Economics
Rising Asia : development challenges, and high stake in global economic recovery
Author: Maria Monica Wihardja, CSIS, Indonesia The Asian Development Bank, along with Indonesian ministries, including the Trade Ministry and the National Development Planning Ministry, this month held a symposium on ‘Asia’s Development Agenda in Regional and International Fora’ and a consultation meeting on ‘Asia 2050.’ These themes are timely; despite its growth miracles, Asia continues to face development challenges, and its stake in the global economic recovery is high. Asia’s success is not pre-ordained, according to Shigeo Katsu, a senior associate of the Centennial Group, at the Asia 2050 meeting. He suggests that the worst possible scenario for Asia by 2050 would see India and China become trapped as middle-income countries with poor institutions and governance, and growing inequality. At the middle level of development, information networks that sustain small economic activities in non-contractual and relation-based societies would no longer be able to support contract enforcements in large economies. Although state institutions are needed, the scale of activity is not yet large enough to justify the cost of establishing them, rendering the formation of contractual and rules-based societies a failure. Moreover, there are political obstacles associated with people who have sunk stakes in the old system, preventing the establishment of a new system. Emil Salim, chairman of Indonesia’s Presidential Board of Advisors, foresees an unbalanced Asia in 2050 between the Asia 8 — India, Indonesia, Japan, Malaysia, China, South Korea, Thailand and Vietnam — and the rest of Asia, as dictated by market-based economies. Growing inequality within the countries — between a highly developed urban-based West Indonesia and an underdeveloped East Indonesia; the rapidly modernised coastal areas of east China and poverty-stricken western-most region of China ; and among Indian States with strikingly diverse poverty rates — is also foreseeable. So, is Asia moving in the wrong direction? Or should Asia look more to an equitable and sustainable trajectory? We also see ‘two faces of Asia’ on elements other than economic growth — the first face consists of Newly Industrialised Economies (including Hong Kong, South Korea, Malaysia, Singapore, Taipei and Thailand) plus China and India, while the second face consists of resource-rich, low-income, and less developed countries as well as the small states of Asia. The ‘Asia’s Development Agenda’ symposium stressed three agendas to bring more equitable development between the two faces of Asia, and within country: AID for Trade, Financial Inclusion, and the Social Safety Net. The critical issues for a rising Asia are institutional issues: social norms and culture — issues that are downplayed by many economists. Kaushik Basu, in his new book, Beyond the Invisible Hand (2010) , argues that social norms and culture are as important as law. This can be easily understood if we accept the fact that human beings are social beings — we react to what others do and most of the things we do are shaped by the cultural and social environment in which we live. ‘Equilibrium differences’ are greater than ‘innate differences.’ This is why Asia’s jewels — China, Indonesia and India — may be trapped in a ‘low equilibrium,’ with poor social attitudes reinforcing people’s behaviour, shackling their rise as market-based countries because of poor institutions, governance and political environments. The threat of a ‘middle-income trap’ is real. One other important issue is the regional and global cooperation required to build a more equitable and sustainable Asia . The foreign policies of China, India and Indonesia have been outward-looking and the stakes are high: India hosted leaders from all five permanent members of the United Nations Security Councils last year; Indonesia will host the first expanded East Asian Summit this year with two new members, Russia and the US, and with a possibility of hosting the G20 Finance Ministerial and Central Bank Governors’ Meeting in 2013; and Chinese President Hu Jintao’s 2011 visit to the U S has set the basis for the coming decades of a bilateral relationship, the stability of which is of global importance. ‘Soft-power’ policies from the region are a priority. Mahendra Siregar, Indonesian deputy Minister of Trade and the Indonesian G20 Sherpa, reminds us that Asia’s outward looking strategies should be geared toward reorienting our focus to how Asia can contribute to the global economic recovery, and not vice versa. Without these elements a ‘rising Asia,’ hidden behind high economic growth figures, will be merely a chimera. Maria Monica Wihardja is a researcher at the Centre for Strategic and International Studies, Indonesia and is a lecturer at the Department of Economics, University of Indonesia. A version of this article was published in The Jakarta Post on 2 February 2010. Obama in Asia Wisdom of an Asia rising Indonesia and the BRICs
The Asian Development Bank, along with Indonesian ministries, including the Trade Ministry and the National Development Planning Ministry, this month held a symposium on ‘Asia’s Development Agenda in Regional and International Fora’ and a consultation meeting on ‘Asia 2050.’ These themes are timely; despite its growth miracles, Asia continues to face development challenges, and its stake in the global economic recovery is high.
Asia’s success is not pre-ordained, according to Shigeo Katsu, a senior associate of the Centennial Group, at the Asia 2050 meeting. He suggests that the worst possible scenario for Asia by 2050 would see India and China become trapped as middle-income countries with poor institutions and governance, and growing inequality. At the middle level of development, information networks that sustain small economic activities in non-contractual and relation-based societies would no longer be able to support contract enforcements in large economies.
Although state institutions are needed, the scale of activity is not yet large enough to justify the cost of establishing them, rendering the formation of contractual and rules-based societies a failure. Moreover, there are political obstacles associated with people who have sunk stakes in the old system, preventing the establishment of a new system.
Emil Salim, chairman of Indonesia’s Presidential Board of Advisors, foresees an unbalanced Asia in 2050 between the Asia 8 — India, Indonesia, Japan, Malaysia, China, South Korea, Thailand and Vietnam — and the rest of Asia, as dictated by market-based economies. Growing inequality within the countries — between a highly developed urban-based West Indonesia and an underdeveloped East Indonesia; the rapidly modernised coastal areas of east China and poverty-stricken western-most region of China; and among Indian States with strikingly diverse poverty rates — is also foreseeable. So, is Asia moving in the wrong direction? Or should Asia look more to an equitable and sustainable trajectory?
We also see ‘two faces of Asia’ on elements other than economic growth — the first face consists of Newly Industrialised Economies (including Hong Kong, South Korea, Malaysia, Singapore, Taipei and Thailand) plus China and India, while the second face consists of resource-rich, low-income, and less developed countries as well as the small states of Asia. The ‘Asia’s Development Agenda’ symposium stressed three agendas to bring more equitable development between the two faces of Asia, and within country: AID for Trade, Financial Inclusion, and the Social Safety Net.
The critical issues for a rising Asia are institutional issues: social norms and culture — issues that are downplayed by many economists. Kaushik Basu, in his new book, Beyond the Invisible Hand (2010), argues that social norms and culture are as important as law. This can be easily understood if we accept the fact that human beings are social beings — we react to what others do and most of the things we do are shaped by the cultural and social environment in which we live. ‘Equilibrium differences’ are greater than ‘innate differences.’ This is why Asia’s jewels — China, Indonesia and India — may be trapped in a ‘low equilibrium,’ with poor social attitudes reinforcing people’s behaviour, shackling their rise as market-based countries because of poor institutions, governance and political environments. The threat of a ‘middle-income trap’ is real.
One other important issue is the regional and global cooperation required to build a more equitable and sustainable Asia. The foreign policies of China, India and Indonesia have been outward-looking and the stakes are high: India hosted leaders from all five permanent members of the United Nations Security Councils last year; Indonesia will host the first expanded East Asian Summit this year with two new members, Russia and the US, and with a possibility of hosting the G20 Finance Ministerial and Central Bank Governors’ Meeting in 2013; and Chinese President Hu Jintao’s 2011 visit to the US has set the basis for the coming decades of a bilateral relationship, the stability of which is of global importance. ‘Soft-power’ policies from the region are a priority. Mahendra Siregar, Indonesian deputy Minister of Trade and the Indonesian G20 Sherpa, reminds us that Asia’s outward looking strategies should be geared toward reorienting our focus to how Asia can contribute to the global economic recovery, and not vice versa.
Without these elements a ‘rising Asia,’ hidden behind high economic growth figures, will be merely a chimera.
Author: Maria Monica Wihardja, CSIS, Indonesia Maria Monica Wihardja is a researcher at the Centre for Strategic and International Studies, Indonesia and is a lecturer at the Department of Economics, University of Indonesia.
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The chimera of rising Asia
Business
Henry Keswick: The Jardine Scion Who Transformed China’s Business Landscape
Henry Keswick, 86, a key figure in Jardine Matheson, passed away as the U.S. awaited election results, amid heightened tensions in U.S.-China relations during Trump’s presidency.
Henry Keswick’s Legacy
HONG KONG — The world turned its attention to the U.S. presidential election as news broke of Henry Keswick’s passing at the age of 86. A fourth-generation member of the British conglomerate Jardine Matheson, Keswick had a profound influence on the company, which has deep roots in Asia.
Navigating Challenges
Keswick’s leadership spanned significant challenges, including a strained relationship between the U.S. and China, particularly as Donald Trump prepared for his return to the White House. Under his stewardship, Jardine Matheson navigated a complex landscape in retail and real estate that dovetailed with geopolitical shifts.
A Lasting Impact
His contributions to Jardine Matheson and the broader business community have left an indelible mark. As companies reposition themselves amidst evolving international dynamics, Keswick’s legacy will undoubtedly continue to shape the future of the conglomerate he led.
Source : Henry Keswick, the Jardines scion who razed then restored China business
Business
Faurecia Relocates Electronics Headquarters from Japan to China – Automotive News
Faurecia relocates its electronics business headquarters from Japan to China, signaling a strategic shift to enhance operational efficiency and strengthen its presence in the growing Chinese automotive market.
Faurecia’s Strategic Shift
Faurecia has announced the relocation of its electronics business headquarters from Japan to China. This move is aimed at enhancing the company’s presence in a rapidly growing market for automotive technologies. By shifting its base, Faurecia intends to optimize operations and better serve its clientele across Asia.
Strengthening Market Position
The decision is part of Faurecia’s strategy to consolidate its resources in regions where electric and hybrid vehicle demand is soaring. As China leads the global automotive market in innovative technologies, the relocation will allow Faurecia to align its efforts with industry trends and consumer needs.
Future Aspirations
With this strategic shift, Faurecia aims to drive innovation and expand its production capabilities in China. The company expects this decision to create new growth opportunities and help solidify its competitive edge in the evolving automotive landscape.
Source : Faurecia moves headquarters of electronics business from Japan to China – Automotive News
Business
AstraZeneca Stock Declines Amid Reports of Possible Probe Fallout in China – Reuters
AstraZeneca shares declined following reports of potential repercussions from a probe in China, highlighting concerns over regulatory scrutiny and its impact on the company’s operations and financial performance.
AstraZeneca Under Scrutiny
AstraZeneca faces potential fallout from a reported investigation in China, leading to a noticeable decline in its share price. Investors reacted sharply to the news, reflecting concerns over possible regulatory pressures that could impact the pharmaceutical company’s operations in the region. The drop in shares has prompted analysts to scrutinize the implications of this development for the company’s future prospects.
Market Reactions
The market’s immediate response indicates significant unease among shareholders as they weigh the risks associated with the potential probe. Financial analysts suggest that if the investigation leads to strict regulations or penalties, AstraZeneca could face challenges in maintaining its market position. This uncertainty highlights the fragile nature of investor confidence in the pharmaceutical sector, particularly in international markets like China.
Future Implications
As AstraZeneca navigates this turbulent situation, it remains to be seen how the investigation will unfold and what direct impact it will have on the company’s strategic direction. Keeping a close eye on the developments will be crucial for stakeholders. The pharmaceutical giant’s ability to respond effectively to these challenges will determine its future stability in the competitive global market.
Source : AstraZeneca shares fall on report of potential China probe fallout – Reuters