VIF News Digest: ASEAN, Indo-Pacific, East Asia, Japan & China (Vol 1 Issue II)

Nov 1-15, 2017

ASEAN

Indonesia

Terror Financing done Online, finds new Joint Report

According to a new joint study by the country’s National Counter-terrorism Agency, State Intelligence Agency, and Financial Transaction Reports and Analysis Centre (PPATK), which examined the banking transactions involved in terror cases between 2014 and August 2017, since 2015, online donations have been the avenue of choice for Islamic State supporting groups hoping to finance attacks in Indonesia, the world’s most populous Muslim-majority nation. “Terror groups now call for donations through social media (and messaging platforms) such as WhatsApp groups or Twitter,” said Kiagus Ahmad Badarudin, chairman of the PPATK. “Bitcoin and PayPal are also used to move their money.” Most donations over social media were small, ranging from US$100 to US$1,000, but the flow of aid was continuous and tough to track, he said. Terror cells were also receiving contributions from legal businesses such as small-scale merchants and phone credit sellers, Badarudin added. The shift online was, in part, due to a tightening of the net by security services.

Indonesia has clamped down on Islamic extremism in recent months, arresting at least 160 pro-IS militants since the first attack was linked to the group in January last year. At the end of October, police arrested nine suspected terrorists in East and Central Java, South Sulawesi, and Riau. In East Java, authorities arrested a man with ties to Bahrun Naim, an Indonesian militant in Syria who masterminded the 2016 Jakarta attacks that killed eight people. The man had been communicating with Naim through the messaging app Telegram. While the Indonesian central bank has ruled against the use of crypto-currencies as means of payment, this hasn’t stopped tech-savvy users from exchanging virtual currencies such as bitcoin through local platforms. According to bitcoin trading tracker Cryptocompare, Indonesian trading of bitcoin to rupiah has surpassed 29 billion rupiah, or 335 bitcoins, per day. However, Oscar Darmawan, chief executive of bitcoin exchange platform Bitcoin Indonesia, defended the crypto-currency, saying that while “one or two terrorists might have tried bitcoin”; all transactions were traceable “including the illegal ones”.

Cambodia

Opposition Party Dissolved

On November 16, Cambodia’s Supreme Court ordered the dissolution of the country’s main opposition party. In the ruling, the Court banned more than 100 members of the Cambodia National Rescue Party (CNRP) from politics for five years for conspiring with foreigners to stage a revolution, effectively paving the way for longtime Prime Minister Hun Sen's governing Cambodian People's Party (CPP) to run unopposed in next year's national elections. In September, authorities had arrested the CNRP leader, Kem Sokha, and charged him with treason over what they said was a plot to take power with US help. Washington has rejected Cambodia’s allegations of American involvement in plotting to oust the government as baseless. The European Union too warned that next year’s elections are stripped of credibility with the CNRP now pulled out from the race. The CNRP stated it “still considers itself to be a legitimate party with a mandate from half of the Cambodian population”, though more than half its 55 lawmakers have fled the country in the middle of the crackdown.

Hun Sen said next year’s elections would go ahead as scheduled. In addition to banning the CNRP, his government has in recent months shut down a series of outspoken organizations and independent news outlets – including The Cambodia Daily. Two former reporters from the US-based Radio Free Asia were also arrested on November 7 and accused of supplying a foreign state with information that threatens national security. In April earlier this year, the US embassy announced a US$1.8 million grant to assist local elections this year and next year’s general election. The pro-government Fresh News website reported that Hun Sen said in a speech to garment workers that he welcomed the US aid cut and urged it to cut out all. “Samdech Techo Hun Sen confirmed that cutting US aid won’t kill the government but will only kill a group of people who serve American policies,” Fresh News reported, using Hun Sen’s official title.

Myanmar

US Secretary Rex Tillerson’s Visit

US Secretary of State Rex Tillerson met the Myanmar military’s chief Senior General Min Aung Hlaing in mid-November and stressed the need will stress the need to halt violence and stabilize the Rakhine State. About a half million Rohingya Muslims have fled to Bangladesh since late August, driven out by a counter-insurgency clearance operations of Myanmar forces in Rakhine. Tillerson also met Myanmar leader Daw Aung San Suu Kyi and discussed ways to stabilize areas in northern Rakhine so that people can return there, stopping the violence, making sure that the military would protect all populations in that area equally and that they conduct a credible investigation that leads to accountability for people who have perpetrated abuses.

Aung San Suu Kyi: Combatting Corruption

Meanwhile during a speech at the ASEAN Business and Investment Summit, State Counselor Daw Aung San Suu Kyi emphasized combating corruption and the development of human capital as keys to achieving sustainable economic growth in Myanmar, while also stressing the important role of women in the economic sphere.

During her keynote speech at the meeting in Manila on Nov 12, the State Counsellor told the delegates that “we depend for economic development on the enhancement of integrity … a better way of saying getting rid of corruption.” However, in the early months of the Daw Aung San Suu Kyi-led civilian government, some business sources had made a similar point, but they also noted the lack of direction from the new administration as detailed economic policies weren’t announced until October 2016, seven months after it took office.

Koreas

Despite North Korean Provocations, South Korean Markets at All Time High

Amid continuing threats from Pyongyang, the Korea Composite Stock Price Index, KOSPI hit a record high of 2,557.97 on November 3, up nearly 200 points from the end of September. The rallies were powered by foreign investors who posted net buying of over won 3 trillion in October when tension on the peninsula reached its peak following the North's sixth nuclear test. Market analysts said investors are betting on Korean stocks on the belief there will be no military conflict despite the bombastic rhetoric both from the United States and North Korea. "In my view the Korean market performance reflects no war," Mikio Kumada, executive director of Global Strategist at LGT Capital Partners in Hong Kong, told The Korea Times. "Instead (there is) an expectation of improved international cooperation with all stakeholders. That is reflected in the fact that all regional markets are outperforming." He also said Korean markets are being buoyed by an improving economic situation due to the revival of global trade and increased domestic political stability with the Moon Jae-in presidency.

According to a recent report by the S. Rajaratnam School of International Studies (RSIS) at the Nanyang Technological University in Singapore, market bullishness is not isolated to South Korean stocks but is a common phenomenon for East Asia's equities. The report, co-written by Kumada and Michael Raska, professor at the Institute of Defense and Strategic Studies, a unit of the RSIS, said the pronounced strength of the Far Eastern indices may imply a benign geo-political outcome on the Korean peninsula is in the making. "As a crowd, investors seem to have a clear vision. The current security developments on the Korean Peninsula are not leading toward a destructive war, but a pragmatic recognition of North Korea's nuclear status." From this viewpoint, they think North Korea's current crisis escalation may paradoxically signal a willingness to engage in a process that points toward some form of a negotiated settlement, enabling a breakout from the current geopolitical deadlock.

Mending of Fences between China and South Korea

South Korean President Moon Jae-in and Chinese President Xi Jinping agreed to “normalize exchanges and cooperation in all areas” during their summit on November 11 at Da Nang during their second summit on the sidelines of the Asia-Pacific Economic Cooperation (APEC) leaders’ meeting in Vietnam. The two leaders expressed the need to manage the security situation on the Korean Peninsula and the North Korean nuclear issue to ultimately be resolved through dialogue. At the end of last month, the two countries put bilateral ties back on track after a yearlong stand-off over the deployment of the US-led Terminal High Altitude Area Defense (THAAD) battery in Korea. On the THAAD issue, Xi emphasized that the October 31 agreement between the two countries marked a “new start and a good beginning.” Last month, the two countries’ foreign ministry officials agreed to return to “a normal development track,” mending relations that have been frayed since the decision by Seoul and Washington in July 2016 to deploy a THAAD battery in Korea to defend against North Korea.

The Korean government also assuaged Beijing’s security concerns with the so-called “three no’s,” meaning no additional THAAD deployments, no joining of a broader US missile defense system and no Korea-US-Japan military alliance. The Blue House (residence of head of state) initially said the THAAD issue was not going to be raised during the summit, but Xi brought it up. The Blue House statement on the results of the meeting did not go into detail regarding THAAD, but a Blue House official told the Joong Ang Ilbo, when asked whether Moon addressed Korean companies in China being affected by economic retaliation over THAAD, “There was confirmation that the economy has to be improved comprehensively and quickly, and I believe that was included in this.” Moon also agreed to make his first visit to China next month.

Japan

Trump’s Visit to Japan

US President Donald Trump visited Japan from November 5 to 7on his first stop of his maiden tour to Asia. The two leaders reconfirmed the ironclad US commitment to Japan’s defense through the full range of US military capabilities, both nuclear and conventional. Trump and Abe welcomed deepened coordination among US, Japan and South Korea. Both leaders reaffirmed that the full implementation of the relevant UN Security Council resolutions on North Korea is imperative and confirmed that they intend to encourage affected countries, including China and Russia, and through direct engagement with their counterparts, so that the international community as a whole maximizes pressure on North Korea.

The two leaders notably stressed the importance of the Indo-Pacific region and a free and open maritime order based on the rule of law, calling on all states to respect freedom of navigation and overflight and other internationally lawful uses of the seas. In addition, both leaders affirmed that Japan and the United States will work together to promote peace and prosperity in the region by developing the Indo-Pacific as a free and open region. They directed relevant ministers and institutions to flesh out detailed cooperation, in particular, in the following areas:-

• Promotion and establishment of fundamental values (rule of law, freedom of navigation, etc.);
• Pursuit of economic prosperity (improvement of connectivity, etc.); and
• Commitment for peace and stability (capacity building on maritime law enforcement, etc.)

Both leaders reiterated that they will cooperate with any country that shares this vision of a free and open Indo-Pacific. The two leaders also expressed concern about the situation in the East and South China Seas and reaffirmed their opposition to unilateral coercive actions that could alter the status quo and increase tensions. However, they also welcomed China’s positive contribution to regional and global peace and prosperity. Trump reaffirmed US’ support for Japan’s permanent membership on a reformed UN Security Council. Abe also said that Japan would buy Lockheed Martin's F-35A fighter jets.

‘Fresh Start’ to China- Japan Relations

On November 11, Chinese President Xi Jinping and Japanese Prime Minister Shinzo Abe met on the fringes of the Asia Pacific Economic Cooperation (APEC) summit in Da Nang, Vietnam. During the press conference, Abe remarked that “at the end of the meeting, President Xi said this is a meeting that marks a fresh start in relations between Japan and China. I completely feel the same way.” In Manila, two days later, Abe went one step further and claimed relations between Tokyo and Beijing had improved to the point the two leaders might visit each other’s capitals as soon as next year. With 2018 being a landmark year for China-Japan relations as the 45th anniversary of the normalization of diplomatic relations between Japan and China and 40th anniversary of the conclusion of the Treaty of Peace and Friendship between Japan and China, there are possibilities of an array of mutual visits by the two countries’ leaders, such as Li Keqiang’ visit to Japan for the Japan-China-Republic of Korea Trilateral Summit Meeting, Abe’s visit to China, and Xi’s visit to Japan, as well as the early visit to China by Taro Kono, Minister for Foreign Affairs.

The two sides shared the view that they will together discuss how Japan and China will contribute to the stability and prosperity of the region and the world, including the “the Belt and Road” Initiatives. However, Prime Minister Abe stated that there will be no genuine improvement in Japan-China relations without stability in the East China Sea, and the two leaders shared the view that they will continue to communicate in order to make the East China Sea a “Sea of Peace, Cooperation, and Friendship.” The two leaders once again shared the view that they will accelerate discussions between defense authorities in order to begin operating a maritime and aerial communication mechanism promptly. The two sides also held an extremely in-depth exchange of views on the recent North Korea situation and confirmed that the denuclearization of the Korean Peninsula is a shared goal.

Modi-Abe Meeting

On November 14, Prime Ministers Shinzo Abe and Narendra Modi held a summit in the margins of the ASEAN-related Summit Meetings in Manila Based on the outcomes of Prime Minister Abe’s visit to India in September, the two leaders had a candid exchange of views on a variety of issues, including high-speed rail, US-2 amphibian aircraft, connectivity, people-to-people exchanges, and regional affairs. Abe expressed his hope to further concretize two countries’ initiatives to strengthen connectivity, including through the development of quality infrastructure and stated that Japan will continue to cooperate towards the opening of the high-speed rail. He also expressed his hope that prompt and concrete progress will be made concerning cooperation on the US-2 amphibian aircraft. The two leaders also confirmed that Japan and India will work closely together on the issue of North Korea’s nuclear and missile development. Japan will also ease visa requirements for Indian citizens from January 1, 2018, with a view to further expanding people-to-people exchanges.

Indo-Pacific Consultations between Japan, India, US and Australia

Senior officials of diplomatic authorities in Japan, Australia, India and the United States had also met earlier on November 12, and discussed measures to ensure a free and open international order based on the rule of law in the Indo-Pacific. From this perspective, the participants discussed the direction for cooperation, including with countries in the region, in upholding the rules-based order and respect for international law in the Indo-Pacific, tackling proliferation threats, including North Korea’s nuclear and missile issues, against which maximized pressure needs to be applied, ensuring freedom of navigation and maritime security in the Indo-Pacific region, countering terrorism and other issues. The participants affirmed their commitment to continuing discussions and deepening cooperation based on shared values and principles.

China and Taiwan

China Once Again Blocks Listing Masood Azhar as Global Terrorist

On 2 November 2017, China once again blocked the United Nations Security Council Resolution by the US, France, and Britain to list Masood Azhar, chief of Pakistan-based Jaish-e-Mohammed (JeM) militant group, as a “global terrorist”. The JeM, founded by Azhar, has already been in the UN’s list of banned terror outfits. China blocked the move citing “no consensus” as a ground for its objection. Chinese Foreign Ministry spokesperson Hua Chunying said, "We raised a technical hold so as to allow more time for the committee and its members to deliberate on this matter. But there is still absence of consensus on this matter."

India has expressed disappointment on the development. The Ministry of External Affairs Spokesperson, Raveesh Kumar said, “We are deeply disappointed that once again, a single country has blocked international consensus on the designation of an acknowledged terrorist and leader of the UN-designated terrorist organization, Masood Azhar”. India’s strong response did not name China but hinted at “one country” that had hurt the global campaign to ban the terror mastermind.

In August, China extended by three months its technical hold on the proposal backed by US, France, and Britain to name Azhar a global terrorist after blocking the move in February. In 2016 March, China was the only country in the United Nation Security Council to put a hold on India’s application. The other 14 members supported New Delhi’s bid to place Azhar on the sanctions list that would subject him to an assets freeze and travel ban. This is the second year China has blocked the resolution. Essentially, there has been no change in China’s attitude towards the issue. It indicates China’s aim to ensure that the application to designate Masood Azhar terrorist lapses.

Narendra Modi and Li Keqiang ‘Pull-Aside’ Meeting

Prime Minister Narendra Modi and Chinese Premier Li Keqiang had a pull-aside on the sidelines of the East Asia Summit in Manila. The spokesperson of the Ministry of External Affairs of India Raveesh Kumar tweeted, “Two neighbours in deep conversation. PM @narendramodi with Chinese Premier Li Keqiang on the margins of #EastAsiaSummit Summit in #Manila.” Chinese Foreign Ministry Spokesperson Geng Shuang said: “it only came naturally that leaders of two countries met and greeted each other on multilateral occasions.”

It was a brief interaction between the two leaders and the first one post-Doklam. There was no readout of the meeting because none of the officials were present at the meeting.

Donald Trump’s Visit to China

In the third leg of his Asia trip, Donald Trump visited China from 8-9 November 2017. This was the third direct meeting between the two leaders after the Mar-a-Lago and the G-20 summit. China gave a red carpet welcome to Donald Trump. The visit was called a “state visit-plus”, a term which has not been used for any visit until now. Xi Jinping hosted a dinner for Donald Trump in the Forbidden City. Many issues related to the bilateral relations were discussed of which the widening trade deficit and North Korea were on the priority.

On the issue of North Korea, the two leaders agreed to fully implement all United Nation Security Council resolution on the North Korea. However, they were divided over the course of action. Trump called on to “increase economic pressure until North Korea abandons its reckless and dangerous path”, while China insists that dialogue and negotiations are needed to resolve the crisis. The USD 347 billion trade deficit issue was also discussed but for a change, Trump tried to strike a moderate tone, he did not blame China for the trade deficit. Instead, he blamed the previous US administration for the problem. Xi Jinping also discussed the issue on trade and lessen restriction on investment. A major outcome of the meeting was signing of the USD 253 billion trade deals.

Both sides agreed to have a dialogue between the two militaries at various levels at an earlier date. Xi Jinping said China would soon invite the US Defence Secretary James Mattis to visit China and would arrange for a Chinese military delegation to visit the US. Regional issues such as the Middle East and Afghanistan were also discussed. Xi Jinping said that the bilateral relationship between the two countries is at a “new historic stating point”, but added that efforts should be taken to properly manage the differences between the two nations. Further, in the joint conference, Xi Jinping said, that the Pacific Ocean is big enough to accommodate both China and the US. Overall, the visit was high on symbolism and rhetoric and less on substance.

Xi Jinping’s Participation in the 25th Asia-Pacific Economic Cooperation (APEC) Economic Leaders Meeting and His State Visit to Vietnam and Laos

At the APEC Economic leaders meeting, Xi Jinping stressed on the need for innovation, the opening of the economies, inclusive development to enhance people’s sense of fulfillment and to enrich partnerships and deliver benefits to all involved. In his keynote address, he defended globalisation, free trade, and multilateral organisation. He advocated for cooperation and integration in the Asia-Pacific region. He said, “China will not slow its steps in opening up itself.” He presented the Belt and Road Initiative, as an open mechanism that would help advance regional connectivity. He also assured that “all businesses registered in China will be treated as equals,” and that China will “grant more powers to pilot free trade zones to conduct reform, and explore the opening of free trade ports.”

Essentially, his speech was the reiteration of the promises made at Davos in January. It was a declaration of what China would do in coming years. However, it remains to be seen if they actually follow the open and inclusive economic order. After the APEC Economic Leader meeting, he made a state visit to Vietnam and Laos.

During his visit to Vietnam, both the countries signed documents to boost cooperation in the economy, investment, finance and cultural exchanges. Xi Jinping also inaugurated the Vietnam-China Friendship Palace in Hanoi. The Vietnam-China Friendship Palace, located in Hanoi’s development zone, was built with non-refundable aid from the Chinese government. Both the countries agreed to properly handle maritime issues in accordance with the consensus reached by the leaders of the two countries, push forward cooperation including joint exploitation of resources, and be dedicated to maintaining the peace and stability of the South China Sea.

Ahead of his visit to Laos, Xi published an article in Laos’s newspaper. He described the two countries as “friendly socialist neighbors with shared ideals, the same social systems and similar paths of development.” A series of cooperation in various fields such as building the China-Laos economic corridor, digital Silk Road, electricity, science, and technology, were inked. The construction of China-Laos railway is a flagship project between the two countries. On the maritime issue, China and Laos called for relevant parties to reach agreement on a code of conduct in the South China Sea at an early date and jointly build the busy water body into a sea of peace, friendship and cooperation.

Chinese Foreign Minister Wang Yi said that Xi Jinping’s participation at APEC meeting and state visit to Vietnam and Laos chart a new course for major-country diplomacy with Chinese characteristics in the new era. His visit to Vietnam and Laos immediately after the 19th National Congress of the Communist Party of China is an important move in China’s neighbourhood diplomacy and its Belt and Road Initiative.

China Leads the List of World’s Top Supercomputers

According to a biannual ranking of the world's 500 fastest supercomputers, China’s Sunway Taihu Light and Tianhe-2 are the two fastest supercomputers in the rankings, with Switzerland taking third place, Japan fourth and the US fifth. Intel chip-based Tianhe-2 had topped the list for three years until it was displaced in November 2015 by Taihu Light, which was built by entirely using processors designed and made in China.

China has also overtaken the United States in aggregate performance as well. China has 202 supercomputers while the US has 143. Japan is in the third place with 35 system and Germany holds the fourth place with 20. This reflects China’s increased investments in research and development.

Tsai Ing-wen’s Visit to the Pacific Islands

After assuming leadership Tsai Ing-wen took her third oversea visit from 28 October to 4 November 2017. She visited Marshall Islands, Tuvalu and the Solomon Islands. Aside from the stops in the three diplomatic allies, Tsai also made an extended visit to Hawaii at the start of the trip and spent a night in the United State territory Guam on the way back.

During her trip, Tsai Ing-wen signed agreements in the areas of education, healthcare, and agriculture. In Solomon Islands, Taiwan signed pacts on meteorology and law enforcement collaboration. In the Marshall Islands, Taiwan inked two memorandums of understanding (MoU), one on a presidential scholarship program and the other on immigration affairs and anti-human trafficking cooperation. They also signed an agreement between Taipei Medical University Shuang Ho Hospital and the Marshallese Ministry of Health and Human Services to continue a medical internship program as well as establish a hospital information system to enhance the quality of healthcare in the nation. In education, Taiwan continues to provide scholarships for students from its six allies in the Pacific to pursue higher education in Taiwan. As for agriculture, Taiwan continues to provide these island countries with the latest advancements in sustainable agricultural technology, enabling them to make the most of the limited arable land.

Yet another notable aspect of her trip was the stopover at the Hawaii and Guam. China had objected to this stopover visit but the United States called the visit as “private and unofficial”. This was the second stopover visit of Tsai Ing-wen in the US this year. Today, Taiwan has ties only with 20 nations and her Pacific Island trip was to strengthen bilateral ties between Taiwan and each of the respective nations.