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Biden Visits Korea and Japan With Rare Opportunity

May 24, 2022 By in Asia, Australia, Business, China, Communist Party, Geopolitics, India, Indo-Pacific Economic Framework, Investment, Japan, Politics, Quad, South Korea, Stock market, United States Tags: , , , , , , , , , , , , , , , , , Leave a comment

On his first Asia spin as president, Joe Biden will find a surprisingly warm welcome, and is due to launch an economic framework for US-Asia relations.

Joe Biden is today starting his first Asia trip as U.S. president, visiting South Korea and Japan with an unusual opportunity to cement alliances with these key Asia Pacific democracies. He will be mindful all the time of the threats presented by a nuclearized North Korea and by China, with its promise to conquer Taiwan, by force if necessary.

I’m watching Biden’s first steps in Korea, where he has made a Samsung Electronics chip factory in Pyeongtaek his first stop. Samsung chief Jay Lee has been excused from attending his accounting-fraud trial to take Biden on a tour, where they’re joined by new South Korean President Yoon Suk-yeol. Samsung in November announced a US$17 billion chip factory near Austin, Texas, and is showing off its advanced 3-nanometer chips for the first time on Biden’s visit.

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During his five-day Asia stay, Biden will find fertile ground to forge friendships with new U.S.-friendly leaders in both Tokyo and Seoul, arguably the best opportunity in two decades to do so. Rivals China and North Korea, meanwhile, are both battling Covid-19 outbreaks that undermine domestic popularity for the leadership in Beijing and Pyongyang.

Still, U.S. and South Korean intelligence suggests that North Korea may well test another long-range intercontinental ballistic missile during Biden’s visit, or possibly even conduct its first nuclear-bomb test since 2017. Biden cancelled an intended trip to the demilitarized zone between the two Koreas, and there’s been no progress on denuclearization talks since he became president.

Biden arrives in Asia at a time that leaders have newly taken office who have pledged to improve relations with the United States. Japanese Prime Minister Fumio Kishida moved into the Kantei on October 4, while Yoon was inaugurated on May 10. Yoon may push for South Korea to join “the Quad,” the alliance of Pacific democracies that currently consists of the United States, Japan, Australia and India.

The U.S. president is due for a summit with Yoon on Saturday, then will fly to Tokyo on the next day, where he is set to launch the Indo-Pacific Economic Framework on Monday, May 23. The framework is a U.S.-led initiative designed to counter criticism that the United States has focused only on security issues in Asia. China champions the Regional Comprehensive Economic Partnership free-trade deal that went into effect with 14 other Asia Pacific nations on January 1. But the United States has been accused of an “all guns and no butter” approach.

The “IPEF” is very vague and in its early days. An early draft obtained by the Financial Times shows that member nations have agreed only to “launch negotiations” on trade. But even that assertion may be watered down in a planned two-page statement simply to say the countries are starting consultations that could lead to negotiations that might amount to something. Phew. The language was literally being finalized on the Air Force One flight to Seoul.

Biden is attempting to undo some of the damage done when former president Donald Trump pulled out of the Trans-Pacific Partnership, an executive order Trump literally signed on Day 1 when he took office in January 2017. Kishida in Tokyo will likely nudge Biden to consider rejoining the recast 11-nation partnership, which Japan had championed, although there’s been no indication the United States is considering that.

The IPEF will be a weak TPP substitute. It does not include any improved access to U.S. markets for Asian nations, whereas the TPP promised free-market access for many goods. But the IPEF will attempt to address infrastructure, supply-chain resilience, clean energy, and digital trade. Kishida will join Biden at the unveiling, with South Korea, Australia, New Zealand, the Philippines and Singapore likely to join Japan and the United States in the deal.

Biden will then attend a Quad summit in Tokyo on May 24. The four-way partnership has risen in profile since it was rebooted in 2017, having been on hiatus since Australia withdrew in 2008 in a bid to improve Aussie relations with China. How things have changed. Australia is once again “all-in” on the Quad, and is now instead embroiled in trade disputes with China, which it has also accused of meddling in domestic politics to the extent of attempting to get a Beijing “agent” elected to national office.

The Quad, whose leaders met in person in September at the White House, has made progress on public health with the Quad Vaccine Partnership, pledging 1.2 billion vaccine doses globally, and on infrastructure. It has also formed a coordination group to “deliver transparent, high-standards infrastructure” in the region, a response to China’s Belt and Road Initiative. It is also working on green energy, lower-emissions shipping and high-tech supply chains for goods like semiconductors.

But it has yet to make much obvious headway in handling the military threat China poses in the Pacific. Beijing has basically gotten away with its island-building program to construct missile, naval and air-force bases on islands in the South China Sea. There’s been deadly conflict on the Himalayan border between Indian and Chinese troops, where China has again built structures in contested no-man’s land.

Most recently, Australia in particular has been alarmed by a security pact China has struck with the Solomon Islands, which could see Chinese troops based in the island nation. U.S. officials have said they would need to respond to any deployment of Chinese paramilitary troops to a country that saw heavy fighting on Guadalcanal during World War II, after Japan built naval and air bases there. Aussie defense minister Peter Dutton said in response to the China-Solomon security pact agreed in April that “Australia should prepare for war,” claiming China is “on a very deliberate course at the moment.”

The leadership in Canberra is in question. Australia holds national elections on Saturday, in which it is mandatory to vote. The opposition, left-leaning Labor Party holds a very slight edge over the conservative Liberal Party, and its unpopular Prime Minister Scott Morrison, or “ScoMo.” If there’s a change in leadership, it’ll be a scurry to take part in the IPEF signing and the Quad summit, with Biden due to meet the leaders of India and Australia on the sidelines.

Unusually, a group of around 25 independent candidates known as the “teals,” almost all women with successful careers, may hold the balance of power in Australia. Inaction on climate change has fueled frustration with the “gray-haired men fighting for power,” as Damien Cave put it in The New York Times, in a country that produces the world’s highest levels of coal-generated greenhouse gas per person, and that faces devastating now-annual bushfires and floods.

One of Biden’s key differences from his predecessor on the foreign-policy front is his ability to forge multinational diplomatic alliances. He held a summit at the White House on May 12-13 for the leaders of the nine Southeast Asian nations in ASEAN, at which they agreed to strengthen economic ties, improve health security, collaborate on smart manufacturing and develop renewable energy. Most pointedly, they pledged maritime cooperation and to maintain “the South China Sea as a sea of peace, stability and prosperity,” noteworthy since China claims almost all of that sea as its own territory.

Biden noted a joint desire to see an Indo-Pacific that is “free and open, stable and prosperous, and resilient and secure.” The United States committed US$150 million in infrastructure initiatives with ASEAN op top of support of US$100 million made after Vice President Kamala Harris visited Southeast Asia in August.

Former president Donald Trump alienated just about everyone, and championed an isolationist policy of the United States going it alone. He opted to skip ASEAN meetings when he was in power. Given Trump’s antagonism toward NATO, which he repeatedly hit up for money, it is hard to imagine him having any success calling on Europe to present a united diplomatic front against Russia after its invasion of Ukraine. Then-German chancellor Angela Merkel was pretty upfront with her disdain for Trump; French President Emanuel Macron backed off their early “bromance,” saying the lack of U.S. leadership under Trump had led to NATO’s “brain death.”

Trump saved his warmest words for hardmen dictators like Russian President Vladimir Putin, describing Putin’s early moves in Ukraine as “genius.” Putin “was a friend of mine,” Trump told the golfer John Daly in March. “I got along great with him.” His attempts to curry favor with North Korean leader Kim Jong-un led to a great photo op as Trump became the first U.S. president to step across onto North Korean soil, but ultimately produced no progress on the diplomatic front.

Trump also criticized the “horrible” terms of trade with South Korea. He took Japan to task for not buying enough U.S. autos, while ignoring that many American models are way too big for Japanese streets. That informed a decision to impose higher tariffs on Japanese steel. Trump criticized Japan and South Korea, too, for failing to pay enough for the U.S. troops stationed on their soil.

The Biden administration rolled back the Trump-era tariffs on Japanese steel as of April 1. With this first Asia spin, Biden will be hoping to strengthen U.S. influence across the Pacific, both in terms of the economy and the security of the region. These first small steps may help improve the direction of U.S.-Asia policy, after many Asian nations began to sense that Washington was retreating from Asia. The United States, and its leader, are back here in Asia again.

Asian Markets Rally on Biden Victory

November 10, 2020 By in Uncategorized Tags: , , , , , , , , , , , Leave a comment

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https://realmoney.thestreet.com/investing/global-equity/asian-markets-rally-on-biden-victory-15482906

Asian stock markets are breathing a sigh of relief on Monday, now that the result of the U.S. presidential election is clear. It’s a sea of green for Asian indexes on my screen.

Trade-heavy markets in particular such as China, Japan, Singapore and South Korea are seeing their stocks climb higher in hopes that Biden will take a less-confrontational, more-constructive approach on trade.

The U.S. dollar is also losing ground. The Chinese yuan is hitting a 28-month peak, the Korean won is climbing to its highest level since February 2019, and the Singapore dollar is rising to its highest level so far this year.

The Indonesian rupiah, which in March weakened to levels last seen during the Asian Financial Crisis in 1998, is also gaining ground. Investors look willing to take on more risk now that the U.S. election has passed, with emerging markets prime beneficiaries.

The Nikkei 225 in Japan is Asia’s biggest gainer on Monday, traditional Japanese industrial companies seeing their shares rise 2.1%, although the broad Topix index of all major stocks in Japan finished with a more-muted 1.4% advance.

The other major gains came for the CSI 300 of the largest stocks in Shanghai and Shenzhen, which ended up 2.0%, with the Stock Exchange of Thailand index also finishing up 2.0%.

Some of the response is simply a relief rally with the uncertainty of the U.S. election now behind markets. But Asian economies are expected to gain ground with Biden likely to de-escalate tensions on trade, while U.S. monetary policy is set to expand stimulus and therefore weaken the U.S. dollar.

Trump’s very first action on taking office was to withdraw the United States from the Trans-Pacific Partnership. The TPP, a bid to create the world’s largest trade bloc, subsumed bilateral negotiations between the United States and Japan. Former Japanese Prime Minister Shinzo Abe expended considerable political capital getting the influential Japanese farming lobby to agree to the deal, only to be left jilted at the altar by Trump, an ally he had courted immediately upon Trump’s successful election.

Abe’s successor, Yoshihide Suga, will now engage with Trump’s successor. It will be interesting to see the future direction of the “Quad” alliance that has brought together Japan, the United States, India and Australia, with the unstated aim of containing China’s rising influence in Asia.

Biden may now seek to join the TPP’s successor, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which the remaining 11 nations agreed. Biden has certainly pledged, on his first day, to sign the United States back up to the Paris Agreement on climate change.

Biden may be more effective in building diplomatic alliances, whereas Trump alienated many traditional U.S. allies. Australian shares had their best session since the virus-related downturn in March, the S&P/ASX 200 ending up 1.8% and the NZX 50 in New Zealand finishing with a 1.8% gain as well.

Russian President Vladimir Putin and Chinese President Xi Jinping have yet to reach out to congratulate Biden on his victory. Trump had also expressed admiration for other authoritarian strongmen such as Turkish President Recep Tayyip Erdogan, Brazilian President Jair Bolsonaro, the Saudi Arabian king and crown prince, and North Korean leader Kim Jong-un. As of Monday afternoon Asian time, all those leaders have stayed silent on Biden’s election. It has been a useful exercise for anti-democratic regimes to point to the “chaos” of the U.S. electoral process as a way of bolstering their own governance.

The state-owned Global Times mouthpiece used to push Beijing’s foreign-policy agenda says in an editorial that Biden may go further in pushing China on human rights over the pro-democracy crackdown in Hong Kong and the concentration camps for Uighur Muslim minority citizens built in the western province of Xinjiang.

At the same time, the state-owned paper says it may be possible to pop the “bubbles” of pressure created by outgoing President Donald Trump in the election campaign. “Beijing should undertake to communicate with the Biden team as thoroughly as it can, making greater joint efforts to recover China-U.S. relations to a state of great predictability,” the editorial states.

Trump was bipolar on China, saying that he and Chinese counterpart Xi “love each other,” but equally using China as a convenient, little-known and far-off foe, to drum up votes. He was right to push China on the origins of the coronavirus, which had the central Chinese city of Wuhan as its epicenter. China has done its very best to stop efforts to examine just how the outbreak began, undermining efforts by the World Health Organization to present impartial evidence, and blocking efforts to send WHO scientists to Wuhan itself.

It is hard to imagine that Biden administration will act “tougher” over China, the Global Times states, though the Democratic Party is “more stubborn about values.” Biden is highly likely to continue the “maximum pressure” campaign of his administration, only “probably not with reckless gambling-style moves,” the editorial states.

India is cheering the election of Vice President Kamala Harris, whose mother’s family trace their roots to southern Tamil Nadu province. Half-Indian, half-Jamaican by parentage, Harris visited India frequently in her youth. While she will surely seek to bolster India’s position as an American ally, she may also push right-wing Prime Minister Narendra Modi on his treatment of non-Hindu citizens, and human rights. The Sensex main stock index in India was up 1.4% in afternoon trade.

Here in Hong Kong as well as in Taiwan, we will wait to see how Biden approaches diplomacy over our efforts to maintain autonomy in the face of pressure from Beijing.

Taiwan, a Democratic nation that has put in place one of the world’s most-effective programs to combat the coronavirus, remains blocked by mainland China from joining the World Health Assembly and the WHO. Taiwan’s foreign ministry says it has been excluded from a World Health Assembly meeting that starts today and runs all week on instructions from China. The WHO’s exclusion of Taiwan is purely on political and not on public-health grounds, undermining the group’s whole mission.

Trump accepted a call of congratulation from Taiwanese President Tsai Ing-wen after he won election, an unprecedented move. It is not clear if Biden will do the same. As Taiwanese lawmakers fret that Biden will be more China-friendly, the head of Taiwan’s Mainland Affairs Council, Chen Ming-tong, has told them there’s “no need to worry,” that while the White House’s tactics may change toward China, “there will be no change in its China strategy.”

Chinese Investors Doubt Trump’s Talk Over Virus ‘Proof’

May 7, 2020 By in Asia, China, Communist Party, Coronavirus, Covid-19, Geopolitics, Investment, Politics, Science, Stock market Tags: , , , , , , , , , , , , , Leave a comment

It seems Chinese investors have called President Trump’s bluff.

Markets in Shanghai and Shenzhen resumed trade on Wednesday with early losses, after a five-day long weekend. That was the first time for investors to respond to renewed hostilities that again threaten China-U.S. trade.

But Chinese shares ended the day with modest gains. The CSI 300 blue-chip index rose 0.6%. Chinese punters are paying more attention to the likelihood of Chinese stimulus. The Communist Party is keen to keep its citizens happy ahead of its major political meeting now due to start on May 22. The central People’s Bank of China also appeased U.S. hawks by setting the Chinese yuan at a neutral rate, at 7.07 to the U.S. dollar.

At this stage, Trump’s attacks amount to hot air. In Chinese, we call it “blowing water,” or chit chat, idle talk.

Trump last Thursday threatened China with new tariffs. This week, U.S. Treasury Secretary Steve Mnuchin warned of “very significant consequences” if China doesn’t follow through on commitments to buy U.S. goods made in its “Phase 1” trade deal with the U.S. Those are worrying sounds here in Hong Kong, bashed last year by trade war winds.

On Tuesday, Trump said the U.S. is ready to dish the dirt about how a Chinese lab mishap led to Covid-19 cursing the world. He earlier told a reporter he has seen evidence that gives him a high degree of confidence that the virus originated from a Wuhan lab. But when asked what the evidence is, he said “I can’t tell you that. I’m not allowed to tell you that.”

Trump now says the U.S. will issue a full report on the origins of the virus. “We will be reporting very definitively over a period of time,” Trump said on Tuesday.

Trump has yet to prove that he is not propagating yet another conspiracy theory when he claims that the SARS-CoV-2 coronavirus leaked from the Wuhan Institute of Virology, China’s first biosafety level 4 lab. Numerous scientists have stepped forward to say the DNA indicates the virus is of natural origin, not man-made.

There are plenty of people here in Hong Kong who believe the lab theory too, without a shred of evidence. I’m sorry, but when U.S. Secretary of State Mike Pompeo says he has “enormous evidence” that Chinese lab technicians messed up, show us the proof. Otherwise keep quiet until you are ready to do so. It’s not just hot water, it’s irresponsibly vague.

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