East Asian Policy

Chinese President Xi Jinping has pursued a proactive foreign policy to strengthen ties with its neighbours. In particular, Xi has proposed two major initiatives, i.e. the Silk Road Economic Belt (an overland route) and the Maritime Silk Road of the 21st Century (a maritime route), that leverage on China's economic strengths. Nevertheless, China will have to contend with the interests of other major powers as well as its own lack of soft power in its implementation.

Guangxi is perceived as the gateway for China-ASEAN (Association of Southeast Asian Nations) cooperation as it is the only province in China with land and sea access to ASEAN countries and the only western province with a sea gateway. The Guangxi authority attempts to make Guangxi Beibu Gulf Economic Zone an important part of the “Maritime Silk Road of the 21st Century” and give it new dynamics for boosting economic development.

After Xi's assumption of office, an unprecedented number of vice-ministerial-level-and-above incumbent officials have been investigated for corruption charges, including Vice Chairman of the Chinese People's Political Consultative Conference Su Rong and Xu Caihou, a retired vice chairman of the Central Military Commission. Many of these probed officials have worked in the security and legal system, the petroleum industry, the Ministry of Land and Resources or the Sichuan province where Zhou Yongkang once held key positions.

The Chinese authorities have demonstrated great capability in putting online activities under strict surveillance. A comprehensive and complex system of internet monitoring and censorship has been established, consisting of the Great Firewall, online content control and targeted suppression, as well as an army of online commentators. Since Xi assumed leadership in late 2012, Beijing has shown considerable determination to win “public opinion” in the cyber world.

As China progresses, its Science and Technology (S&T) system evolves as well, driven by new aspirations, changing needs and surging resources. With the rapid growth of research and development expenditure and a growing supply of talents, China has been reshaping the global research landscape. The quality of research however has been criticised as less impressive than the quantity. To become a global innovation powerhouse, China needs to reform its S&T governance, funding and evaluation.

The global financial crisis prompted the Taiwanese government to pursue demand-driven measures to bail out the economy, a painstaking task to balance the budget. The sustained budget deficits could reduce national savings and further impose a substantial negative effect on long-term economic growth. The growing government debt is a conundrum, which will be a tax burden for future generations if not dealt with decisively.

Confrontations between China and Vietnam reignited in early May 2014 due to an oil rig deployment in an area near the Paracel Islands. China has handled well the information flow to cultivate measured rational nationalism and to avoid a sudden spike in public attention. Vietnam is employing multiple measures to tackle China's growing prowess, its stagnating economic development and the potential subversive impact on its ruling regime. Both are working towards a resolution.

The present ‘honeymoon’ between China and Russia is a temporary alignment of interests between them as a result of the Ukraine crisis to the west and America's ‘Asian pivot’ to the east of the Eurasian Continent. Such alignment does not erase their fundamental differences, but there is a danger that the West may push the two into more permanent alliance. For now, however, both are playing strategically to maximise their options and opportunities.

The European Union's (EU) demand for clean energy has been boosting Chinese exports of green products, while the anti-dumping and anti-subsidy investigations of imports of Chinese solar panels by the EU in 2012 had dampened Chinese exports. The two parties are committed to resolving their trade disagreements instead of applying protectionist measures. A July 2013 agreement was reached for Chinese PV exporters to take a price undertaking and be subject to an export quota.

The Indonesia-Japan Economic Partnership Agreement (IJEPA) faces many obstacles to its full realisation, especially in manpower and capacity building cooperation. Japan's tariff reduction under the IJEPA does not necessarily lead to Indonesia's automatic market penetration as the real challenge is not on tariff, but non-tariff barriers. The investment sector on the other hand has shown relative good progress, especially on Japanese increasing interests as well as its actual investment in various sectors in Indonesia.