to mitigate the impact of this range of mistaken policies, putting pressures on the atavistic states to change their domestic policies.

This article draws on two books by Reuven Brenner, The Force of Finance: Triumph of the Capital Markets and History: The Human Gamble, and on his article “Toward a New Bretton Woods Agreement.”

Continue Reading

foodpanda Malaysia appoints Tan Ming Luk as managing director

By:
On:
In: Technology
  • Brings wealth of industry knowledge, understanding of local markets
  • Past leadership stints at Touch ‘n Go Group, Lazada and OYO Hotels

foodpanda Malaysia appoints Tan Ming Luk as managing director

Foodpanda Malaysia appointed Tan Ming Luk as its new Managing Director, effective 21 Oct.

With over a decade of leadership experience in commercial and operational roles across Singapore and Malaysia, Ming Luk brings a wealth of industry knowledge, deep understanding of local markets and consumers, and a proven track record for driving business growth.

“I’m excited to join the company and be part of a platform that has a positive impact on the communities we serve, particularly in the growing gig economy,” Ming Luk said. “I look forward to working with the talented teams at foodpanda to deliver value to our customers, partners and the wider ecosystem, while staying true to the company’s mission of empowering local businesses and riders.”

Prior to his appointment, he was the Chief Commercial Officer at Touch ‘n Go Group, where he oversaw the company’s top line revenue and spearheaded new growth opportunities. Ming Luk also served as Chief of Staff and Head of LazMall Strategy and Operations at Lazada, as well as Country Head for Malaysia and Singapore at OYO Hotels.

Continue Reading

Letter to Trump: make peace and rebuild America’s industrial base – Asia Times

By:
On:
In: Asia

This article first appeared on The American Mind, a publication of the Claremount Institute think tank, and is republished with permission.

Dear President Trump:

Congratulations on your November election victory. President Joe Biden and Vice President Kamala Harris have left you with a strategic disaster and a fragile economy, but you have put forward a program to keep the peace and restore economic growth. Here are some ideas that may help in your efforts, followed by more specific proposals:

  • Inflation is closer to 8% than the official “3%” after figuring in higher interest costs to consumers. Biden started this inflation by running record budget deficits and the Federal Reserve made it worse by increasing the interest burden on consumers. You must educate the American public on this reality and get the right people in place to fix it.
  • The federal budget deficit is 6.4% of GDP, “larger than any deficit in records going back to 1930 except the years around World War II, the 2008 financial crisis, and the pandemic,” according to the Tax Foundation. Federal interest costs have doubled and now cost as much as defense. Get people on the Fed board who understand your economic agenda.
  • Our woke education system is a disaster and has betrayed working-class kids. We can’t fill skilled jobs in manufacturing because high school graduates lack basic math skills. In the short term, state community college systems and work-study apprenticeship programs can help. Create a federal-state initiative for public-private partnerships in manufacturing skills, and ask Governor Ron DeSantis to head it.
  • Vice President-elect J D Vance offered a workable peace plan in September to end the Russo-Ukrainian war. Give him a big role in handling the Ukraine problem. Leftovers from the foreign policy establishment in your first administration did nothing but sandbag you. Don’t listen to them and put a smart outsider in charge instead.
  • The US military-industrial complex is a hopeless morass of corruption and incompetence that can’t make enough artillery shells to supply Ukraine, let alone enough submarines. Bypass the Pentagon brass and the defense contractors and choose a secretary of defense who understands new defense technologies.
  • Your proposal to put high tariffs on Chinese EV imports but allow Chinese companies to build plants in the US is brilliant—and very much like Ronald Reagan’s response to Japanese auto imports in the 1980s.

An America First Economic Policy

Biden and Harris left you with record debts and deficits, and a dangerous household debt burden. Their reckless spending on handouts to their favored constituencies caused this inflation, not monetary policy, as David Malpass observed.

The Federal Reserve kept interest rates too low for too long and then raised them too much. Former Treasury Secretary Lawrence Summers showed that the real inflation rate is double the official number after including higher interest rates. Ask him to help the Bureau of Labor Statistics publish the real inflation rate.

You need a stable monetary policy instead of the Fed’s boom-and-bust whipsaw. Put people on the Federal Reserve Board who understand how monetary policy actually works instead of the ideologues who run the Fed today.

The biggest obstacle to industrial revival is the lack of skilled labor, thanks to the liberals who control US education. Summon the CEOs of our biggest manufacturing companies, and they’ll tell you the same thing: less than a quarter of US high school students are proficient in math. That puts high-end jobs in computer-controlled manufacturing out of their reach.

We can fix the problem by enlisting state community college systems in partnership with corporations. Florida already has the ball rolling. Ask Governor Ron DeSantis to head an emergency effort to train skilled workers.

For the first time in American history, America imports more capital goods than we produce for domestic consumption. The downside of tariffs is that they will increase costs for manufacturers who rely on foreign inputs, and domestic substitutes will take time and money to provide. You might propose a tariff rebate for American manufacturers who buy Chinese capital goods to expand production in the US.

The tax system is rigged against capital-intensive investment, raising the after-tax cost of capital for manufacturing. America’s stock of manufacturing equipment hasn’t risen in 20 years according to the Federal Reserve.

To return to a long-term growth trend, we need about $1 trillion in capital spending. GOP leaders in Congress should propose emergency legislation to allow immediate tax write-offs of capital equipment.

The 2017 corporate tax cut, which increased the number of years required to expense capital equipment, should be revised to allow immediate expensing of capital equipment. That may be a bigger stimulus for domestic manufacturing than tariffs.

Countering the National Security Establishment

You outraged the foreign policy swamp when you denounced endless wars, and they spent four years trying to remove you from office. The swamp bet the farm on endless war in Ukraine, and your refusal to play along makes you their irreconcilable enemy.

Don’t underestimate how determined they are to stop you. You hired establishment types in your first administration and had cause to regret it every time. Now, there’s no room for compromise with the swamp.

The Deep State entrapped your first National Security Adviser, General Mike Flynn, and his successors H R McMaster and John Bolton repaid your trust by turning on you. You can’t trust the failed, feckless foreign policy establishment.

It knows nothing but forever wars and meddling in other countries’ affairs. The problem is that the establishment has controlled promotion in government service and academia for three generations, so any candidate with a big resume got it the wrong way.

Vance may not have a lot of foreign policy experience, but common sense is a better qualification than years of pushing incompetent policies. Ask Victor Davis Hanson to run foreign policy and national security recruitment for the transition team.

And continue to seek the advice of Hungary’s Prime Minister Viktor Orban, your strongest supporter overseas and the smartest politician in Europe. Vance’s plan to end the war in Ukraine—establishing a ceasefire, a buffer zone, and Ukrainian neutrality—will do the job.

David Friedman did a brilliant job crafting the Abraham Accords as Ambassador to Israel in your first term. Persuade him to return to the job. The Biden administration treats Saudi Arabia like a pariah and cozies up to Qatar, the host and paymaster to Hamas.

That’s an outrage, especially after the October 7, 2023 massacre. Reach out to the Saudis and the UAE. Otherwise, US influence in the region may dissolve in the face of China’s diplomatic initiatives.

You rightly proposed a missile shield to protect the United States. Reviving Reagan’s Strategic Defense Initiative is the best defense policy anyone has put forward in years.

You will get bad advice from the uniforms. They wasted trillions building the wrong kind of military and will try to justify their previous blunders by demanding more of the same. We don’t need nearly a quarter million troops deployed overseas.

The Navy’s expeditionary forces are obsolete. Surface ships are sitting ducks for anti-ship missiles—and China has thousands of them. Meanwhile, our depleted industrial base can barely build one submarine a year.

The Pentagon brass will feed you phony scenarios to justify more obsolete legacy systems. Hire experts who see through flummery like Air Force officer and Stanford Professor Oriana Skylar Mastro.

You can’t trust the US Intelligence Community. Fifty-one senior intelligence officials signed a statement in 2020 claiming that the Hunter Biden laptop story was a Russian hoax. That might have cost you the election. Their appointees hold all the senior jobs today.

Seventy percent of the US intel budget goes to private contractors, opening the system to cronyism and corruption. It will take years to clean up this mess. In the meantime, create a “Team B,” a small group of people you can trust at the National Security Council to keep you informed on world affairs and double-check the CIA’s daily briefing.

Don’t trust the “process people” at the White House. Your Deputy Chief of Staff Chris Liddell told a Republican luncheon not long ago that by picking the people who would attend meetings at the Oval Office and assigning their roles, he could predetermine your decisions 90% of the time. Bring in outsiders who work for you, not the swamp.

We’re in a situation like 1973, when Soviet air defense ruled the skies. In less than ten years we invented smart warfare, turned the tables on Russia, and began winning the Cold War. We invented the Digital Age as a byproduct of our revolution in defense technology.

Don’t put a flag officer or defense contractor lobbyist in charge of the Pentagon. Appoint a defense secretary with deep knowledge of new military technologies, someone like Michael Griffin, your Under Secretary of Defense for Research and Engineering and the former head of NASA.

Under fiscal constraints, we can’t expand defense spending across the board. Focus on missile defense for the American homeland and American military assets. Cut legacy spending on forever wars, like the 230,000 US troops deployed overseas, and legacy systems like aircraft carriers.

Your first two defense secretaries came respectively from the Marines and the defense industry—and both of them tried to stop you from winning in 2024. You would be better served by a scientist who understands high tech in defense of the American homeland. Chips for defense and critical infrastructure should be produced at home under secure conditions.

Biden’s CHIPS Act is a disaster. It gave $8.5 billion to Intel just before it laid off 10% of its workforce. Worst of all, it left out R&D for chips based on new technologies. We’ve played Whack-a-Mole with China’s chip industry for five years. The battle for semiconductor dominance will be won by chips using interaction at the molecular or atomic level, with speeds orders of magnitude faster than silicon.

Finally, the swamp bet the future of NATO on the Ukraine misadventure. That disaster will cripple, if not destroy, NATO in its present form.

How to Deal with China

We’ve spent $7 trillion on forever wars. China spent $1 trillion on its Belt and Road Initiative. We lost influence and power, whereas China gained both. China’s exports to the US, Europe, and Japan are stagnating, but its exports to the Global South have doubled since you left office. China now exports more to the Global South than to all developed markets combined.

A lot of Chinese exports to the Global South are indirect exports to the US: China builds, plans, and ships components to Vietnam, India, and Mexico, and they export in turn to the US. This translates into a jump in Chinese influence in Asia, Europe, the Middle East, and Latin America, and more US dependence on Chinese supply chains.

China is gaining on us. At best, sanctions on exports of US technology to China buy time. At worst, they will backfire: Instead of keeping China dependent on our products, we have handed Chinese companies a captive domestic market for legacy chips and chip-making equipment.

We beat Russia in the Cold War by inventing the Digital Age, using NASA and the defense budget to drive breakthroughs in new technologies. We can innovate better than China. But federal support for R&D under Reagan was double its present level as a percent of GDP.

That’s why it’s critical to shift the defense budget to support new technology. To take only one example: We can’t out-produce China in missiles. The best response to China’s huge force of anti-ship missiles is directed-energy weapons (for example, lasers). But the Pentagon R&D budget for these new weapons is less than $800 million a year, or the cost of ten fighter planes.

We want to maintain the status quo over Taiwan. China won’t risk using force as long as Taiwan doesn’t move toward independence. With thousands of anti-ship missiles and hundreds of 5th-generation aircraft, China already outguns us in the South China Sea. To keep the balance of power, we need new anti-missile technology—not more sitting ducks in the form of surface ships.

Act at once on your proposal to combine steep tariffs on Chinese EV imports with an invitation to Chinese companies to build plants in the US. As Elon Musk well knows, China has a big lead in industrial automation, including AI applications and 5G communications.

Xiaomi just opened a fully automated plant that can turn out 1,000 cars a day. No US company can make an EV with a sticker price under $10,000 like BYD’s Seagull. It’s like the 1980s when Japanese automakers had better technology than Detroit. Forcing the Japanese to build plants here helped the U.S. auto industry get up to speed.

Just as we did during the Cold War, we need to harness America’s unique capacity for innovation to renew our industrial base. And if you can guide us there, Mr. President, your second administration will be remembered as a turning point in American history.

David P Goldman is deputy editor of Asia Times, a Washington fellow of the Claremont Institute and a senior writer for Law & Liberty.

Continue Reading

BRICS isn’t de-dollarizing anytime soon – Asia Times

By:
On:
In: Asia, World

BRICS Summit host Russian President Vladimir Putin disappointed both anti-colonial enthusiasts and Western alarmists last week by conceding that the bloc’s members “have not built and are not” building a payment system to challenge the US dollar-based global banking system.

The leaders of the two economic giants present at the summit, China’s Xi Jinping and India’s Narendra Modi, did not mention alternative payment arrangements in their respective remarks.

The technical requirements for alternative payment systems aren’t the problem. The SWIFT system that controls interbank payments in dollars and other major Western currencies merely transmits secure messages.

The challenge, rather, is economic: US demand for imports fuels an outsized portion of economic growth in the Global South. China’s exports to the US amount to just 2.3% of its GDP, but about half of its surge in exports to the Global South since 2020 depends on re-exports to the United States.

While China’s exports to the Global South more than doubled from about US$60 billion a month to $140 billion a month, US imports from the Global South rose from about $60 billion a month to $100 billion a month during the past four years.

Graphic: Asia Times

Dependence on the US market varies widely across the universe of developing countries. Vietnam and Mexico, the two favorite venues for so-called “friend-shoring,” that is, transferring production away from China to putatively friendlier countries, registered big increases in exports to the US as a share of GDP.

Vietnam’s exports to the US in 2023 amounted to about 27% of the country’s GDP, compared to just 10% in 2020, while Mexico’s US exports rose to 27% of GDP in 2023 from 20% in 2010.

Graphic: Asia Times

Singapore and Malaysia, by contrast, showed little increase in US exports as a share of GDP. Indonesia and Brazil export comparatively little to the United States.

Some Asian countries, notably Malaysia and Thailand, export more than 60% of their GDP, mainly to other Asian countries. Brazil, Indonesia and China are far less export-dependent.

Today, China exports just 19% of its GDP compared to 27% in 2010, which means that an increasing share of GDP growth depends on domestic consumption and investment.

Graphic: Asia Times

What makes the United States such an important factor in the economies of the Global South is its enormous current account deficit. The table below ranks the current account surpluses and deficits of the 20 largest economies from the largest deficit to the largest surplus.

With a current account deficit of $80 billion a month, or $1 trillion a year, the US appetite for an excess of imports over exports dwarfs the rest of the world.

Graphic: Asia Times

China is the largest or second-largest economy in the world, depending on whether we count GDP in US dollars or adjust for purchasing power parity, but China’s imports from the Global South have been stagnant for three years.

Graphic: Asia Times

China won’t replace much of American import demand for the time being, given Beijing’s focus on high-tech investment rather than consumer demand. At the margin, that leaves the Global South all the more dependent on the US.

Projecting current trends into the future suggests a steady rise in consumer spending in the Global South, especially in East Asia, and the emergence of robust domestic markets and less dependence on exports.

Below is a chart published by the Brookings Institution think tank last year, projecting that the total consumer market in East Asia will overtake the US consumer market by 2028.

Graphic: Asia Times

Developing countries, though, don’t pay their bills on projections. Arranging payments for goods in international trade is a trivial issue. More challenging is financing long-term deficits.

India, for example, used to run an annual trade deficit with Russia of less than $3 billion. Discounted Russian oil sales to India after the start of the Ukraine war boosted this to more than $60 billion.

What will Russia do with the Indian rupee equivalent of $60 billion? It would far prefer to have another currency, for example, the UAE dirham, that can be used to buy goods in third markets.

The Global South doesn’t yet have the capital markets or the currency stability to convince a surplus trading country to simply hold assets of the deficit country in exchange for goods.

That is what the United States does so well: Its $18 trillion negative net foreign asset position corresponds to the last 30 years’ cumulative current account deficits.

America sells assets to foreigners in return for their goods. The Global South doesn’t have the assets to sell, or at least not in the form that the rest of the world would like to own.

That helps explain why the BRICS Summit’s final declaration relegated the issue of payment systems to feasibility studies:

We reiterate our commitment to enhancing financial cooperation within BRICS. We recognize the widespread benefits of faster, low-cost, more efficient, transparent, safe and inclusive cross-border payment instruments built upon the principle of minimizing trade barriers and non-discriminatory access.

We welcome the use of local currencies in financial transactions between BRICS countries and their trading partners. We encourage strengthening of correspondent banking networks within BRICS and enabling settlements in local currencies in line with BRICS Cross-Border Payments Initiative (BCBPI), which is voluntary and nonbinding, and look forward to further discussions in this area, including in the BRICS Payment Task Force.

BRICS central banks don’t hold each other’s currencies as reserve assets, with limited exceptions. Just 2.3% of world central bank reserves are held in China’s RMB, up from 1.1% in 2016 but down from a peak of 2.8% in 2022. Most of them are buying gold. If the legend on US currency states, “In God We Trust,” gold says, “Trust nobody.”

Sweeping changes across the Global South would be required to make their currencies attractive reserve instruments—transparency and risk management of capital markets, the development of a local middle class, infrastructure, and education.

A great deal of this is happening in stages in many developing countries but progress is gradual and uneven. We now can foresee circumstances under which the Global South might declare independence from the dollar system. But we aren’t there yet and won’t be for years under any foreseeable circumstances.

Follow David P Goldman on X at @davidpgoldman

Continue Reading

Japan’s LDP rocked and roiled in an election earthquake – Asia Times

By:
On:
In: Asia

As political miscalculations go, it’s hard to top Shigeru Ishiba’s decision to hold a snap election Sunday, just 30 days after his own shock rise to Japan’s premiership.

Ishiba’s Liberal Democratic Party (LDP) lost its majority for only the third time since 1955. But this latest indignity for a party that long took for granted the priorities of Japan’s 125 million people could be the most impactful yet.

Ishiba’s blunder, and the political upheaval it’s causing, come amid a bewildering array of headwinds zooming the nation’s way.

They include slowing growth at home, China’s downshift, North Korea’s provocations and the increasing odds Americans will return Donald Trump and his trade wars to the White House.

It comes as Japanese inflation outpaces wages at a moment when the Bank of Japan mulls whether to continue hiking interest rates. It comes as investors assess whether the Nikkei 225 Stock Average’s surge to record highs is sustainable as policy instability reigns in Tokyo.

At the very least, Ishiba seems more destined than ever for short-timer status as Japanese leader following Sunday’s disastrous election showing for his LDP.

“Japan now enters a period of political uncertainty about whether a new coalition government can be formed,” says David Boling, analyst at Eurasia Group. Economist Takeshi Yamaguchi at Morgan Stanley MUFG adds that “political uncertainty will remain high in the near term.”

Granted, one silver lining for the LDP is that opposition parties didn’t join forces to win a majority or cobble together a governing coalition. Yet the best-case scenario for the LDP and its coalition partner Komeito is to find additional seats via a third party.

Still the damage has been done, particularly to Ishiba and his ability to retain the premiership or claim he has a mandate to lead.

Though predecessor Fumio Kishida stuck around for three years and mentor Shinzo Abe lasted nearly eight, most Japanese prime ministers get 12 months to make their mark – and most don’t.

Chalk it up to leaders spending so much time keeping their jobs there’s no time to do their jobs. The cycle, especially prevalent since the mid-1990s, seems certain to come for Ishiba. Even before Sunday’s repudiation from voters, Ishiba had suffered one of the most precipitous drops in public approval political observers had ever seen.

In late September, when Ishiba shocked the political establishment by navigating past the two front runners for the premiership, Ishiba enjoyed support rates north of 50%. But after four weeks of policy U-turns and managerial chaos, his numbers fell into the 20s.

That’s far from what Kishida had expected when he stepped aside last month. With his own approval in the low 20s amid scandals and soft economic conditions, Kishida opted to let his party head into Sunday’s contest with a fresh face.

It surprised many that this meant swapping one 67-year-old conservative with another. Ishiba’s man-of-the-people persona led LDP bigwigs to hope he might revive the party’s image.

Instead, reality caught up with Ishiba – and fast. For years, Boling notes, Ishiba polled very favorably with the public.

He benefited from being seen as an outsider within the LDP because he was willing to criticize the party. That made him unpopular with many LDP lawmakers but popular with the public.

But “since becoming prime minister, he has made some missteps that have opened him to attack,” Boling notes. That Sunday’s results mean Ishiba is “weakened” and that the “odds would be against him rebounding.”

If Ishiba does stay in, he’ll be busy struggling to save his premiership. Odds are he’ll be too preoccupied to address the economic headwinds racing Japan’s way.

Chief among them is an economy fast losing altitude. This might come as quite a surprise to LDP elders who encouraged Kishida to stand down.

Back in mid-September, when these machinations were in motion, the party figured the economy was on sound footing.

At the time, the Nikkei index was testing all-time highs amid stable economic growth, 10 years of corporate governance reforms were gaining traction and hopes were high that wages gains would accelerate.

Earlier this year, labor unions scored the biggest wage bump in 33 years. That fueled optimism that the “virtuous cycle” Tokyo had craved for decades had arrived.

All this encouraged the BOJ to begin exiting 25 years of zero interest rates and quantitative easing. On July 31, BOJ Governor Kazuo Ueda’s team hiked short-term rates to 0.25%, the highest since 2008. That sent the yen skyrocketing.

Since then, a clear deceleration in retail sales, exports, industrial production, machine tool orders and other sectors has Team Ueda hitting the pause button on additional tightening moves.

It also had Ishida’s government pivoting to the kinds of short-term stimulus maneuvers he claimed his government would avoid. A long-time fiscal hawk, Ishiba also was a proponent of higher rates and a stronger yen. Not anymore.

Ishiba’s reversal on these and other policies has sent the yen tumbling past the 150-to-the-dollar mark. It’s also generating increased volatility in Japanese government bond yields.

For one thing, Ishiba’s government having to rely on opposition parties to retain power makes it harder to champion fiscal consolidation and monetary liquidity normalization. For another, the clock is now ticking faster and faster for Japanese leaders to act on implementing economic reforms.

The LDP’s stumble could not be worse timed for Asia’s second-biggest economy. The export boost on which Tokyo was betting is in growing doubt as Chinese growth slows. China is slow-walking moves to address a property crisis that many compare to Japan’s 1990s bad-loan debacle.

Stephen Innes, managing partner at SPI Asset Management, notes that Beijing is “trying to talk the talk, with more noise about stabilizing the property market.” Generally speaking, though, Innes says, “China’s property mess isn’t something that can be patched up with a few speeches and half-baked measures.”

Macquarie Bank economist Larry Hu adds that measures taken so far “may not be enough to turn the housing market around.”

Meanwhile, Germany’s recession weighs on Europe’s prospects. The US is showing signs of wear. The geopolitical environment is hardly ideal as Middle East tensions flare and Russia’s Ukraine invasion drags on.

The rising odds that Trump might be re-elected on November 5 to supersize trade wars is a major source of global uncertainty.

Amid such uncertainty, investors have valid reasons to question Tokyo’s ability to get the reform process back on track. In the 12 years since the LDP returned to power, few big-picture upgrades have been implemented.

In 2012, the Prime Minister Abe pledged to modernize labor markets, reduce bureaucracy, increase innovation and productivity, empower women and strengthen corporate governance. Abe succeeded with this last endeavor.

The Nikkei’s surge to record highs is partly a result of steps to increase returns on equity, give shareholders a louder voice and diversify boardrooms. It’s also the result of ultra-low interest rates.

Yet surging stocks have meant little to the average Japanese household. Wages have generally lagged the rate of inflation. Japan ranks 30th among the 38 Organization for Economic Cooperation and Development (OECD) members in productivity.

What so-called Abenomics did, ultimately, was prove that “trickle-down economics” still doesn’t work. And that sporadic stimulus packages don’t alter economic trajectories nearly as much as structural changes. Now, the clock is already ticking as Japan’s latest government inherits a uniquely lopsided economic trajectory.

On the one hand, the inflation Tokyo had been craving for 25 years is here. And the BOJ is finally trying to normalize a super-aggressive interest-rate regime. On the other, that very rising-price dynamic is wrecking household and business confidence. It makes Japan the economic equivalent of the dog that caught the car. Consumers find themselves missing deflation, which many viewed as a stealth tax cut.

This balancing act proved too much for Kishida, who took power in early October 2021. Ostensibly, Kishida’s dismal approval ratings reflected political funding scandals within his LDP. In reality, it was mostly an underperforming economy that ended his tenure.

Like his mentor Abe, Kishida did himself no favors by prioritizing foreign policy over reforms. Ishiba, a former defense minister, irked voters by appearing to do the same. An old-school China hawk who favors creating an “Asian NATO,” Ishiba seemed more interested in creating a bulwark against Beijing than tackling kitchen-table issues.

Now, with political winds shifting, Tokyo seems even more captive to events in Beijing and Washington.

Recently, Chinese leader Xi Jinping’s government conceded that the globe’s No 2 economy is in trouble.

Earlier this month, Beijing unveiled aggressive stimulus measures to support an economy grappling with a deepening property crisis. The People’s Bank of China announced its first simultaneous cut in key short-term rates and banks’ reserve requirements since at least 2015.

Mainland stocks have tried to rally on the news. And PBOC Governor Pan Gongsheng is hinting at further cuts in the amount of cash banks must hold as reserves.

The faster Beijing puts a floor under the economy, the more Japan’s prospects will improve. China is by far Japan’s biggest trading partner. Having the top customer for your goods battling deflation is rarely a plus for economic confidence.

On top of that, the specter of Trump trade 2.0 is keeping many Tokyo officials up at night. Preparing for a Trump or Kamala Harris administration will be a major preoccupation for LDP officials. Yet not as great as figuring out whether the nation’s dominant party can find a way forward. With, or without, Ishiba in the mix.

Follow William Pesek on X at @WilliamPesek

Continue Reading

China backs Thai success in Brics role

By:
On:
In: South-East Asia

Ambassador pledges economic support

PUBLISHED : 28 Oct 2024 at 04:54

Zhiqiang: To look at trade compliance
Zhiqiang: To look at trade compliance

China’s Ambassador to Thailand has insisted China will support Thailand’s economy, including Thailand’s hope to join membership of Brics, a league of countries that includes Brazil, Russia, India, China and South Africa.

The ambassador, Han Zhiqiang, delivered remarks on “China’s Economy from a New Perspective”, an event held recently in Bangkok by the Thai Journalists Association and the Chinese Embassy.

Mr Han said China has a unique socialist system which differs from Western welfare socialism or the former Soviet model.

China’s system integrates traditional Chinese culture with a market-driven economy, creating a governance style that is both similar to and different from that of other nations.

In recent years, China has faced economic challenges like many other countries.

To support economic growth, its government has implemented key measures, including central bank policies to lower interest rates and reduce banks’ reserve requirement ratio (RRR).

Mr Han also said additional measures have been taken to ease local government burdens, each aligning with economic stimulus goals.

Despite Western media having predicted China’s economic collapse within four decades, Mr Han said China remained optimistic about its economic outlook due to its status as the world’s largest manufacturing country and its vast consumer market.

The current set of economic goals extends until 2050, he said.

Regarding Thailand-China relations, Mr Han described Thailand as a close partner and hoped that China’s economic growth would benefit Thailand’s economy.

The Chinese merchandise that might affect small Thai businesses as competitors accounts for only a tiny portion of total market value, he said. Conversely, China’s industrial goods have created many jobs and a strong supply chain in Thailand.

The Chinese ambassador also expressed his concern about the illegal activities of certain Chinese in Thailand, reiterated that China would beef up its surveillance, and said the actions of a few groups of people should not be generalised to affect bilateral relations.

In 2025, Thailand and China will celebrate the 50th anniversary of their diplomatic ties, a significant milestone that the ambassador hopes will lead to even greater collaboration between the nations.

He said China is delighted to work on trade compliance issues, especially those related to Chinese goods saturating Thai markets.

He also said China will lend its support as Thailand looks to complete its membership journey.

Continue Reading