China’s pivot to America could overshadow the US’s pivot to Asia

Alfred Romann 5 December 2016

Not so much a shift in policy but a growing trend

There has been so much discussion of the United States pivot to Asia that few people have stopped to consider the implications or the success of China’s own pivot to America.

China already wields enormous influence in Asia through its size and its adroitness at negotiating, buying or bullying its way to goodwill among its partners – much like every other player on the geopolitical landscape. It has or is part of free trade agreements that include just about every country in the region.

The all-but-certain death of the Trans-Pacific Partnership (TPP) opens another door for China to step in with its own Regional Comprehensive Economic Partnership (RCEP) that includes India, Japan and most countries in Southeast Asia. China also has plans to push for the Free Trade Area of the Asia Pacific (FTAAP), that would include some 21 countries in Asia and America.

Meanwhile, the U.S. pivot has been one of the key shifts in global economics and policy over the last couple of decades. It had the promise of helping the world continue along the path towards greater globalization.

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Poverty, growth and baseless anger

Alfred Romann 15 November 2016

The economics of misplaced anger

Fast growing Asian countries have “eliminated” poverty at an astonishing speed, bringing people out of extreme poverty into mere gut-reaching poverty.

At first blush, the numbers are suggesting of a hopeful future. In 1990, about a third of the people in the world lived on less than US$1.90 a day. By 2013, it was just 10.7%. In actual numbers, that is 1.85 billion in 1990 compared to 767 million in 2013. A second glance puts in perspective the anger of many people in the world, and not in a good way.
In 1990, the bulk of global extreme poverty was in Asia, the most populous region in the world. Now it is in Africa, the most troubled region in the world.

We wrote about this with my colleagues in a series of stories in China Daily Asia Weekly last month to mark International Day for the Eradication of Poverty, which falls on 17 October. The World Bank says the number of people living in extreme poverty is falling by 88 million per year.

Before we start celebrating, though, let’s go back to that US$1.90 a day, which adds up to US$57 for a 30 day month or a whopping US$693.50 a year. To meet the threshold, a family of four would have to earn US$2,774 per year or US$231 per month. It is hard to imagine any place in the world where that is anywhere near enough.

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Indonesia’s FDI troubles

Alfred Romann 8 April 2015

Largest ASEAN economy claims economic prowess but foreign investors remain unconvinced

When Indonesia’s Investment Coordinating Board (BKPM) rejected some 6,541 foreign investment permits last month, it underscored a problem Indonesia has been facing for a couple of years. Investors are looking at the country. They are scouting deals. They are searching for opportunities. They are not always investing, though.

Last year Indonesia attracted around US$24 billion in foreign investment but that is about a quarter of the total investment that China attracts and less than half of what Brazil receives, reports MNI’s Asia Insight. For the country to maintain levels of economic growth of close to 6% per year, it will need a lot more investment.

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Asian cities need sustainability

Alfred Romann 7 April 2015

Environment, productivity and work hours are all big issues

Asia is home to some of the largest urban centres in the world.

Jakarta, in Indonesia, is home to some 25 million people. Manila is huge. Tokyo and Seoul are both large. Smaller Hong Kong and Singapore are large by any standard. High urbanisation rates are making these cities even larger, but not necessarily more sustainable.

As Cornelia Zou reports in China Daily Asia Pacific last week the challenges are quite significant, but so are the opportunities for Asian cities to start taking issues of sustainability seriously and make significant leapfrogs in terms of the environments, quality of life, education, even work hours and governance.

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Cheap oil helps Indonesia

Alfred Romann 30 January 2015

Lower subsidies cut government costs and could help build infrastructure

Cheap oil has helped Indonesia eliminate punishing subsidies and while the move is likely to bump inflation up, it will also free up a about US$21 billion that the government can now spend on infrastructure or social programs.

All this is good news for the economy, which is still making a comeback from a mini-crisis in 2013. Growth this year is expected to be in the 5.5% range, around the same level as Malaysia. Inflation could average out to 4%.

Speaking during the Asian Financial Forum in Hong Kong, the deputy governor of Bank Indonesia Perry Warjiyo said the country’s central bank is more likely than not to keep its policy rate steady at 7.75%. As this piece in Asia Insight, a Market News International publication, points out things are looking good for the largest economy in Southeast Asia.

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Malaysian rate hike signals new trend

Cornelia Zou 28 July 2014

Looking ahead, inflation is, however, expected to remain above its long-run average. — Bank Negara Malaysia

Malaysia’s central bank welcomed Ramadan fasts and celebrations through July and August by raising the country’s interest rate for the first time in three years.

As many economists expected, Bank Negara Malaysia (BNM) announced after a routine meeting at the beginning of July that it decided to raise its overnight policy rate by 25 basis points. The new interest rate is 3.25 percent with floor and ceiling rates raised to 3 percent and 3.5 percent accordingly.

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World Cup economics benefits are virtually nill

Alfred Romann 16 July 2014

The World Cup is finished, much to the chagrin of our favorite Argentine team that came so close to taking a third cup only to see their chances vanish on a single but great German goal in overtime.

The World Cup is the most watched sporting event in the world. The governing body of football, FIFA, says something like 3.2 billion people watched at least a minute of the World Cup. It is a lot of people. Many of them are in Asia. And almost none of them see any economic benefits.

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