INDIA AND THE U.S.

OBAMA'S VISIT TO INDIA UNDERLINES ITS ECONOMIC POWER AND RIVALRY TO CHINA

The arrival of US President Barack Obama in Mumbai next weekend has been hailed a turning point in India's standing as a political and economic power.

Dean Nelson

The Telegraph, October 31, 2010

His vast delegation will include US energy chief executives eyeing new alternative and nuclear energy deals and defence CEOs chasing lucrative field gun and transporter plane contracts. There will be university principals looking at tie-ups with their Indian counterparts and engineering executives salivating at the prospect of building locomotive factories to make 1,000 new trains in a deal worth as much as $5bn (£3bn).

Like David Cameron's visit with the largest-ever Cabinet delegation in July, President Obama's visit is an acknowledgement that India is becoming a lucrative source of potential domestic growth and an increasingly serious rival to China.

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VIETNAM AND CHINA’S RISE

CHINA'S RISE PROMPTS VIETNAM TO STRENGTHEN TIES TO OTHER NATIONS

John Pomfret

The Washington Post, October 30, 2010

HANOI - Three weeks ago, an exhibition opened at the Vietnam Military History Museum. On one side of a long hall, the mementos of Vietnam's 25 years of war against the United States and France - letters of surrender, quotations from Ho Chi Minh, hand grenades and AK-47 rifles - lined the walls. Nothing new there.

But on the other side, the History Museum was actually making history. Along those walls hung daggers, paintings and quotations from Vietnam's struggle with another rival: imperial China. Battles dating to 1077, 1258 and the 14th and 18th centuries were featured in intricate detail.

Putting China on a par with "Western aggressors" marks a psychological breakthrough for Vietnam's military and is troubling news for Beijing. For years, China has tried to forge a special relationship with Vietnam's Communist government. But China's rise - and its increasingly aggressive posture toward Vietnam - has alarmed the leadership of this country of 90 million, prompting it to look differently at its neighbor. Beijing risks losing its status here of a fraternal Communist partner and being relegated to its longtime place as the empire on Vietnam's northern border that has shaped and bedeviled this country for centuries.

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JAPAN’S FUTURE

SUNDOWN FOR JAPAN?

Fears of being left behind by China and South Korea are fuelling visceral anger and xenophobia in Japan. But is the prognosis really so dire?

David McNeill

The Irish Times, October 29, 2010

EARLIER THIS year, with the rumblings from China’s economic juggernaut growing louder by the day, Japan’s conservative media began sounding alarm bells. In a 24-page feature in March, the right-leaning Sapio magazine warned that China was about to “buy up Japan”, noting how Chinese conglomerates were gobbling up real estate and resources – and even eyeing up uninhabited islands around Japan’s coast. Another magazine ran a front-page story entitled: Your next boss could be Chinese.

That was just a prelude to the orgy of national soul-searching accompanying the summer news that China had overtaken Japan as the world’s number two economy in dollar terms – a position Japan had held for four decades.

Tokyo announced second-quarter figures in August, putting the value of its economy at roughly $1.28 trillion, just behind China’s $1.33 trillion.

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WEN JIABAO AND REFORM

IS CHINA’S WEN BACKING AWAY FROM REFORM?

Russell Leigh Moses

China RealTime Report, October 28, 2010

Last week’s Communist Party plenum represented a clear victory for those who want to slow down any debate on political reform.

Cadres bent on deflecting discussion of the subject clearly won the weekend, which had been shaping up as a showdown between opposing forces in the Party. Instead, the plenum focused largely on securing consensus on China’s 12th five-year plan.

But the struggle is far from over. Politics is never a simple equation in China. As soon as plenum was over, state media launched an unrelenting series of assaults on reformist impulses within the Party. The vehemence of the attacks, led by the People’s Daily, suggests that those cadres urging actual political reform are not slinking away.

The big question now is how badly Wen Jiabao and the people whose platform he is sponsoring have been wounded. Wen himself made no mention of political reform on a recent inspection trip to Wuhan (report in Chinese), perhaps chastened by the absence of support in the leadership. Wen could well be backing away.

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CHINA AND INDIA

INDIA'S "LOOK EAST POLICY" MEANS "LOOK TO ENCIRCLE CHINA"?

Li Hongmei

People’s Daily, October 27, 2010

Indian Prime Minister Manmohan Singh's three-nation visit to Japan, Malaysia and Vietnam has been a media hype at home, being even describe as a missionary trip to seek new strategic allies to deal with China, and to showcase India's resolve to persist on its "Look East Policy" on its way to pursue the geopolitical and economic goals and achieve a "Big Power" status in the region, if not the leading power.

Some of the Indian media even add more color to Singh's Japan visit, besides the nuke deal and trade agreements, desperately crying it is high time for India that it strengthened the embankment of Tokyo to prevent "China's expansion."

As for Japan, whose relations with China have frosted over amid the diplomatic détente over the East China Sea, India, with a large consumer base, exudes a magnetic appeal to the presently sluggish economic power. Moreover, India's rare earth, although much less than China's deposits, is enough at the moment to present a peculiar fascination to Japan, who has all these days complaining about Chin's restriction on the rare earth exports and is anxious to get rid of the passive status quo caused by the undue reliance on China's supplies.

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G20 IN SEOUL

G20 SUMMIT AND KOREA'S IMAGE

Behzad Shahandeh

The Korea Times, October 26, 2010

The designation of South Korea to host the fifth summit meeting of the Group of 20 is, beyond all doubt a diplomatic triumph for the nation, since it will be the biggest international event in contemporary Korean history, and far more important than holding the 1988 Olympics, or the 2002 World Cup.

Seeing that the summit convenes and proceeds smoothly will be in itself a success and definitely boost South Korea’s image abroad. The achievement will be augmented if Seoul initiates and instills a number of policy agendas in the final proceedings of the summit, ensuring that they will be included in the deliberations to be followed at the next summit in France. Formalizing the “go-green” concept initiated by President Lee Myung-bak, to become a Korean brand and be most welcome in a world evermore threatened by environmental degradation.

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FROM BRICs TO BRICIs

WILL INDONESIA BE THE WORLD’S FIFTH LARGEST ECONOMY?

Aris Ananta

The Jakarta Post, October 25, 2010

Since surviving from the recent global crisis, with economic growth rate at 4.5 percent in 2009, while many other countries suffered economic contraction, some economic observers have started projecting the emerging economic power of Indonesia. They began adding “I” (for Indonesia) to the emerging BRIC (Brazil, Russia, India, and China) countries, to make BRICI or IBRIC.

Recently, businessman Chairul Tanjung, who is also the chairman of National Economic Committee, an ad hoc forum for the President of Indonesia, made another grouping.

He said that in 2030, Indonesia, with a 285 million population, will become the fifth largest economy in the world, after China, the US, EU and India. He said that the gross domestic product of Indonesia will jump from the current US$700 billion to $5,100 billion in 2030.

In other words, Tanjung predicted that Indonesia’s economy would grow at an average of about 10.0 percent every year from next year until 2030. Per capita income in 2030 will be $17,895, assuming $1 is equal to 9,000 rupiah. Nevertheless, with an exception in 1987, Indonesia never achieved an annual economic growth rate of more than 9.0 percent.

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INDIA AND JAPAN

RIDING IN THE LAND OF ‘RISING YEN’

Ajay Dua

The Economic Times, October 24, 2010

A promise which both the Indian and Japanese governments have kept since 2004 is to have annual summit-meetings. Starting Sunday, Dr Manmohan Singh sets out on his fourth visit as PM to Japan. Perhaps there is no other country which he has visited more often or with whose head, he has had as many as seven structured meetings.

It is a different matter that in each of his trips, he has to deal with a different Japanese Prime Minister.

Regular engagement with a country, till very recently the world’s second largest economy, is warranted despite all the economic and political problems Japan has been facing of late. Its cup of woes seems full with problems like a shrinking work force, mounting public debt and prospects of a prolonged deflation.

But most Japan-watchers agree that it also has the potential to start growing once again, given its high domestic savings, a well diversified $5 trillion economy—3.5 times the Indian GDP, and a huge current account surplus. It is currently the only Asian country having excess capacity, causing many to believe that its best days are yet to come.

In line with our ‘Look East Policy’, we have rightly upgraded our relationship with Japan to a strategic partnership. For years now, Japan has been our highest official aid-giver.

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INDONESIA’S GROWTH

INDONESIA: AMONG LEADERS IN GLOBAL RECOVERY

Anoop Singh

The Jakarta Post, October 23, 2010

While the global recovery has slowed, Asia continues to lead the economic rebound. Almost all economies in Asia grew well above trend in the first half of 2010, fueled by exports and investment.

Indonesia was one of the world’s best performing economies during the 2008−2009 global financial crisis, and the only G20 economy to lower its public debt-to-GDP ratio in 2009.

The IMF recently concluded its annual consultation on Indonesia’s economic policies and outlook (reports are available at www.imf.org/external/country/IDN/index.htm). That review admired and applauded the way that Indonesia steered the economy through the global financial crisis with the support of strong macroeconomic fundamentals and robust domestic demand.

In our recently-released Asia-Pacific Regional Economic Outlook, we envisage that, in Asia as a whole, GDP will grow by 8 percent in 2010 and 7 percent in 2011. In contrast, we expect growth in advanced economies in 2010−2011 to be relatively sluggish. This performance will provide less export demand to Asian countries than occurred in late 2009 and early 2010.

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THE MUMBAI CONSENSUS

INDIA FINDS FORMULA THAT DOESN’T LEAVE MIDDLE CLASS BEHIND

Chrystia Freeland

The Globe and Mail, October 22, 2010

They call economics the dismal science, but Larry Summers, one of its pre-eminent public practitioners, is anything but dull. That penchant for intellectual controversy means he hasn’t always won popularity contests, but he is unfailingly stimulating, as he proved in a speech in India last week when he hit on one of the biggest issues in the world economy today and coined a snappy catch-phrase to describe it: the “Mumbai consensus.”

The Mumbai consensus, Mr. Summers said, is “people-centric.” He contrasted it both with the Washington consensus, the U.S.-led free-markets-and-democracy formula that seemed to have conquered the world after 1989, and with the Beijing consensus, China’s state capitalist approach that today is winning fans in emerging markets and in some developed ones.

He thinks the real model to watch is that of India, the world’s largest democracy. Partly because of its political system, India’s economic rise has been powered as much by the voracity of its domestic consumers as it has by the country’s push into foreign markets. That’s a sharp contrast with China, where the focus has been on working for the rest of the world, while the Chinese people, who are poorer on average than those of Albania or Jamaica, nonetheless save more than half of their GDP.

What makes the idea of the Mumbai consensus, and of people-centric economic growth, so powerful is that the smartest and most politically potent critique of global capitalism right now is that it isn’t delivering for the middle class.

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CHINA’S GROWTH

CHINA'S ECONOMIC GROWTH SLOWS IN THE THIRD QUARTER

Its economy still grew 9.6% from a year earlier, government figures show. China remains well poised to achieve its stated annual growth target of 8%.

David Pierson

Los Angeles Times, October 21, 2010

The pace of China's economic expansion slowed modestly in the third quarter but still grew a robust 9.6% from a year earlier, official figures released Thursday showed.

The rate was in line with economists' expectations as the Chinese government is focused on reining in runaway growth that could precipitate a crash.

"The national economy kept moving toward the expected direction of macroeconomic control," the National Bureau of Statistics said in a statement.

The drop from the second quarter's year-on-year growth of 10.3% was due partly to new regulations in the residential property market and the withdrawing of stimulus, analysts say.

Separate data released Thursday showed China's consumer price index rising to 3.6% in September from 3.5% in August.

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RATE INCREASE IN CHINA

ECONOMISTS REACT: CHINA RATE INCREASE

China RealTime Report, October 20, 2010

Today’s decision suggests the acceleration in growth and official worries about property and inflation are more serious than anticipated. Moreover, while tightening is expected to contain growth and inflation over the next 2 to 4 quarters, more serious economic and financial reform is needed to resolve medium-term risks. - Ben Simpfendorfer, Royal Bank of Scotland

We believe this is a positive development…The rate hike only increases borrowing costs by a small margin, but its signalling impact is much more meaningful. It conveys at least two important messages: 1) top policy makers in China are watchful of the increasing risks on inflation, especially at a time when energy price deregulation is undergoing more quickly…and 2) Chinese leaders probably see less of a risk of a “double dip” in global growth and a severely negative impact on the Chinese economy. Meanwhile, we still expect the divide in the policy mix to continue, with easing in investment and fiscal policies to help support growth stability, and a tightening bias in monetary and property policies to manage inflation and asset inflation risks – Helen Qiao & Yu Song, Goldman Sachs

We expect this rate hike to be the first of a series to come, before interest rates are normalized to pre-crisis levels… Since the rate hike caught the market by surprise, we think the initial reaction is likely to be negative, especially for the property and related sectors…. However, in general, we think the market should see the rate hike as a speed bump on the road, as it also reflects the government’s confidence in the strength of economic activity. – Tao Wang & Gao Xu, UBS

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CHINA AND POLITICAL REFORM

ANALYSIS: CHINA'S ABSENT POLITICAL REFORMS WORRY MANY

Chris Buckley

Reuters, October 19, 2010

BEIJING (Reuters) - China's Communist Party has vowed ambitious changes on all fronts except the one -- its vast power -- that worried scholars, officials and even Premier Wen Jiabao call the biggest threat to long-term growth and stability.

It is a choice that shows the ruling party's confidence that it holds the country's future surely in its grip; it is also an absence some warn could come back to rattle that grip.

Party leaders emerged from a four-day meeting on Monday to present their plan for transforming the world's second biggest economy over the next half-decade, focusing on boosting income and spending power for millions. Even for a policy wish list, the few words on reforming government were hazy.

"Political reform was never on the table," said Wu Jiaxiang, a former aide to Chinese central leaders.

"Wen Jiabao may favor political reform, but he's just the premier in charge of the economy. Political reform is something the Standing Committee would have to all agree on, and they're really not interested."

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NK’s BLACK SWAN

WHEN NORTH KOREA FALLS . . .

Fareed Zakaria

The Washington Post, October 18, 2010

The most important lesson to have come out of the financial crisis is to worry about "black swans." These are, in Nassim Nicholas Taleb's formulation, events that are unlikely but with the potential to cause major disruption. In geopolitics there is one such event that should have us all thinking hard -- the collapse of North Korea.

Most of Washington's attention has been devoted to the Pyongyang regime's small nuclear arsenal. But perhaps a more likely scenario, and possibly one that would be even more disruptive, is a meltdown of the regime.

As Christopher Hill, the veteran diplomat who led the U.S. team that negotiated with the North Koreans, pointed out to me in Seoul last week, the situation in North Korea sounds like a story out of medieval Europe. An aging king, who rules in strange ways but with total power, finally names an heir -- his youngest son. The 27-year-old has little experience with arms or government, so his father appoints a regent. The regent is his brother-in-law and, further consolidating the family's tight grip, the king gives his sister a high military rank.

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THE US AND NORTH KOREA

INTRANSIGENCE IN N. KOREA POLICY

Tong Kim

The Korea Times, October 17, 2010

In the midst of a significantly shifting security environment in Northeast Asia ― with the confirmation of Kim Jong-un as the next leader of North Korea, China’s remarkable rise in power, assertiveness and influence, and the cementing of a ``lips and teeth” relationship between China and the DPRK, the United States needs to reassert its leadership with a new strategy to protect its interest in the Korean peninsula and the region. The U.S. seems to have abandoned its leadership role that its friends respected and its foes recognized in the past.

While taking no clear position on the North’s succession issue, Washington just wants to wait and see how the process would unfold or what impact the process might have on its relations with the South and the United States. On the prospect of denuclearization, Washington still sticks to its passive strategy of waiting for Pyongyang to show a genuine willingness to comply with its commitment to the 2005 and 2007 agreements. Recently, Washington added a new condition for reengaging Pyongyang: improved inter-Korean relations. The United States is also waiting for the South to improve relations with the North.

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US-CHINA

NEW STRATEGY NEEDED FOR US-CHINA CO-EXISTENCE

John Milligan-Whyte and Dai Min

The China Post, October 16, 2010

Policymakers in the United States need to present a new grand strategy to replace their current strategy of preparing for currency, trade and military conflict with China. The U.S. needs a grand strategy that opens up U.S. companies to investment by Chinese companies creating sustainable U.S. economic recovery and jobs.

To protect the world's economic recovery and peaceful coexistence, the U.S. must reciprocate China's peaceful coexistence strategy.

The new grand strategy must be implemented now to create the breakthrough needed to prevent a breakdown in Sino-U.S. bilateral and multilateral relationships. The growing economic and national security crises of the U.S. and the suffering and anger of its citizens endangers Chinese people's progress and safety.

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CCP’s PLENUM

CHINA’S COMMUNIST PARTY PREPARES FOR A SHOWDOWN

Russell Leigh Moses is a Beijing-based analyst and professor who writes on Chinese politics. He is writing a book on the changing role of power in the Chinese political system

China RealTime Report, October 15, 2010

It’s not often that we get to see a real showdown in Chinese politics. But that’s what the next few days here in Beijing promises, as the upper echelon of the Communist Party convenes an annual plenum.

Economic policy centered on the five-year plan is supposed to be the main topic, along with personnel.

But a growing number in the government would like to expand the conversation and take on a far more vexing question: political reform.

For some time now, there has been a debate within the Party, not about how to survive in power but how to thrive and grow. Under the rubric of “Party-building”, cadres have been in constant conversation about just how much reach the Party should have when it comes to the economy, how much control is needed over society.

Would a smaller, smarter Party be more efficient? Is oversight of the Party best achieved by anti-corruption campaigns or the steady stare of a public that would hold officials accountable? Would that mean elections? Should the Party be in the business of persuading the populace through a more attractive ideology or should it focus on helping local governments provide needed services to society?

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INDIA’S AND CHINA’S GROWTH

AHEAD OF THE CURVE – INDIA’S GROWTH TO OUTPACE CHINA’S

Chris Devonshire-Ellis

China Briefing, October 13, 2010

It’s always nice when a subject you have firsthand and long standing involvement in finally makes the mainstream media, and so it proved last week with The Economist’s cover story stipulating how India’s growth will outpace that of China. We’ve been pointing this out for some time both last month here on China Briefing in the piece “Why China Demographics Dictate India as a Global Manufacturing Hub” and regularly over the past few years on our 2point6billion.com and India Briefing sites.

The Economist’s articles essentially state what we’ve already said, that India will soon start to outpace China thanks to a young and growing workforce. It also goes on to point out that India’s “much-derided democracy” is finally proving fruitful rather than a hindrance, and attributes “India’s surprising economic miracle” as largely due to its private sector.

“The country’s state may be weak, but its private companies are strong,” the magazine said. That’s very true, and is a major part of where China and India, and the quality of senior management and innovation, differ.

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CHINA 2011-15

CHINA INDUSTRIAL POLICY: THE 12TH FIVE-YEAR PLAN

China Analytics

Seeking Alpha, October 12, 2010

The fall political season is about to get underway in China, and in advance of more official statements from the central government about the focal areas for the next 5-year plan provincial governments are leaking the broad strokes of their own proposed agendas to the media. Behind the scenes provincial and city-level governments are fully engaged in competition for preferential policy treatment where it comes to land usage, tax transfers and directed lending. It goes without saying that once individual regions are written into the central government's 12th Five Year Plan they are destined to receive “a policy windfall”, and with the NDRC having been engaged in an intensive period of local "inspection tours" there are likely to be some tired looking faces among the local and regional delegates at the upcoming meetings in Beijing.

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NORTH KOREA’S KIMS

NORTH KOREAN RULER AND HEIR ATTEND PARADE

Chico Harlan

The Washington Post, October 11, 2010

TOKYO - North Korean leader-in-waiting Kim Jong Eun appeared Sunday with his father at a mass-scale military parade, orchestrated to showcase Pyongyang's might as it builds support for another hereditary power transfer.

With select foreign news media broadcasting live, North Korea staged one of the biggest celebrations in its history. Leader Kim Jong Il and his youngest son watched from a viewing box as tens of thousands of troops - as well as tanks, missiles and rocket-propelled grenades - moved in perfect geometry through an open public square, named after North Korean founder Kim Il Sung. Kim Jong Eun, wearing a dark Maoist suit, greeted the procession with applause, salutes and the occasional smile.

North Korea took unprecedented steps to turn its Oct. 10 Workers' Party anniversary - among its biggest holidays - into a coming-out party for its young general, who only two weeks ago remained shrouded in mystery. Nearly 80 foreign journalists were granted access to the secretive nation. Although they followed a mandated schedule, always accompanied by official guides, they were allowed to broadcast live footage of Sunday's events.

North Korea typically limits dissent by sealing off outside information, but journalists staying at the Koryo Hotel also discovered two surprises: a press room and Internet access.

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CHINA AND LIU XIAOBO

CHINESE MEDIA STAY RESOLUTELY SILENT ON NOBEL WINNER

Imprisoned Liu Xiaobo wins one of the world's highest honors, but most of his countrymen have no idea. Web search engines return error messages for his name. The few who try to celebrate are arrested.

Megan K. Stack

Los Angeles Times, October 10, 2010

Reporting from Beijing

The silence was conspicuous in China on Saturday.

Dissident Liu Xiaobo languished in a prison cell, possibly unaware that he had been awarded the Nobel Peace Prize a day earlier. His wife was incommunicado after telling a reporter she was being taken away by police. And the Chinese news media appeared determined to pretend that nothing had happened.

As for most Chinese, they didn't have to pretend. Many of them don't know Liu exists, let alone that he has been honored with the world's most coveted award.

This is the paradox of China: It's an economic superpower that is very much a part of the world and yet, at times, separate from it.

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LIU AND CHANGE

NOBEL EUPHORIA FAILS TO MASK TOUGH REALITY IN CHINA

Ben Blanchard

Reuters, October 9, 2010

BEIJING (Reuters) - The euphoria overseas and in some domestic circles at dissident Liu Xiaobo's winning of the Nobel Peace Prize has failed to mask deeper unease that his victory will likely bring little change in Communist Party-ruled China.

Liu, 54, has been a thorn in the government's side since 1989 when he joined student protesters on a hunger strike days before the army crushed the Tiananmen Square pro-democracy movement and has been in and out of jail ever since.

Yet in today's booming and bustling Beijing -- with its luxury boutiques, well-dressed residents and sleek new subway lines -- the heady days of 1989 are a distant memory and public discussion is taboo. Few people know who Liu is.

The award was ignored by Chinese media, apart from a few brief newspaper articles carrying the Foreign Ministry's condemnation of the decision as an "obscenity."

"I've never heard of him," said one Beijing businessman waving his hand dismissively, who gave his family name as Han, in comments typical of those heard on the street when Liu's name is mentioned. "I'm too busy to watch television."

The government's grip on power is as tight as ever, and it has shown no signs of relaxing its stance toward the small band of Chinese "rights defenders" who continue to mount seemingly futile legal challenges against the Party.

Many signers of the "Charter 08" petition which called for sweeping political reforms have either been locked away, put under house arrest or otherwise harassed. Perhaps the most famous of whom is Liu, jailed last Christmas Day for 11 years

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AF-PAK

THE WHITE HOUSE'S REPORT ON AF-PAK: HOLD THE OPTIMISM

David Ignatius

The Washington Post, October 8, 2010

What's notable about the new White House report on Afghanistan and Pakistan sent to Congress this week is its bleak assessment of the security picture. You could almost read President Obama between the lines warning the military: This strategy isn't working the way we hoped. Don't ask me for more troops.

"The report doesn't paint an optimistic picture of the security situation," said a White House official. He described the 27-page document as "very candid and very frank." Government officials always say that about reports, but in this case, it's actually true.

You can sense in this report the tension that lies ahead between Obama and his commander in Afghanistan, Gen. David Petraeus. The military didn't write this assessment (one top military leader hadn't even read it before it was leaked to the Wall Street Journal).

The White House knows that Petraeus might offer a somewhat different account of where things are heading in Afghanistan. "The military would not dispute that the situation is challenging," said the White House official. "They'd say, 'Yeah, it's bleak, but we're working full speed on all fronts to get ahead of it.' "

What drew a front-page headline in the Journal was the report's discussion of the deteriorating political situation in Pakistan and the refusal of the Pakistani military to mount a new offensive against the Taliban and al-Qaeda in North Waziristan, as the United States wants. "This is as much a political choice as it is a reflection of an under-resourced military prioritizing its targets," the report notes, although it concedes that after the devastating floods in August, the Pakistani military was swamped with relief work.

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JAPAN’S WOMEN

WOMEN: JAPAN’S SECRET ECONOMIC WEAPON

Japan RealTime, October 7, 2010

The outlook for Japan’s economy has gone from bleak to bleaker. With the country still mired in deflation, the Bank of Japan on Wednesday downgraded its assessment of the economy. With not much left in their respective policy arsenals, what more can both the central bank and the government do to lift Japan out of its funk?

Turns out there’s a simple way to boost Japan’s gross domestic product growth by as much as 15%: getting more women into the work force, according to a recent Goldman Sachs report entitled “Womenomics 3.0: The Time is Now.”

The argument goes like this: While Japan’s overall female employment rate is now at a record 60%, there’s still a significant lag behind the men’s participation rate of 80%. If the female employment rate was also 80%, this would add another 8.2 million employees to the work force and boost Japan’s GDP by as much as 15%.

“Japan has but no choice but to tap its most underutilized resource,” says the report. “It’s hard to run a marathon with just one leg.”

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CHINA’S AUTO INDUSTRY

IS CHINA BUILDING TOO MANY CARS?

China RealTime Monitor, October 6, 2010

Nissan Motor Co. recently said the company’s joint venture company in China is nearly doubling its manufacturing capacity by 2012 to 1.2 million vehicles a year. The announcement came amid worries among some Chinese government officials about possible excess capacity developing in the world’s biggest auto market. But Nissan’s chief executive Carlos Ghosn quipped: “China is now the second-largest economy in the world, and our ambitions and actions are aligned with the current reality.”

So who’s right? Anxious government officials? Or Mr. Ghosn, who heads both Nissan and France’s Renault SA as CEO?

A senior official at China’s National Development and Reform Commission, Chen Bin, warned at an auto industry conference in Tianjin last month that China’s top 30 auto groups are expected to have combined capacity to build 31.24 million vehicles a year by the end of 2015, up from 13.95 million at the end of 2009, according to media accounts.

Blindly expanding manufacturing capacity will not only harm the health of China’s auto industry, Chen warned, but will also affect the country’s economy as a whole.

Nissan executives maintain the Nissan China unit’s planned expansion is being made to help meet real demand, and analysts seem to agree. Many believe China’s auto industry is still lacking manufacturing capacity, especially in the top tier.

“In fairness to Chen, China’s economic structure gives incentives to local governments to add capacity because new capacity means new investments in new jobs, which means a kind of economic growth,” says Michael Dunne, president of Hong Kong-based investment advisory firm Dunne & Company Ltd. “Local governments provide loans and cheap land and subsidized energy. Add capacity and their jobs are done - they don’t worry about the demand side of the equation. This leads to the kinds of inefficiencies that Chen is warning about.”

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JAPAN’S NEW ZIRP

BANK OF JAPAN CUTS RATES TO AS LOW AS ZERO PERCENT

Hiroko Tabuchi

The New York Times, October 5, 2010

TOKYO — In a surprise move Tuesday, the Japanese central bank lowered its benchmark interest rate to a range of 0 percent to 0.1 percent, a tiny change from its previous target of 0.1 percent but a significant move back into an age of zero interest rates.

The Bank of Japan also said it would set up a fund of ¥5 trillion, or $60 billion, to buy Japanese government bonds, commercial paper and other asset-backed securities amid concerns about weakening growth in the economy, the world’s third-largest, after the United States and China. The bank also kept its credit facility for banks at ¥30 trillion.

With the interest rate cut, a bid to bolster lending in the moribund Japanese economy, the central bank effectively reintroduces a policy of a zero interest rate for the first time since July 2006. The decision underscores concerns that a strong yen and persistent deflation threaten Japan’s economic recovery.

In a statement, the bank confirmed that it would maintain its “virtually zero interest rate policy” until it achieved “medium- to long-term price stability”— or an end to deflation.

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ASIA AND ASEM

CHINA-JAPAN ROW CLOUDS EUROPE, ASIA LEADERS' EVENT

AFP, October 4, 2010

BRUSSELS — European and Asian leaders begin three days of talks Monday centred on trade, IMF reform and climate change but under the cloud of a territorial spat between Japan and China.

Leaders will meet at the royal palace in Brussels for the 48-member Asia-Europe Meeting (ASEM) for two days, followed by separate European Union summits with South Korea and China on Wednesday.

The Japan-China row could steal the show, however, as observers watch whether Chinese Premier Wen Jiabao and Japanese Prime Minister Naoto Kan meet face-to-face to ease tensions over a maritime incident near disputed islands.

The diplomatic standoff was sparked by Japan's arrest on September 8 of a Chinese trawler captain near the islands in the East China Sea.

Japan has released the captain, but tensions remain with Beijing freezing high-level talks.

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8th ASEM MEETING

A CRITICAL MEETING AT A CRITICAL TIME

The Korea Herald, October 3, 2010

The 8th ASEM Summit, a vital forum for dialogue between Europe and Asia will convene in Brussels, Belgium.

The biennial international meeting will bring together leaders from 27 member states of the European Union with 16 Asian countries, the European Commission and the Association of Southeast Asian Nations Secretariat.

“The meeting aims at enhancing the dialogue on current political, economic, financial and socio-cultural issues,” said Belgium Ambassador Pierre Clement Dubuisson.

“It also is an important platform to stimulate rapprochement and partnership among participants,” he added.

The Asia-Europe Meeting will also officially welcome new members Australia, New Zealand and Russia.

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INDIA AND THE GAMES

INDIA WITHERS UNDER GAMES' SPOTLIGHT

Rama Lakshmi

The Washington Post, October 2, 2010

IN NEW DELHI It didn't take long for the first athletes arriving in New Delhi last week for the upcoming Commonwealth Games to catch a glimpse of modern India's two faces.

Their gateway to the country was the capital's gleaming new international airport terminal, built by a privately led consortium and opened in June four months ahead of schedule.

But the official wristbands that the visitors were handed at the airport turned out to be an emblem of India's famous red tape and government inefficiency. When the teams reached the athletes' village, the police guarding the facility refused to recognize the IDs, saying that the Games Organizing Committee had not sent the required authorization order.

The jet-lagged athletes stood about under a tree for hours with their luggage, calling their embassies for help, and the problem was not finally resolved for four more days.

To observers, the incident illustrated more than just the well-documented sloppiness that has marked India's preparations for the Games. It also underscored the gap that has emerged between a government rooted in a slower-moving, socialist era and a private entrepreneurial class that is busy building global IT companies, the world's largest oil refineries and spectacular structures such as the $2.8 billion airport terminal.

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NORTH KOREA’S RULERS

WHAT GROUP PHOTO SAYS ABOUT NEW N.KOREAN POWER ELITE

The Chosun Ilbo, October 1, 2010

The official North Korean media on Thursday published a group photograph showing the faces of its new leadership, including heir apparent Kim Jong-un, formed at the latest extraordinary congress of the Workers Party. "A look at the group photo gives a clear picture of the power structure in the era of Kim Jong-un," a South Korean intelligence official said. "The closer one is to the Kim dynasty, the higher one rises through the ranks."

◆ Proximity Equals Power
The photo, splashed across the front page of the official Rodong Sinmun daily, features 235 officials, out of which 70 are clad in military uniforms. Another South Korean intelligence official who saw the photo, said, "Centering on Kim Jong-il, the nine rows in total contain officials in exact order of their rank in the power structure."

In the front line are Kim Jong-il and his son Jong-un, plus Kim Kyong-hui (Kim Jong-un's aunt). Seated between Kim Jong-il and Kim Jong-un is Ri Yong-ho (68), chief of the North Korean Army's general staff. He rose to the position of standing member of the political department of the Workers Party, which is its highest rank, as well as vice chairman of the Central Military Commission. Ri is tipped as the key military figure during Kim Jong-un's rule.

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