Tuesday, December 27, 2005

The Year in Asia, 2005

The simmering feud between Japan and China was the most important continuing story in Asia during 2005. Even as the year ended, Japanese foreign minister Taro Aso irritated the Chinese once again by publicly asserting that China’s military buildup posed a threat. Relations between the two countries worsened significantly during the year, strained by competition over natural resources, leadership in East Asia and wartime history. They blew up in a short-lived spate of anti-Japanese demonstrations in the spring, while the authorities looked away. Chinese officials refused to meet with Prime Minister Junichiro Koizumi at two regional meetings near the end of the year, protesting his regular visits to the Yasukuni Shrine, a memorial to Japan’s war dead. Yet trade relations deepened, and China displaced the U.S. as Japan’s most important trading partner. Other important developments of the year:

2. China adopts anti-secession law aimed at Taiwan.

3. Chinese firm fails in bid to buy Unocal

4. Koizumi’s September election blowout.

5. Japan’s economy finally recovering

6. North Korea claims to have nuclear weapons

7. Taiwan electorate turns on ruling party

8. South Korean fabricates cloning research.

9. Indonesia corners and kills master bomber

10. Massive toxic spill in Northeast China

In mid-March China’s National People’s Congress approved an “anti-secession” law pledging to attack should Taiwan formally declare independence. But the Chinese government almost immediately softened the blow by inviting Lien Chan, leader of the opposition Kuomintang Party, to visit Beijing in May, the first such formal contact between the two historic antagonists. Meanwhile, the U.S. escalated its pressure on Taiwan to boost defense spending and pass an important defense appropriations bill that has been opposed in the Legislature. At year’s end the appropriations bill was defeated again – for the 42nd time.

It was probably inevitable, given its growing economic resources, that China would emulate the Japanese by buying American companies. But the bid by the CNOOC, one of China’s three state-owned petroleum companies, to buy the Unocal Corp. of Los Angeles, revealed suppressed anxieties and unexpectedly strong opposition from Congress. The fact that it was an oil company during a summer of rising gasoline prices didn’t help. Chinese washing machine maker Haier’s simultaneous bid to buy the ailing Maytag (also unsuccessful), made it look like the Chinese were set on taking over everything. Eventually the Unocal board decided to accept the somewhat lower bid from the American rival Chevron. But the Chinese will be back in 2006.

When the upper chamber of Japan’s Diet defeated Prime Minister Junichiro Koizumi’s plan to privatize the Japanese post office (which includes its mammoth postal savings system), the premier dissolved parliament, purged the dissenters in his party and called for a new election. The press focused on Koizumi’s efforts to recruit celebrities and others (dubbed “assassins”) to run against them. By the time the press tired of this story angle the election was on and Koizumi’s increased his majority by more than 80 seats, unquestionably the slickest political success by anyone, anywhere, during the year. Oh yes, the new Diet passed the postal bills.

This is the year that Japan finally began to pull itself out of a 15-year economic slump. There have, of course, been false dawns before, and the projected GDP growth rate of 2-3 percent, doesn’t seem so dazzling set against China (whose economy was discovered to be about 17 percent bigger than previously thought). But the sheer size of Japan’s economy means that even that modest growth should have an important ripple effect. All the signs are there for a recovery: the stock market gained 30% during the year, property prices in central Tokyo are rising again, consumer prices are up, the job market, especially for new graduates, seems to be brisk. If that were not proof enough, Toyota Motor Co. announced that it would overtake General Motors as the world’s largest automobile maker next year.

In February the official voice of North Korea announced: “We have manufactured nuclear weapons for self-defense.” This story might have ranked higher had the North Koreans proved the assertion beyond doubt by setting one off. Nevertheless, problem of North Korea’s nuclear weapons ambitions was a dominant theme for the year. The Six-Party talks in Beijing seemed to meet with some success when the conference issued a joint statement that the parties had agreed in principle to de-nuclearization of the Korean peninsula. The talks broke off at that point and would not resume until 2006, if then.

Taiwan’s Democratic Progressive Party suffered an historic defeat in local elections held Dec. 4. The opposition Kuomintang and its allies won mayors and county councils in subdivisions that had been bedrock DPP strongholds for years. The election seems to set the stage for capturing the presidency in 2008. As elsewhere, politics in Taiwan is local, and one can read a little too much into outside influences. But it would seem that, in contrast to 1996 and 2000 when Beijing boosted DPP prospects through intimidation, its friendly cultivation of KMT leaders, including offering such goodies as eliminating tariffs on Taiwan fruit, paid off handsomely.

All of South Korea basked in the reflected glory of its “supreme scientist,” Hwang Woo Suk. He seemed to have single-handedly catapulted Korea into the forefront of biotechnology with his claims, published in respected journals, of successes in cloning. Then it all collapsed when his research was revealed to be based on deliberate fabrications (see more in post below).

The bombers returned to Bali in October, when three suicide bombers blew themselves up in restaurants of a seaside resort, killing about a dozen people. Less than one month later, Jakarta’s special forces cornered and killed one of the two masterminds of this and other bombings in Indonesia, Azhara bin Husin. The swiftness underscored the fact that Indonesia emerged in 2005 as one of the success stories of the global war on terrorism. Arrests and internal dissension have severely weakened Southeast Asia’s principal Islamic terrorist group, the Jemaah Islamyiah.

You would have thought the Chinese authorities learned their lesson after the SARS cover up unraveled. But it is hard to shed old habits. When a petrochemical plant south of Harbin exploded Nov. 13 sending 100 tons of toxic benzene into the Songha River, the first reaction of the authorities was to stonewall. The city officials explained that they were shutting off the water supply for this city of 3.8 million to carry out “repairs and inspections” on the system. The true story soon emerged, thanks largely to efforts of journalists working for the China Youth Daily.

Biggest non-story of the year
Unquestionably the biggest non-story of 2005 was Beijing’s decision to “revalue” the reminbi, China’s undervalued currency. In July Beijing announced it was linking it to a basket of currencies. But as of year’s end, the reminbi had scarcely budged more than 2 per cent. Meanwhile, the Japanese yen fell some 18 percent during the year, a situation seemingly unnoticed by anyone except maybe in Detroit. General Motor’s Chairman Rick Wagoner published an editorial in the Washington Post in December claiming that moves by Tokyo to lower the value of the yen gave Japanese automakers an unfair advantage selling cars in the U.S.

27 Comments:

Blogger Colin said...

Nice column, but you're wrong here:

"General Motor’s Chairman Rick Wagoner published an editorial in the Washington Post in December claiming that moves by Tokyo to lower the value of the yen gave Japanese automakers an unfair advantage selling cars in the U.S."

The editorial appeared in the WSJ, not the Post.

http://www.opinionjournal.com/extra/?id=110007641

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