1 east asian economy: northeast asian economy * some parts of this note are summary of the...
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East Asian Economy: Northeast Asian Economy
* Some parts of this note are summary of the references for teaching purpose only.
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East Asian Economy <Lecture Note 3 > 2013..10.10
Semester: Fall 2013 Time: Thursday 2:00-5:00 pm Classrom: 423 Professor: Yoo Soo Hong Mobile: 010-4001-8060 E-mail: [email protected] Home P.: http://yoosoohong.weebly.com
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Geography, History and Culture
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Definition of “Northeast Asia”
• Broad definition: Entire countries of China, Taiwan, Japan, Korea, Mongolia, Russia
• Narrow definition 1: Northeast China, Japan, Korea, Mongolia, Russian Far East
• Narrow definition 2: China, Japan, Korea
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Geographical Map
Broad Northeast Asia
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Population Density
Chapter 1 , Section 1
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• “Land of Golden Embroidery”
• A peninsula, stretching into the Yellow Sea and Sea of Japan
• More than 70 percent of the land consists of steep and rocky slopes
• Since 1945, has been divided into two separate countries.
The Koreas
• An archipelago in the western Pacific Ocean
• Four major islands and more than 3,000 smaller ones
• Every major city is located on the coast
• Nearly 80 percent of the country is mountainous
Japan
• A land of extremes• Oldest civilization on
Earth• More people than
any other nation• Mountains and
deserts make up two-thirds of China
• Home to some of the highest mountains
China
China, Japan, and the Koreas
Chapter 1 , Section 1
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• Lacking natural resources
• A developed country with many industries
• Must import minerals it needs from other countries
South Korea
• Large supply of natural resources
• They mine copper, tin, and iron
• Huge oil reserves and lots of coal
• Still must import some raw materials
China
• Lacking natural resources
• A modern industrial society
• Must import vast quantities of minerals, such as coal, natural gas, and oil
Japan
• Coal and iron are plentiful
• A developing country with low industrial production
• Does not get along, and therefore does not share, with South Korea
North Korea
Mineral Resources
Chapter 1 , Section 3
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Confucian Influence
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Economic Growth and Status
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Graph: growth over timeReal Growth 1960-2001
-10
-5
0
5
10
15
20
1960
1965
1970
1975
1980
1985
1990
1995
2000
Taiwan
Korea
Hong Kong
Singapore
[Newly Industrializing Economies]%
Source: Economic Planning Agency, Asian Economic 1997 . For the data of 1997-2001, IMF, The World Economic Outlook (WEO) Database , April 2002.
ANIEs Growth Rate in the Main Period
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Rates of Economic Growth and Inflation in North-East Asian Economies, 2011-2013 (%)
Reprinted from: ESCAP 2013. p.72.
Source: ISA Economic Forecasts, national statistics
Northeast Asia Economic Growth, Past and Future
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- China’s economic growth slowed in recent years as export demand weakened. Japan suffered a deep recession in 2011 as a result of the natural and nuclear disasters in that country, but bounced back in 2012 and early 2013. Growth will remain below previous levels across Northeast Asia over the near-term as export markets continue to struggle.
Reprinted from: International Strategic Analysis. 2013. p. 32
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- East Asia is the most populous region in the world.
- China is the most populous country with the oldest continuous national culture.
- Eastern China is undergoing rapid economic development.
- China and Japan have been rivals from time to time.
- Northeast Asia has seen international conflict and one of the forefront of international tension.
- Japan has been extremely successful and wealthy, but has been more than three decades of recession or difficulties.
- Northeast Asia (Sometimes also called East Asia) is one of the core areas of the world economy and an emerging center of political power
Introductory Remarks
While Japan was building one of the world’s strongest economies in the years after World War II, other Asian nations were also making great economic growth. Because of economic successes, South Korea, Hong Kong, Taiwan and Singapore became known as the Asian Tigers.
• Asian Rim started the 1960s as undeveloped region.
• Over next few decades Asian Tiger economies performed spectacularly.
• Growth higher than that of similar economies in Latin America and Africa
Spectacular Growth
Asian Tigers
• Countries followed the pattern similar to the postwar Japanese model.
• Investment in human resources through education and training helped industrial development.
• Outward-looking industrialization strategy
Industrial Expansion
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Early Stage of Japan, Korea, and Taiwan-China
Resource-poor economies
-Shortage in natural resource Less diversified ethnic groups (one nation) The Cold War environment
- The importance of strategic location (anti-communism)
-> US military assistance: improving stability, more budget assignment
to economy
-> Economic assistance: American Aid, expanding American Market Successful land reform
- Away with the landholding classes
- Made wage income the main source of advancement
- Equity of income
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Means for Economic Development
Korea
• Deliberately created large private conglomerates, the chaebol
• 7 Five-Year Economic Development Plans
Japan
• Deliberately created large private conglomerates, the keiretsu
• 12 Economic development plans: Set up the way of economic and social development
Taiwan
• Directed FDI into areas where local firms lacked world-class capability
• Played a very active role in helping SMEs to locate, purchase, diffuse and adapt new technologies
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After World war II, Japan emerged as an manufacturing leader. JAKOTA Triangle - Japan, Korea and Taiwan-China make up the JAKOTA triangle. - The area has become an attentive part of the global economy. - Countries become dependent on each economically.
JAKOTA Triangle
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The First and the Second ANIEs
• East Asia comprises 23 countries. All these economies grew faster than all other regions from mid-1960. This growth has been unprecedented in eight of these countries.
• These are clubbed under two heads: “Four Tigers” and the “ Asian Newly Industrializing Economies (ANIE’s)
- Four Tigers or the 1st ANIEs: Hong Kong, the Republic of Korea, Singapore and Taiwan (China).
- The 2nd ANIE’s: Indonesia, Malaysia and Thailand
• Growth Performance: Some highlights - Between 1960 and 1985 Japan and the Four Tigers recorded over 4-fold
increase in their real per capita income. - This increase was more than two-fold in the case of three second ANIE’s .
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- GNP average annual growth rates ranged 7.1% in Korea during 1965- 1990. - Since 1960, these economies (HPAEs) have grown more than twice as fast
as the rest of the East Asia, roughly three times as fast as Latin America and south Asia, five times faster than Sub-Saharan Africa
- They also outperformed significantly the industrialized and the oil-rich Middle East-North African region.
• Most of these economies ranked higher even in respect of leveling income inequalities.
• Their growth has been inclusive as gender inequalities have also come to be smoothed to a good extent.
• Life expectancy in the region increased from 56 to 71 years between 1960 and 1985.
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• Some of these countries did not hesitate to import educational services especially in vocationally and technologically sophisticated disciplines.
• Primary education came to be universalized in record time.
• Hong Kong, Korea and Singapore attained this distinction by 1965.
• By 1987 half of these fast growing countries had universalized primary education for the female children.
• Quality of education was top priority, realized through continuous rise in real per capita expenditure while holding teachers salaries stable.
• Korea, the leader here, recorded 355% increase in educational expenditure between 1970-1989, comparative figures for Mexico, Kenya and Pakistan were 64%, 38% and 13%, respectively.
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Northeast Asian Lead
The Role of the Government
- Although both of Northeast Asia and Southeast Asia persued catch-up strengthen by rapid industrialization, the North more emphasized the role of the government than the South.
- The North was slower in opening the economy than the South.
Strong Industrial Structure
- The North secured endogenous technology of medium level through imitation and learning by doing, which become the basis for becoming semi-leaders from followers.
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Jakota Triangle and Growing Competition
Three Poles in the World - A major trend of globalization today is the concentration of global
producion networks, trade, technology transfer, and financial flows into three key geographic regions: North America, the European Union, and Northeast Asia.
- Northeast Asia today- China, Korea, and Japan – has become the global center of manufactured goods, producing one-fifth of global production, and leader in information technology.
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Economic Position of NEA
Korea China Japan Sum
GDP1,014
(1.6%)
5,878
(9.3%)
5,459
(8.7%)
12,351
(19.6%)
Export442
(2.9%)
1,580
(10.5%)
772
(5.1%)
2,794
(18.6%)
Import415
(2.7%)
1,394
(9.0%)
694
(4.5%)
2,503
(16.1%)
(2010, Bil.US$)
The three countries share 20% of the world total GDP.
Exports share 19%, imports share 16%.
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Key Economic Indicators of Northeast Asian Countries, 2011
Reprinted from: Kawai, Masahiro. 2013. p.5.
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Business Environment Rankings of Countries in Northeast Asia, 2012
Reprinted from: Kawai, Masahiro. 2013. p.7.
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Global Competitiveness Index and Infrastructure Quality in Northeast Asia
Reprinted from: Kawai, Masahiro. 2013. p.8.
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Levels of Selected Infrastructure in Northeast Asia—International Comparison
Reprinted from: Kawai, Masahiro. 2013. p.9.
Disparate Powers in NEA
Population mid-2005;
millions
GDP 2004; US$ billions, current prices
GDP PPP per capita 2004,
US$
Soft Power**highly subjective assessment
China 1,303.7 1,653.7 5,641.6 ++ --
Taiwan 22.7 305.2 25,983.1 +
Japan 127.7 4,671.2 29,905.6 ++---
DPRK 22.9 -- -- ---
ROK 48.3 680.4 21,418.6 ++
Mongolia 2.6 1.5 1,917.5 +
Russia 143.0 581.8 10,179.4 + -
USA 296.5 11,734.3 39,495.0 +++ --
For more recent economic data, refer to the individual economies’ data, provided in other pages.31
Current Picture of Northeast AsiaCurrent Picture of Northeast Asia
-Lack of full reconciliation-North Korean nuclear issue-Competition on leadership
-Lack of full reconciliation-North Korean nuclear issue-Competition on leadership
-No sense of common identity as Northeast Asian community-Collision of nationalism
-No sense of common identity as Northeast Asian community-Collision of nationalism
CultureCulture
EconomyEconomy
InternationalRelations
InternationalRelations
-Surge of China as the World’s factory and market-Japan’s high-tech capacity-No FTA yet
-Surge of China as the World’s factory and market-Japan’s high-tech capacity-No FTA yet Common Common
ground for ground for Northeast AsiaNortheast Asia
No foundation for No foundation for sound competition sound competition
and cooperationand cooperation
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Northern HPAEs
Excellent Performance of East Asia
- The impressive economic performance of East Asian economies in the recent decades induced a mixture of awe, paranoia and disbelief in the industrialized countries (e.g. East Asian Miracle Debate). Developing countries perceived a pattern to achieve high growth and swift industrial development.
- Some critics however pointed out that the cultural, institutional and political differences between the East Asian countries so large that it was not justified to fit the East Asian performance within a single unambiguous economic framework.
- Professional sceptics like Krugman almost entirely ascribed the Asian growth performance to the accumulation of human and physical capital and claimed that there was little technological progress in most high-growth East Asian countries.
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What Made the Difference?
- Recent endogenous growth theory explains how, due to dynamic economies of scale, the developed countries can extend their lead over developing countries.
- This offers a possible explanation for the growing delay of most developing countries but can not explain the catch-up of Japan and the four tigers unless one considers important spillovers from the developed countries.
- The question remains why only East Asian countries seem to have benefited from such spillovers.
- For obvious reasons there exists unanimousness as to the importance for East Asian growth of macro-economic stability and the accumulation of physical and human capital (World Bank. 1993).
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- The World Bank however observes that the performance of HPAE can not entirely be ascribed to a well-considered ‘liberal’ policy and that most of these countries established a relatively high degree of government interventionism.
- Certain sectors were goal-directedly subsidized, exports were promoted and domestic markets of import substitutes were protected although the necessary foreign capital goods were imported without high taxes.
- Governments highly invested in applied research and the transfer of knowledge between the public and the private sector was activated.
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Industrial Policy in NEA and SEA
- A big difference between Northeast and Southeast Asian economies is the extent to which government attempted to influence the allocation of resources during the industrialization process.
- The governments of Japan and Korea pursued significantly more active industrial policies than their Southeast Asian counterparts. The Southeast Asian economies relied more on market forces to determine winners and losers among industries.
- Southeast Asian countries do not have the strong tradition of a powerful and capable indigenous bureaucracy as did Japan and later Korea. The state could thus not play a dominant role in national economic development in Southeast Asian nations as it did in Northeast Asia.
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Northeast Asia: Strong Fundamentals Economic
- China is expected to grow 7~8 percent annually in several decades ahead.
- Japan may move out eventually of the several decades long recession and returning to a normal growth path.
- Korea will be able to maintain 4~5 percent annual growth again albeit the recent slowdown.
- Exports (trade) will remain the engine of growth in the region. Price and Financial Market Stability- Inflationary pressure is mounting.- Despite the banking sector problems and structural weakness of
capital markets, financial crises originating in domestic financial markets of any country will not be serious enough to spill over into other neighboring economies. However, the world economic crisis will change this.
Factors characterizing China’s development
− China has a window of opportunity framed differently from that of previous latecomer countries and firms.
− If Japan and Korea’s catch-up model is a half-opened one, that of China is a wide open one with three specific features.
− First, information technology has changed the rules of the game for catch-up. Information technology is a new system of technology that is totally different from that dominating manufacturing. It has given rise to new business models, products and services. Obviously. China has benefited from this trend.
− Second, modular production-enabling low cost and high product variety-emerges with global competition. Modular products may be machines, assemblies or components that accomplish an overall function through the combination of distinct building blocks or modules. Modularity allows the outsourcing of design and production of components and subsystem within the product system architecture.
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− The implication of modularization for innovation is that companies in developing countries, whether they are assemblers or suppliers, can enter the innovation competition more easily than before. They may not be good in technological innovation but they can excel and succeed commercially by sourcing modules and assembling them.
− Third, related to the globalization of technology, global technology outsourcing gives Chinese companies a new way to make quick product innovations.
− The globalization of technology can be either a window of opportunity or a further burden, depending whether the firm playing catch-up has made the technological effort supporting the absorption, adaptation, mastery and improvement of technology or not.
− In order to grasp the windows of opportunity in a much faster way, relying less on absorption and adaptation, and driven more by market-oriented innovation supported by technology outsourcing and alliances is encouraged. China has been successful in medium-level technology products by this. (However, most of innovations by Chinese firms have been incremental type.)
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− The result is that a strategy based on market-oriented innovation and technology outsourcing has become the primary approach for China’s leading companies.
− The technology may come from anywhere, although most of the core, proprietary technology comes from the USA, Japan, Europe and Korea. This has enabled Chinese companies to rapidly catch up in product innovation competition at higher levels of technological sophistication, not just at the low-margin end. However, this has retarded China’s own innovative capability so that China has recently been emphasizing ‘self-reliant technological innovation’ .
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R&D IT, bio, space & defense Gov’t Services
Beijing/Tianjin(Zhongguancun Area)
Chinese Industrial Clusters
Production area of frozen vegetables & processed food Home appliances Korean presence
Shangdong Area
IT/ PC Electronice componentsTaiwan hinterland Chemicals & Petrochemicals Automobiles
Zhu Jiang Delta Area
Heavy Industry, aircraft Software Para-statal enterprises
Liaoning (North-East Area)
Textiles Automobiles Laptop PCs Mobile phone Financial Institutions Semiconductors
Chang Jiang Delta Area
Agricultural & Fishery products Taiwanes companies Textiles Tea
Xiamen/Fuzhou Area
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Comparison of Two Models
Chinese model Korean model
Role of government
• Decentralization
• More Open Policy
• Government intervention
• Less aggressive in opening
Foreign capital inducement
FDIs Foreign loans
Outward-looking industrialization
High contribution of MNCs and FDI firms
Exports mainly by domestic enterprises
Industrial structure and organization
• Coexistence of different levels of sectors, extremely compressed growth
• Dominance of SOEs
• Following the typical industrialization stages, but compressed growth
• Big conglomerates
Regional Economic Growth Comparisons
Per Capita GDP at PPP
Avg
. A
nn
ua l
GD
P G
row
th 2
0 07 -
2011
Size of the circle indicates the size of the economy
Source: ISA Economic Forecasts,
Reprinted from: International Strategic Analysis. 2013. p. 28 43
Comparison of Development
China Korea Japan
1960- 1979
• Great Leap Forward
• Cultural Revolution
• Set back
• Rapid industrialization
• Authoritative regime
• High growth
• Energy-saving technology
1980-1999
• Reform and Open-door
Policy
• Rapid industrialization and
growth
• Innovative catch-up
• Asian Financial Crisis
• Active (Forced)
restructuring
• Trade disputes
• Forced Yen appreciation
• The Lost Decade
2000-2010
• G2 (in GDP)
• Self-reliant technological
innovation
• ‘Scientific Development’
• Successful response to
the world economic crisis
• IT leader
• Losing growth momentum
• Successful response to
the world economic crisis
• Long recession (Two Lost
Decades?)
• Turning to Asia?
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Comparison of Political Economy
China Korea Japan
Political
leadership
• One socialist party
(President)
• Democratic multi-party
(President)
• Democratic, conservative
parties (Prime Minister)
State-market relationship
• Transition to a market
system
• Private-sector leading
• No planning
• Private sector leading
• No planning
• PPP (Concesus making)
• Zaibatsu-SME
cooperation
FDI • Actively hosting • Passive • Passive
International relations
• ‘Factory of the world’
• G2: Rising to a
superpower?
• The only divided country
• G20: Bridging the devel-
oped and developing
world?
• Active FTAs (K-US FTA,
K- EU FTA)
• G7
• Active ODA contribution
• ‘ASEAN+6’ idea
• Turning to Asia?
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Recovery from Global Financial Crisis
Annual Growth Rates of GDP in Asia (%)
0.0 2.0 4.0 6.0 8.0 10.0 12.0
South Asia
East Asia
Developing Asia
Pacific
Central Asia
East Asia
SouthEast Asia
South Asia
Asia Average
Average (2004-8) 2009 2010
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Gross Domestic Product (GDP)-Growth Rates
Reprinted from: Naughton, Barry. 2013. p.6.
The Rise and Fall of NEA Growth
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Recent Growth of Northeast Asia
Growth slows as the global economy weakens again
-Most of the economies in the Northeast Asia performed well in the first half of 2012, but growth slowed during the second half of the year as sovereign debt crisis in Europe and the economic recovery in the United States.
-GDP growth in the region as a whole improved to 4.1% in 2012 compared with 3.5% in 2011. However, this improvement in growth was due to economic recovery in Japan after the 2011 earthquake and tsunami. Excluding Japan, average GDP growth in the subregion decelerated to 6.4% in 2012 from 8% in 2011, reflecting the slowdown of all the economies in the subregion.
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- Most of these economies are highly export-oriented. The share of the agricultural sector in GDP has decreased with the increase in the shares of the industrial and services sectors over the years. In 2011, the agricultural sector accounted for about 10% of GDP in China. The share of the agricultural sector was much lower in other economies.
- The share of the industrial sector in GDP was more than 40% in China and somewhat lower in Mongolia and the Republic of Korea.
- The services sector gained in all the economies and dominated in Hong Kong, and China.
- The economy of China grew by 9.2% in 2011 but growth fell to 7.8% in 2012, with the rate of GDP growth slowing for 7 consecutive quarters and missing the Government’s target of July-September 2012, for the first time since the depths of the global financial crisis. At the end of the year, the activity indicators of China were stronger than expected, proving economic rebound in the last quarter.
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International Competitiveness, Trade and FDI
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Trade/GDP Ratios (%)
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Trade Dependence of Individual Countries on Northeast Asia (%)
Reprinted from: Kawai, Masahiro. 2013. p.6.
53/15
Shares of Intra-regional Trade Shares of Intra-regional Trade between CJK
Source: IMF (2011), Direction of Trade Statistics.
% %
Intra-Regional Trade Trends
Slowing Regional Trade
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Source: UNCTAD
Foreign Investment in Northeast Asia
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- Over the past decade, only the United States as attracted more actual foreign investment than China and this will continue for the foreseeable future as the Chinese market is too attractive for foreign companies not to be present. Meanwhile, Japan and S. Korea both will see significant FDI inflows in the future.
Reprinted from: International Strategic Analysis. 2013. p. 43
Inward FDI Stock/GDP Ratios (%)* stock=accumulated quantity
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Socio-Economic Development
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Human Development Index in Northeast Asia
Reprinted from: Kawai, Masahiro. 2013. p.5.
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Public Social Security Benefit Expenditure (Excluding Health Care) in Selected Asia-Pacific Economies
(latest available data)
Reprinted from: ESCAP 2013. p.54.
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Income Inequality in Selected Developing Asia-Pacific Economies (1990s and latest available data)
Reprinted from: ESCAP 2013. p.51.
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Inequality-adjusted GDP Per Capita and Index of Social Development (latest available data)
Reprinted from: ESCAP 2013. p.51.
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Percentage of Population without Access to Electricity and Modern Cooking Fuels (latest available data)
Reprinted from: ESCAP 2013. p.168.
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Development and Universal Access to Energy Services (latest available data)
Reprinted from: ESCAP 2013. p.169.
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Total and Youth Unemployment Rates in Selected Asia-Pacific Economies (latest available data)
Reprinted from: ESCAP 2013. p.21.
Geopolitics and Security
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Viet Nam
TPPTPPPeru
Australia
Vietnam
Malaysia
RussiaChina
CH. TaipeiCH.
HongKong
Australia
New Zealand
Canada
US
Mexico
Peru
Chile
BruneiThailand
Malaysia
PhilippinesVietnam
Korea Japan
Singapore
Indonesia PNGAustralia
& NZ
India
ChinaKorea
Japan
ASEAN+1 FTAASEAN+1 FTA
FTAAP (APEC)
Asia-Pacific Economic Integration Vision
TPPRCEP(ASEAN+6)
（ ASEAN+JP, CH, KR, IND, AUS, NZ）
Japan-China-Korea
Current members
(Source: METI, Japan)
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FTAs involving China, Japan and Korea
FTAs concluded by CJK
Japan: Singapore, Mexico, Brunei, Indonesia, Malaysia, the Philippines, Thailand, Vietnam, ASEAN, Chile, Switzerland, Peru and India Korea: Chile, Singapore, the EFTA, ASEAN, the United States, the European Union, India and Peru China: Hong Kong, Macao, Chile, Pakistan, ASEAN, New Zealand, Singapore, Peru and Costa Rica
Ongoing FTA negotiations by CJK
Korea: Canada, Mexico, the GCC (Bahrain, Kuwait, Oman, Qatar,
Saudi Arabia, the UAE), Australia, New Zealand, Colombia and Turkey Japan: Australia and the GCC China: Australia, the GCC, Iceland, Norway and SACU (Southern African Customs Union)
Many FTAs under study or preparation involving CJK
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NO FTA between China, Japan and Korea
Japan-Korea FTA
Korea-Japan FTA negotiations started in December 2002 and have
been stalled since November 2004
Currently only Director-General-Level Consultations on a Korea-
Japan FTA are under way however, recent ultra-right wing Abe
regime makes barriers.
China-Korea FTA
Official tripartite joint study on a Korea-China FTA, which started in March 2007, was concluded in May 2010. In 2013, reached the 1st round negotiation.
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China-Japan-Korea FTA
Joint Study Committee on a CJK FTA
Agreed at the Trilateral Summit Meeting in Beijing, in October 2009
Five meetings since May 2010, and two more meetings to be held
by the end of 2011
At the Trilateral Summit Meeting, which was held in Tokyo in May
2011, the leaders agreed to conclude the Joint Study within the
year.
The outcome of the Joint Study Committee was submitted at the
next year’s Trilateral Summit Meeting, 2012.
Motivation
CJK are neighboring countries
FTA is a type of RTA (regional trade agreement)
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CJK are major trading partners for each other
Dependency on intra-regional trade (2010) - China’s export: 12.0 % .import: 22.5 % - Japan’s export: 27.5 % import: 26.2 % - Korea’s export: 34.3 % import: 34.7 %
Problems
- Despite growing cooperation, there are some serious problems that are hindering the growth of the integration process in the three countries.
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Problems for Regional Integration in East Asia
North Korea problem
- Three countries failed to agree on a common approach to deal with North Korea‘s nuclear program because of their own national interests and domestic political dynamics.
• Japan: refused to enter into serious negotiations with NK and failed to align its policies with other countries in the region.
• South Korea: its “Sunshine Policy“ often cut across the purpose of the policies of other countries, especially Japan and the U.S. Recently, abandoned, and the North became hostile. • China: refused to take a hardline approach towards NK‘s nuclear program, although there seems a change.
- The three countries‘ failure to produce a joint strategy towards NK is emerging as one of the most significant setbacks to the ongoing integration process in the region.
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Historical Differences
- Despite the growing economic relations, the three countries has
somehow failed to resolve their past problems, and witnessed with
the growth of narrow nationalism.
- Narrow nationalism has the potential of causing further serious harm
to the forces of regional integration.
Territorial Disputes
- In 2005, disputes between Korea and Japan and in 2006 between
China and Japan in islands-related territorial reflected the conflict
between the regional powers on politics,
security and economic
competition for natural resources.
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• Japan and China (Senkaku/ Diaoyutai Islands), Korea and Japan
(Dokdo/ Takeshima Island), China and Korea (Leodo Island/Suyan
Rock)
- In 2012 the same disputes have been aggravated and currently going
on.
- Changing power equations in the region are spurring narrow
nationalism in Japan, Korea and China. Narrow nationalism may hurt
the forces of regionalism very badly and can even spill over into
violence.
- The economic rise of China has caused suspicions to many neighbor
country people‘s minds in the region. Japanese right-weeng politicians
are trying to restore the country‘s hegemony.
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NEA and ASEAN+3 (APT)
- The most critical current obstacle toward closer institutionalized cooperation among China, Japan and Korea can be easily figured out by looking at the fact that China, Japan and Korea still need the ASEAN “umbrella” for their cooperation.
- Under the ASEAN initiative, they participate together in the ASEAN+3 process and their heads of nation meet during the ASEAN+3 (APT) summit as a “slide show.” it is simply because peoples of the three countries have yet to establish a strong foundation for mutual trust and respect.
- Despite the necessity of close economic cooperation among themselves, the three countries are still uncomfortable sitting together by themselves. Therefore, it is the most important immediate task for the region to lay the foundation for a closer economic cooperation.
- For the purpose of trust-building for the region, it would be wise for the three countries first to engage in specific projects that would produce mutually beneficial tangible results, such as enhancing energy security and protecting the environment or technological cooperation.
Balance of Power in the Region
- China’s growing military capabilities are creating more alarm throughout the region.
- At present, China’s power projection abilities are minimal and easily contained by the US military presence in the region.
- However, China has the world’s second-largest military budget and it is growing at a rapid pace.
- As a result, countries from Japan to Southeast Asia are all increasing their military spending.
Regional Military Outlook
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Outlook
-As long as the United States keeps a substantial military presence in the Asia-Pacific region, China’s military ambitions will be contained.
-Furthermore, Japan, South Korea and some Southeast Asian countries may develop closer defensive arrangements to counter the growing threat from China.
-Meanwhile, the Korean Peninsula could be the flashpoint that triggers a wider Asian conflict that could draw in the US, China and Japan.
7676
Source: SIPRI
77
Total Military Spending (US$ bil.)
Reprinted from: International Strategic Analysis. 2013. p. 25
78
Military Spending in Asia & Oceania (2000-2012)
Source: Hellendorff. 2013. p.10.
Implications and Prospects
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An Integrated Framework for Ideal Development- Can they achieve the new development?
Source: ESCAP 2013. p.5.
Achievements and Challenges
CJK and NEA as a whole became an economic powerhouse in Asia, forming one of the tri-poles in the world today. It is predicted to be the center of the 21st Asian Century.
It is an irony that the region has not achieved any institutional framework for integration yet, even though intra-trade is expanding. As the results of historical remnants and conflicts among them, in addition to the North Korean threat make it difficult to realize.
Whether China can continue growth is an controversial issue. If China’s growth would be slow down it will not only negatively affect its own economy
but also East Asia as a whole.
S Korea is in the most delicate position. The country can be a mediator, but it needs to solve three challenges: economic growth, reunification, and soft-power leadership.
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China faces at least three serious challenges: turning to a more equitable growth and securing social welfare, maintaining ‘adequate’ growth and realizing innovation-based economy, and successful ‘coopetition’ with US.
Japan also faces three big challenges: resuming growth, resuming soft-power and compromising with Asian countries in conflict with its excessive nationalistic drive, and being a true contributor to ‘One-Asia’.
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Reflection on Northeast Asia
The issue or problem is the relationship of the three countries, China, Korea and Japan. Japan is trying to build-up alliance against China. It is understandable, but it may not be wise since the 21st century will be a tri-polar century where Asia is one of the poles. Japan alone cannot make other major Asian countries as its allies.
The younger generations of CJK should think of open future, overcoming narrow nationalism.
What is the solution to the North Korean threat? Obviously a war is not the solution. Then what? If China and Korea be allies, there may be a better solution.
China. China’s issue is fundamentally not becoming a mere superpower, but with what it will contribute to the world, to be a true respected leader. Then the question is: can China be a respected country, why or why not?
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References ESCAP. 2013. Economic and Social Survey of Asia and the Pacific.
IMF. 2013. World Economic Outlook Database.
Kawai, Masahiro. 2013. “Financing Development Cooperation in Northeast Asia”.
Naughton, B. 2013. “China’s Economy: Achievements; Institutional Constraints; and Development”. University of California: San Diego.
Singh, Lakhvinder. 2008. “Regional Cooperation between Korea, Japa and China: Problems and Prospects.
Urata, Shujiro.2013. “Japanese New Trade Policy”. (Google)
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