China's trade surplus shrank to an eight month low in December, official figures show.
Imports increased by 25.6% on the same month a year earlier, leaving China with a surplus of $13.1bn ($8.4bn).
Exports were up 17.9%, much slower than November's 34.9% rise.
Analysts said the data may give Beijing grounds to fend off US pressure for faster currency appreciation ahead of Chinese President Hu Jintao's visit to the United States next week.
"Imports are much stronger than we have expected, indicating that the domestic investment and internal demand are mainly pushing up domestic consumption," said Wang Han, an economist at advisory firm CEBM in Shanghai.
Figures showed that the surplus for 2010 as a whole had fallen for a second consecutive year, down 7% on 2009 levels to $183.1bn.
Many US politicians and economists accuse China of manipulating the value of the yuan in order to boost its net exports at the expense of its trading partners.
A bill is set to go before the Senate that would call for retaliatory trade sanctions against countries such as China that intervene to weaken their currencies.
China relaxed the yuan's fixed exchange rate against the dollar in June, but since then it has been allowed to appreciate by less than 3%.
Source: http://www.bbc.co.uk
Monday, January 10, 2011
Sunday, January 9, 2011
China to lead Asian economic slowdown
NEW YORK, Jan 6 (Reuters) - China will lead an economic slowdown in Asia this year -- but that's good news for investors, as it should avoid bigger inflation problems in the region, fund managing company Amundi said on Thursday.
Markets are expected to be choppy in 2011 as Beijing adjusts policy to fight inflation, but a foreseeable end to its monetary tightening cycle later this year could boost the return profile of Greater China's equity market, Amundi said.
"Investors should welcome, not fear, a slowing Chinese economy in 2011," Ray Jovanovich, who helps manage more than 650 billion euros at the fund manager, said in a letter to investors.
Asia is on the opposite side of most developed economies such as the United States, where deflation remains the main threat, Jovanovich said.
"A gradually moderating economy (in Asia) is exactly the prescription warranted to arrest the harmful side effects associated with the current inflation threat. We view a slowing economy as a positive signal for China; along with the rest of the Asian region, and the world, for that matter," he said.
China and India have been raising interest rates to stop an inflation spiral which threatens to cause a spike in prices of raw materials and energy.
More anti-inflation measures are expected in 2011, both in terms of monetary and fiscal policies, along with a renewed push for administrative measures, the fund manager forecast.
Amundi, which combines the asset management business of French banks Credit Agricole and Societe Generale, maintains a neutral portfolio position in China and a "significant" overweight stance towards Hong Kong.
"Monetary conditions in Hong Kong's banking system continue to be significantly boosted by both the acceleration in Renminbi internationalization policies and QE2 from America," Jovanovich said.
"We anticipate double-digit monetary base and credit growth in the Hong Kong banking system in 2011, which would eventually lead to further re-rating of risk assets such as equity and property markets."
The firm downgraded its asset allocation to India to neutral from significant overweight on worries that lower GDP growth and earnings estimates for the country still have to be priced in by markets.
It is also "constructive" towards South Korea, despite tensions in the peninsula, as it sees the won as "fundamentally undervalued."
Market performance in 2011 should be driven by key investment themes such as domestic consumption, machinery and capital goods, along with tourism, Jovanovich said, pointing to sectors that would benefit from medium-term secular growth trends.
He also forecasts public housing and healthcare activities will rapidly gain prominence in China in 2011.
By Walter Brandimarte
Source: www.reuters.com
Markets are expected to be choppy in 2011 as Beijing adjusts policy to fight inflation, but a foreseeable end to its monetary tightening cycle later this year could boost the return profile of Greater China's equity market, Amundi said.
"Investors should welcome, not fear, a slowing Chinese economy in 2011," Ray Jovanovich, who helps manage more than 650 billion euros at the fund manager, said in a letter to investors.
Asia is on the opposite side of most developed economies such as the United States, where deflation remains the main threat, Jovanovich said.
"A gradually moderating economy (in Asia) is exactly the prescription warranted to arrest the harmful side effects associated with the current inflation threat. We view a slowing economy as a positive signal for China; along with the rest of the Asian region, and the world, for that matter," he said.
China and India have been raising interest rates to stop an inflation spiral which threatens to cause a spike in prices of raw materials and energy.
More anti-inflation measures are expected in 2011, both in terms of monetary and fiscal policies, along with a renewed push for administrative measures, the fund manager forecast.
Amundi, which combines the asset management business of French banks Credit Agricole and Societe Generale, maintains a neutral portfolio position in China and a "significant" overweight stance towards Hong Kong.
"Monetary conditions in Hong Kong's banking system continue to be significantly boosted by both the acceleration in Renminbi internationalization policies and QE2 from America," Jovanovich said.
"We anticipate double-digit monetary base and credit growth in the Hong Kong banking system in 2011, which would eventually lead to further re-rating of risk assets such as equity and property markets."
The firm downgraded its asset allocation to India to neutral from significant overweight on worries that lower GDP growth and earnings estimates for the country still have to be priced in by markets.
It is also "constructive" towards South Korea, despite tensions in the peninsula, as it sees the won as "fundamentally undervalued."
Market performance in 2011 should be driven by key investment themes such as domestic consumption, machinery and capital goods, along with tourism, Jovanovich said, pointing to sectors that would benefit from medium-term secular growth trends.
He also forecasts public housing and healthcare activities will rapidly gain prominence in China in 2011.
By Walter Brandimarte
Source: www.reuters.com
Thursday, January 6, 2011
Asian Stocks Rise on Optimism for U.S. Economic Recovery; Honda Advances
Asian stocks rose, with the regional benchmark index advancing for the eighth day in nine, as a stronger dollar boosted earnings prospects for exporters and reports in the U.S. signaled a broadening of the economic recovery.
Honda Motor Co., Japan’s No. 2 automaker by sales that counts the U.S. as its biggest market, gained 1.3 percent in Tokyo. Hyundai Motor Co., South Korea’s biggest carmaker, rose 2.4 percent in Seoul. Canon Inc., a Japanese camera maker that generates about 80 percent of its revenue overseas, rose 1.2 percent after the dollar surged against the yen, boosting the outlook for export earnings. Mitsui & Co., which gets about 40 percent of gross profit from commodities, advanced 2.1 percent after crude oil and copper futures increased.
“There are mounting expectations about an economic recovery in the U.S.,” said Naoki Fujiwara, who helps oversee $6 billion in Tokyo at Shinkin Asset Management Co. “Investors have their eyes on the favorable factors. Excess liquidity is boosting demand for commodities.”
The MSCI Asia Pacific Index climbed 0.4 percent to 137.71 as of 11:38 a.m. in Tokyo. Five stocks advanced for every four that dropped on the gauge. The index rose 14 percent last year, extending a 34 percent increase in 2009, as positive global economic data and corporate profits outweighed concerns about Europe’s debt crisis and China’s steps to curb inflation.
Japan’s Nikkei 225 Stock Average increased 1.2 percent. Singapore’s Straits Times index gained 0.3 percent and Hong Kong’s Hang Seng Index was little changed. China’s Shanghai Composite Index dropped 0.7 percent and Australia’s S&P/ASX 200 Index slipped 0.4 percent.
U.S. Services, Jobs
Futures on the Standard & Poor’s 500 Index were little changed today. The index rose 0.5 percent in New York yesterday to its highest level since September 2008.
The U.S. Institute for Supply Management said yesterday that its non-factory index, which covers about 90 percent of the economy, rose to 57.1 in December, exceeding the median forecast of economists surveyed by Bloomberg News and the fastest expansion since May 2006. A reading higher than 50 signals growth. ADP Employer Services said yesterday that U.S. companies added 297,000 jobs last month, almost triple the median economist estimate.
Gauges of consumer discretionary stocks as well as industrial and information technology companies had the biggest increase among the 10 industry in the MSCI Asia Pacific Index.
Honda climbed 1.3 percent to 3,245 yen in Tokyo. Toyota Motor Corp., the world’s biggest carmaker, advanced 2.3 percent to 3,370 yen. Hyundai Motor gained 2.4 percent to 193,500 won in Seoul.
Auto Rally
Asian carmarkers also gained after the Federal Chamber of Automotive Industries in Australia reported sales of new vehicles increased 10 percent in 2010 to 1.036 million from the previous year.
Mazda Motor Corp., Japan’s fifth biggest automaker by sales, advanced 2.5 percent to 248 yen. The company sold 239,709 vehicles in China last year, an increase of 33 percent from 2009, according to a statement on its website.
Fuji Heavy Industries Ltd., owner of the Subaru auto brand, climbed 3.8 percent to 683 yen after Goldman Sachs Group Inc, increased its rating to “buy” from “neutral.”
Japanese exporters also increased after the dollar gained the most in three months against the yen yesterday in New York, advancing to as much as 83.38, the highest level since Dec. 23. A stronger dollar boosts the value of U.S. income at Japanese companies when revenue is repatriated.
Canon, the world’s biggest camera maker, gained 1.2 percent to 4,265 yen in Tokyo. Nintendo Co., the maker Wii gaming consoles, climbed 2 percent to 23,330 yen. Fanuc Corp., Japan’s largest maker of industrial robots, advanced 2.6 percent to 12,960 yen.
‘Business Confidence’
Nikon Corp., Japan’s second biggest camera maker by sales, increased 4.4 percent to 1,834 yen. The company expects operating profit from its precision equipment operations will reach 28 billion yen in fiscal year 2012, seven times the amount forecast for the current year, the Nikkei newspaper reported.
“Investors are taking business confidence as being on a recovery track because economic measures are good in general,” said Mitsushige Akino, who oversees about $450 million in Tokyo at Ichiyoshi Investment Management Co. “A global pickup in business sentiment is boosting actual demand for commodities.”
Mitsui & Co. gained 2.1 percent to 1,418 yen. Mitsubishi Corp., which gets about 40 percent of sales from commodities, increased 2.2 percent to 2,380 yen. Woodside Petroleum Ltd., Australia’s second-biggest oil producer, climbed 1.1 percent to A$42.83.
Crude oil for February delivery increased to $90.30 a barrel in New York yesterday. Copper futures for March delivery rose 0.9 percent to close at $4.408 a pound yesterday.
Shares on MSCI Asia Pacific Index were valued at 14.1 times estimated earnings on average at yesterday’s close, compared with 13.5 times for the S&P 500 and 11.1 times for the Stoxx 600.
Source: http://www.bloomberg.com
Honda Motor Co., Japan’s No. 2 automaker by sales that counts the U.S. as its biggest market, gained 1.3 percent in Tokyo. Hyundai Motor Co., South Korea’s biggest carmaker, rose 2.4 percent in Seoul. Canon Inc., a Japanese camera maker that generates about 80 percent of its revenue overseas, rose 1.2 percent after the dollar surged against the yen, boosting the outlook for export earnings. Mitsui & Co., which gets about 40 percent of gross profit from commodities, advanced 2.1 percent after crude oil and copper futures increased.
“There are mounting expectations about an economic recovery in the U.S.,” said Naoki Fujiwara, who helps oversee $6 billion in Tokyo at Shinkin Asset Management Co. “Investors have their eyes on the favorable factors. Excess liquidity is boosting demand for commodities.”
The MSCI Asia Pacific Index climbed 0.4 percent to 137.71 as of 11:38 a.m. in Tokyo. Five stocks advanced for every four that dropped on the gauge. The index rose 14 percent last year, extending a 34 percent increase in 2009, as positive global economic data and corporate profits outweighed concerns about Europe’s debt crisis and China’s steps to curb inflation.
Japan’s Nikkei 225 Stock Average increased 1.2 percent. Singapore’s Straits Times index gained 0.3 percent and Hong Kong’s Hang Seng Index was little changed. China’s Shanghai Composite Index dropped 0.7 percent and Australia’s S&P/ASX 200 Index slipped 0.4 percent.
U.S. Services, Jobs
Futures on the Standard & Poor’s 500 Index were little changed today. The index rose 0.5 percent in New York yesterday to its highest level since September 2008.
The U.S. Institute for Supply Management said yesterday that its non-factory index, which covers about 90 percent of the economy, rose to 57.1 in December, exceeding the median forecast of economists surveyed by Bloomberg News and the fastest expansion since May 2006. A reading higher than 50 signals growth. ADP Employer Services said yesterday that U.S. companies added 297,000 jobs last month, almost triple the median economist estimate.
Gauges of consumer discretionary stocks as well as industrial and information technology companies had the biggest increase among the 10 industry in the MSCI Asia Pacific Index.
Honda climbed 1.3 percent to 3,245 yen in Tokyo. Toyota Motor Corp., the world’s biggest carmaker, advanced 2.3 percent to 3,370 yen. Hyundai Motor gained 2.4 percent to 193,500 won in Seoul.
Auto Rally
Asian carmarkers also gained after the Federal Chamber of Automotive Industries in Australia reported sales of new vehicles increased 10 percent in 2010 to 1.036 million from the previous year.
Mazda Motor Corp., Japan’s fifth biggest automaker by sales, advanced 2.5 percent to 248 yen. The company sold 239,709 vehicles in China last year, an increase of 33 percent from 2009, according to a statement on its website.
Fuji Heavy Industries Ltd., owner of the Subaru auto brand, climbed 3.8 percent to 683 yen after Goldman Sachs Group Inc, increased its rating to “buy” from “neutral.”
Japanese exporters also increased after the dollar gained the most in three months against the yen yesterday in New York, advancing to as much as 83.38, the highest level since Dec. 23. A stronger dollar boosts the value of U.S. income at Japanese companies when revenue is repatriated.
Canon, the world’s biggest camera maker, gained 1.2 percent to 4,265 yen in Tokyo. Nintendo Co., the maker Wii gaming consoles, climbed 2 percent to 23,330 yen. Fanuc Corp., Japan’s largest maker of industrial robots, advanced 2.6 percent to 12,960 yen.
‘Business Confidence’
Nikon Corp., Japan’s second biggest camera maker by sales, increased 4.4 percent to 1,834 yen. The company expects operating profit from its precision equipment operations will reach 28 billion yen in fiscal year 2012, seven times the amount forecast for the current year, the Nikkei newspaper reported.
“Investors are taking business confidence as being on a recovery track because economic measures are good in general,” said Mitsushige Akino, who oversees about $450 million in Tokyo at Ichiyoshi Investment Management Co. “A global pickup in business sentiment is boosting actual demand for commodities.”
Mitsui & Co. gained 2.1 percent to 1,418 yen. Mitsubishi Corp., which gets about 40 percent of sales from commodities, increased 2.2 percent to 2,380 yen. Woodside Petroleum Ltd., Australia’s second-biggest oil producer, climbed 1.1 percent to A$42.83.
Crude oil for February delivery increased to $90.30 a barrel in New York yesterday. Copper futures for March delivery rose 0.9 percent to close at $4.408 a pound yesterday.
Shares on MSCI Asia Pacific Index were valued at 14.1 times estimated earnings on average at yesterday’s close, compared with 13.5 times for the S&P 500 and 11.1 times for the Stoxx 600.
Source: http://www.bloomberg.com
Wednesday, January 5, 2011
Asia to lead global economic recovery in 2011: HK banker
HONG KONG, Jan. 5, 2011 (Kyodo News International) -- Asia will likely see better economic recovery in 2011 as the United States and European countries continue to struggle, while the liberalization of China's currency will remain the topic of greatest concern, veteran Hong Kong banker Benjamin Hung said Wednesday.
Briefing the media on the upcoming Asian Financial (NYSE:DYP) Forum to be held here, Hung, the chief executive officer of Standard Chartered Bank (Hong Kong), predicted the global economy will recover on a ''steady but gradual'' basis, with Western economies growing below 2 percent and Asia showing a strong growth of 6-7 percent, powered by China.
''The road remains bumpy and the market will remain volatile, but I do think the world should hopefully be regaining more confidence and going through more gradual and steady pace of economic growth,'' Hung said.
The United States has been pressuring China to let the yuan appreciate significantly to offset trade imbalances between the countries. Beijing has insisted on a controlled currency rate rise to prevent negative impact on its export.
''The whole process of liberalization of renminbi (yuan) will probably be one of the biggest developments in the next decade. China is the second largest economic body in the world which is very connected with the world through trade, textiles, etc., but not connected with the world by its currency financially,'' Hung said.
The annual forum, to be held on Jan. 17-18, has invited speakers from financial sector and government officials of different countries including Japan.
Three dozen representatives from 25 Japanese companies mainly of venture capital and private equity firms will be attending the forum in a mission led by Japan's Ministry of Economy, Trade and Industry for the first time.
''Japanese investors are very conservative and are reluctant to invest their money in these challenging enterprises,'' said Minoru Suzuki, director general of the Japan External Trade Organization in Hong Kong.
Suzuki said the forum can help these small companies draw investment from Asian investors, in light of an anticipated economic slowdown in 2011 during which Japan's economic growth is forecast to drop from around 3 percent last year to 1.5 percent this year, as the rising currency exchange rate is hurting export.
Source: www.istockanalyst.com
Briefing the media on the upcoming Asian Financial (NYSE:DYP) Forum to be held here, Hung, the chief executive officer of Standard Chartered Bank (Hong Kong), predicted the global economy will recover on a ''steady but gradual'' basis, with Western economies growing below 2 percent and Asia showing a strong growth of 6-7 percent, powered by China.
''The road remains bumpy and the market will remain volatile, but I do think the world should hopefully be regaining more confidence and going through more gradual and steady pace of economic growth,'' Hung said.
The United States has been pressuring China to let the yuan appreciate significantly to offset trade imbalances between the countries. Beijing has insisted on a controlled currency rate rise to prevent negative impact on its export.
''The whole process of liberalization of renminbi (yuan) will probably be one of the biggest developments in the next decade. China is the second largest economic body in the world which is very connected with the world through trade, textiles, etc., but not connected with the world by its currency financially,'' Hung said.
The annual forum, to be held on Jan. 17-18, has invited speakers from financial sector and government officials of different countries including Japan.
Three dozen representatives from 25 Japanese companies mainly of venture capital and private equity firms will be attending the forum in a mission led by Japan's Ministry of Economy, Trade and Industry for the first time.
''Japanese investors are very conservative and are reluctant to invest their money in these challenging enterprises,'' said Minoru Suzuki, director general of the Japan External Trade Organization in Hong Kong.
Suzuki said the forum can help these small companies draw investment from Asian investors, in light of an anticipated economic slowdown in 2011 during which Japan's economic growth is forecast to drop from around 3 percent last year to 1.5 percent this year, as the rising currency exchange rate is hurting export.
Source: www.istockanalyst.com
Tuesday, January 4, 2011
Oil mixed in Asia on improving US economy
Oil was mixed in Asia today on strong economic data suggesting an improvement in the health of the US economy.
New York's main contract, light sweet crude for February delivery, dipped eight cents to $91.47 a barrel. Brent North Sea crude for February was up three cents at $94.87.
The Institute for Supply Management said yesterday that US manufacturing activity grew for the 17th month in a row in December, bolstering confidence that the US economic recovery is gaining momentum.
The Commerce Department also said that construction spending rose by 0.4% in November to its highest point in five months. The US is the world's biggest oil-consuming nation.
Analysts said that oil sentiment has turned decidedly bullish, partly driven by unusually cold weather, but more due to an increasingly optimistic consensus view on the 2011 economic performance, especially for the US.
Source: www.rte.ie
New York's main contract, light sweet crude for February delivery, dipped eight cents to $91.47 a barrel. Brent North Sea crude for February was up three cents at $94.87.
The Institute for Supply Management said yesterday that US manufacturing activity grew for the 17th month in a row in December, bolstering confidence that the US economic recovery is gaining momentum.
The Commerce Department also said that construction spending rose by 0.4% in November to its highest point in five months. The US is the world's biggest oil-consuming nation.
Analysts said that oil sentiment has turned decidedly bullish, partly driven by unusually cold weather, but more due to an increasingly optimistic consensus view on the 2011 economic performance, especially for the US.
Source: www.rte.ie
Monday, January 3, 2011
Pace of China manufacturing growth eases
The pace of growth among China's manufacturers eased last month but output continued to expand, figures suggest.
The China Federation of Logistics and Purchasing said its purchasing managers index fell to 53.9 in December, from 55.2 in November and 54.7 in October.
It was the first time in five months that the measure had fallen.
Monthly PMI (Purchasing Manager Index) readings have stayed above 50, indicating expansion, for 22 months.
Analysts maintain that strong domestic demand has continued to offset weakness in some of the country's export markets such as the US and Europe.
Chinese authorities have been taking steps to try to control growth in a bid to control inflation - which in November hit a 28-month high.
On Christmas day, Beijing raised key interest rates, the second such move in less than three months.
And the amount of money banks keep in reserve has also been restricted to try to reduce bank lending levels.
The latest data showed that China's economy grew at an annual pace of 9.6% in the three months to the end of September from 11.9% in the first quarter of this year.
Source: BBC
www.bbc.co.uk
The China Federation of Logistics and Purchasing said its purchasing managers index fell to 53.9 in December, from 55.2 in November and 54.7 in October.
It was the first time in five months that the measure had fallen.
Monthly PMI (Purchasing Manager Index) readings have stayed above 50, indicating expansion, for 22 months.
Analysts maintain that strong domestic demand has continued to offset weakness in some of the country's export markets such as the US and Europe.
Chinese authorities have been taking steps to try to control growth in a bid to control inflation - which in November hit a 28-month high.
On Christmas day, Beijing raised key interest rates, the second such move in less than three months.
And the amount of money banks keep in reserve has also been restricted to try to reduce bank lending levels.
The latest data showed that China's economy grew at an annual pace of 9.6% in the three months to the end of September from 11.9% in the first quarter of this year.
Source: BBC
www.bbc.co.uk
Saturday, January 1, 2011
Asia's unstable rise
CHINA - The current turmoil on the Korean peninsula demonstrates this vividly. An unresolved relic of the Cold War, Pyongyang's nuclear ambitions have been difficult to deal with despite the diplomatic efforts of the six-party talks.
But it isn't nuclear warheads that have created the current turmoil. A torpedo sank the South Korean Navy vessel Cheonan in March, and on November 20 artillery shells pummelled South Korean military and civilian installations on the disputed island of Yeongpyeong. Standard weapons are more than enough to create a new sense of uncertainty. Nothing done since March has rebuilt stability.
Never mind that South Korea is a major economy and hosted the recent G-20 summit, the first in Asia. Economic growth in the country, as in much of Asia, is built on a tenuous foundation of peace. Unable to manage the situation, Seoul has reinvigorated its old alliance with the US.
Click here to find out more!Click here to find out more!
Ties with China are inevitably affected. Like most Asians, South Koreans look to the Chinese economy to drive growth. It is indeed one of the few countries in Asia to enjoy a trade surplus with China. There was earlier talk about a free trade agreement with China, either bilaterally or including Japan as a third partner. Such economic diplomacy now looks less likely.
China is the only country believed to be able to influence Pyongyang. But what Beijing has done since March is judged by many in South Korea as being less than helpful.
This highlights a second question about the rise of Asia: the role and attitude of China. There is no single Asia. Much depends - perhaps too much - on this giant that is changing as it rises.
Economically, China is the hub for the region's future growth. Inter-dependence in trade and investment between South Korea, Japan, Asean and even Taiwan - especially after their Chinese free trade agreement - is real and growing. The picture in South Asia too is similar, with China now India's number one trade partner.
Politically, however, Beijing has been much less attractive in 2010. The Korean issue comes on top of controversies with Asean members in the South China Sea, as well as the dispute with Japan over the Senkaku islands. These steps were surprising as China has for over a decade sought to befriend and charm Asean neighbours. The current leaders in Tokyo also want better ties with Beijing.
Visiting India in December, for the first time in five years, Chinese Premier Wen signed off on business deals worth US$16 billion. But the underlying competition between the two Asian giants continues to simmer. There is strategic competition over sea power as well as distant points in the Himalayas and political influence as India vies for a seat on the UN Security Council, where China is the only current Asian permanent representative.
That the Chinese leader went on to visit Pakistan also did not escape notice. Many in New Delhi believe Beijing continues to support their old rival in order to preoccupy India. Even in economic relations, trade tensions underscore the increase in flows, and India has slapped tariffs on a range of Chinese imports, including in the telecoms sector.
The nature of China and its diplomacy is being tested, and how Beijing has acted and will act in the coming months will be judged as showing its character as it grows. Some already ascribe ambition and arrogance to China while others will wait and see. Perceptions will shape how other Asians react. How the Chinese leadership approaches the US-China Summit to be held in January will be looked at carefully, not only by Americans but by other Asians.
It is to Asia's credit that through the financial crisis and 2010, the region has continued to rise. But challenges in 2011 may be even tougher, not only in economics but the underlying politics. Growth will be tested, but even fundamental peace and stability will come under stress. Compared to the developed world, Asia may be the only region expected to show strong growth, but that does not mean Asia is ready to be alone.
Simon Tay is chairman of the Singapore Institute of International Affairs and author of "Asia Alone: The Dangerous Post-Crisis Divide From America."
Source: http://news.asiaone.com
But it isn't nuclear warheads that have created the current turmoil. A torpedo sank the South Korean Navy vessel Cheonan in March, and on November 20 artillery shells pummelled South Korean military and civilian installations on the disputed island of Yeongpyeong. Standard weapons are more than enough to create a new sense of uncertainty. Nothing done since March has rebuilt stability.
Never mind that South Korea is a major economy and hosted the recent G-20 summit, the first in Asia. Economic growth in the country, as in much of Asia, is built on a tenuous foundation of peace. Unable to manage the situation, Seoul has reinvigorated its old alliance with the US.
Click here to find out more!Click here to find out more!
Ties with China are inevitably affected. Like most Asians, South Koreans look to the Chinese economy to drive growth. It is indeed one of the few countries in Asia to enjoy a trade surplus with China. There was earlier talk about a free trade agreement with China, either bilaterally or including Japan as a third partner. Such economic diplomacy now looks less likely.
China is the only country believed to be able to influence Pyongyang. But what Beijing has done since March is judged by many in South Korea as being less than helpful.
This highlights a second question about the rise of Asia: the role and attitude of China. There is no single Asia. Much depends - perhaps too much - on this giant that is changing as it rises.
Economically, China is the hub for the region's future growth. Inter-dependence in trade and investment between South Korea, Japan, Asean and even Taiwan - especially after their Chinese free trade agreement - is real and growing. The picture in South Asia too is similar, with China now India's number one trade partner.
Politically, however, Beijing has been much less attractive in 2010. The Korean issue comes on top of controversies with Asean members in the South China Sea, as well as the dispute with Japan over the Senkaku islands. These steps were surprising as China has for over a decade sought to befriend and charm Asean neighbours. The current leaders in Tokyo also want better ties with Beijing.
Visiting India in December, for the first time in five years, Chinese Premier Wen signed off on business deals worth US$16 billion. But the underlying competition between the two Asian giants continues to simmer. There is strategic competition over sea power as well as distant points in the Himalayas and political influence as India vies for a seat on the UN Security Council, where China is the only current Asian permanent representative.
That the Chinese leader went on to visit Pakistan also did not escape notice. Many in New Delhi believe Beijing continues to support their old rival in order to preoccupy India. Even in economic relations, trade tensions underscore the increase in flows, and India has slapped tariffs on a range of Chinese imports, including in the telecoms sector.
The nature of China and its diplomacy is being tested, and how Beijing has acted and will act in the coming months will be judged as showing its character as it grows. Some already ascribe ambition and arrogance to China while others will wait and see. Perceptions will shape how other Asians react. How the Chinese leadership approaches the US-China Summit to be held in January will be looked at carefully, not only by Americans but by other Asians.
It is to Asia's credit that through the financial crisis and 2010, the region has continued to rise. But challenges in 2011 may be even tougher, not only in economics but the underlying politics. Growth will be tested, but even fundamental peace and stability will come under stress. Compared to the developed world, Asia may be the only region expected to show strong growth, but that does not mean Asia is ready to be alone.
Simon Tay is chairman of the Singapore Institute of International Affairs and author of "Asia Alone: The Dangerous Post-Crisis Divide From America."
Source: http://news.asiaone.com
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