Asia's Week: Key Players Aren't Yet to Finish Line

Apr 25 2014, 5:36pm CDT | by

This week in Asia, at least economically, is ending with a mark of “incomplete.”

Most notably, if unsurprisingly, there was no breakthrough in negotiations for a TransPacific Partnership trade agreement.  So the attention on U.S. President Obama’s stop in Japan diverted to his apparently stout defense of his hosts’ claims to the Senkaku/Diaoyu islands. That’s big stuff but of unclear commercial effect.  A multilateral reduction of trade barriers would be of obvious economic magnitude, which is why domestic interests are resisting so mightily. The onus is being put on Japanese farmers, although some also wonder when the auto industry there will see real import competition.

So Japan treads water but what about its great emerged rival, China? Financial disturbances continued around the real-estate sector, and general nervousness keeps dragging the yuan currency down.  Nearly everyone thinks the central government will step in to rev things up again in time. Unless, that is, the Chinese economy is getting so big and interconnected with world markets that it could have a mind of its own.  This story, too, still needs to play out.

India will wait a few more weeks to find out who all those millions of people are choosing in the ongoing national election. Exit polling suggests a dominant showing for Narendra Modi of the opposition (and mostly pro-domestic busines) BJP party.  But Indian polls have been wrong not so long ago. Clearly, there’s an undercurrent of discontent, and the chance for something momentous to happen, even if some of the old vote buying persists.

Even before India gets a groove back, Japanese investors have been especially eager to get in. It doesn’t always turn out well, but the bigger entities can show the sort of patience required in the Indian market. McKinsey Global Institute, meanwhile, calculated this winter that better than half the Indian population cannot meet essential needs (being “empowered,” in the consultancy’s terms, as opposed to merely escaping dire poverty) because close to half of public services don’t reach them. It asks more spending on health care, water and sanitation and less on food subsidies and make work. If the “efficiency” of the social plan were much improved and a bit more was spent, India would actually get a handle on things.  Even the Japanese may not wait around for that, but maybe Mr. Modi will find an honest minister to read the report.

Thailand’s democratic story also is incomplete, because the opposition is still working on ways to keep the prime minister from holding an election, and thereby remaining in office. Things are said to be coming to a head soon.  Better not dilly dally, Southeast Asia: the Vietnamese tiger could start to roar again.  The finance minister there is talking as if foreign investors could enjoy majority ownerships at last. That plus a little rule of law and the halting Asian rivals may be surprised in how fast interest shifts to Vietnam.  It’s closer to Japan anyway.

All these stories should be clearer–if not fully complete–by the latter half of 2014Obama’s trip, though it will end after stops in Malaysia and the Philippines and the cameras will go home, will play out diplomatically over these next several weeks as well as we watch China’s response. If it ever led to a completed trade pact, it could play out economically for years to come.

 
 

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