East Asian Policy

The new foreign policy team is more professional and with an Asian focus than its older counterpart. Although still fragmented, it may have stronger leadership and better coordination. This is critically important because China is at a defining moment as to its international role. Xi Jinping's closer ties with the military and his hands-on style may encourage assertive nationalism and more active role of the military in foreign affairs.

Xi made his first overseas state visits to Russia, Tanzania, South Africa and the Republic of Congo, and attended the fifth BRICS leaders' summit shortly after becoming China's president in March 2013. The visits show Xi's confident grip on power and China's emphasis on building ties with its giant neighbour and developing countries. To some extent, this is China's response to a US rebalance in the Asia-Pacific region that appears directed at China.

The Xi administration has established a new task force for high-level coordination and policy promulgation of maritime affairs. The move further echoes Beijing's determination to pursue new policies to establish China into a new marine power. Beijing is restructuring its marine affairs administration and law enforcement as its first step. Yet, challenges remain on tackling the different departmental interests and the culture of intra-agency competition for central budget and policy support.

China has achieved remarkable growth despite weak legal protection of investors and an underdeveloped financial system. Other financing channels have played a significant role in the growth of the non-state sector. However, informal financial organisations do not have mechanisms that guard against financial risks and lack a reserve and deposit insurance system. Recent measures seem inadequate in accelerating the development of China's financial market. More and bolder reforms are needed.

In most days of January 2013, many Chinese cities including Beijing and Shanghai were in an unprecedented smog crisis that saw air pollution indicators reaching hazardous and off-the-chart levels. The government was more tactful this time and reported candidly on the pollution. The new leaders played an important role in the data disclosure. The smog reinforces the government's resolve to de-emphasise GDP growth in its development strategy.

Rapid economic development and a rising middle class have given hope to China's political development. The democratisation history around the world provides clues to the possible directions China's new middle class might be heading in politics. The conservative Chinese middle class is predicted to make China's democratisation more stable than volatile, more gradual than radical. China may experience a long but steady path towards democratisation just like other major democratised countries.

A 2009 American Society of Civil Engineers report indicates significant underinvestment in the maintenance and upgrading of US infrastructure. The group estimates a five-year investment of US$2.2 trillion is required. This presents an exciting opportunity for Chinese construction and engineering firms. Because infrastructure work provides long-term economic benefits, if done without controversy, they might generate goodwill towards China and may even help advance Chinese commercial interests in the United States.

The 2012 elections in Japan, Taiwan and South Korea exhibit both long-term trends and short-term variations in each country's political landscape. All three societies are moving towards two-party competition lately, thanks mostly to the mixed-member majoritarian system adopted for legislative elections, despite the social cleavages that provide, to varying degrees, niches for small parties. The cleavage structure coupled with the electoral system largely explains the changing political landscape in these societies.

The image of Japan today is that of an economic giant mired in stagnation and deflation but it is still an active player seeking a comprehensive role in diplomacy, economics and ASEAN community-building in the Mekong Basin.

China and India have drawn on transnational diasporas to implement past reforms. Entrepreneurial diasporas were the bedrock of China's foreign direct investment and exports. Professional diasporas were key policy advisors in India. Both countries presently have diasporas to carry out social reform in China and to spur entrepeneurship in India. Whether diasporas can play such roles in the future depends on the leadership and vision of their home states.