Sep 1-15, 2017

ASEAN

Myanmar

PM Narendra Modi visited Myanmar form 05-07 September 2017 after attending the BRICS Summit at Xiamen, China. This visit can be said to have been his first bilateral visit to Myanmar even though he had visited Myanmar in 2014 to attend ASEAN-India Summit where he had met Aung San Suu Kyi on the sidelines of the summit. The visit also came at a time when terror strikes against Myanmar security forces’ posts by Islamic radicals had taken place in Rakhine State during last week of August. PM Modi met both the President Htin Kyaw and held bilateral talks with the Myanmar delegation led by State Counsellor Daw Aung San Suu Kyi. He also visited the holy and historic Ananda Temple, where restoration work is being carried out by Indian and Myanmar archaeologists under the expert guidance of the Archaeological Survey of India.

Both sides leaders reviewed the entire gamut of relations and PM Modi appreciated the measures taken by the Government of Myanmar towards peace and national reconciliation and commended the on-going peace process. He reiterated India’s continued support to the Government of Myanmar in consolidating democratic institutions in Myanmar and for the emergence of a democratic Federal Republic. A review of the security situation prevailing along their borders was undertaken and both sides expressed concern at various incidents of terrorism and extremist-inspired violence that have taken place in their respective territories.

Enhancing defence cooperation was another area which was stressed upon by both sides; recent successful visit of the Commander-in-Chief of the Defence Forces of Myanmar to India was highlighted. Besides institutionalized cooperation through regular coordinated patrolling initiatives, both sides agreed to focus on bilateral maritime cooperation in non-traditional security domains, such as humanitarian assistance and disaster relief, which are critical for safeguarding the Bay of Bengal and the Indian Ocean as global commons. Further, there are a number of connectivity and infrastructure projects which are under implementation with India’s help which are expected to be completed soon.

India also agreed that the situation in Rakhine State had a developmental as well as a security dimension. India has agreed to undertake some developmental projects in Rakhine which would spur socio-economic development.

Rohingya Crisis

Because of the uncertain and unstable situation resulting from strikes by Arakan Rohingya Salvation Army (ARSA), an Islamic radical group, and response by the Myanmar army a large number of Rohingyas have been displaced and many have moved to Bangladesh. On September 9, the MEA issued a statement that India “remains deeply concerned” about the situation in Rakhine and “the outflow of refugees from that region”. The statement also added that "We had earlier condemned the terrorist attacks on Myanmar security forces in Rakhine. The two countries have since affirmed their shared determination to combat terrorism and not allow its justification under any pretext”. India has offered to provide relief material to Bangladesh for the refugees and some has already been delivered. India will also work to oppose Myanmar’s act of pushing into Bangladesh or other countries.

New Singapore President - Without Voting

Singapore was meant to undergo polls to vote for a new President in mid-September, but only one candidate qualified for the race. The announcement on September 12 by Elections Department that only one candidate had qualified marked an underwhelming conclusion to a controversial election carried out under changes to the elected presidency system in Singapore voted through Parliament earlier this year. The amendment stated that an election will be reserved for candidates from a particular racial group if the previous five elections have not produced a president from that racial group. In Singapore, it's dubbed a "hiatus-triggered model." In this election, for the first time, candidates to become Singapore's president could only come from one racial group: Malays. Singapore hasn't had a Malay president since the country's first President Yusof Ishak, who served as head of state from 1965 to 1970. Subsequent presidents have been from the Eurasian, Chinese and Indian communities.

Halimah Yacob, Former Speaker of Parliament, emerged victorious by default after other presidential hopefuls fell short of new rules. "It shows we don't only talk about multi-racialism, but we talk about it in the context of meritocracy or opportunities for everyone, and we actually practice it," Halimah told The Straits Times newspaper, before declaring her intention to contest the election. Singapore's population is 74% Chinese, 13% Malay, 9% Indian and 3.2% are the ambiguously named others.

Thailand Prepares for late King’s Funeral

King Bhumibol Adulyadej was Thailand’s longest reigning monarch, sitting on the throne for over 70 years from June 1946 until his death, aged 88, in October 2016. Most Thais hold the monarchy with a very high degree of reverence. During the year of mourning, extensive preparations had been underway for his funeral, an event that will last five days and has an estimated cost of US$ 90 million. Royal funeral chariots have been restored, an urn has been made to hold the king’s ashes, and a huge temporary crematorium has been constructed in Sanam Luang, the huge square in the center of Bangkok, next to the Grand Palace, that has been the setting for previous funerals. The cremation itself is scheduled for October 26.

China’s Projects in Vietnam Earn Reputation for Poor Quality, Delays

Hanoi's first elevated railway line had its trial run in September cancelled without an alternative being proposed by the builders from China. On September 18, Vietnamese authorities told reporters that further work on the project is not possible until China disburses $250 million in official development assistance (ODA) promised last year. The delayed test run is the latest problem on the controversial project, which has been dogged by accidents, fatalities, and injuries to passers-by. Poor quality materials, faulty installations, and untrained workers have raised safety concerns. During his first official visit to Beijing, Prime Minister Nguyen Xuan Phuc said the slow pace of work and accidents have among other things contributed to congestion in Hanoi, causing public dissatisfaction. There are plans to ask the Chinese embassy to work with the consortium on ameliorating the situation.

The Hanoi metro has been seized upon by critics as a prime example of problematic China-backed projects. Surveys suggest most projects suffer from quality concerns, delays, and cost overruns. These include: the $69 million My Dinh National stadium in Hanoi; the $360 million steel complex expansion in Thai Nguyen province; the $264 million iron and steel mill in Lao Cai Province; a $1.4 billion bauxite-alumina project in the central highland; waste-treatment and energy-related projects; and a number of textile factories. Common to all the projects were low bids and cheaper cost of investment arrangements. According to Pham Chi Lan, a Vietnamese economic analyst, this will turn out to be very expensive in the long run -- costs will continue escalating for low quality results. Mistakes, shoddy work, obsolete machinery, and accidents have become commonplace, causing a general loss of confidence in China-backed projects. Many are being reappraised, including 12 under the Ministry of Industry and Trade.

The Koreas

North Korea’s Sixth Nuclear Test

North Korea conducted its sixth and most powerful nuclear test on September 3, which it said was a successful detonation of an advanced hydrogen bomb, technically known as a two-stage thermonuclear device. All of North Korea’s six nuclear tests have taken place at its underground testing site in Punggye-ri, deep in mountainous terrain, and it is hard to independently verify the claims. But experts who studied the impact of the earthquake caused by the explosion - measured by the US Geological Survey at magnitude 6.3 - said there was enough strong evidence to suggest the reclusive state has either developed a hydrogen bomb or was getting very close. The detonation produced 10 times more power than the fifth nuclear test a year ago, South Korean and Japanese officials said. NORSAR, a Norwegian earthquake monitoring agency, estimated the yield at 120 kilotons, significantly above the 15 kiloton “Little Boy” bomb dropped on Hiroshima and the 20 kiloton “Fat Man” dropped on Nagasaki at the end of World War Two.

Pyongyang is also yet to prove that any warhead it places on a long range-missile can survive re-entry into the earth’s atmosphere after an intercontinental flight. However, analysts mention that developing a hydrogen bomb is important to having a lighter warhead, because that would offer much greater explosive yield relative to size and weight. “Getting this high of a yield would likely require thermonuclear material in the device,” said David Albright, a physicist and founder of the non-profit Institute for Science and International Security in Washington. “It would show that their design, whatever the specific design, has achieved a yield that is capable of destroying modern cities.” Albright, however, still questioned the North’s claim that it was a genuine two-stage thermonuclear device. Other outside experts also mentioned that it could have also been a “boosted” device, meaning an atomic bomb which uses some hydrogen isotopes to create bigger yield.

South Korea: Growing Frustration for President Moon Jae-in

Following a massive nuclear test, North Korea's launched a ballistic missile on September 15 that flew over Japan after a previous one on August 29. President Moon Jae-in condemning North Korea’s provocations mentioned that dialogue with Pyongyang was "impossible in a situation like this", while presiding over a National Security Council session at Cheong Wa Dae. Moon mentioned that North's repeated provocations will make it more difficult for the Kim Jong-un regime to come back to the negotiating table that might inevitably lead to its collapse. The North's missile provocation over Japan came less than a week after the United Nations Security Council (UNSC) adoption of harsher-than-ever sanctions against Pyongyang in response to its sixth nuclear test conducted on September 3. The new sanctions resolution targeted oil supplies to the impoverished state for the first time, capping imports of crude oil at the level of the last 12 months and limiting the imports of refined petroleum products to 2 million barrels a year. US President Donald Trump on September 14 mentioned that he plans to visit Korea, China and Japan later this year. The visit will focus on North Korea's nuclear and ballistic weapon programs, and trade. Trump will also meet with his Chinese counterpart Xi Jinping during the trip.

The Moon Jae-in administration's plan to offer $8 million in humanitarian assistance to North Korea is also producing a frosty reaction at home and abroad due to its timing.
Criticism is mounting over the timing of the announcement, which came only two days after the UNSC adopted a new resolution on sanctions on Pyongyang for its sixth nuclear test on September 3. Cheong Wa Dae claimed the timing was just a coincidence. Lee Eugene, vice spokesman for the Ministry of Unification, said the UNSC's strongest resolution, which would further isolate North Korea's economy, would make children and mothers more vulnerable. The decision will be made on September 21 whether to approve the aid to infants and pregnant women in North Korea. If approved, it would mark the first humanitarian aid in 21 months since the previous Park Geun-hye government sent $800,000 through the United Nations Population Fund, formerly the UN Fund for Population Activities, in December 2015.

Japan

India-Japan Relations take a Significant Leap with 2017 Annual Summit

This year’s annual summit between Prime Minister Modi and Prime Minister Abe took place from September 13-14 in Gujarat. The Joint Statement shows a marked difference from last year with prime highlight given to the Defense and Security Partnership. India and Japan’s concerns regarding their neighborhoods bear blatant similarities of an aggressive China and rogue states such as Pakistan and North Korea; including worries over security of maritime domain. Both India and Japan realize the significance of their role and the potential of their bilateral relations to ensure stability and security in Indo-Pacific region. Thus along with commonality of concerns and priorities, the gradually built trust has now transitioned into a strong defense and security partnership. This year’s joint statement also signals that both countries now confidently back each other’s concerns be it regarding North Korea or Terrorism. In a break from precedent, this year’s joint statement out rightly asks Pakistan to bring to justice the perpetrators of terrorist attacks including those of the November 2008 terrorist attack in Mumbai and the 2016 terrorist attack in Pathankot.

Another important theme that emerged from this year’s summit was the high primacy accorded to connectivity. Be it India’s North East or African continent, the two Prime Ministers underlined the importance of all countries ensuring the development and use of connectivity infrastructure in an open, transparent and non-exclusive manner based on international standards and responsible debt financing practices, while ensuring respect for sovereignty and territorial integrity, the rule of law, and the environment. They also reaffirmed the importance of "quality infrastructure” which, among others ensures alignment with local economic and development strategies, safety, resilience, social and environmental impacts, and job creation as well as capacity building for the local communities. Japan’s committed to provide $17 billion at a nominal rate of 0.1% for 50 years for India’s flagship bullet train or the Mumbai Ahmedabad High Speed Rail (MAHSR) project. MAHSR project’s ground breaking ceremony and laying of foundation stone was done by both leaders with hopes to see its inauguration in 2022, India’s 75th year of Independence.

The Year 2017 is being celebrated as the Year of India-Japan Friendly Exchanges with a number of cultural events being organized in both countries. From language learning and medicine to sustainable ship industry and outer space, the two prime ministers outlined a large agenda for the two countries to jointly work upon, ensuring more integrative India-Japan relations for the future.

Abe Sets Japan on Course for Snap General Elections

As per Japanese media reports, PM Shinzo Abe may be heading towards a snap general election in October to exploit a shambolic opposition and secure power beyond the 2020 Olympic Games. Another general election in Japan is now due in December 2018. Japanese analysts say North Korea's provocative actions including a nuclear test and two missile launches over Japan have fanned the fears of Japanese voters, and Abe could use the crisis to justify his call for an early general election. In a Yomiuri Shimbun survey released earlier this fortnight, half of respondents approved of Abe's efforts to deal with the crisis compared to 37 per cent with the opposite view. "A sense of crisis has arisen among the Japanese people and they believe the country needs a hawkish leader now," said historian Hideaki Kase. The TOPIX stock index rallied 1.8 per cent to a two-year high of 1,667 on the prospect of continued economic stimulus if Abe wins a third election, after victories in 2012 and 2014, to become one of Japan’s most successful prime ministers. Analysts state the ruling Liberal Democratic Party is well-placed to win, but there were risks to calling an early vote that could echo UK Prime Minister Theresa May’s electoral disaster earlier this year. “It’s an election so nobody knows what will happen,” said Masatoshi Honda, a political analyst. “So far, however, it’s looking very low risk for Abe.”

Toshiba to Sell Chip Unit to Bain Group for 2.4 trillion Yen

Struggling electronics giant Toshiba Corp. ended months of speculation about the sale of its lucrative memory chip business with a September 20 decision that a consortium led by US investment fund Bain Capital has won the bidding. Toshiba said it will offload its semiconductor subsidiary to the Bain-led group for 2.4 trillion yen ($21.5 billion). The figure includes the cost of investment in plant and equipment. Toshiba will use the windfall from the sale of its Toshiba Memory subsidiary to wipe out huge losses stemming from its nuclear business by the end of the fiscal year next March. The move will allow the parent company to maintain its listing on the Tokyo Stock Exchange. Toshiba is in danger of being delisted because its debts exceed its assets. The consortium includes Toshiba’s main customer, Apple Inc. of the United States, as well as South Korean chipmaker SK Hynix Inc. Optical equipment maker Hoya Corp. is among Japanese companies considering investing in the subsidiary. Toshiba also intends to invest in the subsidiary to maintain a degree of control on working conditions and other factors. Japanese companies are likely to acquire a majority of the voting rights. Two Japanese government-backed funds, Innovation Network Corp. of Japan (INCJ) and Development Bank of Japan Inc. (DBJ), will initially refrain from joining the consortium. But they will later invest in Toshiba Memory, and that will allow them to be involved in its management.

The Western Digital Corp. of the United States, which jointly produces memory chips with Toshiba at Toshiba Memory's factory in Yokkaichi, Mie Prefecture, has applied to a court of international arbitration to stop the sale to a third party on grounds it violates a contract it has with Toshiba. Depending on the outcome of the ruling, the sale to the Bain-led group could yet be nullified. The INCJ and DBJ will not invest in Toshiba Memory until the dispute between Toshiba and Western Digital is settled.

China & Taiwan

Brazil Russia India China and South Africa (BRICS) 2017

The ninth Brazil Russia India China and South Africa (BRICS) summit was held in Xiamen, the Fujian Province of China from 3-5 September 2017. This was the second time the summit was being held in China (first time it was held in 2011 in Sanya, China.) The theme of this year’s conference was “BRICS: Stronger Partnership for a Brighter Future”. Five countries namely; Thailand, Tajikistan, Mexico, Egypt, and Guinea were invited as BRICS- plus members. The BRICS leaders Xiamen Declaration spread over 43 pages and contained 71 points. The document is divided under four sub-headings namely; BRICS Practical Economic Cooperation, Global Economic Governance, International Peace and Security and People to People Exchanges. The summit is particularly significant as it was held against the backdrop of disengagement of Indian and Chinese troops in the Doklam area. Additionally, a few hours, ahead of the summit, North Korea carried out its sixth nuclear test.

In his speech, during the summit, Prime Minister Narendra Modi, urged for fastening the effort to create BRICS rating agency. He suggested that the central Banks must further strengthen their capabilities and promote co-operation between the Contingency Reserve Arrangement and the International Monetary Fund. He further highlighted the affordability, reliability and sustainable access to renewable energy for the BRICS countries. He stressed on the involvement of youth in joint initiative among the BRICS countries, cooperation between countries on smart cities, urbanisation, and disaster-management and more focused capacity building engagement between BRICS and African countries in areas of skills, health, infrastructure, manufacturing and connectivity. Meanwhile, Xi Jinping in his speech gave an overview of the achievements of BRICS. He said, “We should build on past success, chart the course for future cooperation and embark on a new journey to jointly usher in the second “Golden Decade” of BRICS cooperation.” He stressed on boosting BRICS cooperation to create new impetus for the economic growth of the five countries, BRICS countries should shoulder responsibilities to uphold global peace and stability, contribute to enhancing global economic governance, increase the influence of BRICS and build extensive partnerships.

The major achievement of this year’s summit is signing of four major documents; BRICS Action Agenda on Economic and Trade Cooperation, BRICS Action Plan for Innovation Cooperation (2017-2020), Strategic framework of BRICS Customs Cooperation and Memorandum of Understanding between the BRICS Business Council and the New Development Bank on strategic Cooperation were signed in the presence of BRICS Leaders during the summit. Notably, the Xiamen Declaration noted the importance of BRICS countries, as the engine of global growth.

Prime Minister Narendra Modi Meeting with the Xi Jinping on the Sidelines of BRICS

The Indian and Chinese leaders had the first face-to-face meeting, post-Doklam on the sidelines of the BRICS summit. Prime Minister Narendra Modi tweeted “Met President Xi Jinping. We held fruitful talks on bilateral relations between India and China.” The meeting lasted for sixty minutes. After the meeting, Indian Foreign Secretary said that “the two leaders reaffirmed that it is in the interest of both India and China to have good relations and felt there should be closer communication between the defence and security personnel of India and China. It was a forward-looking conversation and not a backward-looking one.” He also said, “India and China agreed that it’s in the interest of both the countries to keep the relationship looking forward and on an upward trajectory”. He reiterated that important point made during the meeting was peace and tranquillity in the border area is a prerequisite for further development of a relationship. The two leaders also reaffirmed the understanding reached at Astana between the leaders, which states; not to allow differences to become disputes.

The spokesperson of the Chinese Foreign Ministry also commented on the meeting. He said that “during the meeting President Xi stressed that China and India are each other’s important neighbour and we are the two largest developing countries and emerging markets. A sound and stable China-India relationship serves the fundamental interest of the two people’s and is the shared aspiration of this region and the international community at large.” The meeting is a positive development in the bilateral relations as it helped in bringing the relations back to normal and reinstated the positive developments that have taken place.

China supports United Nation Security Council Resolution on North Korea

The United Nation Security Council (UNSC) unanimously approved resolution 2375 to impose fresh sanctions on the Democratic Republic of Korea (DPRK) over its recently held nuclear test. With the new measures, 90 percent of the DPRK's exports are now banned. The resolution followed a council resolution on 5 August 2017, which imposed a ban on the export of coal, iron, iron ore, lead, lead ore, and seafood from the DPRK, among other restrictive measures. The council also adopted a presidential statement on 29 August 2017 condemning the DPRK's launch of a ballistic missile earlier as well as other missile launches.

Chinese Foreign Ministry Spokesperson Geng Shuang said that China hopes the UNSC resolution can be fully and comprehensively carried out. Further, he used the opportunity to highlight the proposals of the "suspension for suspension" initiative and "dual-track approach”. He reinstated that these are practical and viable ways to address the Korean Peninsula issue. Notably, he opposed the deployment of the Terminal High Altitude Area Defense System (THAAD) by the United States and South Korea.

State Councilor Yang Jiechi’s stopover Visit to Washington

After wrapping up his visit to Jamaica, the Chinese State Councilor Yang Jiechi made a stopover in Washington. During his visit, he met United States Secretary of State Rex Tillerson. Both the leaders discussed how to make the forthcoming visit of President Trump to China a success.
Seemingly, the visit was to prepare for the forthcoming visit of Donald Trump to China. According to the statement released by the Chinese Ministry of Foreign Affairs on the visit, Yang Jiechi reiterated that the Chinese side is willing to work with the United States to strive for the positive outcomes of this visit. Rex Tillerson also said that the United States stands ready to step up communication and coordination with China to ensure that the visit of President Trump is fruitful. Both also exchanged views on international and regional issues of common concern. However, it is unclear if the North Korean sanction was discussed during the meeting.

Donald Trump Blocks the Lattice Semi-conductor Bid

Donald Trump blocked a deal for Lattice Semi-conductor Company on the pretext of national security concerns. The deal has been under scrutiny because it was noted that the buyer, Canyon Bridge Capital Partners, is funded by the Chinese government. The White House press secretary has cited the importance of “semiconductor supply chain integrity” to United States security, the Chinese government’s role in supporting the transaction and the potential transfer of intellectual property to a foreign buyer as the main reason for blocking the bid. A federal panel that reviews foreign investment in the United States for possible security threats ruled against the proposed USD1.3 billion purchase of Lattice Semi-conductor.This was the fourth time in 27 years that a United States president stopped a foreign takeover of an American firm on national security concerns. China's Ministry of Commerce has responded to this decline by saying that “the purchase action is a market-oriented choice and that a transparent and appropriate business environment is expected in the state in question.”

Despite the fact, the United States seeks China’s help to resolve the North Korea crisis it has maintained a tough stance against Chinese takeovers. By blocking the deal, Trump is taking direct aim at China’s industrial policy. Perhaps the decision was intended to send a political message.

Prosecution of Lee Ming-cheh

Taiwanese democracy activist and Non-profit Government Organisation (NGO) worker Lee Ming-cheh, “confessed” to charges of subversion at this trial in the central Chinese province of Hunan. At the trial, Lee confessed to the charges, expressed contrition, blamed his errors on hostile foreign forces, and praised the fairness of the proceedings against him. He had been missing for over five months after he disappeared while entering China via Macau.

On 1 January 2017, China has adopted “The Law of the People’s Republic of China on the Administration of Activities of Overseas Nongovernmental Organizations in the Mainland of China”. It has changed the landscape for foreign individuals and organizations working in China. Lee Ming-che’s trial marked China’s first criminal prosecution of an NGO worker since China passed the law. Lee was held on the charges of conducting online lectures on Taiwan’s democratization and managed a fund for families of political prisoners in China. He is the only Taiwanese ever to be charged with subversion of state power. Earlier, both China and Taiwan were in regular contact over such issues. Relevant agencies authorized from both sides carried out negotiation with each other. However, with the coming of the Tsai Ing-wen led Democratic Progressive Party (DPP) government, the cross-strait relations has become strained and China has suspended these contact with Taiwan. Hence the Taiwanese authorities were unable to make inquiries on Lee’s behalf with their counterpart.

Taiwan’s Push for New Southbound Policy

John Deng (the Minister without portfolio, Executive Yuan) announced that the Taiwanese Government will renew Bilateral Investment Agreement (BIA) with six Southeast Asian countries as part of its push for its New Southbound Policy. Taiwan has already established BIAs with eight of the 18 countries targeted by the New Southbound Policy. The eight countries are Vietnam, the Philippines, Thailand, Malaysia, Indonesia, India, Singapore and New Zealand. Among them, Singapore and New Zealand have signed free trade agreements with Taiwan for four years. The BIAs between Taiwan and six other countries have already been in existence for over 20 years.

The government has allocated USD 3.3 billion to help Taiwanese businessman undertake public construction projects in countries identified under the New Southbound Policy. The New Southbound Policy is a crucial part of Taiwan's economic and trade strategy, which aims to redefine Taiwan's important role in Asia's development, identify a new direction and a new driving force for a new stage of economic development, and create future value.