A passion for wine in Vietnam’s Central Highlands – Southeast Asia Globe

By:
On:
In: South-East Asia

The climate of Vietnam’s Central Highlands, rising high above the country’s muggy coast and river deltas, wasn’t lost on erstwhile French colonists. In the early 20th century, seeking relief from tropical lethargy and illness, they carved a health resort from pine forests at 1,600 metres elevation. They named it DaLat.

As it turned out, apart from íts benefits for well-being, DaLat was a great place to grow things that didn’t do well at sea level. Vegetables and fruits like avocados, artichokes and strawberries thrived in the cooler climate. So, too, did flowers: orchids, roses, hydrangeas. Coffee farms and cashew orchards proliferated on the steep-sided mountain slopes.

Much to the gall of the Gauls, however, grapes didn’t do as well. French being French, they loved their wine, and they had high hopes that the upland climate might yield something akin to the Vitis vinifera of their European homeland: A merlot, perhaps. A robust cabernet. A crisp sauvignon blanc.

Through many fits and starts, they finally have it, although the French colonists (obviously) are long gone.

Today the Ladora Winery, operated by Ladofoods, is firmly established in greater DaLat. Its wines may not be to the taste of many Westerners, but as wineries go, it is the “only one with a proper vineyard and winemaking”, affirmed Tu Lê Huy, president and co-founder of the Saigon Sommelier Association. Indeed, Ladora is the only start-to-finish winery anywhere in the former French Indochina.

The Ladora Winery, near the Central Highlands city of DaLat, is the only start-to-finish winery in the former French Indochina. Photo by John Gottberg Anderson

Ladora grows its own grapes and processes its own wines. The grapes — cabernet sauvignon, shiraz, merlot and sauvignon blanc, plus the hybrid Cardinal varietal — are grown in 125 hectares of vineyards near Phan Rang, not far from ancient Champa Empire ruins. Immediately upon their twice-yearly harvest, they are trucked 60 kilometers to the Ladofoods factory to be de-stemmed, crushed, fermented, pressed, filtered, aged and bottled.

The French had found the local grapes to be far too tart for wine. Even with vineyard cuttings from Europe, the heat and humidity produced only low yields of bitter berries. So they turned their attention to making sweeter fruit wines, especially apple and strawberry. (The Vietnamese already knew that tropical fruits, including bananas and pineapples, could be fermented to produce a high-proof if barely palatable household plonk.)

Upon the normalization of diplomatic relations with the West in the 1990s, wine grapes made a reappearance in Vietnam, boosted by Australian and European investment and modern technology. The key to success was planting in a different climate zone than the production facility.

“DaLat is too rainy, too fertile for grapes,” said Huy, one of three Vietnamese men who founded the sommeliers’ group in 2017. (It has now grown to 120 members.) “DaLat is great for tea and coffee, but not good for grapes. That’s why Lado grows its grapes in Ninh Thuan province.”

Wine in Asia

Elsewhere in Vietnam, Hanoi’s MAM Distillery, established in 2019, blends rice wine with fermented fruit juices, 15 in all, kumquats to raspberries to lemons. Sơn Tinh, founded in Hanoi by a Swiss winemaker in 2000, makes a small-batch rice wine noted for its herbal qualities.

The DalatBeco wine company, launched in 2007, has been importing fruit from France to counter struggles with the quality and consistency of grapes produced by local growers, despite a joint-venture partnership with wine experts in Avignon. “A lot of bulk wine importers bottle their own wine here,” Huy noted.

The nearest full wineries to southern Vietnam are 1,000 km from DaLat, in Thailand’s Khao Yai hills northeast of Bangkok. (Cambodia has a fruit winery at Battambang.) Other Asian countries are slowly progressing.

One of their champions is American wine educator and author Liz Thach, a certified Master of Wine and a professor at California’s Sonoma State University.

“I am pleased to see the growth of wineries in Asia, along with consumer interest in wine,” Thach said. “China actually has a very old wine culture and over 400 wineries, with some of them producing excellent award-winning wines. Bali now has four wineries, and I recently visited one of them and was extremely impressed with the quality of the wine.

“Vietnam has also been producing wine for many years, and they have become very creative in pairing wine with the delicious Vietnamese cuisine. Wineries are growing in number in Thailand, Japan, Korea and India. I believe there is an exciting future for wine in Asia.”

Huy was less enthusiastic about Chinese wine than Japanese. “China is still very much in the early stage of winemaking,” he said. “I tried some; it still has a lot of tannin and lacks character. But Japan makes some nice whites, which they’ve crossed with native grapes suitable to the climate.”

Profit and projection

From a profitability standpoint, wine is far from big business in Vietnam. Consumption of imported wines far exceeds domestic brands, yet in 2023, the market yielded only US$229 million, about $2.30 per capita. (By contrast, U.S. wine revenue was over $56 billion, with per capita consumption of about $58.) Continued growth in the Vietnam wine market is anticipated at a rate of just under 4 percent per year through 2027.

Figures from Ladofoods highlight the fallout the domestic industry experienced in 2022 as a result of the COVID-19 pandemic. Vietnam’s leading wine producer netted US$10.15 million in sales in 2021, yet that figure plummeted to $7.85 million in 2022. It’s likely that 2023 will show a recovery to more than $9.2 million (223 billion in Viet Nam Dong).

Chateau DaLat specializes in sweeter wines for the Asian market, adding mulberries to increase the sugar and alcohol content. Photo by John Gottberg Anderson

About 40 percent of Ladora’s production is exported to other Asian countries, said tasting-room manager Ngoc Dung. Of that, Japan gets the lion’s share, followed by Korea. Lesser amounts are shipped to Thailand, Cambodia, Malaysia, Singapore, Laos, China and Taiwan. That leaves 60 percent for the domestic market.

“The Vietnam market is definitely an entry-level market,” said Huy. “They are only starting to get the idea of wine pairing. There’s a niche market of well-educated and really wealthy Vietnamese for whom classic Bordeauxs are number one.

“They’ve started to drink white with seafood. But for the most part, white wine is not working well here. It’s better in the north because North Vietnamese have a different palate. They like more acidity but not sweet. Central Vietnam likes more spice. The South likes sugar.”

A visit to Ladora

The Ladora Winery is located 28 kilometers east of DaLat city in the hill country of the Phat Chi district. The elegant Chateau DaLat, sitting atop a garden knoll, is at the heart of a building complex overlooking a landscape of greenhouses that provide colourful flowers to the markets of DaLat and Ho Chi Minh City.

Twenty-five steps beneath an earth-covered hummock is an elaborate and extensive wine cellar. Oak barrels filled with aging cabernet sauvignon, shiraz and merlot, and stainless-steel drums of sauvignon blanc, are stacked against the walls. A tower of unlabeled bottles of reds occupies the middle of one room. A long tasting table awaits tour groups, not present on this day.

Ladora’s factory area processes grapes grown on 125 hectares of vineyards near Phan Rang, 60 kilometers to the southeast. Photo John Gottberg Anderson

Assistant winemaker Nguyen Lan said the company makes two principal kinds of wine with these same grapes, for two distinct markets. The Chateau DaLat brand is designed for those of European predilection; wines are plus or minus 12 percent alcohol. Vang DaLat, its grapes blended with the hybrid Cardinal varietal, is typically over 15 percent. (Ladoro also makes a sweet but lower-alcohol Nouvo Sangria and a sparkling Vivazz fruit wine.)

“Mostly, Asians like the sweeter wines,” Lan said. “So we add mulberries, whose sugar increases the alcohol content while making the colour a bit lighter.”

“In DaLat, there’s just not enough sugar in the natural wine,” sommelier Huy reiterated. “The mulberry adds more sugar and more colour.”

Europeans, by contrast, prefer the unblended Chateau DaLat varietals, made under the direction of head winemaker Lê Binh together with European consultants. Some of these have been honoured at wine competitions in Hong Kong and San Francisco.

A sample tasting

A visit to Ladora’s sophisticated, Czech-designed tasting room begins with a video presentation introducing the Ninh Thuan vineyards. The company owns one-fifth of the grapes here; the remaining 100 hectares belong to private farmers contracted to sell the grapes to Ladora. Drip irrigation ensures the plants have sufficient water in the dry season. Flocks of ducks patrol the wine hedges to eat insect pests.

Annual grape production averages 10 to 15 tonnes per hectare, Lan said. All of the fruit is transported uphill to the modern Central Highlands factory, where the temperature is maintained at a steady 18 to 20 degrees Celsius.

Chateau DaLat offers tastings of European-style and sweeter hybrid wines, along with sangrias and fruit wines. Photo John Gottberg Anderson

It would be impossible to taste each one of the more than two dozen wines in the Ladofoods catalogue in a single sitting. A sample tasting is more instructional than comprehensive. The 2017 Chateau DaLat Special sauvignon blanc (12.5 percent) is very dry, a little sour, with aromas of lime and passion fruit. It’s recommended to be enjoyed with shellfish.

The Vang Dalat Classic Special is a 70-30 blend of Cardinal grapes with mulberries. Despite high acidity and peppery spice, it has a mellow finish. “It’s my favorite,” said the assistant winemaker. Vang Dalat Strong, at 15 percent alcohol, is an 85-15 blend of Cardinal and mulberries with a lighter ruby colour and the aroma of sweet berries, almost like jam on bread. “Korean guests love this one,” Lan said. Because of their mulberry content, the Vang Dalat wines don’t carry a vintage date.

More traditional in approach is the 2018 Chateau Dalat Reserve cabernet sauvignon (12.5 percent), aged in French-made American oak barrels for 1½ years. A subtle flavour of black currant presides over a gentle red that retails at US$14. Aged six months longer, the 2019 Chateau Dalat Signature shiraz (13 percent) is earthy and full-bodied with rich tannins and a white-pepper finish. Its retail price is US$34. “Japanese and Koreans love this one,” said Lan.

“Most people in Vietnam have the idea that import wine is better than wine from Vietnam,” the assistant winemaker said. “So it’s hard to change their mind.”

Of course, not all Vietnamese are enamoured with their country’s domestically produced wines. Lê Huy, the sommelier, suggested that they lack originality: “Welcome to the government company,” he laughed. (Formerly state-owned, Ladofoods is now in fact a Vietnamese joint stock corporation.)

Looking ahead

Today, as a picturesque city of nearly half a million people, Da Lat is a favorite of tourists both domestic and international. It remains a health resort as well as a center for education, its universities famed for their work in biotechnology, nuclear physics and architecture. Beautiful gardens surround its urban lakes. A street market is renowned throughout Vietnam.

Tu Lê Huy is president and co-founder of the Saigon Sommelier Association. He calls the Vietnam market “entry level” for fine wines. Submitted photo

But there are no winery tasting rooms even though there is apparently no prohibition against them. DaLat wines are widely available in shops in that city, and in Ladofoods’ showroom in Ho Chi Minh City, but consumers have no chance to taste the wines before buying them. It seems that someone is missing a great great marketing opportunity.

Foreign investors have looked into the possibility of establishing other wine regions in Vietnam. But Huy said it’s unlikely that will happen.

“In the North, we don’t have a delta big enough for vineyards,” he said. “It’s only rocks.

“The BaNa Hills near DaNang are very suited for wine grapes, but the best climate is in the middle of a national reserve — and money cannot talk in the national reserve. There was interest from an Italian winemaker, but the wine would have had to be priced at US$70 a bottle. There would be no way to sell it.”

Continue Reading

Chinese tourists are returning – but not to Thailand

By:
On:
In: Asia
Waiters at 76 Garage
Written by Jonathan Head
Bangkok

For Chinese tourists Bangkok, 76 Garage, an open-air restaurant on the northern outskirts of the Thai capital, has long been near the top of the list of places to visit.

They visit the staff there rather than the foods.

There is a swimming pool in the middle of the diner. The chefs, all fit young men, strip off their shorts and wade into the lake, offering to take the diners in exchange for a photo opportunity and tip. This is when the evening reaches its zenith.

When 76 Door was so well-known, reservations had to be made a month in advance. These time, half of the chairs are bare.

The Chinese are not among Thailand’s most popular tourists, which is a problem.

Thailand had higher expectations when China’s zero-Covid restrictions were finally lifted in January, allowing its residents to go abroad. It anticipated a firm boost that may aid in the recovery of much of the lost ground caused by the Covid crisis for its tourism industry.

By the end of the year, the government estimated that up to five million Taiwanese tourists would have arrived. However, the positive outlook is overly cheerful.

In the first nine weeks of 2023, significantly fewer than 2.5 million Chinese tourists visited Thailand. This is still a significant improvement over the nearly 11 million visitors who arrived in 2019, when there were only 270, 000.

Empty tables at 76 Garage

Jonathan Head, BBC

“Our tourism ministry said visitor numbers would recover quickly after the pandemic,” said Anucha Liangruangreongkit, a Chinese-speaking tour guide at the Grand Palace Bangkok who has been working there for 42 years.

However, they’re dreaming. I’m a manual, so I ought to know. It would be packed if it were normal, like in the history, correct? Look at it right then. Are there many individuals present? No.

A lack of low-cost planes after Covid and a sluggish Taiwanese market are both contributing to the issue.
The news of a five-month card exemption by the new Thai government was intended to draw in more visitors. A Foreign mother of two children was killed in a shooting at Bangkok’s most well-known shopping center on October 3, which added to Thailand and other South East Asian nations’ photo issues.

They are now viewed as dangerous by a large portion of Chinese citizens.

Anucha Liangruangreongkit

Lulu Luo for BBC

A fresh movie called No More Bets debuted in China in August and quickly made tens of millions of dollars. It portrayed a Taiwanese model and an unknown South East Asian nation’s computer programmer being lured by the promise of high-paying jobs into swindling centers and being made to work in conditions resembling slaves.

No More Bets rode on the back of worrying reports over the previous two to three years about thousands of people — many of them Chinese — being held captive in such conglomerates in Cambodia and along Thailand’s lawless borders with Myanmar and Laos. Horrifying records of abuse and misuse by those who have escaped have also appeared in Chinese social media.

Abby, a Chinese scholar in Thailand who enjoys praising locations like 76 Garage on social media, has observed how remarks on her TikTok pull have changed the public’s perception of Thailand.

She claims that” The feedback on my supply used to be very beneficial.” ” Many people expressed a strong desire to visit Thailand after watching my videos ,”

However, she claims that now people are even more concerned that the naked waiters in the pool may be a ploy to persuade unwary diners to donate their kidneys.” People would ask me ,” she asks,” Are you running an” kid harvesting” scam?” Are citizens from Thailand being sent to Myanmar by you?

Foreign tourists in Thailand used to have a bad reputation. They were perceived as pushy and rude and frequently traveled in sizable, loud organizations. There were concerns about so-called” zero dollars tourism ,” where they came on all-inclusive deals with the majority of the money going to users ago in China, and there was open discussion about the dangers of relying too heavily on the Chinese.

The Thai tourism industry has been concentrating its efforts on other areas like Russia and India as security issues are currently keeping many of them away.

However, a nation as dependent on tourism as Thailand never afford to ignore the largest market in the world. Chinese tourists spend an average of$ 180(£ 148 ) per day, making them one of Thailand’s biggest spenders.

Grand Palace Bangkok

Lulu Luo, BBC

Tirawan Taechaubol, whose family owns a sizable ring of opulent hotels and serviced apartments as part of their Kaseko Group, said,” Basically, travelers from China to Thailand straight today are at the higher end of the market.”

They spend a lot of money on healthy meals and activities, and we’ve noticed that they’re more receptive to new experiences. We have Chinese clients who purchase the entire island for birthday or ceremonies, even just for marriage ideas, just like at Cape Fahn, our location on a private area with 24 villas.

She claimed that in contrast to the noisy, bargain-seeking Foreign crowds of famous folklore, Thai tourism is beginning to attract a different type of visitor.

Chinese real estate agent Owen is waiting to meet Lincoln and Wonson, two new users who arrived from Shanghai the previous night for their first-ever trip to Thailand, at the entrance to a newly constructed, 55-story apartment building in the heart of Bangkok.

They claim that as a gay couple, they want to take in Thailand’s wide range of LGBTQ pleasure. However, they serve a more important function. They are looking for a prospective home because they want to start families, which is much more difficult for gay people in China.

According to Owen, Thailand is the top travel destination for Chinese LGBTQ people, and two-thirds of his clients are now looking to settle here.

We saw a lot of transgender people, gays, and gay people around, Lincoln remarked. So yes, I believe that this is a really free and open state. We felt somewhat freed when we arrived.

Lincoln and Wonson

Jonathan Head, BBC

” Wonson continued,” I think the most important thing is the atmosphere here.

” The independence, because you are aware that it is difficult for us to live in China while dealing with social pressure from family and standard society. Perhaps these we can live a life similar to the one in our mind that can not only meet our own needs but also those of our children. And from this point on, we may reassure our kids that we are perfectly ordinary, just like everyone else.

According to Gary Bowerman, whose business Check – in Asia monitors travel trends in the area, for visitors will account for an increasing percentage of Foreign travelers.

” When you have these rumors of schemes and robberies, it will have an impact on people’s opinions ,” he continued.” Three times stuck in a very safe country during the pandemic has probably changed their perceptions of safety and safety.” However, one thing I did suggest about the younger Chinese travelers is that they are open to trying new things.

And he claims that” that aspect of adventure and, let’s say, reasonable risk” is what draws people to Thailand the most.

Related Subjects

More information on this tale

Continue Reading

Aphelia wins Malaysia regional finals of Startup World Cup, will pitch at finale in San Francisco

By:
On:
In: Technology

For place, a heavy tech startup creates wireless charging stations.Engage against more than 70 companies worldwide to earn US$ 1 million in funding.Aphelia Sdn Bhd, a heavy tech startup, was chosen as Malaysia’s local champion and does represent the nation at the Startup World Cup Grand Finale, which will take place…Continue Reading

How to read China’s US Treasury sell-off

By:
On:
In: Asia, Finance

In the home stretch of a rocky 2023, China and Warren Buffett are warning the global economy that the year ahead could be even more precarious.

Not directly or in tandem, of course. But the financial decisions being made in Omaha, Nebraska and Beijing don’t seem very promising for the 12-14 months ahead.

Buffett’s Berkshire Hathaway conglomerate, for example, is raising its cash position in headline-generating ways. Its cash pile is now a record-breaking US$157.2 billion amid rising global interest rates and a lack of solid investment options.

Xi Jinping’s China is also going as liquid as it can — and rapidly — without panicking investors everywhere. As of the end of August, China’s stockpile of US Treasury securities dropped to the lowest level in at least 14 years.

What’s more, Beijing’s exposure to US government debt has fallen about 40% in just the last decade. Xi’s Communist Party has long since passed the dubious honor of Washington’s top banker to Japan. But at No 2, with $805.4 billion of US Treasuries, China’s selling activity is raising eyebrows in government offices and trading pits around the globe.

Though some might claim foul geopolitical play, there could be perfectly rational economic reasons for Xi’s government to offload US debt. As economist Torsten Slok at Apollo Global Management sees it, “growth in China is slowing for cyclical and structural reasons, and Chinese exports to the US are lower. As a result, China has fewer dollars to recycle into Treasuries.”

Brad Setser, a former US Treasury Department economist, says the suspicion that Xi is exacting revenge on the US “sort of makes sense. China does worry about the weaponization of the dollar and the reach of US financial sanctions. And why would a rising power like China want to fund the Treasury of a country that China views as standing in the way of the realization of the China dream ­– at least in the Pacific?”

Yet, Setser says, “that is not what I believe is actually happening.” The bulk of China’s post-2012 efforts to diversify its reserves “have come not from shifting reserves out of the dollar, but rather by using what could have been reserves to support the Belt and Road and the outward expansion of Chinese firms.

Those non-reserve foreign assets, strangely enough, seem to be mostly in dollars; almost all the documented Belt and Road project loans, for example, have been in dollars.”

A Belt and Road bridge project in Croatia. Image: Twitter

Whatever the motivation, though, the global financial system is right to worry about the wider fallout from China selling dollars, including surging US yields. US bond rates recently hit a 17-year high and further spikes are sure to hit asset markets around the globe.

Slok notes that rising US yields are “inconsistent” with the view that stock markets are undervalued. “In short, something has to give,” Slok notes. “Either stocks have to go down to be consistent with the current level of interest rates. Or long-term interest rates have to go down to be consistent with the current level of stock prices.”

Strategist Lauren Sanfilippo at Bank of America sees China’s selling of Treasuries, circa 2023, as a bookmark of sorts. The other was in 2013, when senior People’s Bank of China officials declared it was “no longer in China’s favor to accumulate foreign exchange reserves.” That, she argues, marks “the beginning of a downtrend in China’s holdings of US Treasuries.”

In late 2013, Sanfilippo says, China owned more than $1.3 trillion in Treasuries, in excess of 23% of all foreign holdings. More recently, and over the last 18 months, China has sold more than $200 billion in Treasuries.

This isn’t the full picture, though. All in all, Sanfilippo says, “the landscape of buyers of US Treasuries has shifted. While foreigners own 30%, that share has been declining. The Federal Reserve owns 18%, or another $4.7 trillion, down from a peak of $6 trillion via the monthly run off of $60 billion of Treasuries through their ongoing quantitative tightening program. Importantly, and increasingly coming to the table, are hedge funds, pensions, retail investors, mutual funds and insurers as marginal buyers.”

In Sanfilippo’s view, the “bottom line” is that “foreigners are still a major source of demand for our paper. An important fact, particularly when accounting for a growing US deficit. A list of concerns such as a shifting geopolitical landscape, polarizing US politics, hits to the US credit rating, or a worrying pile of debt, could all chip away at the allure for US assets over the long term.”

But, she notes, “good reasons remain for our preference of US dollar-denominated assets relative to non-US dollar assets. The US economy remains the largest, wealthiest and most competitive economy backstopped by the US corporate sector. Globally speaking, that’s a rare combination that continues to drive flows into US assets, both foreign and domestic.”

Even so, Washington’s bankers in Asia losing faith en masse could be the game-changer officials in Beijing have long feared. The nine Asia-Pacific economies holding the most US debt are sitting on more than $3 trillion of it.

That, at a moment when the US national debt tops $33 trillion and the Fed might soon extend its most aggressive tightening cycle since the late 1990s. Add in extreme political dysfunction in Washington putting the last of its AAA credit ratings at risk.

US Federal Reserve Chair Jerome Powell. Image: Xinhua

The risk is that all that red ink prompts more of Washington’s bankers to buy fewer Treasuries or, worse, call some loans.

In March 2018, Cui Tiankai, China’s then-ambassador to the US, hinted that Beijing might scale back on debt holdings amid concerns about losses. “We are looking at all options,” he said.

That same year, Fan Gang, a top PBOC adviser, said the time to diversify had come. “We are a low-income country, but we are a high-wealth country,” Fan said. “We should make better use of capital. Rather than investing in US government debt, it’s better to invest in some real assets.”

Those concerns in 2018 were being expressed seven years after the US lost the first of its AAA ratings – from S&P Global Ratings. They also came nearly a decade after then-Chinese premier Wen Jiabao in 2009 urged Washinton to safeguard its creditworthiness.

“We have made a huge amount of loans to the United States,” Wen said at the time. “Of course, we are concerned about the safety of our assets. To be honest, I am a little bit worried.” Washington, Wen stressed, must “honor its words, stay a credible nation and ensure the safety of Chinese assets.”

One big worry for China and the rest of Asia: that bickering in Washington between President Joe Biden’s Democrats and the Republicans loyal to predecessor Donald Trump might brawl in ways that prompt Moody’s Investors Service to downgrade the US as Fitch Ratings did in August.

With approval ratings in the low 40s, at best, Biden’s path to defeating Trump in November 2024 is narrowing. Trump has suggested in the past that he might default on US debt to retaliate against China.

Also on Trump’s watch, from 2017 to 2021, America’s standing in Transparency International’s annual corruption perceptions index nosedived 11 places since from 2017 to 2021 – to a 27nd ranking from 16th place.

These aren’t comforting data points for China and other Asian governments effectively holding Washington’s mortgage. As 2024 approaches, Xi, the strongest Chinese leader since Mao Zedong, may also be trying to avoid terrible headlines about hundreds of billions of state wealth lost to US yield volatility. It’s complicated, of course.

The resulting surge in US yields if China accelerated Treasuries selling would boomerang back on China’s economy, just as it’s growing the slowest in three decades. As rates rise, American consumers will buy fewer Chinese goods. The US, of course, is already slowing. In October, the US added just 150,000 nonfarm payroll jobs, a marked slowdown.

“Some of [October’s] weakness will reverse next month with the United Auto Worker (UAW) strike ending, but there is more weakness beyond that,” says economist Thomas Simons at Jefferies, a US investment bank. “This data fits in line with the trend that had been in place before the surprisingly strong September print.”

Yet as Buffett’s Berkshire noted in a recent report: “The effects of significant increases in home mortgage interest rates in the US over the past year has slowed demand for our home building businesses and our other building products businesses. We continue to anticipate certain of our businesses will experience weakening demand and declines in revenues and earnings into 2024.”

As such, economist Mark Williams at Capital Economics doubts that Beijing is letting political objectives dictate foreign exchange reserve management.

“Falls in the value of China’s recorded holdings of US Treasuries tell us little about whether China is divesting from the dollar,” Williams notes. “A broader look at the data suggests that it isn’t, despite geopolitical pressure to decouple. The analysis of the US Fed suggests that China has been a net buyer overall,” of dollar assets.

Photo: Reuters/Jason Lee
China isn’t apparently wholesale dumping US debt. Photo: Asia Times Files / Reuters / Jason Lee

Setser, who’s now with the Council on Foreign Relations, thinks worries about China dumping US debt are overdone. In his view, there “aren’t realistic channels for financial contagion” from the second-biggest economy to the US. Bottom line, he sees “no real scenario” in which China “disrupts” American markets in ways the Fed can’t handle.

But can the PBOC handle things? Some of the US Treasuries sales of late seem to reflect a desire to have funds available to keep the yuan from extending its 5.5% drop this year.

On the one hand, it’s increasing the odds China will import inflation amid elevated global commodities prices. On the other, it raises the risks of additional defaults among property developers as offshore debt payments become more expensive.

Still, as recent actions by Xi’s government and Buffett suggest, there may be an even bigger economic storm brewing in 2024. As such, some battening down of the hatches may be in order.

Follow William Pesek on X at @WilliamPesek

Continue Reading

India’s growing imperative to empower S Korea in Indo-Pacific

By:
On:
In: Asia

The Indo-Pacific area is currently experiencing a prominent power struggle, which is somewhat characterized by China’s efforts to lessen the influence of the United States there. Concerns about regional security, as well as worries about South Korea’s sovereignty and autonomy, have been raised by the expanding economic and military footprint of China in the Korean Peninsula.

South Korea must strengthen its security infrastructure and improve its functions due to the growing Chinese military appearance near the Korean Peninsula. The South Korean government is under more stress as a result of the growing alliance between Russia, China, and North Korea, which has forced safety measures to be strengthened.

This new alliance even puts pressure on countries with similar passions, like the US, Japan, and India, to support South Korea.

Importantly, Beijing has begun to use the web of economic interdependence that China has created as South Korea’s main trading partner for its strategic goals. The ability of South Korea to combat China’s growing confidence in the Korean Peninsula is constrained by its prominent reliance on Chinese markets.

India’s proper essential to equip South Korea has gained significant fame in this dynamic geopolitical environment of the Korean Peninsula and the wider Indo-Pacific area.

This critical is brought on by the region’s rapidly shifting power dynamics, which are accentuated by Chinese dominance and pose serious threats to regional security and the sovereignty of not only South Korea but also many other smaller countries in the area.

Without endangering its own objectives, India never afford to ignore this transfer of power. India is extremely being compelled to play a crucial role in bolstering South Korea’s endurance due to its significant client status in the area of regional peace and security.

India’s growing effect in Korea

India has become a significant and influential player in the development of peace and stability in East Asia in recent years. Given its unique vantage point and ability to have a significant impact on the balance of power within the Korean Peninsula, India’s role in bolstering the political position of South Korea assumes significant significance.

India’s expanding presence in the area and its ability to implement a comprehensive and varied approach encompassing economic, cultural, military, diplomatic, and tactical dimensions serve to emphasize this significance.

It is crucial to understand that the preservation of peace and stability within the larger Indian Ocean place is inextricably linked to the stability of the Korean Peninsula. Any noticeable change in the power dynamics on the Korean Peninsula did unavoidably affect the larger Indo-Pacific area and its overall balance of power.

India is under increasing pressure to develop an all-encompassing economic and security strategy given that China primarily uses a combination of military and economic tools to enhance its corporate objectives. In order to maintain the status quo on the Korean Peninsula, this approach aims to fully leverage South Korea’s economic, military, social, and diplomatic ties to China.

Financial hedging

The urgent need is to lessen South Korea’s significant emphasis on the Chinese market for its goods given the proper use of trade and investment by China as tools of policy. In response, India is compelled to implement targeted import incentives geared toward the promotion of Vietnamese goods, with a focus on lessening South Korea’s reliance on Chinese markets for particular goods.

These actions are intended to support the foreign policy stance of the current Seoul authority.

Significantly, North Korean commercial enterprises find themselves seriously entangled in the importation of essential high-tech organic materials from China, which limits South Korea’s ability to make decisions about its foreign and security policies on its own.

India & nbsp must address this issue as a crucial part of its comprehensive economic strategy for South Korea’s empowerment. Growth of sources for vital organic materials and technologies represents a crucial step in preserving South Korea’s protection and independence.

A growing number of North Korean firms are thinking about moving away from the Chinese island due to a variety of geopolitical and economic factors. However, the high cost of such evictions presents a significant challenge for some.

India should extend incentives and concessions as part of its developing monetary strategy to make it easier for Asian businesses to move from their well-established manufacturing hubs in mainland China to alternate locations in Southeast Asia and India.

Korean businesses may be motivated to think about moving to India if the financial difficulties brought on by these relocations are properly addressed, possibly through the implementation of tailored packages.

India is relevant because of the obvious slowdown in South Korea’s economic growth, which has serious economic and geopolitical ramifications that affect regional security.

It is India’s responsibility to considerably increase its monetary assistance to Korea through a wide range of channels in order to revitalize and stabilize the North Korean economy. As a result, it is crucial for the American government to implement an incentive plan that is specifically tailored to the interests of American businesses.

With the specific aim of promoting investments in North Korean businesses, this system should include both technical expertise and financial assistance. Stabilizing the Vietnamese economy is the initiative’s main goal, which also helps to advance local harmony, stability, and security.

government support

India must pay close attention to enhancing South Korea’s military capabilities in addition to strengthening its financial resilience, a task that is being accentuated by the growing defense prowess of China.

There is currently a pervasive misconception in American legislation circles that the US and South Korea’s strong military alliance eliminates the need for additional contributions. This perception, however, belies a more nuanced reality, where the United States is constrained by specific restrictions in its ability to give South Korea complete support.

In light of this historical context, India has a responsibility to strengthen its military ties with South Korea, highlighting its increased dedication to joint naval exercises, intelligence-sharing mechanisms, and the exchange of cutting-edge protection technologies. Like joint efforts may significantly improve South Korea’s protection capabilities and readiness.

Given India’s reputation as a country known for its expanding indigenous defense capabilities, the idea of transferring developed defense technology to South Korea merits careful consideration, especially in areas where Korea currently has relative shortages, such as long-range missile systems, marine warfare technologies, electronic warfare capability, and space warfare technology.

Maritime assistance

Local peace and stability are being seriously threatened by China’s increasing naval hostility in the area, particularly the South China Sea and its surrounding regions. Given that the majority of its business passes through the sea lanes in this region, Korea has a sizable play in the free and open Indo-Pacific region.

It is essential for India to give Korea the tools it needs to resist Chinese naval aggression and influence because Korea is extremely susceptible to Chinese pressure and possible blackmail in this area.

The two nations are now working together in a constructive way. India needs to do more to help Korea, though, given the extent of Taiwanese confidence. The peace and current situation in this region are essential to Korea’s financial stability, so in the coming weeks, the Taiwanese political and military leadership may be tempted to use this area to put pressure on Korea.

South Korea has recently been looking to expand its influence in the Indian Ocean. India may assist these initiatives, especially those involving the presence of the North Korean navy, which can help India balance China in the Bay of Bengal and the surrounding areas.

Through a variety of channels, India needs to support the South Vietnamese Navy in the Indian Ocean more actively, promoting participation and maritime security. India may improve combined naval exercises in the Indian Ocean with the North Korean Navy, giving them valuable exposure and practice. These exercises may encourage cooperation, information sharing, and fostering trust between the two navies.

India’s expertise in carrying out anti-piracy activities in the Indian Ocean may be useful for protecting South Korean shipping lanes and ensuring the security of sea roads used by Korea for business.

To improve their abilities and knowledge in fields like anti-submarine warfare, coastal surveillance, and search and rescue operations, India should expand training programs for North Korean marine personnel.

Closer ties can be fostered by South Korean naval vessels making more frequent interface visits to American ports. Discussions about marine protection and the potential for mutual marine operations in the event of emergencies on the Korean Peninsula and nearby areas could be included in these visits, which may increase in frequency.

In order to exchange marine intelligence and provide real-time information on sea conditions, probable threats, and security situations, the two nations should strengthen their mechanisms.

Support for cyber security and cross war

China is increasingly using digital and hybrid warfare as tools to increase its regional effect. India must therefore concentrate on enhancing Korea’s strategic capabilities in the areas of security and cross warfare.

India and South Korea should work together on security and techniques to counter non-traditional threats given China’s expertise in computer war and cross tactics. This partnership may aid in defending both countries from China’s destructive actions.

In order to maintain regional balance and counter China’s forceful habits, India and South Korea should simultaneously develop and carry out initiatives in the Indo-Pacific region.

Interpersonal influence

South Korea is now dealing with a wide range of complex local social issues, including demographic aging, mental health problems, and declining birth rates. These inner conflicts not only weaken South Korea’s social structure but also limit its ability to successfully manage the physical difficulties brought on by the continuous energy interactions between the United States and China.

India had not ignore the inside schisms and difficulties afflicting South Korea in its power as a key stakeholder committed to the survival of local peace and stability. India has the capacity to offer priceless insights and assistance mechanisms aimed at overcoming these internal challenges because it is endowed with a politically different environment and an abundance of varied experiences.

It is crucial to emphasize how South Korea’s capacity to take on a more forceful role in creating an entirely new, rules-based security framework within the region is essential to the resolution of these home issues.

As a result, India should pay close attention to bolstering South Korea’s inside social stability as part of its overall effort to empower the country.

improving Korea’s sweet energy

The expansion of South Korea’s soft energy represents a circle in which India may pay particular attention outside of the realms of economic, cultural, and military impact.

Through social exchanges, informative initiatives, and tourism, South Korea’s soft power is being developed, which has the potential to strengthen ties between the country and its neighbors and support India’d regional diplomatic efforts.

India is in a good position to support South Korea’s effective participation in international forums like the Quadrilateral Security Dialogue, the United Nations, and the Association of Southeast Asian Nations. With such assistance, South Korea’s position within the region could be considerably improved, making it a significant participant in the emerging rule-based world order.

In order to counter China’s autocratic influence, India may join forces with South Korea in promoting democratic values and human rights in the area.

India also has the ability to intensify efforts to support Seoul’s initiatives to increase North Korean effect in the area. This includes supporting Korea’s initiatives for talks and negotiations with countries in Southeast Asia and Africa as well as the development of political ties to help the area establish a rules-based order.

In this situation, joint initiatives between India, South Korea, Japan, and the United States may become crucial tools for achieving local security and advancing a common set of political principles.

Conclusion

American policymakers must sincerely understand the gravity of the changing condition taking place on the Korean Peninsula and acknowledge that South Korea’s response to internal and external stresses will have a profound impact on every aspect of local life in the area.

A prolonged and comprehensive commitment that combines various facets, including financial, social, military, political, and strategic dimensions, is required to empower South Korea. India is tasked with the complex tracking of the political landscape while being aware of its own interests and working together with other regional countries to strengthen local stability and security.

India must demonstrate a thorough understanding of the complex dynamics underpinning the Korean economy and society in the wake of President Yoon & nbsp, Suk Yeol’s advocacy for an active and influential role for South Korea within the global spheres of geopolitics and economics, with an emphasis on the associated security implications.

Strategically important goals include the upkeep of the status quo within the Korean Peninsula and the protection of a healthy energy balance.

India’s growing economic and security cooperation with South Korea serves as an example for other countries dealing with similar safety conundrums. As a result, the proper paradigm of India may take into account factors related to economic, cultural, and secure facets, with the ultimate goal of bringing about North Korean empowerment.

India and South Korea are celebrating the gold anniversary of their diplomatic ties, so now is the perfect time for India to come up with a fresh, all-inclusive plan that strengthens its relationships with the country and the larger regional community.

Continue Reading

Import substitution subverting Asia’s next economic miracles

By:
On:
In: Asia

The increase of security-driven monetary policy in commercial nations gives rise to antediluvian inward-looking policy thinking, infecting the formulation of development strategies at a crucial juncture in nations like Indonesia, India, and nbsp, which are poised to make significant developmental advancements.

The world’s monetary policy environment is changing as a result of politics. The transfer of business plan in developed nations has been fueled by security-based logic and a second-best approach to the energy transition without costing carbon in the context of today’s proper competition and conflict. & nbsp,

An & nbsp, an explosion of trade interventions, industrial policies, and subsidies, has exacerbated the threat to the global economy posed by the widespread and a derogation of international trade laws.

In this policy environment, where self-sufficiency and import-supply strategies are gaining strong novel support, how may developing economies like India and Indonesia navigate it?

The only major shift from an economic backwardness to an advanced economy status in modern times has occurred in South Eastern economies. Therefore, it is wise to comprehend the lessons learned from the South Eastern development miracle, which are still applicable today. & nbsp,

On September 6, 2018, staff at the BMW Group Production Network 2 PT Gaya Motor factory in Jakarta, Indonesia, assembled new MINI Countryman pieces. Dasril Roszandi, NurPhoto, and Asia Times Files

In order to lay the groundwork for broad-based business growth, developing economies, constrained by their financial capacity, should remember the waste and futility of previous commercial policies that chose industry champions rather than producing people goods.

Based on the traditional experiences of Japan, South Korea, Taiwan, Singapore, Southeast Asia, and China, powerful South Asian growth was based on trade-oriented growth( anchored in the disciplines of participation in international markets) and deeper integration into the global economy rather than flee from it or reliance on import substitution. & nbsp,

The rapid trade growth experienced by these economies was & nbsp, supply-driven, and was based on the growth of market share in long-established industries rather than the expansion of trade in high-growth, new sectors of the global economy. With a departure from state role in business, government investments were focused on social and economic facilities in public goods like roads and schools.

Politicians now appear to be living in a unique era. Modernization appears to have peaked, the global economy is fragmenting, and a policy pathology that favors self-sufficiency and import – substituting industrial policy is sweeping the world. Home events and political circumstances are posing the threat of stagnant growth upon established professional economy.

The cliche that emerging economies should turn to internal import substitution due to a less positive outlook on world market growth does not fit with Asia’s successful industrial growth.

Advancement in an international economic framework is about putting a lot of labor into more and more effective jobs, increasing productivity, and increasing national incomes.

So, pro-development strategies are those that encourage import specialization in labor-intensive products, attracting large amounts of work into globally competitive manufacturing, and higher productivity employment. & nbsp,

Powerful analytical benefit drives a more technology-intensive export trade framework over time as capital accumulates. A distribution of income that frequently favors labour has been the beneficial corollary of export-oriented development techniques.

Countries have emphasized the production of high-tech, capital-intensive goods from the beginning as a result of the new trend toward self-reliance and security.

Concentrating on these industries necessitates skilled labor, which is in short supply compared to an abundance of poor labor and cheap government expenditures, all of which come at the expense of supplying crucial government infrastructure. If a nation ages before it becomes wealthy, failing to make careers runs the risk of escalating injustice and stretching public resources in an untenable way.

Investing workers in sectors that may take advantage of its abundance and create global competitiveness is the key to effective trade-oriented growth. As comparative advantages change, this enables nations to take over other people’s business stocks. This is a method supported by an open market policy framework based on the principles of non-discrimination.

The relative advantage logic also holds true even during a slow growth period. By limiting access to low-cost and high-quality capital and industrial inputs, import-supply policies undermine this transition and keep businesses from becoming globally competitive.

The history of the South Asian financial miracle was undoubtedly messier and more intricate than the narrative that highlights its key elements has occasionally suggested. The policy approaches that led to victory in Japan, Northeast Asia, Singapore, China, and Southeast Asia were developed in various administrative and political contexts and each had a unique national figure. Special national paths and patterns of development have been shaped throughout the region by policy quirks, technological context, regional size, and location.

However, some elements persisted throughout the South Eastern experience. Rapid growth was largely facilitated by allowing access to inputs that made it easier for vast local labor to be absorbed into productive manufacturing employment. This required opening up to foreign market competition and accepting international investment. & nbsp,

Effective business plan across the place was typified by local reforms to support flexibility, increased state investment mobilization in education, health, transportation, communications networks, and friendly business infrastructure, as well as reduced state shares in financial enterprise and the allocation of capital.

On September 10, 2020, workers at a Haier shop in Wuhan, Hubei province in northern China, are working on an atmosphere condition production line. Asia Times Files, AFP, and Stringer

These ideas and experiences applied to China as well. At level, it has been a key component of it.

Two of Asia’s most promising candidates for revolutionary industrialization in the coming decades— India and Indonesia — have reached a turning point in their respective development paths. They are in a statistical sweet spot due to their young populations and new strong economic performance.

However, both nations run the risk of falling victim to the influence of professional policy 2.0. They would be better positioned to both realize their financial potential and avoid the risk of homeless growth that both currently face if their development strategies were tuned to the principles derived from the West Eastern experience.

At the Crawford School of Public Policy at ANU, Peter Drysdale serves as the head and Rojan Joshi as a research associate at the East Asian Bureau of Economic Research.

This andnbsp, post, and was originally published by East Asia Forum and are being reprinted with permission from Creative Commons.

Continue Reading