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301. China’s 2020 Economic Agenda: Maintaining Stability Amid Flux

Author:
Yun Jiang and Adam Ni
Publication Date:
12-2019
Content Type:
Journal Article
Journal:
China Brief
Institution:
The Jamestown Foundation
Abstract:
China’s top annual economic policy gathering, the Central Economic Work Conference (中央经济工作会议, Zhongyang jingji gongzuo huiyi), or CEWC, was held between December 10 and 12 in Beijing. This year’s CEWC focused on the theme of “achieving developmental progress on the basis of first ensuring stability” (稳字当头, 稳中求进 / wen zi dangtou, wen zhong qiu jin) (Xinhua, December 12)—thereby continuing a theme stressed during the meeting of the National People’s Congress in March of this year (China Brief, March 22). Given increasing economic risks and political challenges, both domestic and international, the party-state’s focus on the supremacy of stability is unsurprising. Importantly, the CEWC reiterates that the goal of achieving a “moderately prosperous society” (小康社会, xiaokang shehui) by the end of 2020 is “a priority among priorities” (重中之重, zhong zhong zhi zhong). This article examines the key outcomes of the 2019 CEWC, which set the overall direction of China’s economic policy agenda for 2020. In doing so, we highlight a central underlying tension: on the one hand, the Chinese Communist Party (CCP) wants to keep a steady ship at a time of economic and strategic flux; on the other, maintaining strong economic growth requires ambitious developmental goals and economic reform imperatives, which have added pressure for bold policy actions. How well Chinese policymakers can navigate this tension in 2020 has important ramifications for both China’s national development and the CCP’s political legitimacy.
Topic:
Security, Development, Economics, Legitimacy, and Strategic Interests
Political Geography:
China and Asia

302. The Benefits of Regional Integration for Pakistan and Central Asian Republics

Author:
Sarwat Rauf
Publication Date:
12-2018
Content Type:
Journal Article
Journal:
Journal of Political Studies
Institution:
Department of Political Science, University of the Punjab
Abstract:
Regional cooperation can give power to the small states and in order to get economic development, states usually prefer to enter in political and economic alliances. This paper examines the efforts of Pakistan and China to upgrade their regional cooperation through connectivity. China-Pakistan Economic Corridor (CPEC) is an important branch of Chinese mega project, Belt and Road Initiative (BRI), which intended to link South Asia, Central Asia, Middle East, Europe and Africa by using land and sea routes. The main argument is that CPEC will bring comprehensive changes in the economy of Pakistan and it would be beneficial for neighboring countries particularly CARs. CPEC has steered several other economic projects such as signing of Central Asia-South Asia (CASA-1000) envisages cooperation between two regions. Similarly, groundbreaking ceremony of Turkmenistan, Afghanistan, Pakistan and India Pipeline (TAPI) reflects revamping of relations between states. The paper is set out in the perspective of available harmonious grounds for Pakistan and CARs. It also examines the various facets of the utility of CPEC for China, Pakistan and CARs
Topic:
Economics, Belt and Road Initiative (BRI), and Regionalism
Political Geography:
Pakistan, China, South Asia, and Asia

303. The Future of Business: Shaping Inclusive Growth in South-East Asia

Author:
Shubert Ciencia and Alex Maitland
Publication Date:
09-2018
Content Type:
Working Paper
Institution:
Oxfam Publishing
Abstract:
South-East Asia has seen remarkable economic growth over recent decades but also faces serious challenges, especially growing levels of inequality. Solutions are emerging, and the region’s leaders have agreed that inclusive growth is the way forward. Inclusive economies need inclusive businesses. Although at an early stage, we’re witnessing the potential for business to deliver the solutions. This discussion paper reviews the issues faced in the region, how business can be part of the solution through a spectrum of approaches, ways in which social enterprise models can be supported to thrive, and makes recommendations for the region’s businesses.
Topic:
Economics, Regional Cooperation, Innovation, and Inclusion
Political Geography:
Asia and Southeast Asia

304. North Korea’s Military Strategy, 2018

Author:
Chun In-bum
Publication Date:
08-2018
Content Type:
Special Report
Institution:
Korea Economic Institute of America (KEI)
Abstract:
As the focus shifted from North Korea’s military advances in 2017 to its diplomatic offensive in 2018, we should not lose sight of the strategic thinking behind gaining the maximum time to develop the capacity to extend its military threat. At present North Korea needs time to perfect its nuclear strike capability. It has been very successful in developing missile capabilities, but it needs additional time to achieve its goals. Starting with high-level North-South talks on March 5, 2018, the DPRK has just gained what it needs most: time. Whenever the first talks begin with the United States and the DPRK, there should be no surprise if the DPRK comes with an improved capability to threaten the alliance. Thus, for an extended period in 2018, as diplomacy proceeds, we should expect a subdued North Korean approach: not flaunting its nuclear weapons and missiles, while striving to boost capabilities for the struggle ahead. In the seven years since Kim Jong-un officially inherited the leadership of the DPRK, his stated policy has been byungjin ( 병진, 竝進), the pursuit of both economic and military development. In conjunction with purges and efforts to eliminate rivals, byungjin may, in part, derive from Kim’s efforts at the outset of his tenure to consolidate political power. Through it, Kim displayed moderate economic flexibility, thereby gaining favor with the North Korean people through facilitating an improvement in living standards. It is tempting to see byungjin as a sign of the regime’s weakness, or as an indication of moderation, either of which would prompt the eventual collapse of the Kim regime. Correspondingly, one might see it as a reflection of Kim’s immaturity, inexperience, and lack of political and strategic acumen. These viewpoints reflect mirror imaging more than a sophisticated understanding of North Korea. Byungjin may be more of a political device and a strategic communications element of a grand strategy, as opposed to the regime’s strategy. It may be a significant instrument in the regime’s effort to maintain elite cohesion and focus the energies of the North Korean people toward productive pursuits that likewise add to the regime’s legitimacy and staying power. It by no means suggests any diminishing of the priority of making advances in nuclear and missile development in order to pose a more serious threat. Since taking power, Kim’s regime has fired close to one hundred missiles of wide variety and range compared to thirty-one for his father and grandfather combined. He has also conducted four nuclear tests, boasting of a thermal nuclear capability. During his 2018 New Year’s address, Kim Jong-un proclaimed that the DPRK had perfected its nuclear and intercontinental missile capabilities, supporting North Korea’s constitutional claim to be a nuclear power. Despite an upsurge in diplomacy after this address, we should keep our eyes on its military advances.
Topic:
Diplomacy, Economics, International Security, Military Strategy, and Weapons
Political Geography:
Asia, North Korea, and Korea

305. North Korea’s Economic Strategy, 2018

Author:
William B. Brown
Publication Date:
08-2018
Content Type:
Special Report
Institution:
Korea Economic Institute of America (KEI)
Abstract:
This chapter takes the perspective of North Korea’s leadership as it confronts difficult economic problems in the remaining months of 2018. The major current and potential issues are listed and prioritized. Short and longer-term remedies are presented, each with trade-offs that affect other economic and policy issues. Given the absence of direct reporting from North Korea, the issues and debates presented are speculative, designed to give the reader a more comprehensive understanding of North Korea’s current problems than is ordinarily presented in western media. Kim Jong-un’s recent diplomatic offensive, reaching out to South Korea, China, and the United States is, in this view, suggestive of these internal economic troubles in addition to the nuclear security issues. The troubles are both short-term—the collapse in trade with China in just the past few months—and long-term, the slow-motion collapse of the communist country’s “command” economy. And much more than in the past, the problems relate to the regime’s unusual and dangerous monetary system, money being a normal issue for most governments but a relatively new one for this still partially rationed, or planned, oriented system. The leadership may have little choice but to let the domestic economy move further from the plan—allowing decentralized market and private activities more sway—than ever before. This would help cushion the central government from losses due to the sanctions and open the door to a much more prosperous future. Without major moves in this direction, inflation and unemployment may cascade into social crisis. It should be noted, that the recent Assembly Meetings, which annually focus on the economy, gave little official indication of policy changes, only a sense of digging in further to protect the regime from outside forces. But just a week later, Kim may have telegraphed an upcoming sea change when, in his address to the Party Central Committee plenum, that he is instituting a new Party Line, socialist economic construction, as the total focus of the Party and the country. Major changes, if they are to occur, will likely come after the upcoming important summits with South Korea and the U.S.1 There is little doubt that the economy in 2018 is in very poor condition, delivering one of the worst productivity rates—productivity in terms of labor and of capital—in the world, but it is important to recognize that this is due not to natural circumstances but to decisions the government has made over the years, and trade-offs it has already made. This suggests that astute government policy can create solutions and restore growth. Remedies of the sort expressed here, for example in liquidating, that is selling or leasing state assets to private buyers, raising fixed prices for state delivered electricity and for water and other utilities, and giving large pay raises to the millions of state workers who now rely on rations, while culling their numbers, would require difficult economic and social trade-offs; one might say there is no free lunch for Kim and his regime although no doubt they are looking for one, even in these summits. The chapter discusses just what kinds of decisions might be made and the likely consequences. Negotiations being set with South Korea and with the United States, and likely more discussions with China, may weigh heavily in how far Pyongyang will be willing to go in these respects. In my view the regime will be looking for: outright aid, payments for pushing back the nuclear weapons program, and premature relief from sanctions, which would only give the regime time to avoid the hard choices needed to permanently fix the broken economic system.
Topic:
Diplomacy, Economics, Sanctions, Services, and Trade
Political Geography:
China, Asia, North Korea, and Korea

306. The Game for Regional Hegemony: China's OBOR and India's Strategic Response

Author:
Anshuman Rahul
Publication Date:
06-2018
Content Type:
Journal Article
Journal:
AUSTRAL: Brazilian Journal of Strategy International Relations
Institution:
Postgraduate Program in International Strategic Studies, Universidade Federal do Rio Grande do Sul
Abstract:
The OBOR initiative of China often termed as ‘Modern-day Silk Road’ is based on President Xi Jinping’s epic vision to make ‘China Great Again’ by reviving the Silk Route of ancient times. This initiative aims to engage Eurasia economically by creating a network of infrastructure. In this regard, the article attempts to understand the geo-politics behind India’s refusal to join OBOR and strategic response to counter the most appealing economic engagement of the present era but considered to be a debt-trap by India.
Topic:
Economics, International Trade and Finance, Military Strategy, and Silk Road
Political Geography:
China, India, and Asia

307. Economic Regionalism is Key to Openness and Growth: An ASEAN Perspective

Author:
Sanchita Basu Das
Publication Date:
08-2018
Content Type:
Special Report
Institution:
Korea Economic Institute of America (KEI)
Abstract:
The 10 members of the Association of Southeast Asian Nations (ASEAN) are involved in several regional economic arrangements, not only their own ASEAN Economic Community (AEC), but also those in a bigger geographic area, such as the ASEAN+1 Free Trade Agreements (FTAs) and the Regional Comprehensive Economic Partnership (RCEP). A subset of these countries are partaking of Asia-Pacific deals, namely the latest Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) and the Asia-Pacific Economic Cooperation (APEC). Some are pursuing bilateral deals in pursuit of deeper economic cooperation. Finally, all ASEAN countries are members of the Belt and Road Initiative (BRI), which although not labelled a trade agreement, is concerned with trade-related measures including transport infrastructure, policy coordination, economic connectivity through trade and investment, customs modernization, financial cooperation, and people-to-people linkages. A common feature of all these trade agreements is that they are not just focused on removing restrictions on trade, i.e. lowering import tariffs and quotas, but are much more comprehensive and include issues like trade in services, investment, labor, intellectual property rights, regulatory standards, and health and safety rules. All of these agreements deal with cooperation measures beyond national borders and can be called deep economic cooperation. They go beyond the WTO framework and are often labeled “new regionalism,” understood as state-led projects in the context of global developments. The extent of deepness varies, mainly depending on the participating countries’ development stage and the economic competitiveness of domestic sectors. What do the ASEAN countries aim to achieve? Theory has elucidated that governments have motives ranging from politics to economics when entering an economic cooperation arrangement. The political motives could be confidence building, i.e. if an international relationship was blemished by a history of conflict, economic cooperation can introduce a process of confidence building.3 For smaller countries, it could be seen as a means to increase bargaining power with the international community. Countries often see economic cooperation as a means to hasten their domestic economic reforms so as to increase attractiveness to foreign investors.4 Governments could follow a regionalism exercise also to defend domestic interests that are threatened by regionalism elsewhere. As for the economic motives, countries prefer cooperation among a limited number of players as it enables continued protection in a bigger geographical space and shuns producers from non-members. This enables them to exclude “politically sensitive,” noncompetitive domestic sectors completely from trade liberalization. Finally, regional economic arrangements are essential for creating economies of scale for producers and offering a larger market for consumers, which increases attractiveness to potential investors. This chapter elaborates on ASEAN’s perspective on economic regionalism in the Asia-Pacific. It examines key initiatives that ASEAN countries are currently negotiating or implementing in their national economies, discusses economic and strategic motives, and views the future of regionalism from an ASEAN perspective. It concludes that although the ASEAN countries are facing some uncertainties in their pursuit of economic regionalism, they will continue to support the endeavor as it serves their economic structure of openness. The countries have realized the benefits of economic integration in terms of confidence building of investors, thereby bolstering economic growth.
Topic:
Economics, Treaties and Agreements, Economic Growth, and Regional Integration
Political Geography:
Asia and Southeast Asia

308. Advancing the Regional Trade Order in East Asia with a Less Engaged United States

Author:
Korea Economic Institute of America
Publication Date:
08-2018
Content Type:
Special Report
Institution:
Korea Economic Institute of America (KEI)
Abstract:
In the aftermath of Donald Trump’s election and immediate pullout from the TPP, a scramble ensued over how to proceed with constructing a regional trade order centered on East Asia. For China this brought closer scrutiny of its pursuit of the Belt and Road Initiative (BRI). In the case of Japan, questions followed about what to do with the residue of TPP. Others, notably countries in Southeast Asia, were left contemplating the balance between eastern exclusive regionalism and the western presence in regionalism. In the background were efforts in South Asia aimed at advancing economic integration with East Asia. A kind of free-for-all was in progress without the moorings that had been lost after the paradigm of competition between a U.S.-led TPP and a China hub-and-spokes BRI no longer was guiding the strategic calculations of Asian countries. Then, in March 2018 came Trump’s disruptive tariffs, threatening to set a trade war in motion. Four chapters explore the challenge of advancing a regional trade order in East Asia in the new circumstances of 2017-18. Tu Xinquan in Chapter 10 questions whether BRI is a path toward regionalism, delving deeply into the Chinese strategy for BRI. T.J. Pempel follows in Chapter 11 by exploring Japan’s thinking about TPP and the process of refocusing on TPP- 11 following the U.S. withdrawal. Chapter 12 by Sanchita Basu Das offers a hopeful ASEAN perspective on economic regionalism. Finally, in Chapter 13 Pradumna Bickram Rana traces thinking about re-energizing economic integration between South Asia and East Asia. With no finality to the RCEP talks and the recently concluded TPP-11 pact still taking shape and Trump’s “America First” trade policy casting a dark shadow, we aim to capture signs of a new trade order at a time of flux.
Topic:
Economics, Regional Integration, and Trade
Political Geography:
Japan, China, East Asia, Asia, and Korea

309. Making Korea Grow Again: Rebalancing the Moon Jae-in Economic Agenda

Author:
Choong Yong Ahn
Publication Date:
05-2018
Content Type:
Working Paper
Institution:
Korea Economic Institute of America (KEI)
Abstract:
The Moon Jae-in administration in South Korea has taken a two-pronged approach to ensure urgently needed job creation and inclusive growth. Although measures towards each set of economic policies have been implemented since Moon took office in May 2017, what’s often referred to as “incomeled growth” has been prioritized over innovative growth. The income-led growth model is largely driven by domestic consumption through pro-labor distributional policies including a wage hike to raise the disposable income of low- and middleincome individuals, thereby triggering equity with growth. Focused more on the supply side, the innovative growth model encourages startups to create jobs and innovate. It is a great challenge for Korea to pursue growth and equity through both sets of policies. After a year in office, the Moon administration’s economic agenda, often referred to as J-nomics, has not fully produced the intended policy objectives in terms of job creation and growth. To mitigate a declining potential growth rate and pursue robust and inclusive growth, the twin policies need to be rebalanced, reprioritized, and interconnected in a mutually reinforcing manner to empower the private sector to play a bigger role. As a mid-sized open economy, Korea requires global market competitiveness on the supply side to create decent jobs by buoying entrepreneurship and innovation. Structural reforms in the labor market combined with deregulations necessary for the advent of disruptive 4th-industrial-revolution technologies must be expedited. Furthermore, a new business ecosystem in which win-win collaborations between globally-oriented conglomerates and small businesses must be encouraged to replace a zero-sum business culture.
Topic:
Economics, Science and Technology, Global Markets, and Economic Growth
Political Geography:
Asia, South Korea, and Korea

310. The Economic Importance of the KORUS FTA: A Case Study of the Korean Beef Market After Renegotiations

Author:
Jin Kyo Suh
Publication Date:
05-2018
Content Type:
Working Paper
Institution:
Korea Economic Institute of America (KEI)
Abstract:
Beef trade was a major sticking point between the United States and South Korea in ratifying the KORUS FTA. The outcome of the renegotiations that led to the March 2018 agreement in principle did not impact sections pertaining to beef in the agreement, though looking at how beef trade would have been affected should the talks have failed highlights the importance of the agreement to both countries, but particularly the United States. This paper estimates the demand for imported beef in South Korea by source and product by using the production version of the Rotterdam demand system and assesses what the potential impact of U.S. withdrawal from the KORUS FTA would have been on beef trade between the U.S. and South Korea. The results suggest U.S. withdrawal from the KORUS FTA would have resulted in a considerable increase in Australian beef exports to South Korea, largely at the expense of U.S. beef. This is because there is significant price competition between beef imports from the United States and Australia. Furthermore, Korean consumers substitute American beef for Australian beef when the relative price of U.S. beef rises.
Topic:
Economics, Treaties and Agreements, Exports, and Trade Policy
Political Geography:
Asia, South Korea, North America, Korea, and United States of America