East Asian Policy

In 2009, China initiated a new round of health reform to establish a well functioning health system by 2020. Local pilot reforms were encouraged for all five components of the health reform. Between 2009 and 2011, the growth in government health expenditure was a hefty RMB1.24 trillion. Three years on, total health expenditure was over RMB2.2 trillion, or about 4.8% of GDP in 2011. Issues that remain to be tackled include addressing the incentives of providers and insurers as well as improving quality of services and medicines.

In March 2011 the Chinese government announced its plan to construct 36 million social housing in 2011-2015. Although capital and land provisions for 2011 had been made, some problems have emerged. Chinese social housing development should be legislated to provide legal evidence not only for the proper implementation of this plan in the coming years, but also for social housing development in the coming decades.

China relies heavily on the hukou system to manage internal migration. Over time, urban China has been segregated into local hukou holders and migrants. New realities are beginning to challenge the approach of exclusion and segregation. A new round of hukou reforms is underway in many cities and provinces. The issue of integrating the "floating population" is finally on the reform agenda.

America's new security strategy in the Asia-Pacific region is on the Southwest Pacific and Indian Ocean and realigning them to a combined new theatre. Will this lead to a US-China conflict or a more peaceful region? The author argues that the future of security in the Asia-Pacific region will be more dependent on intellectual competition than a raw military power rivalry. Overestimation of the threat, miscalculation and misjudgement are likely to be the most dangerous challenges.

In April 2012, another territorial dispute broke out in the South China Sea highlighting challenges to regional peace and security in East Asia. While China and the Philippines sought to resolve the Scarborough Shoal dispute peacefully, domestic concerns coupled with greater US involvement in the region illustrated the multifaceted nature of these issues. Future attempts at managing and resolving disputes will need to balance interests between actors at the sub-national, national and international levels.

China regards rare earth elements (REEs) as strategic products and fosters the REE industry with neo-mercantilist support. It then restrains exports of REEs as a means of exerting pressure on Japan in maritime security disputes. In response, Japan pursues a soft balancing strategy to strengthen linkages with Vietnam and India, and reconfirms the value of security linkages with Washington. Thus, the economic instrument became a catalyst in stimulating balancing behaviour.

Iran is China's third largest oil supply country and an important destination of China's FDI. As US-led sanctions on Iran tighten, China faces increasing pressure to adjust its policies on Iran. China is caught between its extensive commercial relations with Iran and its desire to be recognised as a big responsible country.

China's recent deepening relations with Central Asia aim to ensure regional security, satisfy its rising energy demand and generate economic gains for China's western regions. Bilateral relations will likely intensify, as China's energy demand continues to rise; serious constraints however remain, including possible protectionist sentiments in Central Asia due to rising trade imbalances, growing competition for influence among big powers and the relatively poor infrastructure in the region.

NEAT is a loosely constituted regional scheme under the ASEAN plus Three (APT) framework. Its main objectives are to promote exchange among APT scholars and research institutes in the region, and to promote relevant research that can facilitate the APT regional cooperation process. Research is done through organising Working Groups. NEAT has made important progress in the past 10 years. To grow and expand in future, it will have to improve on its networking function and strengthen its Working Group mechanism.

Hong Kong's society has become more politicised after 2003. Policy decisions have been driven by public opinion. With a growing "war of ideas", more social actors choose to do policy advocacies by research rather than slogans through setting up think tanks. Think tanks have seen their influence rising over time. The government has started to invite think tank representatives to give suggestions during the drafting of some important policy papers, like Policy Address.