What the TPP means for US-Asia ties
The US reached agreement this week with Japan and 10 other Pacific Rim economies on a Trans-Pacific Partnership. Gideon Rachman discusses the scope of the pact and what it will mean for those who have signed up, and those left out, with Shawn Donnan and Geoff Dyer
© Getty Images
Have the US and its allies in Asia reached a tipping point in their relations with China? The question posed by US China scholar, David Lampton, in a speech in Shanghai in March looks disturbingly prescient after a whirl of diplomatic and security offensives in recent weeks in the region.
The US and Japan substantially upgraded their defence alliance in a high profile summit meeting in Washington earlier this month. Japan, in turn, held its first naval exercises with Vietnam and the Philippines in the South China Sea. This week, the US announced (and then later denied) it would station B-1 bombers in northern Australia, also with an eye on balancing China in the region.
Then, just in time for John Kerry’s weekend visit to Beijing, the Pentagon made it known it was contemplating limited military options in the form of naval patrols and surveillance flights in contested areas in the South China Sea to reinforce its opposition to Chinese actions. Read more
Obama seeks to cement Japan ties
Siona Jenkins, Gideon Rachman and Lindsay Whipp discuss the Japanese prime minister’s visit to Washington as the US seeks to cement defence and trade ties with Japan, a key ally in its bid to push back against growing Chinese influence in Asia.
By Richard McGregor
Shinzo Abe’s visit to the US this week is by any measure a significant moment. Japan’s prime minister will with President Barack Obama consecrate revised guidelines for the US-Japan security treaty, described by one close observer of Japan as the longest surviving alliance between great powers “since the 1648 Peace of Westphalia”.
The pair will also oversee the final negotiations of one of the largest trade pacts in two decades that will bring together 12 Asia-Pacific countries. Finally, Mr Abe will become the first Japanese leader to address a joint session of Congress.
In a week of landmarks, then, it may be surprising that much of the focus ahead of Mr Abe’s visit is whether he will “apologise” for Japan’s role in the second world war, which ended in Tokyo’s crushing defeat nearly 70 years ago. Read more
Remarks by the president of Chechnya have sparked theories that Boris Nemtsov, the assassinated Russian opposition politician, fell victim to infighting in an opaque regime
Policy makers in some of the world’s largest economies have devalued their currencies in a bid to boost export-led recoveries, but there is evidence lower exchange rates do not always work
An unprecedented environmental protest movement in a remote part of Algeria has disrupted the country’s multibillion-dollar shale programme, and is making political waves across the region
Four years after a nuclear disaster, Fukushima’s farmers are struggling to sell their produce despite decontamination efforts as the region tries to stand on its own two feet (WSJ)
Win or lose in Tikrit, Isis can only be defeated in Iraq by the Sunnis, writes Hassan Hassan (The Guardian) Read more
Japan’s snap elections
Shinzo Abe’s decision to call snap elections only two years into his term perplexed many people. Was it simply cover for a U-turn on a planned rise in consumption tax or was the prime minister seeking a renewed mandate for more radical measures to kick-start growth? Ben Hall discusses what the elections mean for the future of the world’s third-largest economy with Ben McLannahan and David Pilling.
Shinzo Abe launching his election campaign on Tuesday © EPA
The ink is barely dry on the first estimate of Japan’s gross domestic product from July to September, which suggested that the world’s third-largest economy shrank an annualised 1.6 per cent over the period. Combined with the 7.3 per cent annualised fall in the three months after the tax increase in April, it implied that Japan had tipped into yet another technical recession – its fourth since the Lehman crisis. Read more
The crew that was dead set against raising consumption tax in Japan will be feeling vindicated. The economy unexpectedly fell back into recession in the third quarter, contracting 0.4 per cent quarter on quarter, or 1.6 per cent on an annualised basis. That makes it highly unlikely that prime minister Shinzo Abe will push ahead with a second round of VAT hikes, from 8 per cent to 10 per cent, after the first increase from 5 per cent in April. At least for now.
Here are seven charts showing the worrying side of Abenomics, and some reasons to be hopeful. Read more
What hopes for detente between Japan and China?
What are the prospects for some form of detente between Japan and China? Ahead of next week’s Apec summit, where leaders of the two countries are expected to meet, Ben Hall discusses the reasons for the strained relations between the two countries with Beijing bureau chief Jamil Anderlini and David Pilling, Asia editor.
By Gideon Rachman
In 1990 Kenichi Ohmae, a management consultant, published a book called The Borderless World, whose title captured the spirit of globalisation. Over the next almost 25 years developments in business, finance, technology and politics seemed to confirm the inexorable decline of borders and the nation states they protected.
Japan’s Government Investment Pension Fund, the world’s largest pool of publicly managed pension assets, is poised to make a change to its investment strategy that has equity markets salivating. Indications are that a review of its allocation guidelines, expected to be wrapped up next month, will raise the percentage of the fund’s roughly Y127tn ($1.3tn) portfolio that is dedicated to Japanese stocks, while reducing holdings of Japanese bonds.
The GPIF’s current guidelines are risk-averse by global standards, with the majority of the model portfolio dedicated to low-yielding Japanese public debt and just 12 per cent given over to domestic equities. Under the new guidelines, the equity level looks likely to rise to 20 per cent – a change that could send trillions of yen flowing into the Topix, the Nikkei and other Japanese share indices. And as of this week, key investment decisions will be made by the fund’s investment board, rather than Takahiro Mitani, its president. Read more