06 Feb Asian Fortunes: China and ASEAN in the Year of the Horse
What lies ahead for Asia in the Year of the Horse? The Singapore Institute of International Affairs asked our members and fellows what issues they will be keeping a close eye on in the coming months.
Mr. Manu Bhaskaran, SIIA Council Member and Director of Centennial Group International, on his concerns about bad investments, overcapacity and other weaknesses in China’s economy:
“The country I’m really concerned about is China, [where] there are structural imbalances and vulnerabilities. And worryingly, the triggers that could crystalise these weaknesses into something more serious are emerging…[But] people who have been bearish about China have been saying this, and they have been consistently wrong…because there is an offsetting force in China – that is, the quality and competence of the policymakers. Now the question is, can they handle this situation? Do they have the tools that can handle the kind of fine balancing China needs? My fear is they don’t.”
Prof. James Tang, SIIA Council Member and Dean of the School of Social Sciences, Singapore Management University, on why Sino-Japanese tensions could be resolved:
“[The Air Defence Identification Zone] is a dangerous move in many ways, but at the same time it allows the [Chinese] leadership to claim, in front of a domestic audience, that they are at long last able to do something concrete in dealing with Japan…this is a way of manifesting domestic nationalist sentiments rather than an attempt to really create a situation which will lead to further military tensions. These moves might actually, in a counterintuitive sort of way, provide the framework for a slightly more stable environment. If cooler heads prevail, there may be a way of moving forward.”
Mr. Manu Bhaskaran on why ASEAN is becoming increasingly attractive to investors:
“Overall, [ASEAN countries’ share of global foreign direct investment] has been rising. A lot of global multinational corporations are now saying – we’ve got our optimal allocation to China, it’s time to reallocate again. ASEAN is the beneficiary of that new reallocation. So if we can avoid political crises and improve our business environment, [this could be] ASEAN’s moment.”
Dr. Hank Lim, SIIA Senior Research Fellow and Chairman of the Academic Advisory Council at the Economic Research Institute for ASEAN and East Asia (ERIA), on what the region needs to do as it moves towards the creation of the ASEAN Economic Community (AEC) by 2015:
“The year of the Horse is when ASEAN countries will need to unclog the bottlenecks that are slowing the region’s integration process. Particularly so in the services sector, which means liberalising and harmonising rules within the region that will encourage greater connectivity, improved transportation, and ease of professional mobility…Many important elements have not been implemented. Without adequate and effective services liberalisation that will level the playing field between ASEAN countries, a single market and production base would be much less competitive as a regional and global value chain and less effective in narrowing the development gap”.