East Asian Policy

Chinese President Xi Jinping has shown himself to be a tough and charismatic leader whose vision is to fulfill the “Chinese dream”. He has adopted a hardline policy on official extravagance, corruption and online criticism, and is a steadfast reformist in his first year of office. Xi's austerity policy on official extravagance is to placate civil anger over official profligacy in an economic slowdown and consolidate Xi's populist image.

President Xi Jinping has been quick to make his mark on China's foreign policy compared to his predecessor, especially in fostering a positive momentum in China-US relations. China is also leveraging on its economic strength by engaging in mutually beneficial cooperation with other countries. Nevertheless, China's Air Defence Identification Zone and its expressed determination to administer the waters within the nine-dotted lines have cast doubts on China's professed policy of good neighbourly relations.

China's economy grew at 7.7% in 2013, slightly lower than the 7.8% of 2012 but higher than the 7.6% projected by most foreign observers. A 7.7% growth is still a highly creditable growth performance given that China's total GDP was US$9 trillion in 2013. A mere 7% growth will add to China in one year, half of Indonesia's total GDP or one-third of India's. China's economy is thus entering a new phase of stable growth.

The Third Plenum of the 18th Party Congress is determined to deepen reform in a wide range of areas. On the social front, three broad areas have received substantial attention. One is the urbanisation programme, or integrated ruralurban development; the second is the development and reform of “social sectors”, a broad term encompassing education, employment, income distribution, social security, healthcare and population policy; and the third is the innovation of “social governance”.

Several explosions launched by discontented individuals in politically significant locations became the new manifestation of social instability in 2013. The Third Plenum's Decision announced a series of reforms for the Letters and Visits System and the termination of the Re-education through Labour System. The new Xi Jinping-Li Keqiang leadership will continue with the dual strategies of repression and liberation to maintain social stability in its tenure.

Hong Kong's longstanding governance problems are compounded by an increasingly polarised society and widening social fissures. Close to one-fifth of the city's population lived below the poverty line; more young Hong Kongers are identifying themselves with Hong Kong rather than China, and competition for resources has stoked tensions between locals and Mainlanders. Amid these trends and record low public ratings for the chief executive, what is in store for Hong Kong in 2014?

In 2013, the Ma administration had implemented various domestic reforms, such as revamping the military trial system and the fourth nuclear power plant construction plan. Ma's popularity rating plummeted after the Wang Jin-pyng wiretapping scandal broke out. Ma managed to balance between China, the United States and Japan. The ineffectualness of the Ma administration is likely to negatively impact on the Kuomintang's performance in the coming local election in end 2014.

Taiwan's economy continued to struggle in 2013 with 1.7% growth rate. Besides the soft external demand, Taiwan's stagnant economy today is a reflection of its persistent inability to upgrade its industry aggravated by the government's fiscal deficits which restrain its capability in providing an immediate solution to the ailing economy. A free market economy is so far the only way to sustain economic growth in an era of globalisation.

In February 2013, Japanese Prime Minister Abe Shinzo confidently declared: “I am back, and so shall Japan be”. Japan is also back in at least two ways. First, the country is poised to end its economic doldrums (the so-called two “lost decades”) and chronic deflation thanks to Abenomics. Second, an Abe-led Japan has become more assertive in international affairs and is prepared to stand up to a rising China.

Japanese Prime Minister Shinzo Abe regained power in end 2012. Almost simultaneously, Japan's economy started flourishing. Abe proclaims that his new economic policy called Abenomics is responsible for the growth. Since many factors account for the current economic boom, it is uncertain how much comes from Abenomics. It is, however, quite certain that Abenomics has worsened the financial condition of the government, which is already struggling with dangerous budgetary problems.

In 2013 South Korea elected Asia's first female president. President Park Geunhye enjoyed high approval rating of 60% on average, possibly due to her diplomatic success with the United States and China and her firm North Korean policy. Unemployment trended downwards and South Korea's Kaesong Industrial Complex in North Korea reopened amid controversies. Relations with the North are however likely to worsen with mounting speculation of Pyongyang's possible fourth nuclear test.