(October 01-15, 2016)
China and Taiwan
RMB Joins the Special Drawing Rights (SDR) Basket
On 1 October 2016, marking the 67th anniversary of the founding of the People’s Republic of China, the Chinese currency renminbi (RMB) joined the IMF’s SDR. It is for the first time in the history of IMF that a currency is being added to the SDR basket and that too of an emerging market. This is a milestone in China’s reform and opening up process. It is a symbolic recognition by the international community of China’s reform process.
It was assessed in November 2015 that RMB met all conditions and operational requirements for being determined as “freely usable”. After a period of transition it was finally included this year. IMF’s recognition that the RMB is freely useable reflects China’s expanding role in global trade. With this inclusion, RMB became the fifth currency in the IMF SDR basket. The weight of RMB was decided as 10.92 per cent. The weight of other four currency are; the US dollar as 41.73 per cent, the Euro 30.93 per cent, the Japanese Yen 8.33 per cent and Pound Sterling 8.09.
Party Strengthening Control over the State-owned Enterprises (SOEs)
President Xi Jinping has emphasized the Communist Party of China's (CPC) unswerving leadership of SOEs, during a national meeting on building the role of the Party within SOEs. He has urged to strengthen and improve Party leadership, as well as to build the role of the Party in SOE’s to make them the most trustworthy and reliable forces of the CPC and the state. President Xi announced that the Chinese Communist Party had the ultimate say over state companies. “Party leadership and building the role of the Party are the root and soul for state-owned enterprise.” Clearly, this indicates that president Xi Jinping who is also the party’s general secretary is unwilling to relinquish too much control over China’s state companies. It also shows that change must not run counter to the ideological aims of the Party. Overall, since 2003, the number of central government SOE’s has dropped to 103 from 189.
7th Xiangshan Forum (10-12 October 2016)
The 7th Xiangshan Forum organised by Chinese Defence Ministry, Academy of Military Science and Institute of Strategic Studies was held in Beijing on 10-12 October 2015. It is a high level platform which has acquired International profile. The regional security forum had been held every two years since 2006 to 2014, after that it is being held annually. The year 2016 marks the 10th anniversary of the founding of the Xiangshan Forum and it was upgraded from track 2 to track 1.5 event. This year’s forum was attended by more than 400 representatives from 59 countries and five international organisations. The theme of the forum was “building and developing a new type of international relations through security dialogue and cooperation”. Admiral Sun Jianguo, Deputy PLA chief of staff, delivered the key note address.
Range of issues discussed were pertaining to new security challenges in the Asia-Pacific, role of militaries, Maritime security and terrorism. According to People’s Daily, on the Maritime Dispute, it was agreed that it should be handled by directly involved parties through consultations and negotiations in line with UN Charter and the international law and with respect to historical facts.
Xi Jinping’s Visit to Cambodia and Bangladesh
Chinese President Xi Jinping, visited Cambodia from 13-14 October, 2016. This is his first visit to Cambodia as the President of China. Both the countries enjoy a “comprehensive strategic cooperative partnership.” Though, China and Cambodia are not neighbours, but President Xi Jinping has hailed the bilateral relations as “good neighbours and true friends who treat each other with all sincerity.” According to China’s Ministry of Commerce, the two way trade between China and Cambodia was USD 4.43 billion in 2015, an annual growth of 17.95 per cent.
In the course of his visit, President Xi met with Cambodian King Norodom Sihamoni and Prime Minister Hun Sun. During the visit, 31 agreements, including soft loan deals of around USD 237 million, were signed. He also cancelled around USD 89 million in debt and pledged another USD 14 million in military aid to Cambodia. He also agreed to help modernise Cambodia’s military. Further, he assured investment in high-speed rail in Cambodia and an airport in Siem Reap province, as well as providing an additional 500 scholarships. Both the sides agreed to accelerate the alignment of China’s Belt and Road initiative and the 13th Five year Plan with Cambodia’s Rectangular Strategy and Industrial Development Policy 2015-2025, while working to raise bilateral trade volume to USD 5 billion in 2017.
In the second leg of his visit, Xi Jinping visited Bangladesh. This is considered to be a “milestone” in the Sino-Bangladesh relations as a visit of such high level took places after 30 years. The last one was in 1986, by President Li Xiannian. China inked 27 deals with Bangladesh worth USD 24.45 billion in soft loan for various key development projects. China and Bangladesh signed 27 agreements and Memorandum of Understandings (MOUs). Besides this Chinese state-owned and private entities also signed 13 agreements mostly with Bangladeshi private enterprise. Amongst these MOU’s, the important ones area cooperation agreement on increasing investment and production capacity building, an economic and technical cooperation agreement for USD 80.3 million grant, USD 700 million loan agreement for Karnaphuli tunnel construction, USD 280 million credit agreement for Dashekandi Sewerage Treatment Plant project. MOU’s havealso been signed, under China’s “One Belt, One Road” initiative wherein Bangladesh agreed to provide support to the Bangladesh, China, India and Myanmar (BCIM) economic corridor. Further, a joint feasibility study on a free-trade area between China and Bangladesh, new Information and Communication Technologies (ICT) framework, counter-terrorism collaboration, capacity building and sharing of information, tackling climate change risks, regional and international cooperation, and cooperation on power and energy sectors were also signed. Besides these, two framework agreements for constructing Karnaphuli tunnel and Dasherkandi plant were signed.
The six projects whose plaques were unveiled by President Xi Jinping and Prime Minister Sheikh Hasina include the Karnaphuli Multi-Lane Tunnel project in Chittagong, the Confucius Institute at Dhaka University and the Tier-4 National Data Centre in Gazipur’s Kaliakoir, Shahjalal Fertiliser Company Limited in Fenchuganj, a 1320 megawatt thermal power plant in Patuakhali’s Payra and a 1320 MW coal-fired power plant in Chittagong’s Banshkhali.
In 2015, the two way trade between China and Bangladesh was USD 14.7 billion. So far, trade between both the countries is skewed and is in favour of China. Bangladesh is exporting goods worth USD 808 million to China while it is importing USD 9.64 billion. During the visit both sides decided to upgrade the bilateral ties from “closer comprehensive partnership” to a “strategic partnership of cooperation”. After the visit, Chinese President visited India to attend the BRICS summit in Goa (15-16 October 2016). China is particularly interested in Bangladesh for its interest in the Indian Ocean Region and the successful implementation of One Belt One Road initiative. For Bangladesh, such kind of deals send positive message to the rest of the world about the overall situation in Bangladesh and project the country as potential destination.
Joshua Wong sent back to Hong Kong
The student activist from Hong Kong, Joshua Wong, was not allowed to enter Bangkok. On his arrival at the Suvarnabhumi Airport his passport was confiscated and was surrounded by twenty policemen. He was detained for 12 hours and sent back. He was invited by the Chulongkorn University and Thammasat to speak at an event on 6 October 2016, the anniversary of a bloody 1976 crackdown on student protest in Bangkok by Thai military, police and paramilitary forces. To commemorate this incidence, he was supposed to speak about lessons from Hong Kong’s 2014 “Umbrella Movement” protest. He was barred from making phone calls to either Thai human rights lawyers or his family. The reason for this detention is not clear; the Thai military said that they were instructed by Chinese authorities to do so but on the contrary the spokesman from Thailand ruling military junta, denied any request from China. This is not the first time that he has been barred from an Asian country. Earlier, he was denied entry in May 2015 to Malaysia on the pretext that they do not want to jeopardise their ties with China. Amnesty International has reacted sharply to this entire development.
Tsai Ing-wen interview to the Washington Post and the Cross-strait relations
On 4 October 2016, Tsai Ing-wen has given an interview to the Washington Post that has once again made the cross-strait relations heated. The interview came after Taiwan was not allowed to participate at meetings of international organisations including the ICAO assembly in Montreal last week. After assuming power, President Tsai has maintained ambiguity over ‘1992 Consensus’. It was only during her present interview that she “officially refused to accept the ‘1992 Consensus.’” She hoped that China should not misinterpret or misjudge the current situation, or think that it can make Taiwanese bow to pressure. On the issue of economic dependence, she said the economies “compete more than complement each other”. With reference to US-Taiwan ties she expected the relations to remain firm irrespective of the government that comes to power next month. In her interview, she was quite firm that Taiwan will never succumb to China’s pressure and urged the Chinese government to hold talks.
China has responded to this interview, by reiterating the “one China” principle. The Chinese mainland and Taiwan belong to the same China. They opposed any Taiwan independence activities and adhered to the ‘1992 Consensus’.
Japan and Russia Strengthening Relationship
The Vice Foreign Ministers of Russia and Japan held important talks in Moscow on 14 October to lay the groundwork for a bilateral summit meeting scheduled in December 2016 between Prime Minister Abe and President Putin. It will be Putin's first visit to Japan since Abe took office in December 2012, although Abe has been to Russia several times. The longstanding territorial dispute over the four Russian-held northern territories off Hokkaido topped the agenda for the summit meeting. The two countries are yet to conclude a peace treaty after the last world war because of the dispute. It is also reported that the ministers discussed North Korea’s nuclear and missile development program, the civil war in Syria and state of affairs in Ukraine.
In a departure from the customary lethargy of Japan’s diplomacy towards Russia, Japan is taking initiatives for economic cooperation and elevation of bilateral relations with Russia hoping progress in resolving the islands dispute. The economic cooperation covers Japan’s investments in infrastructure construction, energy development, improvement of Far Eastern ports and construction of a petrochemical plant in Russia. However, skeptics question whether economic cooperation would prompt a breakthrough since Putin has declared that there will be no trading of any territory for economic cooperation. By improving bilateral ties with Russia, Japan also hopes to limit the growing understanding between Russia and China on the South China Sea and East China Sea. A growing relationship with Japan also benefits Russia that is trying to have a say in world affairs.
ASEAN
Myanmar
Myanmar GDP Grows at 7.8%
The World Bank in its projections for 2016-18 has forecast growth in Myanmar to hit 7.8 percent for the fiscal year, with inflation easing to 8.5 percent. However, this positive outlook has been met with skepticism by business leaders in Rangoon, who have cited the impact of flooding in recent months, lower than expected foreign investment under the new government since April, the current rapid depreciation of the Burmese kyat, stubbornly high inflation and weak global demand.
Myanmar Ethnic Leaders meet visiting US Military Leader
Leaders of ethnic armed groups, including those from the United Nationalities Federal Council (UNFC), met with a US delegation at the American Embassy in Rangoon on October 4. Lt-Gen Anthony G Crutchfield, Deputy Commander of the US Pacific Command and representatives from ethnic armed groups including those in the UNFC met for exchange of views. The nature and content of the discussions was not revealed. The US Embassy in Rangoon said that they held a meeting with senior government and military officials in Naypyidaw to “discuss how civilian control of the military functions in the United States.” It is also reported that the US delegation also allegedly said at the meeting that if ethnic armed leaders signed the NCA, then peace talks might be easier.
PLA Navy Shows its Flag in Yangon Port
Chinese naval vessels Xiangtan and Zhoushan of the 23rd Escort Task Group called at the Myanmar International Terminals Thilawa (MITT) in Yangon's Thanlyin township in first week of October following the completion of its escort mission in the Gulf of Aden. The objectives of the visit have been stated as implementing the important consensus reached by military leaders of both sides, that is to strengthen strategic communication, promote practical cooperation and enrich the China-Myanmar comprehensive strategic cooperative partnership, according to the news agency. The visit also aims to enhance exchange and cooperation and increase mutual understanding and traditional friendly ties between navies of the two countries.
President Obama Lifts Sanctions on Myanmar
President Barack Obama formally announced the lifting of US sanctions on Myanmar on October 7 terminating an emergency order that deemed the policies of the former military government a threat to US national security. A US Treasury statement said that as a result of the termination of the emergency order the economic and financial sanctions administered by the Department of the Treasury’s Office of Foreign Assets Control were no longer in effect.
Thailand
King Bhumibol’s Death and ambiguity in the politics of Thailand
The world’s longest reigning monarch, King Bhumibol Adulyadej passed away on October 13th, 2016. The death of the 88 year old king who was seen as a stabilizing force in Thailand which is known for political upheavals. Thailand's government has named 96 year old former Prime Minister Prem Tinsulanonda as regent, who came from the powerful ranks of the military and became Prime Minister in 1980. He will act as caretaker of the monarchy while the country mourns the death of King. Prem Tinsulanonda was at the helm of affairs for eight years and led the country through economic problems and a series of military challenges including two coup attempts. However, he is accused of instigating the coup that removed the populist leader in 2006.
The junta, which seized power in a 2014 coup, has laid out a 'roadmap' for a return to democracy under a constitution that was endorsed by a referendum in August, with an election that would be held late next year. It is speculated that due to the death of King and one year of mourning for the King, would push elections into 2018. The civil unrest and a decade full of turmoil have stunted the growth of the Thailand’s economy. Though at present the economy looks stable but for next couple of months investors will monitor the political stability of Thailand and will avoid taking risks till the King’s successor, Crown Prince Vajiralongkorn, shows himself to be a stable leader.
US Commitment to ASEAN
On September 30th, Ashton Carter discussed regional security issues in regional security with South East Asian Defence Ministers in Hawaii, United States. In the regional security summit with Southeast Asian nations, the Defence Secretary Carter reassured his counterparts about the ongoing commitment of the US to its Asia "rebalance" and affirmed that it would continue into the next US administration.The rebalance - or "pivot," as it is sometimes called - has been a cornerstone of President Barack Obama's foreign policy, with a shifting of focus away from the Middle East and toward the Asia-Pacific region. He further assured to the ASEAN Defence Ministers that, the US would reaffirm its commitment to strengthen cooperation on the shared security challenges in the region, including the return of hundreds of Islamic militants from Iraq and Syria. Chinese assertive presence in the strategically vital waterway, turning small maritime features, islets and reefs into much larger islands capable of holding military facilities. While sharing the details about this discussion on October 1st, Carter clarified US commitment to operate in waters and airspace surrounding the islands ignore China’s contentious claims in South China Sea. During the informal summit another prominent topic was deliberated was of the rise of Islamic State-affiliated groups, especially in Indonesia, Singapore, Malaysia and the Philippines, as well as the return from Iraq and Syria of war-hardened jihadists. Singapore Defense Minister Ng Eng Hen highlighted it as a "core concern" among ASEAN members, and warned that IS and affiliated jihadists had grown better organized and networked over the past year or so. This highlights the US confidence to retain its ASIA focus despite the result of the US presidential elections scheduled in November this year.
India-Singapore
Singapore Prime Minister concluded his five day tour from October 3rd to October 07th, 2016. PM Lee and PM Modi witnessed exchange of an MOU on cooperation in industrial property between the Department of Industrial Policy and Promotion, and Singapore’s Intellectual Property Office. India and Singapore on October 04th, 2016 decided to strengthen cooperation in countering threats of rising terrorism. Modi, who held comprehensive talks with Singapore Prime Minister on ways to enhance cooperation in key sectors including trade and investment, endorsed by saying that, “defence and security cooperation is a key pillar of strategic partnership between India and Singapore”. Besides security cooperation, two more MoUs were signed on cooperation on establishment of a North East Skills Centre in Assam.
Philippines, Malaysia, Indonesia Agree on Joint Patrol
On the sidelines of the ASEAN-US Dialogue in Hawaii on October 05th, the Defence ministers of the Philippines, Indonesia and Malaysia agreed to conduct coordinated maritime patrols as part of a broader plan to tackle rising security challenges in the waters bordering the three countries. At a trilateral “2 + 2” meeting of their foreign ministers and military chiefs held in the central Java town of Yogyakarta, the Southeast Asian states agreed to conduct joint patrols in their surrounding waters. The group of defence ministers also agreed to set up crisis centers within their countries as well as a hotline between them to ensure speedy communication during maritime emergencies. In September, the three countries signed a document on the standard operating procedures for trilateral maritime cooperation to secure the regional waters.
The move to strengthen air surveillance came after a crisis situation developed in these three countries due to series of kidnapping since the past month or so involving 14 Indonesian and four Malaysian sailors. The abductions are believed to have been carried out by gunmen linked to the Abu Sayyaf Group. From the abducted citizens, ten Indonesians were released earlier in second week of October following close communication between the three countries, while the rest still remain in captivity. The Sulu Archipelago, where the kidnappings occurred, forms the northern limit of the Celebes Sea and the southern limit of the Sulu Sea. The area is in the southern part of the Philippines, while Indonesia and Malaysia both share a land border on Borneo, which lies southwest of the Sulu Sea. In 2015, more than 100,000 ships crossed the waters of the Sulu Archipelago carrying 55 million metric tons of cargo and more than 18 million passengers.
Philippines, US Hold War Games
On October 04th 1100 American and 400 Filipino military personnel began joint combat exercises under certain uncertainty in waters close to flashpoint areas of the South China Sea. The drills were aimed at are aimed at improving readiness by the two countries to respond to a range of crises while deepening their historic ties.The drills began in the backdrop of Philippines President Duterte’s recent indications that these war games will be the last of his six-year term. The Philippines’ previous President, Benigno Aquino, sought to draw the United States closer and signed an ‘Enhanced Defence Cooperation Agreement’ (EDCA) with the United States in 2014. The agreement grants Washington increased military presence through rotation of ships and aircraft for humanitarian and maritime security operations. However, Duterte has said that agreement will be reviewed and he insists that the Philippines, the third-largest Asian recipient of American military aid after Pakistan and Afghanistan, can do without assistance. It means no more US troops to counter Chinese expansion in the South China Sea. China in recent years has expanded its physical presence in the strategically vital waterway, turning small maritime features, islets and reefs into much larger islands capable of holding military facilities. It further claimed nearly all of the sea, even waters close to the Philippines and other Southeast Asian nations, and has in recent years built artificial islands in the disputed areas capable of hosting military bases.
