Asia Pacific

China Stares Down a Financial Reckoning

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One has to wonder what Jack Ma was thinking when, in a speech in Shanghai in late October, the Alibaba and Ant Group founder...

The World’s Largest Trade Pact

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(click to enlarge) Judging solely by its headline figures, the newly inked 15-member Regional Comprehensive Economic Partnership (RCEP) – by most metrics the world’s largest...

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East Asia is the world’s most dynamic economic region. Since the early 1980s, annual trans-Pacific trade has outpaced trans-Atlantic trade.

The center of gravity in East Asia is the relationship between the two countries with the region’s largest economies and strongest militaries – China and Japan – and their individual and collective relationships with the United States.

The key to this relationship is China’s internal economic and domestic political situation. When China is unified and strong, as it is at the moment, its influence in the Asian mainland is pervasive, with the peripheral states in southeast Asia looking to Japan and the United States for balance. When China goes through a fragmentary phase, as it did from the mid-19th century until the communists took power in 1949, the peripheral states can at times assert themselves.

Despite some saber-rattling in the South China Sea, East Asia’s challenges in recent years have had more to do with economics than with aggression. But it is important to keep in mind that the last 30 or so years in Asia have been something of an aberration. For most of the 20th century, East Asia was rife with instability and war.

U.S. strategy in East Asia is two-fold. On one hand, the U.S. seeks to maintain a balance of power between Japan and China. On the other hand, the U.S. employs a maritime strategy whereby it cultivates close relationships with island nations in the western Pacific to maintain its control over trade routes and contain the Chinese on the mainland.

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Required Reads: Asia Pacific

From our 2020 Forecast...

To compensate for the internal weakness, China will seek to stabilize the social system by increasing repression. In addition, China will become more assertive militarily, particularly in the South China Sea but also the East China Sea as it tries to take advantage of the South Korea-Japan confrontation. We expect quiet political tensions among the elite to grow.

Asia Pacific in our Memos

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