Lowy Institute

Over the last two months, there has been noticeable progress on three separate fronts in Japan's 30-year process of 'renormalising' its' approach to external defence:

  1. Last week, the Abe cabinet approved the 2015 Japanese Defence White Paper after revisions were made to make it focus more squarely on the growing military threat from China, both to Japan and the region more generally. As Malaysia, the Philippines and the US are doing in the South China Sea, Japan is more frequently providing photographic evidence of Chinese actions in the disputed waters of the East China Sea.
  2. On 15 July, Japan's House of Representatives passed the first of many key legislative changes that will enact last year's constitutional reinterpretation that permits Japan to exercise a limited right of collective self-defence.
  3. Regional support for Japan's more active defence policy has grown and become more tangible. For instance, in early June the Philippines and Japan signed a joint statement on security cooperation with an attached action plan. On 25 May, Japan and Malaysia signed a similar, but less ambitious joint statement. Discussions have started on a possible status of forces agreements between the Philippines and Japan. On 23 June, as part of a Japan-Philippine bilateral exercise, a Japanese P3-C Orion anti-submarine surveillance plane flew over disputed waters in the South China Sea to Beijing's ire. The Philippines could also be the first recipient of Japanese arms exports when it finalises the purchase of a small number of these maritime surveillance aircraft from Tokyo.

However, Japan is still far from a normal external security actor and alarmist talk of Japanese remilitarisation tells you more about the ideological predispositions of the accuser than of present reality. Yet, it's clear that Japan is again becoming a more proactive and independent security actor in East Asia in both words and action. It is also increasingly focused on the threat from China and is finding growing support from regional countries with similar concerns.

The US-China major power relationship is not the only one that is reshaping the regional security order.

Photo courtesy of Flickr user U.S. Pacific Fleet.


Michael Thawley's comments on China's present global leadership credentials and ambitions are correct and phrased in the refreshingly direct manner Australians usually take as a badge of national pride and uniqueness.

The fact that his comments caused such a stir in Australia (and seemingly in Australia alone) tells us more about the commentators than the comments themselves.

The Chinese state has so far eschewed attempts at global leadership. Rather, Chinese policy-makers are focusing their institution-building efforts at the regional level, as part of what Beijing refers to rather undiplomatically as 'peripheral diplomacy', and among fellow developing-economy states.

The Shanghai Cooperation Organisation (SCO) and the Asian Infrastructure Investment Bank (AIIB), for instance, are both regional institutions. The SCO only has Asian member-states and observer-states, while the AIIB has regional and non-regional members, though membership is in strong favour of the regionals and China itself. The New Development Bank (known widely as the BRICS Bank) is in line with China's decades-old view of itself as a leading state in the developing world.

In existing global multilateral bodies, from the UN Security Council to the WTO, China has been comparatively low-key and primarily focused on defending specific national interests.

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China was a late-comer to the WTO and its restrictive trade practices and policies have made it not a leader in that institution but the most frequent subject of cases heard by the WTOs dispute-settlement mechanism. In the G20, a new global body created to better acknowledge rising powers like China and India, Beijing has also failed to take a leading role. In the UN Security Council (another body that has long recognised China's leadership potential), Beijing rarely leads or uses its veto power (unless it is in company with others, usually Russia). On climate change, China was painted as the major villain of the failed 2009 UN summit in Copenhagen. 

Recent Pew Research Center polling shows that Australians seem to be a global outlier when it comes to judging China's global economic weight. 57% of Australians mistakenly see China as the world's leading economic power, the highest score among the 40 countries polled. In no other country did a majority of respondents identify China as the world's leading economic power.

The comparatively disproportionate amount of money being invested in Australia into understanding China risks reducing the Australian discussion of Asia as a whole. Given the tempest in the teapot caused by Michael Thawley's remarks, this risk may spill over from Asia, where China is starting to flex its leadership muscles, to the world as a whole, where it is not. 

Photo courtesy of Flickr user G20 Australia 2014.


Sidu River Bridge in Hubei Province, China, the world's highest bridge.  (Wikimedia Commons.)

China's Asian Infrastructure Investment Bank (AIIB) initiative was has spurred an explosion of opinion and analysis. The Asian Development Bank's (ADB) 2009 estimate that Asia will need US$8.22 trillion in infrastructure investment is the headline figure used to explain the importance of the new bank. Much of the opinion expressed so far has also assumed that the AIIB will be, as the main Chinese media agency Xinhua puts it, a Chinese gift to the world, with China as the main creditor.

But looking more closely at the ADB's figures and at China's present interactions with the World Bank and ADB, a more interesting possibility emerges that has so far escaped attention or analysis.

China, befitting its huge size and developing-economy status, could be a major AIIB borrower. China's own infrastructure needs alone account for over half of the total for Asia, according to the 2009 ADB estimate. In 2014, China was second-largest recipient of ADB loans after India. This was also the case in 2013. Likewise, China has the second-largest present borrowing obligations with the World Bank (at US$17.2 billion) after India (at US$36.4 billion).

Will the lending portfolio of the AIIB follow suit? Asia's present infrastructure needs and China's use of the existing development banks suggest it should.


Vice-President Jejomar Binay. (Flickr/ISS.)

Elections are rarely decided by foreign policy issues, but election results can decide foreign policy issues.

The 2016 Philippines presidential election looks like it could lead to a sharp change in Manila's approach to its maritime boundary disputes with China in the West Philippine Sea. The US, Indonesia and Vietnam are taking firmer and more active positions on the South China Sea disputes involving China in the face of Beijing's aggressive reclamation activities targeting Philippine claims. President Aquino has won international support for the Philippines' firm stance.

But his most likely successor could significantly soften Philippine policy towards China on this issue.

Vice-President Jejomar Binay, despite being the focus of a Senate Blue Ribbon Committee investigating alleged corruption, is the clear front-runner for the 2016 elections. In the latest Pulse Asia poll on 2016 presidential candidates, Binay garnered 29% support, a clear 15% ahead of Senator Grace Poe in second at 14% and a full 25% ahead of Manuel 'Mar' Roxas (Aquino's presumed favoured candidate), at 4%.

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Binay has no foreign policy experience, having risen to national prominence as long-time Mayor of Makati, the wealthiest city in Metro Manila and the country. In one of his first extended interviews addressing foreign policy issues, Binay focused on the prospects for joint Philippines-Chinese development of natural resources in the West Philippine Sea, and downplayed the case filed by the Aquino Administration to the International Tribunal on the Law of the Sea regarding the Philippines' maritime boundary disputes with China. The ruling on this landmark case is expected to be delivered in mid-2016, potentially at the same time Binay takes over as president.

If Binay wins and follows through on these views, it would be a return to the policy preferred by Aquino's predecessor, President Macapagal-Arroyo. Macapagal-Arroyo's joint development plans with China were widely viewed as unconstitutional. In the face of this furore, in 2009, the Macapagal-Arroyo Administration did not renew the 2004 joint seismic study agreement signed in China covering the disputed waters. When Aquino took office in 2010, he and Foreign Secretary Albert del Rosario quickly adopted a much firmer stance.

The foreshadowing of a second reversal of Philippines policy on its maritime boundary dispute with China in two presidential terms shows how divided the Philippine political elite and their financial backers are on this issue and its place in Philippines-China relations. A second reversal in two presidential terms would rightfully reinforce views within ASEAN, and in Washington and Tokyo, about the unreliability of the flip-flopping Philippines, and would throw into doubt the wisdom of aligning their South China Sea approaches with the policy prevailing in Manila at any given moment.


The best chance for peace in Muslim Mindanao in the Philippines has just noticeably faded.

Members of the Philippine National Police carry a body bag in Maguindanao province, 26 January 2015 (Reuters/Stringer Philippines).

The deadly clash in the early morning of Sunday 25 January between the Special Action Force of the Philippine National Police and the local command of the Moro Islamic Liberation Front (MILF) and the Bangsamoro Islamic Freedom Fighters (BIFF), in an MILF stronghold in Maguindanao, left five MILF fighters and between 30 to 60 police officers dead and up to eight captured. This is the largest number of police officers killed on duty in Philippines history.

The term 'misencounter', used by both the government and the MILF to describe the clash, seems euphemistically inadequate, as noted by opposition Senator JV Ejercito.

Four different but intertwined elements of the massacre will aggravate its damaging, potentially disastrous, impact on the progress of the peace deal signed between Manila and the MILF command in March 2014:

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  1. The massacre occurred at a sensitive time in the legislative deliberations over the draft Bangsamoro Basic Law. The Basic Law is meant to turn the March 2014 peace deal into a national law, establishing a new, more autonomous, regional government for the Moro Islamic community. This process is already months behind President Aquino's ambitious timeline, which calls for elections to this new regional government to coincide with the 2016 presidential poll and the end of Aquino's single term. With at least two of the 13 senators who co-sponsored the senate version of the draft Basic Law withdrawing their support due to the massacre, further delays are a certainty.
  2. Opposition to the draft law and the 2014 peace deal among local Mindanao politicians (Muslim and Christian) and national legal and political figures was already mounting before the massacre. The massacre will increase the number of politicians at both levels opposed to the peace deal and the Basic Law, and provides them a powerful new emotive rationale for their opposition.
  3. The fact that the slain police detachment was hunting for a known Malaysian terrorist and suspected that this senior Jemaah Islamiyah figure, 'Marwan', and his associate Basit Usman, were hiding out in the house of the local MILF commander, focuses new attention on the multiple personal links between senior personnel in MILF and regional terrorists seeking safe haven in Mindanao. Multiple reports that BIFF fighters joined in the fighting further reinforces recognition of the strong, often familial, connections between the MILF that struck the latest peace agreement with Manila and insurgent groups that reject the deal.
  4. It is reported that the nearby Philippine Army detachment was unable to provide support to the cornered and outgunned police during the 'dusk to dawn' fighting due the stipulations of the ceasefire agreement between the MILF and the Philippines Government. This could well undermine support for the ceasefire conditions among local Army and police personnel mourning their fallen peers and smarting from the seemingly one-sided outcome of the clash.

Both the MILF and the Aquino Administration have called for the peace process to continue unimpeded despite this apparent massacre, which stands out even by the violent standards of Mindanao. Many opponents to the peace deal in Manila and in Mindanao will disagree.

The decades-long search for peace in Muslim Mindanao has seen many false dawns and the recurrence of low-intensity war. While the 25 January clash may not, by itself, spoil the latest and most comprehensive peace deal, it will not be easily overcome. The delays to the peace process will put the search for peace at risk yet again. 


Thanks to Hugh White for continuing our debate on the China-Australia FTA and the intersection between Strategic Studies and Economics. Like Hugh, I do not think that 'Australia's economic weight and sophistication is such an irresistible magnet for China that we can dictate the terms of the relationship and compel it to accept without demur whatever strategic positions we choose to adopt'.

Each of the last four Australian governments has felt the tongue-lashings of the Chinese when their positions on various issues differed from those of the Chinese Communist Party (positions Australia was far from alone in the region in adopting). Even as a callow program director at the Lowy Institute, a private think tank, I was castigated more than once by Chinese officials in Australia for demurring against Chinese views. But although China forthrightly pushes back against those with a different worldview, that does not mean it lets such differences undercut Chinese interests.

I agree with Hugh that measuring the benefits of a bilateral preferential trade deal and divining its policy weight against assumed strategic imperatives is fiendishly difficult. But I think Hugh is underestimating the importance of the China-Australia deal for Beijing, for three reasons:

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  1. Leon Berkelmans indicated why the dated and modest estimates Hugh references are no longer a credible guide to the deal signed.
  2. As trade economists remind us every time a trade deal is done, the dynamic gains from structural change to the affected economies are likely to be much greater than the static gains to bilateral trade flows, which are the focus of traditional models such as the one Hugh cites.
  3. As shown by both Japanese and Chinese private sector firms getting the same elevated foreign direct investment ceilings through their respective deals with Australia, the same ceiling first granted to US firms a decade ago in the US-Australia preferential trade deal, the effects of any trade deal cannot be treated in isolation. Rather, each should be seen as part of a much larger whole. This explains why an economy the size of China would bother to negotiate a bilateral deal with Iceland, an economy less than 1% the size of Australia.

China's trade diplomacy seems to be following Deng Xiaoping's maxim to 'cross the river, feeling for the stones.' As shown by the Korea and Australia deals, China under Xi Jinping is signing broader and deeper trade deals with larger trading partners.

Through the ongoing Regional Comprehensive Economic Partnership process, China is now also in serious negotiations with its largest regional trading partner, Japan. And President Xi's embrace of the decade-old Free Trade Agreement for the Asia-Pacific idea indicates China is willing to consider trade talks with its largest national trading partner, the US. Lastly, China's trade deals with European Free Trade Area members suggest that China has 'felt the stones' towards trade talks with the European Union, China's largest collective trading partner.

Undoubtedly, Japan, the US and the EU will look at China's commitments in the China-Australia FTA as a minimum standard to be much improved upon, given their greater economic weight and sophistication.

Economic interests and strategic ones are both important, and these interests certainly do intersect. But in the case of the China-Australia FTA, I think Hugh understates the deal's economic importance to China and overstates the intersection between China's global economic interests and regional security interests. He also overstates the prominence of these regional security interests in this intersection.

Economics does explain the China-Australia FTA better than Strategic Studies.

Photo by Flickr user Alexander Kesselaar.


Thanks to Hugh White for responding to my post on the China-Australia free trade agreement (FTA). Hugh lays out three options for interpreting China's decision to go ahead with the FTA despite the Abbott Government's pro-Japan and pro-US stances. I am not an Option 1 believer ('Beijing doesn't really care much about these strategic/political issues, and their importance is outweighed by the economic value to China of the FTA and the diplomatic value of a warmer relationship with Australia'), as Hugh suggests.

Rather I think Option 4 — China's primary motivation for signing the trade deal with Australia is its global (not regional) trade diplomacy strategy aimed at domestic structural reform – is the most compelling. In this case, China is telling the truth when it says its foreign policy is primarily driven by the domestic concerns of a developing, previously centrally planned, economy in rapid transition.

Australia is the fourth developed economy to sign a preferential trade deal with China in 2014, following after Iceland, Switzerland and South Korea. More are on the way. These four were preceded by deals with Singapore, New Zealand, Hong Kong and Taiwan. Not only is China under Xi Jinping increasing the number of trade deals with advanced economies, the scope of these deals, as we can see with the Australian and Korean FTAs, is increasing.

For me, the China-Australia deal is motivated more by China's global trade diplomacy aimed at domestic economic goals than it is by the regional strategic order in East Asia and Australia's perceived position in this order in relation to China and the US. I imagine the same is true for Australia as well.

If Option 4 is the best explanation, this is a good sign for the regional security order and a strong caution against over-interpreting the scope and effect of regional strategic competition. If the Abbott Government is an Option 4 follower, then the China-Australia trade deal is even more of a coup than advertised, and is the sign of a mature, not adolescent, Australia in Asia.

Photo by Flickr user gp1974.


We've all heard of Mythbusters, the TV program that tests whether common assumptions are based in reality or myth.

The conclusion of negotiations for the China-Australia FTA, President Xi Jinping's elevation of Australia-China relations from the strategic partnership (agreed during the Gillard prime ministership) to a comprehensive strategic partnership, and the agreement by Japan, Australia and the US on the sidelines of the G20 in Brisbane to jointly develop submarine technology definitively bust two long-held myths about Australian foreign policy and its Asian engagement project.

Yet these magically combined myths have been busted before, only to reappear as major underlying assumptions to much of the commentary on Australian strategic and foreign policy under Prime Minister Abbott.

The first myth is the partisan one that Liberal governments and prime ministers are less able to manage relations with East Asian states than Labor ones. Michael Wesley did a masterful job debunking this myth in relation to the Howard years in The Howard Paradox. From his earliest, understandably tentative, days as leader, Abbott, a confessed foreign policy non-expert, has faced a similar barrage of at times caustic commentary about alleged Asian faux pas and the assumed damage they were causing to Australia's relations with key East Asian states.

Yet, just over a year into its first term, the Abbott Government can claim to have gone faster and further than the Howard Government in deepening relations with the US, China, Japan, India, South Korea, the Philippines and Singapore, with the new Jokowi Administration offering opportunities to include Indonesia on this long list.

The Liberal Party's traditional focus on bilateral relationships over regional bodies has continued under the Abbott Government, and Abbott's critics argue that, with the geopolitical situation in East Asia becoming more uncertain, this focus is having damaging consequences. But in fact these uncertainties provide more opportunities for Australia to forge closer relations with major powers, and Abbott is well placed to take advantage of them. The Abbott paradox is in full swing.

The second strategic myth is that closer relations with the US, to which the Liberals are seen as being more prone than Labor, are detrimental to Australia's key relationships in Asia. Australia's Asian engagement policy would benefit from a more 'autonomous' and 'independent' relationship with the US and its ally Japan, it is argued.

The most sustained and inaccurate criticism of the Abbott Government's foreign policy is that closer relations with Japan and the US will undercut relations with China, with Beijing likely to impose costs on the bilateral economic relationship. The exact opposite now seems to have occurred, with the signing of the historic Japan-Australia FTA earlier this year clearly an important late-term stimulus to the decade-long China-Australia trade talks.

It seems Chinese and Australian policy makers are better able to separate economic policy benefits from strategic policy concerns than many of us commentators.

Photo by REUTERS/Lucas Coch.


When Shinzo Abe led the LDP to a landslide lower house election in late 2012, excitement in and outside of Japan about an abnormally productive period in Japanese politics featuring a strong, popular and reformist prime minister was palpable.

The 18 May 2013 cover of The Economist depicted Abe as a flying super hero; Abe's opinion polling was at Koizumi levels (the last Japanese prime minister to spark such excitement). The LDP-led coalition's second thumping of the dispirited Democratic Part of Japan in the Upper House elections in July last year (an election which also saw a fracturing of the opposition on both the left and right of the resurgent LDP), further strengthened Abe's hand and hopes for his administration.

Abe was popular within the LDP and faced no clear rival (unlike Koizumi a decade earlier), the LDP coalition controlled both houses of parliament and faced a weak and disorganised opposition, and Abe and his cabinet had strong public backing aided by an economic upturn.

Abe has spent some of this unprecedented political capital to pursue tough economic reforms (joining TPP negotiations, the trade deal with Australia and hiking taxes) and security reforms (setting up the National Security Council, passing the new state secrets law, easing bans on arms exports, reinterpreting Article 9), and to politically reinforce his revisionist views on Japanese wartime history by visiting Yasukuni shrine.

Coming into the second half of his second term as prime minister, Abe's political position shows signs of weakening; we may be seeing a return to the frustrating 'normal' of Japanese politics.

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The economy is softening after the effects of the fiscal pump-priming and ultra-loose monetary policy pass through, and the challenges of structural economic reform are starting to bite. The much-needed increase in the value-added tax is causing sharp short-term economic pain. The time to turn back to Japan's nuclear reactors (that accounted for about a third of power generation before the Fukushima disaster) has arrived

Abe and his cabinet are seeing their high and resilient poll numbers start to sag, and with it comes the inevitable calls for Abe to circle the wagons and focus on support for local economies and not structural reforms. Within the LDP, Ishiba Shigeru's challenge to Abe is growing. In the latest cabinet reshuffle, Abe was forced to give Ishiba a portfolio that will allow Ishiba to strengthen his local political networks, the key to political success in Japan. And the dispirited, fractured opposition is recovering from its double thumping and beginning to act appropriately. The opposition successfully pressured Abe to dump two newly promoted female cabinet ministers, one for the misdemeanor offence of handing out hand-fans to supporters.

Abe's ability to traverse the world as Japan's leading statesman and his ability to expend political capital pushing through reforms are both under challenge. Good for Australia that the trade deal with its largest source of investment from Asia and its second-largest export market was concluded in Abe's extended honeymoon period. This period may well be over. 

Photo courtesy of Flickr user CSIS.


The ongoing student-led demonstrations in Hong Kong, which oppose China's undemocratic framework for the 'selection of the Chief Executive by universal suffrage', are similar in cause, focus and likely outcome as the 2003 mass demonstrations against the then attempts to implement Article 23 of the Basic law.

The anti-sedition act aimed at fulfilling Article 23, which was withdrawn after the 1 July 2003 marches, states that 'The Hong Kong Special Administrative Region shall enact laws on its own to prohibit any act of treason, secession, sedition, subversion against the Central People's Government…'.

As in 2003, the present attempt to fulfil the conditions of the Basic Law under the 'one country, two systems' formula has led to hundreds of thousands of supposedly non-political Hong Kongers to protest in the centre of the city. Also similar to 2003, the primary and existential cause was Hong Kongese fears that the Central Government in Beijing was deepening the 'one country' part of this formula and eroding the two systems, by restricting Hong Kong's freedoms and undercutting its liberal tenets. Tenets that find expression in the acceptance of peaceful political protest.

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The 2003 demonstrators focused their political voice against the deeply unpopular Chief Executive Tung Chee-hwa, whose support for the anti-sedition law was seen as capitulating to, or conniving with, Beijing to make Hong Kong a region more closely administered by authoritarian China. The current Chief Executive, the equally unpopular Leung Chun-ying, is feeling the brunt of the present student-led demonstrations and the earlier 'Occupy Central with Love and Peace'. This is mainly because of Leung's endorsement of China's plans to ensure that the nominating committee for the election of the Chief Executive by universal suffrage is neither broadly representative nor reflective of democratic principles.

The 2003 demonstrations, the loss of Tung Chee Hwa's legitimacy in Hong Kong and his utility in Beijing were key factors in his resignation in early 2005. The present demonstrations could well see Leung Chun-ying not finish his five-year term that ends in 2017 for similar reasons. However, unlike in 2003 when the anti-sedition law was withdrawn, Beijing is not likely to withdraw its framework for ensuring that Hong Kong's Chief Executive will be chosen from a very short list of Beijing-approved candidates.

The similarities between the present demonstrations and those in 2003 show that the 'two political systems in the one country' formula is unworkable. One is a liberal system seeking true democracy and one is authoritarian where liberal thought and democracy are anathema.

Unfortunately for Hong Kong, the system that hundreds of thousands came out to defend in 2003, and today, will likely continue to be eroded. As for China's plans to uphold the one-country two system model for democratic Taiwan, the likely outcome of the ongoing demonstrations are another nail in an already very well sealed coffin.

Photo courtesy of REUTERS/Carlos Barria.


Hugh White's latest post immediately reminded me of three things: my admiration for Hugh's ability to spark debate; an Interpreter post I wrote on the same topic 18 months ago; and the fact that I frequently agree with Hugh's analysis of the situation and disagree with his conclusions.

Hugh poses the questions of whether China is being 'dumb' by provoking Japan toward a more 'normal' defence policy, and sets up a dichotomy that assumes Chinese provocation of Japan is aimed at undermining Japanese confidence in and commitment to the US-Japan alliance: either China stops trying to undermine the US-Japan alliance, which leaves US strategic weight in Asia largely intact as the principle limit to Chinese ambitions, or it undermines the US-Japan alliance, in which case Japan replaces America as the major balancer of Chinese power in Asia. Which would Beijing rather deal with? I think they'd probably prefer Japan, Hugh says, concluding that therefore China is not being dumb.

Yet the answer to Hugh's question of whether China is being 'dumb' by provoking Japan may very well be 'yes'.

China's provocations in the East China Sea certainly are supporting Japan's less abnormal defence policy. However, Japan's changes are not aimed at replacing the US as a balancer of Chinese power in Asia but rather helping to support America's continued role as the primary balancer. Rather than the White-envisioned US-Japan split in the face of a more aggressive China, there is a growing unity, with Japan stepping up to play a more active alliance-based role. The Abe Administration's reinterpretation of Article 9 to include the limited exercise of the right of collective self-defense is primarily motivated by Japanese alliance responsibilities and the upcoming revisions of this very treaty, as well as Japan's role in the US-led regional ballistic missile defense system.

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Likewise, Japan's developing strategic partnerships with Australia, India, the Philippines, Vietnam and others parallel US developments with these countries. In the case of Australia it is being done explicitly to bolster the US-Japan-Australia trilateral relationship. The Abe Administration's loosening of arms export bans will also allow Tokyo to play a more active and central role in US-Japan and US-led multi-partner weapons systems' developments, and will allow Japan to export its indigenously developed arms. Changes to Japan's planned military capabilities, particularly the expansion of its Aegis-capable fleet, also are consistent with Japan seeking greater security through a stronger alliance with the US and not outside it.

Certainly, policy-makers and the wider security community in Japan are worried about the US strategic position in Asia and the rising threat from China (and North Korea). Yet, all the steps taken by Japan so far are either driven by or fully consistent with a stronger US-Japan alliance with Japan playing a more active role.

Photo by Flickr user US Navy.


Prime Minister Abe's carefully crafted speech to the Australian parliament gave credence to Prime Minister Abbott's much tut-tutted claim that Japan is Australia's best friend in Asia. The historic speech also clearly helped dispel one doubt about Prime Minister Abe: that he was unwilling to address Japan's World War II past and the pain it caused. Rather, to the surprise of some, Abe started his speech with direct reference to exactly this. 

Alas, some doubts are harder to dispel than others, as shown by Sam Roggeveen's initial thoughts on Abe's speech and the coverage of Abe's visit prior to his arrival. Sam and Hugh White both worry that closer Japan-Australia relations mean Australia is somehow at risk of siding with Japan against China, given the worsening strategic rivalry between the two Northeast Asian neighbours, or of being dragged into a Japan-China war. I am sure many in the Ukraine or Georgia who waited in vain for Western military support may disagree with this logic.

This durable doubt mistakes convergence of interests for commonality of interests. As Abe makes clear in his speech, his main reason for pursuing a free trade agreement with Australia is structural reform of the Japanese economy. This is not the main reason Australia signed onto the deal. Similarly, even if Ian Buruma is correct and Abe's strategic and defence policy reforms are mainly driven by a growing (and rational) fear of China and desire to counterbalance it, Australia and many others can still seek opportunities to strengthen relations with Japan and get more out of Japan even if they do not share these same fears or counterbalancing goals.

Clearly, Australia can benefit from closer defence-technology cooperation with Japan which Abe's relaxation of arms exports facilitates.

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The UK realised this and signed a defence cooperation agreement with no existential angst about moving closer to war with China. Likewise, Abe's more forthright advocacy of adherence to international law when dealing with territorial disputes and Japan's enhanced support for maritime surveillance capacity-building in Southeast Asia are very much in line with long-standing Australian policy goals that were developed without primary consideration of China.

Friendships, special relationships and skilful diplomacy are built upon the recognition of convergence of interests and beliefs. This is different to a commonality of interests and beliefs, and such a convergence does not have to imply required future action. I would hazard that the burgeoning of the China-Australia relationship, despite the huge differences between the two states, is testament to this distinction.

If one accepts that Australian officials and politicians can do their job and realise this difference, it is hard to see how the steps taken by Japan and Australia to foster closer security ties is putting Australia or the Australia-China relationship at any greater risk. Forgoing such opportunities with Japan for doubts that deserve to be dispelled would be an opportunity lost and would raise questions in Japan about how good a strategic partner Australia really is.

 Image courtesy of pm.gov.au.


If Prabowo Subianto does win tomorrow's presidential election in Indonesia, most if not all of Asia's elected democracies will be led by realist conservatives who triumphed over candidates less associated with this political position.

From Netanyahu and Modi in West Asia to Park, Abe and Ma (less so) in Northeast Asia, Aquino and Najib in Southeast Asia, and Abbott and Key in Oceania, the territory covered by this political trend is truly continental. Modi, Abe, Park and Najib are also stronger conservative nationalists than their party predecessors (Vajpayee, Fukuda, Lee and Abdullah respectively). The same trend is noticeable among East Asian non-democracies with Kim Jong-un and Xi Jinping seemingly more conservative and nationalist than their predecessors. The coup in Thailand is clearly inspired by conservative and nationalist goals and forces. Will the next generation of Vietnamese Communist Party leaders in 2016 follow suit?

The diversity of Asian societies and political systems and the fact that there are few if any exceptions (I cannot think of one) simply adds to the power of this political phenomenon and the need to try to understand it better beyond looking to the unique intricacies of each state.

Alas, Occam's Razor explanations do not help much. 'Kicking the incumbents out' is not persuasive because Key and Ma have served beyond their first electoral terms, while Park and Najib are from the same ruling party as their predecessors. Mohdi, Aquino, Abe and Abbott, on the other hand, are new. Similarly, the 2008 global financial crisis has not had a uniform political effect even in its North American and European heartlands; its putative political effects in Asia are even harder to divine.

Looking from India eastwards, I would hazard that the worsening external security environment is a contributing factor to the trend and one that is unlikely to change in the foreseeable future. In Northeast Asia in particular, conservative rule seems to be the norm, with the rise of the centre-left Democratic Party of Japan to power followed quickly by its political demise, and both the right-leaning Kuomintang in Taiwan and the Grand National Party and its successors in Korea well into their second terms after each losing the two previous ones. Economically, Northeast Asian countries have small state sectors (measured by share of GDP and total public sector employment) and tax takes, with limited welfare state systems, suggesting a regional conservative economic consensus.

A group effort might bring a clearer understanding of this trend. It would be great if Interpreter readers could comment from their own points of view on explanations for, exceptions to and disagreements with this trend, using the comments thread below.


Prime Minister Abe's historic speech at last week's Shangri-La Dialogue focused regional and global attention (and Chinese ire) on Abe's desire for greater and more proactive Japanese security engagement in Southeast Asia. The International Institute for Strategic Studies' Shangri-La Voices series provides a useful caution on the domestic hurdles facing Abe's pursuit of this strategic rebalance.

But Japan is also in the midst of an economic rebalance towards Southeast Asia. This rebalance is sharper, and has some key differences to Abe's security shift. First, Prime Minister Abe is a minor figure; second, Japan's domestic situation is the primary driver, not a constraint; and third, the economic rebalance could well have a greater and more positive impact on Southeast Asia than the security rebalance.

Japanese investors are moving more money out of the demographically declining Japanese market and putting a larger share in Southeast Asia. But China (and India), despite their larger market sizes, are not the beneficiaries of these outflows. The rising cost of labour in China, not the rising tensions in the East China Sea, explain Japan's economic rebalance away from China. In 2013 alone, the six largest Southeast Asian economies (Indonesia, Malaysia, Thailand,  Vietnam, Singapore and the Philippines) received 2.5 times more FDI inflows from Japan than China received, and 11 times more than India received. Q1 2014 figures show an even sharper differentiation, with Southeast Asia's big six receiving more than four times as much Japanese FDI as China and 20 times more than India.

When it comes to portfolio outflows from Japan, the figures are even starker. According to a 19 May report in the Edge Malaysia newspaper by Bank of America Merrill Lynch researchers (not online), since 2010 there has been a net outflow for Japanese portfolio investment from China and a surge of inflows to Southeast Asia. Southeast Asia now accounts for 7.2% of Japanese overseas equity holdings, up from 4.3% in 2010, while China's share has fallen from 1.3% in 2010 to 0.7% at the end of 2013. Japanese bank lending to Southeast Asia is also growing much faster than Japanese cross-border lending to China.

While America's rebalance to Asia is seeing greater progress on the security side than the economic one, Japan is experiencing the opposite.

Photo courtesy of Wikipedia.


Unity, at least for the group photo. (REUTERS/Soe Zeya Tun.)

History neither repeated nor reversed itself at the ASEAN Summit last weekend when it came to the South China Sea disputes. Three preliminary judgments can be made with an eye for ASEAN's future centrality in relation to this issue.

1. ASEAN and its host state clearly learned from its historic 2012 failure, due to internal divisions over the South China Sea, to issue a joint communique. Even before all the leaders had arrived in Myanmar's capital for the Summit's opening dinner,  ASEAN foreign ministers released a joint statement expressing 'serious concerns over the ongoing developments' in the South China Sea. As Singapore Foreign Affairs Minister Shanmugan noted, not issuing such a statement 'would have further dented ASEAN credibility'.

ASEAN as an institution and Myanmar as a host evaded the worst outcome. In fact, for Myanmar, the intense focus on the South China Sea disputes may even have reduced the Summit media horde's interest in more sensitive domestic issues like the treatment of the Rohingya.

2. The divisions within ASEAN over approaches to the territorial disputes between half of its members (including the three most populous) and China in the South China Sea mean ASEAN is increasingly sidelined when it comes to this core interest for the region. The joint statement places its hope in all parties respecting international law and the glacial negotiations between China and ASEAN on a Code of Conduct. Departing Indonesian President Yudhoyono, attending his last Summit, offered the nascent and amorphous ASEAN Political Security Community as a wider regional dispute-settlement mechanism. Even the largely boilerplate ASEAN statement was achieved only after the foreign ministers' meeting was extended by an hour and it was agreed that no specific country or 'ongoing development' be mentioned.

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For the Vietnamese Government, with large anti-China protests flaring and China's largest offshore oil rig in waters it sees as Vietnamese, this will not be reassuring. Same for the Philippines, which saw the Chinese gain de facto control of Scarborough Shoal after, according to the Philippine interpretation, welching on an American-mediated agreement for both sides to withdraw. For Hanoi and Manila, Chinese 'facts on the ground' are real, and hopes for a Code of Conduct that China will agree to and abide by are not.

If ASEAN had wanted to stay relevant to these concerns, it could have: (a) noted that China's recent actions are not consistent with the 2002 Declaration on Conduct in the South China Sea; (b) given ASEAN's stamp of approval to the Philippine case against China over this maritime dispute in the South China Sea as a way of bringing international law to bear and/or (c) provided public support to the draft Code of Conduct that has circulated within the confines of ASEAN for months. No such proactive steps, which certainly would have triggered a Chinese verbal barrage, were taken.

3. At the same time that President Aquino and Foreign Secretary Del Rosario were not being reassured in Myanmar, they were getting reassurance elsewhere. Philippine and American troops (along with 100 Australian participants this time around) were in the middle of the 30th annual Balikatan ('shoulder-to-shoulder') exercises, practicing the amphibious defence and recapture of remote offshore islands. Furthermore, both Japan and the US have officially singled out the danger of Chinese actions in the South China Sea, noting that they are part of a consistent and destabilising set of actions by China in its maritime disputes in East Asia more widely, and have repeatedly endorsed the Philippines' decision to take its dispute with China to an international legal tribunal. Reassurance sought and gained.

ASEAN was created to help individual Southeast Asian states manage relations with major extra-regional powers and to reduce the influence of major powers in Southeast Asia through united action. The 2002 Declaration on Conduct in the South China Sea has been held up as an exemplar of this approach. But since these heady days, ASEAN has been increasingly unable to live up to dual purpose when it comes to the South China Sea. The ASEAN Summit in Myanmar did nothing to alter this trend.