Japan’s Economy Shrinks as Abe Puts Off Reforms

Night falls in Tokyo, Japan
Night falls in Tokyo, Japan (Unsplash/Simon Launay)

Japan’s economy shrank at an annualized pace of 1.6 percent between April and June of this year, calling into question Prime Minister Shinzō Abe’s commitment to controversial but pro-growth reforms.

Exports fell, as did consumer spending, depressed by a sales tax hike.

The Bank of Japan’s weakening of the yen has also made imported foods more expensive, putting further pressure on households. Read more “Japan’s Economy Shrinks as Abe Puts Off Reforms”

Disenchanted Japanese Give Abe Another Chance

Japan’s ruling conservative parties were on track to win another majority in snap elections on Sunday but low voter turnout reflected rising disenchantment with Prime Minister Shinzō Abe’s economic reforms.

Japanese media projected Abe’s Liberal Democrats and their socially more conservative coalition partners in the Komeito party would win more than 317 seats in the country’s lower house of parliament, a loss of under ten seats but enough to maintain a comfortable majority.

However, barely one in two eligible voters turned out compared with almost 60 percent turnout in the last election in 2012.

Abe called early elections last month to seek a fresh mandate for his economic policy when the country slipped back into recession.

Key parts of the reform agenda have stalled. Read more “Disenchanted Japanese Give Abe Another Chance”

Japan’s Abe Calls Snap Elections as Reforms Stall

Japan’s prime minister, Shinzō Abe, called a snap election for the lower house of parliament on Tuesday to seek a fresh mandate for his stalled economic reforms. The announcement came a day after data showed the country had slipped back into recession.

Abe also said he would delay a planned sales tax increase to 10 percent. His earlier tax hike, from 5 to 8 percent, is widely blamed for pushing the world’s third largest economy into negative growth.

The nationalist politician, who staked much of his political capital after returning to power in December 2012 on reasserting Japan’s regional influence, nevertheless insisted during a news conference in Tokyo that his economic program was working.

“I am aware that critics say ‘Abenomics’ is a failure and not working but I have not heard one concrete idea what to do instead,” he said. “This is the only way to end deflation and revive the economy.”

But key parts of his reform agenda remain stalled. Read more “Japan’s Abe Calls Snap Elections as Reforms Stall”

Abe’s Refusal to Shake Up Japan’s Labor Market Spells Decline

When Prime Minister Shinzō Abe finally unveiled his plans to make Japan more competitive in June, the proposals underwhelmed. While he promised to lower Japan’s corporate tax rate, currently the highest in the developed world, to below 30 percent, Abe shied away from comprehensive agriculture and labor reforms that could revitalize the island nation’s economy. The latter, especially, are sorely needed.

Japan’s rigid labor laws, which make it nearly impossible to lay off workers, have led many companies to limit hiring to part-time or temporary employees who are typically paid a third less. 17 percent of Japanese men aged 25 to 34 now hold such jobs. For women of all ages, the rate is a staggering 57 percent. 70 percent of Japanese women also still quit their job when they have children.

For both genders, regular jobs have fallen 3.1 percent in recent years. The average wage per worker in real terms has dropped 9 percent since 1997 and 2 percent since Abe took office just two years ago. Read more “Abe’s Refusal to Shake Up Japan’s Labor Market Spells Decline”

Xi Seen Distancing China from North Korea

Xi Jinping Barack Obama
Presidents Xi Jinping of China and Barack Obama of the United States speak at Sunnylands in Rancho Mirage, California, June 8, 2013 (White House/Pete Souza)

Visiting South Korea on Thursday, China’s president, Xi Jinping, appeared to distance himself from his country’s longtime communist ally North Korea, telling his South Korean counterpart, Park Geun-hye, that China took an “impartial” view to situation on the peninsula.

According to Chinese state media, Xi said, “All parties concerned should jointly and properly manage and control the situation, avoid causing tension, prevent the situation from losing control and creating no more stirs.”

He added that China believes “all sides should be treated in a balanced way,” suggesting a shift away from Chinese support for the North Korean regime which just a day before Xi’s visit launched two rockets off its east coast in a show of force. Read more “Xi Seen Distancing China from North Korea”

Japan’s Abe Shies Away from Structural Economic Reforms

Japan’s prime minister, Shinzō Abe, finally unveiled the “third arrow” of his economic reform program on Tuesday but the measures hardly signified a decidedly more liberal policy.

The conservative leader promised to lower Japan’s corporate tax rate, currently the highest in the developed world, to below 30 percent. But he notably shied away from proposing agriculture and labor market reforms that could lift the island nation’s economy out of its long slump.

Abe has promised to revitalize Japan’s economy, the world’s third largest, after two “lost decades” that followed a deep recession in the 1990s. Read more “Japan’s Abe Shies Away from Structural Economic Reforms”

Chinese Aggression Could Be Informed by Domestic Policy

A Chinese junk sails past the USS Peleliu amphibious assault ship in the harbor of Hong Kong, April 18, 2013
A Chinese junk sails past the USS Peleliu amphibious assault ship in the harbor of Hong Kong, April 18, 2013 (See-ming Lee)

China’s revisionist maritime claims and aggressive policy toward its neighbors in Southeast Asia suggest the country’s “peaceful rise” has come to an end. If that is the case, America’s strategists would be wise to advice increased engagement — to reassure allies in the Pacific and prevent China from challenging its supremacy there.

However, China’s policy may not be a calculated one. If America “responds” with a show of military force, it could inadvertently exacerbate China’s sense of encirclement and encourage the sort of aggression it believes China started.

In recent months, China has moved a deepwater drilling rig into waters that are disputed by Vietnam, rammed Vietnamese fishing boats in the South China Sea and deployed three nuclear missile submarines to the same area, engaged in a standoff with the Philippine navy over the Scarborough Shoal and declared an Air Defense Identification Zone over Japan’s Senkaku Islands — which America immediately challenged by flying two bombers through it unannounced.

It is hard not to see a more belligerent China in these moves but Robert E. Kelly, who is an associate professor of international relations at Pusan National University in South Korea, cautions at The Interpreter, the Australian Lowy Institute for International Policy’s blog, not to “attribute to conspiracy that which can be just as easily explained by incompetence.” What looks like a larger plan to push the United States out of East Asia may be far less organized and coherent, he writes — “the outcome of a series of domestic factional battles in a new administration rushing to establish itself, control its military and legitimate itself to a cynical population.”

One explanation for recent Chinese behavior may lie in the leadership change that was finalized in March last year when Xi Jinping became president. Kelly believes he almost certainly made promises to the army as part of a factional power struggle within the ruling Communist Party — which “is arguably the most hawkish, anti-American faction in the government.”

Xi’s governing philosophy taps into a resurgent Chinese nationalism as the mere promise to deliver growth that was made by his predecessors no longer placates either the army or the population at large.

The Communist Party made a basic compact with the Chinese people: It would deliver growth while the people gave it a monopoly on power.

That compact has largely held up but could start to fray once growth inevitably slows down. What Kelly calls “naval nationalism” could be designed to maintain popular support once it does — and simultaneously keep the generals happy.

For now, the Communists have delivered prosperity and pulled China back to the global esteem it believed it enjoyed before the “century of humiliation” that began with the First Opium War in 1839 and only ended when they took over in 1949.

Ironically, the Communist Party “has succeeded to the point where it is longer necessary,” writes Kelly.

Specifically, China is at the point where single-party rule for developmental purposes can no longer be really justified. China is not really a poor country anymore. The “Asian developmentalist” argument that democracy obstructs growth no longer holds. China is either now, or will shortly, be ready for democracy: its citizens are educated and wealthy enough that paternalist arguments for party guidance no longer make sense (if they ever did).

This provides another possible reason for China’s behavior toward its neighbors. “Better tension than transition,” as Kelly puts it. The Communist Party’s priority is staying in power, even if it comes at the expense of scaring its neighbors and risking a standoff with the United States.

Putin at Ease in Asia’s Power Politics

Presidents Vladimir Putin of Russia and Xi Jinping of China observe a military ceremony in Shanghai, May 20
Presidents Vladimir Putin of Russia and Xi Jinping of China observe a military ceremony in Shanghai, May 20 (Kremlin)

There is an expression in Japan: kumo o tsukamuyou. It translates roughly into “like grasping a cloud.” We might call it “wishful thinking.” The proverb springs to mind when reading Japan’s former defense minister Yuriko Koike’s recent commentary.

In it, Koike presents her perspective of the challenges Japan has to face in East Asia. She believes these challenges are easy to enumerate for they all depend on one factor alone: liberal democracy. Those closest to it are under pressure by those farthest from it. China, Russia and North Korea are problems, Japan, the United States and their allies are the solution.

Koike’s is an ideal world in which the leader of the world’s biggest democracy could only possibly choose to ally with likeminded democratic powers and thus India’s new prime minister, Narendra Modi, is dutifully expected by Koike to team up with the alliance being formed to contain China’s assertiveness in the East and South China Seas.

Yuriko Koike, though, might have another thing coming. Not only is Modi not the obvious ally she believes him to be; the government in Tokyo itself may very well have other plans. Read more “Putin at Ease in Asia’s Power Politics”

Thai Coup Leader: Return to Democracy Will Take Year

Thailand’s army and coup leader General Prayuth Chan-ocha appealed for patience from the country’s population and its allies in a speech late Friday night, saying the return to democracy would take about one year.

Prayuth, who ousted the civilian government last week to end six months of deadlock between supporters and opponents of the Pheu Thai party, said a temporary constitution would be drawn up and an interim cabinet installed after three months of “reconciliation”. Read more “Thai Coup Leader: Return to Democracy Will Take Year”

Thai Army Stages Coup After Months of Political Unrest

Thailand’s army took control of the government in a coup on Thursday, two days after declaring martial law.

In a television statement, the country’s army chief, General Prayuth Chan-ocha, said talks between rival political factions to find a solution to six months of deadlock had failed, requiring the military to restore order and push through necessary reforms.

“In order for the situation to return to normal quickly and for society to love and be at peace again … and to reform the structure of the political, economic and social structure, the military needs to take control of power,” he said.

Soldiers ordered cabinet ministers to report to an army base in the north of Bangkok, the capital, by the end of the day and imposed a curfew.

The army’s intervention came two weeks after the country’s supreme court forced Prime Minister Yingluck Shinawatra of the Pheu Thai party to step down over her dismissal of her national-security chief, who was a supporter of the opposition party, three years ago. Read more “Thai Army Stages Coup After Months of Political Unrest”