I Overview
China:
- Xi Jinping’s focus on “common prosperity” and attack on Chinese firms
- Indian and Chinese Troops Disengage at Gogra
- China Backs Afghanistan’s Taliban Government
- Chinese Foreign Ministry spokesperson on Dasu Attack
Japan:
- PM Suga announces he will not seek leadership of LDP
- Japan successfully hosts the Olympic Games
- Japan – Vietnam sign defense transfer deal
- Japan plans a 2.6 % increase in defense spending
South Korea:
- South Korea establishes Task Force to expand space capabilities
- South Korea becomes 1st major Asian economy to raise interest rates
North Korea:
- North Korea fires 2 ballistic missiles
- Kim Jong-un shows off 20-kg weight loss
Hong Kong:
- Exodus of students from Hong Kong
- Hong Kong’s most influential trade union begins to disband
Taiwan:
- DPP seeks action on CPTPP before 2022
- Taiwan plans $9 billion increase in arms spending
II Developments in China
Xi Jinping’s focus on “common prosperity” and attack on Chinese firms
The Communist Party of China under the leadership of all-powerful General Secretary Xi Jinping has, over the past few months, mounted an attack on big Chinese firms. The saga of Ant Financial’s listing in New York and the fiasco of its stock price is now well known. The Chinese authorities have not stopped with fintech but have now carried over this battle for supremacy into the edutech and gaming areas as well. Several different regulations have been brought to rein in the free-wheeling nature of business in these sectors which simultaneously cut down some pretty large firms to size. The huge and ballooning virtual coaching industry in education has been brought to heel, with the Party arguing that it was leading to discrepancies in income and wealth, with the rich becoming richer as a result of their ability to avail of such coaching classes. Common prosperity has become a mantra in China now and all these actions are being justified as moving in that direction. Observers and interpreters of Chinese Communism see this as a leftward lurch by Xi, somewhat in the manner of Mao Zedong. However, many of the firms which heralded China’s rise as an economic power are being cut to size and the impact this behavior will have on economic growth and entrepreneurial ability has to be watched. It is believed that large, successful firms and their leaders such as Jack Ma are being seen as a source of competition to the Communist Party of China and its leader Xi Jinping.
Indian and Chinese Troops Disengage at Gogra
India and China carried out a disengagement process on 4 and 5 August 2021 in the Gogra sector of the LAC in Eastern Ladakh. This was agreed to in the Corps Commanders talks end July. The statement put out by the Government of India stated that both sides have ceased forward deployments in this area in a phased, coordinated and verified manner. The troops of both sides are now in their respective permanent bases. All temporary structures created in the area by both sides have been dismantled and mutually verified. The landform in the area has been restored by both sides to pre-stand off period. While this disengagement in one more sector of the LAC in Eastern Ladakh is welcome, India will have to remain on guard vis-à-vis the PLA and there can be no restoration of India – China ties to the pre-stand off period as trust and confidence between the two has been shattered by China’s military moves dating back to April 2020.
China Backs Afghanistan’s Taliban Government
The picture of Chinese Foreign Minister Wang Yi greeting a delegation of the Taliban in China for bilateral discussions clearly indicated which way Beijing’s policy towards Afghanistan was veering. Thereafter, China has announced aid amounting to US $ 31 million to the interim government of the Taliban putting its money where its mouth is. Needless to say, Beijing is most worried that the Taliban should not take a stance to support Uighur Muslims in China including ETIM. It seems apparent to us that increasingly China backs the ability of the Pak Army – not merely to run Pakistan but also to arrange things in Afghanistan through its puppet. By extension, it is the Chinese PLA which is in charge of running policy towards this part of the world, including not merely Pakistan and Afghanistan, but apparently India too. When seen in this light, the aggression in Eastern Ladakh since summer 2020 makes perfect sense.
Chinese Foreign Ministry spokesperson on Dasu Attack
The attack in Dasu, Pakistan which killed 9 Chinese nationals working on a hydropower project in that country has led to a detailed investigation by authorities in both countries. As can be expected, Pakistan has pointed the finger at TTP stating that the attack was planned and coordinated from Afghanistan and that both India’s RAW and Afghanistan’s NDS were involved. The Chinese Foreign Ministry spokesperson stated that Pakistan’s investigation has seen major progress in a short time period, both countries will strengthen their security cooperation, terrorism is the common enemy of mankind, China opposes any force using terrorism to seek geopolitical gain.
III Developments in Japan
PM Suga announces he will not seek leadership of LDP
In a shock announcement Prime Minister Suga announced that he will not run for leadership of the LDP in end September, implying that his tenure as Prime Minister of Japan will be curtailed to just about a year. Apparently, criticism within the party of his handling of the pandemic and its economic fallout is the main reason for his sudden announcement. Political instability seems to be back in Japan after the long tenure of former PM Shinzo Abe.
Japan successfully hosts the Olympic Games
The 2020 Olympic Games were successfully hosted in Tokyo between 23 July and 8 August 2021. The Games ran smoothly and without any big controversy. Although spectators were not permitted into the Games venues due to an uptick in Corona virus cases in Japan and though there were murmurs from athletes that facilities at the Olympic Village were rather sparse, overall the Games were held as scheduled and the athletes performed admirably.
Japan – Vietnam sign defense transfer deal
Japan and Vietnam have concluded an agreement which will enable Tokyo to sell defense equipment to Hanoi. Common concern about the rising threat from China is the basis of this new concord enabling Japan to transfer defense products and technology to Vietnam. While this is an umbrella agreement, specific items will be discussed later.
Japan plans a 2.6 % increase in defense spending
Japan’s defense budget presented to the Diet recently, seeks an increase of 2.6% in its spending. In absolute terms Japan’s defense budget amounts to 5.48 trillion Yen in 2021-22 (US $ 49.93 billion).
IV Developments in South Korea
South Korea establishes Task Force to expand space capabilities
Seoul has established a new Task Force to draw up a program to expand its space capabilities, following recent US approval to lift restrictions on South Korea’s missile production program. The Task Force is headed by the vice chief of the Defense Acquisition Program Administration and includes personnel from the Ministry of National Defense, Joint Chiefs of Staff, Agency for Defense Development and other similar organizations.
South Korea becomes 1st major Asian economy to raise interest rates
The Bank of Korea raised its base rate of interest from a record low of 0.5% to 0.75% in end August 2021, becoming the first major Asian economy to raise interest rates since the corona virus pandemic began. The measure was taken to curb rising inflation in South Korea while not impacting the nascent economic recovery since the pandemic began.
V Developments in North Korea
North Korea fires 2 ballistic missiles
North Korea launched two ballistic missiles off its east coast recently with Pyongyang announcing that it had tested new long-range cruise missiles describing them as “strategic weapon of great significance”. Such tests violate UN resolutions. Tokyo condemned the tests. Pyongyang had last tested such missiles on 25 March this year.
Kim Jong-un shows off 20-kg weight loss
North Korean leader Kim Jong-un made a recent appearance where he was slimmer by about 20 kgs and had a new haircut resembling his grandfather Kim Il-sung. North Korean media has played up how Kim has taken the world by surprise with his weight loss.
VI Developments in Hong Kong
Exodus of students from Hong Kong
Hong Kong educators have warned of an increasing exodus of pupils as part of a wave of emigration following the passage and introduction of the national security law in HK. Official data shows that 15,000 students had quit school in the past one year.
Hong Kong’s most influential trade union begins to disband
HK’s most influential, pro-Opposition trade union – the Confederation of Trade Unions – has commenced the process of disbanding itself although it has not yet made the decision public. A press conference to announce the decision is to be held soon. There can be little doubt now that the so-called “One Country, Two Systems” formula is dead, much before the 50 year schedule outlined by former Chinese Communist Party chief Deng Xiaoping.
VII Developments in Taiwan
DPP seeks action on CPTPP before 2022
The ruling DPP has urged Taiwan to join the Comprehensive and Progressive Trans-Pacific Partnership Agreement (CPTPP) before 2022, pointing out that once Beijing joins that trade pact it will become impossible for Taipei to join since the PRC is bound to object to this.
Taiwan plans $9 billion increase in arms spending
Taiwan has proposed an increase of T$ 240 billion (US $ 8.69 billion) in defense spending over the next 5 years due to the severe threat it faces from Beijing. President Tsai has made defense modernization and increasing defense spending a priority of her government. Most of the new arms will be made domestically although some will be bought from the US.
