Category: Markets

Under President Xi Jinping, the Chinese Communist Party is applying the Seven Prohibitions to shut down discussion about liberal constitutional change. In comparison, constitutional deliberations in Vietnam appear open, vibrant and far-reaching — prompting some commentators to speculate on whether Vietnam is a model for post-socialist institutional change. However, do all types of constitutional discussion translate into institutional reform or are some types of discourse more potent than others? This inquiry has particular relevance in Vietnam, where the discourse in social media has as much influence in shaping the actual constitution as that within state-mediated forums.

During the debates prior to the adoption of Vietnam’s 2013 constitution, commentators centered on public calls for liberal institutional changes. Hundreds of newspaper articles talked about limits to party energy, constitutional review and human rights. Much has also been made of Request 72, a demand for sweeping liberal constitutional reforms submitted by public intellectuals such as Nguyen Dinh Loc, a former minister of justice. These experts argue that this discourse unveils broad-based support for liberal constitutionalism and law-based governance in Vietnam.

But when the Nationwide Assembly approved the new constitution in late 2013, there were couple of tangible changes to government structures. Attempts to place constitutional limitations on Communist Party power, promulgate a human rights declaration and legalise personal land ownership were rejected. Although the new constitution seems to strengthen fundamental rights, Article 14 gives authorities wide-ranging forces to override civil legal rights in the interests of ‘nationwide defense, national security, community order, the security of society, and social morality’.

In a particularly bitter blow to reformers, after years of debate, the Party rejected the constitutional court with powers in order to strike down unconstitutional legislation as well as government decisions. Unprecedented thought in state-mediated forums, such as the press and academic journals, did not result in meaningful institutional change.

A look at the history of constitutional debates in Vietnam shows that public discussion in state-mediated discussion boards rarely produces liberal institutional reform. Since the Nhan-Van Giai-Pham affair in the Nineteen fifties, reformers have periodically urged the federal government to improve human rights and adhere to legal processes. Recurring attempts in state-mediated forums to introduce liberal democratic institutions, such as a constitutional court, have been unsuccessful.

Although the regulates are not as proscriptive as the 7 Prohibitions in China, the Celebration in Vietnam stage-manages constitutional debate in state-mediated forums. While windows that allow discussion about normally taboo liberal institutional changes may open in state-mediated discussion boards, these windows shut when constitutional amendments are passed. This particular forecloses further discussion and indicators the limits to institutional reform.

Vietnam nevertheless lacks the institutions which are generally considered necessary for generous constitutionalism. There is no constitutional court, electoral democracy, separation associated with powers or judicial safety of politically sensitive civil, economic and political rights. Although Vietnam lacks many liberal institutions, it is a mistake to believe that public discourse surrounding the constitution is merely fictitious with no correspondence to how the government actually works. Understanding how discourse in an illiberal polity might define and constrain state power involves looking past the legal and technical discourse associated with liberal institutional reforms.

In tandem with Party-managed debates in state-mediated discussion boards, there is a vibrant constitutional deliberation among ‘left-side’ (ben trai) social media circles. Reaching 36 per cent of the population, social networking penetration in Vietnam is among the deepest in Southeast Asia — similar to Thailand. State control over bloggers and social media sites in Vietnam is less restrictive than in China. Most bloggers engage in ‘lifestyle’ politics exactly where recounts of their lives are linked with topical ointment social issues such as environmental pollution, urban congestion and meals safety issues.

Other bloggers are playfully transgressive. Buried in their humour are satirical comments about the Party and state. They portray social problems because symptoms of wider regulatory failings and advocate systemic institutional change. Still, most bloggers tend to be careful to avoid discussing multi-party democracy — a subject that routinely attracts penal supports.

While a few bloggers engage in the actual technical legal discourse related to liberal constitutionalism, many more discuss nationwide identity. This discourse, for example, stresses the long good reputation for private control over land in Vietnam and valorises private resistance to state land grabs. Discourse of this kind constrains how the state is imagined and encourages lawmakers to craft a constitution that is embedded in the national consciousness. The extensive coverage associated with social media commentary about issues, such as land grabs, in Party and state publications suggests that social media is slowly impacting on Party thinking. For instances, although not recognising private land ownership, the constitution associated with 2013 has responded to social networking criticism and tightened state powers to take land.

In focusing on national identity rather than specialized legal details, constitutional discourse within social media resembles the debates that surrounded other constitutions within their embryonic stage, such as early constitutional debates in the United States.

To develop into a robust lawful text that can discipline institutional behaviour, what is needed in Vietnam is a continual discussion — as has been initiated in social media networks — regarding whom the constitution covers, whom it does not cover, how far state powers should lengthen over citizens and the validation for its exclusive claim to control the polity. A constitution that can’t justify its own authority as superior law will be ultimately dismissed as irrelevant.

Bloggers keep your windows open in Vietnam’s constitutional debates is republished with permission from East Asia Forum

India has pulled ahead of The far east and United States as the most favoured destination for foreign immediate investment (FDI). According to the Financial Times (FT), India received US$31 million in FDI in 2015, which is US$3 and US$4 billion more than China and also the United States respectively. Moving through fifth place in 2014 to very first certainly reiterates that India is really a bright spot in the world economy today.

But is being number one sufficiently good to make the Modi government’s ‘Make in India’ productivity reform a success tale and achieve its desired 8–8.5 percent growth?

The FT’s position recognises India’s efforts to enhance investment through a number of change measures. India is a good market to invest in as other rising economies — including China — tend to be rapidly slowing. This is also evident from the 2015 World Economic Forum’s report that has placed Indian at 55 among the world’s most competitive economies — 16 positions higher than China.

There are discrepancies in the FDI inflows data used by the actual FT and by the Book Bank of India (RBI). The Foot puts FDI inflows (estimated capital costs) to India at US$31 million in first half of 2015, while the RBI’s figure of net FDI inflows for the same period is actually US$19 billion. This is because the Foot measures actual and announced transactions, while the RBI only measures the former.

The data show that FDI inflows to India have increased during a period of global declines in FDI. FDI outflows from Indian have drastically decreased from US$9 billion in first half of 2014 to US$1.6 billion for the similar period in 2015. This suggests which domestic and foreign traders recognise the efforts of the government to improve the investment atmosphere to sustain growth.

It could be incorrect to celebrate Indian overtaking China in FDI inflows. There’s also discrepancies in the FT’s Chinese FDI figures. China’s National Record Bureau put FDI inflows to The far east at US$68 billion, compared to the FT’utes US$28 billion. More importantly, China includes a larger stock of FDI accessible. In 2013, China’s per capita FDI stock was US$691, when compared with India’s US$181. China has had much more FDI for longer than India, which has contributed to technology development, exports, competitiveness as well as growth.

In addition, even if India celebrates being the top place to go for FDI, it needs to back up the celebrations with actions on the ground. India still ranks 142 out of the 189 nations in the World Bank’s ‘ease of conducting business indicators’.

India needs to develop infrastructure additional. Although the transport minister is extremely proactive in making new roads, India has a long way to visit when it comes to energy, telecommunication along with other modes of transportation. Numerous Indian power companies are troubled because of their bad balance linens and bankrupt state electricity boards. The government is not capable of meet the required infrastructure investment. India must develop a much better regulatory mechanism and a rational pricing system. It needs to change financial markets and strengthen challenge resolution mechanisms so that the personal sector can find infrastructure projects economically feasible.

India must also deal with land acquisition, which is crucial to ‘Make in India’. This is a politically difficult move. The states govern property acquisition rather than the central government. Although the federal government is pressing for higher growth, which may force states to promote land acquisition, narrow pro-poor and pro-farmer national politics hold back states government. The infrastructure for a unified marketplace needs to be designed and performed at the top, not by states in bits and pieces.

India needs to improve governance and streamline the process of registering and clearing new initiatives. It must reduce — or at least rationalise — the number of clearances for setting up company; develop a coordination mechanism between central and state level departments; and promote e-governance extensively for transparency and efficiency. If India manages to do this, it’ll go a long way.

It’s high time the central government works seriously with the states on policy coordination for investment and FDI. Even though it is politically contentious, it is time to review the rigid and old labour rules. The Indian native labour force is accommodative to investment, but current guidelines still scare investors — particularly foreign investors.

The Union federal government has taken some steps like the ‘unified labour and industrial portal’ and the ‘labour inspection scheme’. The state of Rajasthan has also gone for comprehensive reforms, but the Indian economy, as a whole needs to move on this problem. India must invite continual inflows to help Indian firms ascend the technology ladder. This will be possible if India improves intellectual property rights to incentivise, and give safety to, innovation. Foreign traders are currently scared to share their technology or establish joint ventures in India because of the lack of intellectual property rights.

If the actual Indian government is seriously interested in capitalising on its new position as most favoured destination for FDI, it’ll need many more changes on the ground. It might be true that India is number one for FDI, but this won’t be enough.

Why FDI is not enough for Modi’s ‘Make in India’ strategy is republished with permission from East Asia Forum

As the Hindi saying goes:  If you reside in the water, do not make an opponent of the crocodile.

The ruling party in India, the BJP, was conquered in the Bihar state assembly elections.  The actual party came out with 59 chairs out of 243, down 35 chairs from the previous elections and substantially worse than expected.  Many were looking at the Bihar elections as a referendum associated with sorts on Modi’s very first 17 months in power. 

Much of the debate in Bihar revolved around the national debate more than Modi’s perceived hard collection against Muslims and political dissent, made even more salient by the death of four Muslims supposedly attacked through mobs of Hindus.  Now the bad results will set the tone for that multiple subsequent elections that will adhere to, emboldening the opposition, and raising serious questions about the BJP marketing campaign strategy.  Perhaps Modi will soften up his tone as well as sound more conciliatory towards the Hindu-Muslim tensions, but it may be too late in order to reshape his image.

More objectively, regional elections matters because the make up of the state assemblies determines party representation in the Rajya Sabha, the Upper House.  In addition, it is presently there that the opposition is blocking the government.  Now the focus becomes back to implementation – the age-old condition in India.  Despite good motives, it is becoming harder to see how Modi will be able to push through their reformist agenda.  Recent defeats possess included the nationwide products or services tax and land change.

All that said India still has several positives going for it.  Rajan in the helm of the central bank will still be a solid anchor for the country’utes macroeconomic management and banking field reform.  Oil prices from these levels are very favourable for the country’s external account.  The election results are not enough to completely counter our relatively favourable view, but it definitely curbs our enthusiasm.  At the minimum, it means that Modi will have to take more time and energy on campaigning and less on pushing economic reforms.  It also may mean that he will need to refocus his priorities towards addressing social tensions.

Indian assets prices reacted accordingly, however INR suffered the most. After starting down 2.3%, the Sensex recovered to close down only 0.5%.  Local swap rates had been up as much as 12 british petroleum, back to levels seen in late September, undoing the fall in yields that followed the more-aggressive-than-expected 50 british petroleum cut by the RBI on September 29.  USD/INR gapped higher to Sixty six.45 – less than 1% from September highs and 3.5% from Sept 2013 all-time highs.

India Election Outcomes Sours the Mood is republished with authorization from Marc to Market

Many African countries have in recent years, shown phenomenal economic development. However, recent developments on global markets – including the stop by prices of commodities for example oil, copper, and cobalt – have raised questions about the sustainability of Africa’s economic growth.

The lack of stability of global market has lowered investors’ confidence, and led to questions about the health of the global market. There is a feeling of uncertainty and fears of financial global crises, particularly due to a slowdown in China’s economy.

Many countries around the world, including the Democratic Republic of Congo (DRC) are feeling the impact of the fall in commodity costs, particularly minerals. The drop in the price of copper hit the actual DRC. Glencore, the Anglo-Swiss multinational commodity buying and selling and mining company based in Baar, Switzerland, is considering closing some of its procedures in Katanga province.

Agriculture, mineral resources, manufacturing and services pushes the DRC’s economy. In the last decade, the agricultural sector has been declining as the country’s major contributor to its GDP while commodities-related industries have been increasing. The mining sector makes up about one-quarter of the country’s GDP.

Last year the economy grew through nearly 9%, driven by the extractive as well as manufacturing industries, agriculture, commerce and construction, and a higher export demand for raw material. The dramatic fall in commodity prices threatens this particular growth.

In addition, there are fears of increased political instability as President Joseph Kabila encounters accusations of attempting to remain within power beyond his second and last five-year term.

According towards the IMF, the DRC:

… remains a fragile country with vulnerabilities increasing.

A shaking global economy with local impact

Closing mines in the Katanga province would have a devastating impact, with severe social and economic consequences.

Thousands of workers as well as their families depend on the mining industry. Mine closures would lead to large job losses. The company employs an estimated 5000 people in Katanga without counting subcontractors.

New cities and communities have been established and sustained through mining. Smaller businesses have been created and new forms of commodities trade initiated by people living in areas surrounding the mines.

The impact of exploration houses shrinking their procedures could cripple the DRC’utes economy, which is highly dependent on mineral exports. Up to 87.2% of the economy is export focused.

According to the OECD, the DRC’s exports were worth US$7.03 billion within 2013, making it the 103rd-largest exporter in the world. Refined copper accounted for one-third of exports, followed by copper ore (19%), raw copper (7.5%), cobalt (8.8%), cobalt ore (6.9%), as well as crude petroleum 12%.

The country thus remains extremely vulnerable to commodity prices, or to drops in demand for minerals. The question that needs responding to is how to avoid this permanent economic and social vulnerability?

Diversification is key

Many African countries, including the DRC have, for years maximised and concentrated their economic activities, a minimum of at the macro level, in only one sector.

This lack of economic diversity and extreme concentration on 1 sector has never benefited the actual continent, and will never help the DRC. Diversification is key – not only with regard to GDP, but for local financial development, small businesses and business.

In addition to this, the DRC depends on Foreign Direct Investment (FDI), mainly financial investment, at the expense of nearby capital investment. The country shouldn’t be depending almost exclusively on FDI to run its economy. Rather, they should allow local as well as national companies to invest in proper sectors such as farming, agriculture, transport as well as mining.

The federal government could add other guidelines. These include:

* The DRC should motivate and stimulate local expense and they should support startup businesses. Many of the economic or even financial challenges that the DRC offers known for many years link to financial dependency. It is imperative that the government creates a friendly environment for citizens to invest in their own communities and get all the necessary support to establish and boost their businesses in a safe financial space.

* The country must speed up local economic inclusion through tapping into the potential of the casual market. Women and youth within the informal sector conduct many of small trades. These folks constitute a class of casual entrepreneurs who, if backed financially and with the necessary abilities and logistics, would be able to grow the economy and produce more jobs.

* Strengthen interprovincial economic activities and integration according to small-scale economic activity and trade.

* Think about and promote the role and put of women in local economic development.

It is important to mention that many efforts need deployment to insure sustainability, growth, as well as development of the DRC. Political stability and peace are also crucial for long-lasting economic growth and development.

Why dependence on natural resources is bad for the DRC is republished with permission from The Conversation

There has been speculation that Australia’utes recent change in prime minister from Tony Abbott to Malcolm Turnbull will mean a shift in Australia’s choice of partners in Asia. The change does not mean that Australia will now ‘choose’ China over the United States. However, it could change what Australia strategies by its ‘choice’ of the United States.

In choosing the United States, Tony Abbott meant American ideals and its powerful military. With regard to Abbott the success and balance of Asia — and in turn Australia’utes success and stability — was due to US economic as well as military power. In his view, the norms, institutions, and niceties of the regional environment were largely a useful fig leaf. Sometimes they helped, but they could never replace the real basis of regional security — United States power.

Abbott concerned that Beijing’s military spending and assertive behaviour had been directly challenging Washington’s military authority. A lacklustre and aloof Whitened House compounded this. As a way to encourage the United States to regain its confidence, Abbott sought to build up Australia’s military capabilities as well as reach out to fellow US allies.

Most notably, preparations were in position for a historic deal to purchase Japanese submarines. There was even mention by loose-lipped Australian and Japoneses officials of the A-word (alliance). That may not have been the direct ambition, but the path towards a common security relationship was definitely an option if the United States didn’t seek to reassert itself in the region.

For the new Prime Minister Malcolm Turnbull, to choose the United States way to embrace American ideas and also the regional order it has helped build in Asia. With regard to Turnbull this order has a value in its own right that is distinct from the specific capabilities of the US government.

In Turnbull’s view, the United States is a vital player in a regional order, as opposed to the sun around which the program revolves. Emerging powers may become threats and challengers, but their growth is not automatically a risk. The more these states embrace the norms of the region, such as free markets and peaceful dispute resolution through the WTO or the UN, the less their development is a concern.

Power still matters to Turnbull. He is fond of quoting Thucydides’ famous Melian dialogue. As he said in a recent interview, ‘the strong do the things they will and the weak suffer as they must … That is what the whole international order is designed to quit — to ensure that there is a rules-based approach to international relations, and it’s necessary for stand up for that’.

Turnbull sees exactly the same concerns about power-based struggles within Asia as his predecessor did — particularly in the South The far east Sea. Both men would agree Thucydides captured the long lasting impulse by strong states to dominate. However, where Tony Abbott believed the only way to react was through deterrence by a stronger state, Australia’s brand new leader seems to believe we are able to overcome this challenge through a wider range of means. With the right institutions, norms and methods of international politics in place, the region can prevent strong states from aggressively pursuing their interests to the hindrance of weaker states. At least curb the worst extravagances of such behaviour.

As prime minister, Turnbull continues to ensure Australia remains a close ally of the United States. Washington’s energy remains the best way to re-enforce and support the system, helping to keep changes within the existing order, rather than against it. However, simply because power and order aren’t synonymous for Turnbull, there are areas where what is good for the US may not be good for the region (which would be an oxymoron in Abbott’s globe).

Therefore, Turnbull will seek to more obviously distinguish American interests through those of Australia and those from the wider region. He is likely to be more welcoming of endeavours such as the Asia Infrastructure Expense Bank, an initiative that split his predecessor’s cupboard in two. Likewise, he will wish to continue to build links along with states who can support the local order, with less regard for whether they are All of us allies. Therefore, New Zealand was Malcolm Turnbull’s first official go to, a country with similar ideas and concerns to Australia, but who famously abandoned the united states alliance in the mid-1980s.

None of this would be to suggest Australia will ever ‘choose’ China over the US. Nevertheless, its change in leadership will change the implication of ‘choosing’ america. According to the former leader Tony a2z Abbott, US power was what mattered. According to the new Prime Minister Malcolm Turnbull, the order the United States built has a value in its own right, one that might still stand, even as US power declines.

Australia has had four prime ministers in the last four years. None has had a substantial impact on the direction associated with national foreign policy. Architectural factors and a heavy bipartisan straightjacket constrain innovation and debate. Nevertheless, the latest change in leadership will suggest a slight re-evaluation of the hierarchy and meaning of key factors within the national policy mix.

This is unlikely to cause much change in the short term. In the medium to long term — should Turnbull last that long — the change may lead Australia towards a more regional and order-centric approach.

Will a Turnbull government mean a new foreign policy for Australia? is republished with authorization from East Asia Forum

The Trans-Pacific Partnership (TPP) agreed to on Five October 2015 covers almost a third of world trade as well as 40 percent of global GDP. Through not being part of the TPP, India dangers losing out. According to a Focus on Global Trade and Investment study, India’s nominal GDP is likely to trim by a lot more than 1 percent because of trade and investment diversion caused by the actual TPP. The ensuing negative effects upon India’s economy by way of income and job losses will be large.

India’s integration into the global economy is under China’s, also excluded from the TPP. India has a share of only 2.1 percent in worldwide trade (five times less than China’utes) and cannot do with further industry diversion. One reason for China’utes current clout is it’s active integration into the global economy over recent decades. Today it leads exports as well as foreign direct investment (FDI) inflows. If India wants to grow in order to such economic and geopolitical levels, it must practice better plug-in.

Global supply chains make up 80 percent of international trade these days. The TPP will further heighten this trend, as it may link production facilities across edges. Joining the TPP could help Indian integrate its small and medium-sized businesses into these production networks. Indian exports are most likely to take a hit because the TPP provides special concessions to some of its key partners to purchase from other TPP member countries. The United States, for instance, consumes thirty percent of Indian native textiles exports, and will come under stress, as competitors such as Vietnam will be in a position to usurp India’s market share on the back of benefits given under the TPP.

FDI inflows into India began to pick up from the mid-2000s. Today India is one of the largest recipients of FDI in the developing world and the biggest in South Asia. The TPP will incentivise foreign investment among member states, decreasing the relative attractiveness of India as a location among TPP members. Given it’s potential to create jobs and help build infrastructure, India is not in a position to forego potential FDI inflows.

The TPP also involves regulatory harmonisation, meaning that multi-national companies under the aegis of the TPP do not have to encounter regulatory hostilities in host countries or grapple with different laws. India’s legislations do not line up with global standards and companies have previously encountered retrospective tax regulations. In this context, a TPP that excludes India is not good news for the country.

However, despite it’s benefits, India cannot easily agree to several measures under the TPP. India, along with other developing nations, will find it difficult to give within on environmental standards due to its lower stage of economic development. Likewise, India will have a hard time conceding to the kind of intellectual property legal rights protection regime that the United States wants, as it relies on a huge generic drug manufacturing business. In addition, India cannot afford to sign up in sweeping tariff cuts expected under the TPP. It will also be near on impossible to meet the labour requirements of the developed West.

However, India should aim to negotiate upon these issues. Staying out of the TPP doesn’t help in either economic terms or foreign policy terms.

Even more significant are the geopolitical implications from the trade deal. The TPP is really a well-crafted geo-economic exercise as much as it is a industry and investment pact. It has been successful in excluding China as well as thereby potentially stunting its fast rise. While studies show the United States would gain marginally in economic terms using the implementation of the TPP, Washington offers clearly gained a geopolitical victory. Its motivations are understandable, as it may want to regain it’s leadership over global financial governance mechanisms after this lost some credibility following the 2008 financial crisis and the emergence of powerful new groups like the BRICS (Brazil, Russia, Indian, China, and South Africa).

India needs to deftly navigate the TPP waters by making sure it does not isolate itself by staying out of the picture for too long. At the same time, actively investing in the TPP will be hard. Indian should pursue an incremental process, where it initially joins the discussions after which determines how well it is to go in as a member. India might bring much needed flexibility to the TPP and use it to boost its own ties with United States.

However, there is no clear consensus in the Indian federal government on whether enhanced market access through the TPP will be well worth the gains. The TPP would involve huge costs to a few protected Indian industries. Undoubtedly, Indian would need to prepare itself for higher standards than it offers ever committed to in the past. Nevertheless, the gains for India if it joins the TPP cannot be ignored.

Ultimately, major structural changes in the actual Indian economy — from infrastructural overhauls as well as legislative fixes to institutional changes and human resource development — will determine whether India manages to succeed in an enormous amount of complex supply chain-led international industry and investment. Mega-FTAs are only enablers. India should partake in them according to its needs at the time.

India’utes TPP dilemma is republished with permission from East Asia Forum

The long-anticipated abolition of China's one-child policy is a first step in the right path. However, they can do a lot more.  In the West, the criticism of the one-child policy is that it is a "vicious Communist strategy." In reality, most competitors of that policy were Marxists and the idea itself came from free airline.

Overpopulation or old population?

Like in most countries, the birth price in China began to drop with industrialization and urbanization. In the Mao era, the crude birth price almost halved from Thirty seven to 20 per thousand, while infant mortality declined by over 75 percent. In the process, life expectancy almost doubled to Sixty six years in 1948-76, while population grew from 540 million to 940 million.

In the 1960s and 70s, birth planning was seen as a solution to China's economic problems and the slogan was "later, longer, fewer," later marriages, longer spaces in between children, and fewer of them.

While Mao's view was that population growth could empower the nation, Deng Xiaoping favored reducing population growth. However, even Deng advocated a goal, not a specific policy measure.

During a 1978 international conference, cybernetics expert Song Jian met Dutch theorists who had led to the then-famous Club of Rome report, Limits to Growth. Based on modeling, it forecast a catastrophe if globe population would not be limited.

Based upon these assumptions (which were discredited later), Song's own projections recommended that, without birth price limitations, China's population might explode. The seemingly "scientific" ideas appealed to many in The far east, which had coped with years of ideological excess.

As several Marxist theorists opposed Song'utes ideas, one of these critics, Lian Zhongtang, argued that "one-childization" could impose serious social costs upon the peasants. Nevertheless, they adopted the actual one-child policy in 1979.

Not a one-size-fits-all policy

Ever since then, the policy has been widely criticized in the West. Yet, the brand new policy, initially designed like a one-generation measure, did not fully materialize in practice in China.

First of all, the policy allowed many exclusions and ethnic minorities had been exempt. In accordance with China's yes action policies toward ethnic minorities, they usually allowed the second to have two children within urban areas and 3-4 in rural areas. In turn, ethnic Han people living in rural towns could have two children.

Until the 2010s, only a third of China's population was subject to a rigid one-child restriction. More than half of the Chinese language could have a second child if the first child was a woman.

Finally, policy enforcement was not through Beijing, but at the provincial degree. As a result, enforcement varied and some provinces relaxed the limitations. For instance, after Henan's coverage relaxation, majority of the provinces and cities permitted two mother and father who came from one-child families to possess two children.

Toward a new policy

In earlier 2013, I argued which Chinese population trends were at a crossroads. A year before, the working-age population (15-59 years) registered a decline, dropping by 3.5 million to 937 million. I believed that China needs a brand new demographic future because the conclusion of population policy changes takes years and China's economic growth is becoming reliant on human capital.

The first policy alter came in November 2013, when China relaxed its one-child policy. Now families could have 2 children if one parent had been an only child. In practice, the revision applied mainly to urban couples, since there were few rural one-child households.

Nevertheless, while 11 million partners in China could have a second child, barely one million partners applied to have a second child in 2014, less than half the expected figure of 2 million each year. Only half of eligible couples wished to have two children, mostly because of the costs associated with the 2nd child.

That led the government in order to abolish the one-child policy within October 2015, allowing all families to have two children. The new objective is to cope with a maturing population and "to improve the balanced development of population."

More changes needed

Population growth rate in China actually peaked at 2.8 % in the mid-1960s. By 1981, it halved to 1.4 percent and today it is close to 0.4 %. In the process, median age has almost doubled from Twenty two years to almost 36 years. To cope with such trends, they require much more.

• China could consider "pro-natalist" policies that support human reproduction with incentives (a one-time baby bonus, child benefit payments or tax reductions, paid maternity and paternity leave, etc).

• China can promote pro-growth guidelines by raising the retirement, increasing the share of the working force, and accelerating retraining.

• China could contain cruel conventional cultural norms, such as son-preference bias, which continue to prevail, whilst casting a dark shadow over the realization of women'utes true potential.

• While the come back of high-skilled Chinese Diaspora is already promoted, along with green card schemes to foreign talent, China could accelerate more comprehensive skill-based immigration.

Like many other economies, China needs fewer old individuals, more women, and young people. What makes China different is not the kind of demographic challenges it has to cope with, but their magnitude – which is a legacy of the one-child policy.

Unlike most countries, however, China'utes government has a more consequential role in the economy. Beijing might seize that role and push bold policy experiments as long as they emulate the wishes of the Chinese people and long-term growth prospects.

China's Demographic Long term is republished with permission from The Difference Group

Portugal's minority center-right government offers collapsed.  It was less than two months old.  Its downfall made possible by the willingness of the Socialists, the main opposition party to form a vast majority with the Left Bloc, Communists, and Greens.  They garnered 123 votes within the 230-seat parliament to defeat Coelho's program.  Coelho led a majority government until last month's election that saw it reduced to a minority.

The next step is not immediately obvious.  There are three general options.  First, President Silva can title Costa, the head of the Socialists, to form a brand new government.  Of course, this is the preference of the loose coalition he led to defeat Coelho's program.  2nd, Silva could seek an alternative prospect.  This does not seem to be a particularly compelling path.  Third, Silva could allow Coelho to serve as a caretaker till they hold new elections, most likely in Q2.  This would be quite political and controversial.  Yet by allowing Coelho to form a minority government with out giving the left parties an opportunity to form a majority government last month draw a great deal of criticism. 

Another wrinkle is that President Silva, prime minister 1985-1995, is due to step down within January.  He became President in 2006 and re-elected this year. 

There was ostensibly concern that the left coalition would not be stable.  However, the subtext was that the left would antagonize the official creditors.  There are variations among the left, but there is a joint distaste for the austerity that the lenders demanded in exchange for aid which Coelho accepted.  Still, the different daily activities promise to erupt, and potentially quickly.  Costa wants to unwind some public sector salary cuts, and bolster loved ones income by taxing inheritance of more than one mln euros, looking at changing the income tax brackets, and increasing the minimum salary.  The Left Bloc wants to restructure the country's debt while the Communists want to prepare to exit EMU.

Yesterday's developments are not an unexpected.  It has been a bit more than a 7 days in the making.  Over the past 5 sessions, Portugal's 10-year bond yield rose 20 bp, probably the most in Europe.  Portuguese equities have also underperformed, dropping 4.6% in the last five sessions.  In comparison, the actual Dow Jones Stoxx 600 is off about 0.6% within the same period.

To be obvious, Portugal not currently on an international assistance program.  This gives the official creditors less influence than they had over A holiday in greece.  Still, if the EU selected it could sanction Portugal if it misses its fiscal targets.  The main rating agencies place Italy at BB+.  Our proprietary model puts it at BBB-, simply into investment grade.  From the ECB's point of view, that fact that DBRS has Portugal in investment grade status is important.  If DBRS were to cut Portugal's rating, there is risk that the ECB concludes that Portugal no longer qualifies under the asset purchases strategy nor could they use government bonds for collateral with regard to borrowings from the ECB.

Portuguese political developments need the context of the push back against austerity.  Syriza in Greece, chastened by summer and spring events, is still struggling to satisfy the creditors’ demands for the next tranche of assistance.  Left of center governments are in France and Italy.  France seems to be pushing with regard to yet more forbearance from the European union for the 2016 budget target.  Italy's problem is not the deficit but the mountain of financial debt.  Spain has elections next month, and Prime Minister Rajoy appears to be seeking a more sympathetic ruling by the EU.

The Fed is now more widely seen raising rates a fortnight after the ECB eases policy further at the beginning of next month, so the euro remains on the defensive.  Recall that in the Greek drama, the actual euro never revisited the 03 lows (~$1.0460).  In fact, it did not go back below $1.08 until last week.  Portuguese developments may consider further on Portugal resource markets, but the situation appears far from a systemic risk.

Portuguese Politics Takes the Lightening Rod from Greece is actually republished with permission from Marc in order to Market

International scrutiny of Japan’s international policy direction and protection policy posture has been especially intense in recent months. Prime Minister Shinzo Abe’utes 14 August statement around the 70th anniversary of the end of World War II, and security legislation passed on 19 September have brought renewed attention to the topic.

In the lead-up to Abe’s August statement, speculation was rife that relations between Asia and its Asian neighbours might further deteriorate over historic issues. Still, the Abe statement struck a balance that gained a favourable review from the Japanese public, satisfied their conservative political support foundation for the most part and avoided any kind of serious worsening of relationships with China and South Korea. Critically, Prime Minister Abe acknowledged as well as upheld the war apologies associated with previous Japanese governments and declared that this ‘position articulated by the previous cabinets will remain unshakable into the future’.

While the Chinese and Southern Korean governments were not completely satisfied with the Abe statement, these people restrained their criticism. This leaves the door open for serious efforts to improve trilateral relations. On the sidelines of China’utes own World War II anniversary actions on 3 September, Chinese President Xi Jinping consulted with South Korea President Park Geun-hye regarding the possibility of reigniting trilateral Japan–China–ROK summits. All three countries need follow-up efforts to make this a reality.

At the same time frame, having clearly upheld past Japanese government war apologies, the time is right for Japan to shift its focus to the growth and development of proactive and forward searching diplomacy.

The passing of the recent security legislation has been criticised in some circles as an attempt by Japan to return to militarism or to establish itself as a so-called ‘normal nation’. The security bills somewhat loosen the self-imposed constraints upon Japan’s defence, carried out inside the framework of the Article 9 ‘peace clause’ of the Japanese Constitution.

The brand new legislation permits the Asia Self-Defense Forces (SDF) to use force with regards to collective self-defence only if ‘an equipped attack against a foreign country that’s in a close relationship with Japan occurs.’   Or, if the attack ‘threatens Japan’s survival and poses a clear threat to fundamentally overturn people’s right to life, liberty as well as pursuit of happiness’, there are ‘no other suitable means available to repel the attack’, and the use of force is limited to ‘the minimum degree necessary’. The bills also expand the actual permissible scope of the SDF to provide rear-area logistical support to friendly nations, respond to ‘grey zone’ incursions into Japoneses territory short of an outright armed attack, and take part more effectively in UN peacekeeping operations (PKOs) in line with international norms.

Japan’utes neighbours and future Japoneses governments should read the trigger for resorting to the exercise of collective self-defence as related exclusively to defensive objectives. Some of the government explanations within the Diet debates may have been deceptive.  The example of a demining mission in the Hormuz Strait that suggested which economic triggers would be allowable might especially be misleading. Japan is still highly restricted in terms of pursuing collective self-defence like a tool to achieve any political or economic agenda.

Practically speaking, the security bills open the door for SDF participation in joint contingency planning. The SDF may also now provide more substantial rear-area as well as logistical support to friendly militaries in case of a situation that would seriously influence Japan’s security. With regard to UN PKOs, excessive restrictions beyond worldwide and UN norms undermined past Japanese contributions. SDF soldiers were under the protection of troops from other nations, but they could not help defend individuals very soldiers who were safeguarding them. Bringing SDF participation in UN PKOs in line with UN norms will enable Japan in order to contribute more substantially to the peaceful enhancement of the international security environment.

Japan’s tranquil but low-profile foreign policy position over the last 70 years is a source of both praise and criticism. Japan has been commended for eschewing war but has also been disparaged for its passive chequebook diplomacy and the asymmetrical nature of its security dependence on the United States.

Given the ongoing structural changes in Asia, there is a need for Japan to take on a more proactive diplomatic approach to peace. The premise ought to be on the following five crucial principles.

First, Japan must directly face up to history. The basis for that Japanese government’s official acknowledgement of history continues to be the 1995 Murayama Statement, which included a good apology for Japan’s wartime transgressions, and the 1993 Kono Statement, which included a good apology for and recognition of the role of the Japanese military in forcibly recruiting some of the comfort women.

There is absolutely pointless to back away from these jobs in the future. Any statements or even actions by Japanese politics or social leaders which are seen as denying or downplaying this recognition of history will cast doubt on Japan’utes future intentions. History issues must not be allowed to impede the deepening of mutual trust in between Japan and its neighbours, nor disrupt the regional purchase amid the shifting stability of power.

Second, maintain a national commitment to peace. After it’s defeat in World War II, Japan transformed itself and it has taken care of a peaceful posture under Article 9. Under the new security legislation, Japan ought to still maintain this peaceful posture. While it can now participate more actively in worldwide security cooperation, Japan’s basic security outlook must still be rooted in a defensive approach that does not use military way to pursue economic or political agendas.

Third, Japan must offer its self-defence and enhance worldwide security. The two key support beams of Japan’s defence are the SDF and the US–Japan alliance. To ensure its security, Japan should continue to rely on the United States, and particularly its nuclear umbrella. The threshold for the United States to lean towards the use of force internationally is higher under the Obama administration. As a result, Japan should take on higher responsibility for its own defence and increase cooperation along with partners such as Australia, Indian, South Korea and ASEAN. It should additionally play a more active part in the peaceful enhancement of international security through the United nations PKOs and other means.

Fourth, Japan should advance democratic values. The fundamental elements of Japan’s democracy include not only elections, but also a respect for the rule of law, human rights and the principles of a market economy. Japan can’t and should not use military pressure to promote democracy. However, it can behave quietly behind the scenes, including through institutional capacity building, to assist developing countries in establishing the actual foundational elements of democratic society.

Lastly, Asia should pursue more energetic and strategic diplomacy. Future global economic growth and anticipating the waves will undoubtedly centre in East Asia. A rise in the military strength of countries around the region will accompany economic growth, ushering in a more multipolar landscape. Maintaining peace and order in the region amid this shifting stability of power will require innovative diplomacy to realise win–win situations for all countries under an inclusive regional order. Japan must create a proactive diplomatic strategy to further engage with the region and deepen cooperation through such means as the East Asia Summit, the actual Trans-Pacific Partnership, the Regional Extensive Economic Partnership and the suggested trilateral Japan–China–ROK FTA.

By adhering to these five principles, and especially by pursuing a more proactive and strategic approach to diplomacy in Asia, Japan may contribute to the creation of a more steady and peaceful regional order.

Proactive diplomacy for peace under Japan’s new security legislation is actually republished with permission from East Asia Forum

Recent student protests over tuition fees, university staff and curricula, university autonomy as well as outsourcing have highlighted numerous issues facing South Africa. The agreement not to increase fees in 2016 has left the country having a short-term education-financing gap. The increasing demands for free university education leave it having a longer-term, and much bigger, financing issue.

Can South Africa meet the funding deficiency in 2016? Yes.

Can it pay for free education for all? No. Someone will have to pay.

The effect of no fee increases

In the short term, the outcome of the 0% increase is unlikely to boost eyebrows, if it is indeed the once off. Cost estimates range between R2.6 billion and R4.2 billion, depending on the methodology used.

One objective estimation of the cost is based on the dumbbells from the consumer price catalog, where the cost of education makes up about 2.95% of consumer investing (basic and secondary education account for 1.72% and tertiary education accounts for 1.23%). The GDP forecast is at R4.35 billion, which corresponds to R2.7 billion in consumer spending. Using the 1.23% weight to customer spending gives an estimate of the cost of tertiary education.

Between 2009 and 2015, tertiary institutional charges escalated at around 4% to 5% over the rate of inflation. Likewise, student numbers increased more than that period, suggesting the dumbbells above need to adjust upwards. For that reason, we assume a 1.5% consumer weighting.

Thus, the cost of university fees (excluding bursaries) would be close to R40 billion per annum. Given that a 10% increase sparked the student protests, which implies the need for R4 billion. If that is the only cost, the budgetary impact will be small.

If funded by government, without using the contingency reserve (just R2.5 billion has been allocated for the 2016 contingency reserve), the actual knock-on effect on the budget deficit would be no more than 0.1% of GDP (R4 billion from R4.35 trillion GDP, yields 0.092% of GDP).

Is free university education affordable?

Using the same values above, free university education would require a minimal injection of R40 billion in the public purse. Such an shot implies that the deficit might increase by nearly 1% of GDP, if not funded from alternative arrangements.

The amount could be raised through borrowing and monetising that deficit. However, monetising leads to inflation, which is bad for the poor. Thus, tax revenues, either current or future, will have to rise.

In addition, fees aren’t the sole cost to university attendance. To go to a residential institution, students require “study-friendly” accommodation near the institution as well as adequate nutrition. The overall cost towards the fiscus could be as high as R100 billion per annum. Because reduced tuition disproportionately advantages the wealthy, it is unlikely that free education will happen for those.

For this analysis, we assume a cost of R60 billion, which includes the R40 billion and a back-of-the-envelope estimate of the additional amount necessary for state-owned student lender, the National Student Financial Aid Scheme (NSFAS). For 2014-2015, NSFAS obtained R8.8 billion, which was in between one-half and one-third what was required. All of us round the amount to R20 billion.

Raising an extra R60 billion in a depressed economy through taxation is a daunting task. The Medium-Term Budget Coverage Statements suggest that South African Revenue Services still has range to raise further revenues from clamping down on tax avoidance.

In addition, the government will look to secure down on the use of transfer prices by multinational companies as a means of avoiding tax. Nevertheless, these improvements in selection will not cover the additional costs.

Other options include an increase in value-added-tax (Tax), personal or corporate income tax, or the siphoning of funds through some other activity. The Tax rate now is 14%.

Based on simulations we’ve done, VAT would have to go up by around 0.6% to 14.6% to raise revenue by R60 billion. For personal income tax, the actual feasible increase rate might lie between 1%-5%, depending on the degree of bracket creep and distribute assumed. On the other hand, the public field wage bill is in the selection of R450bn, and increases of 7% had been recently agreed.

How about a higher education tax?

The government could also consider the introduction of new taxes, like a carbon tax, wealth tax or higher education tax.

A higher education tax, as in the UK, has appealing elements. Its imposition is actually on those who have earned a higher education degree, can scale to earnings, and a established number of years.

The tax could also apply retroactively. According to the 2011 census, there were 3.6 million individuals outdated 20 and older holding a higher education qualification. If your higher education tax were put on all 3.6 million, the average higher education tax would be regarding R16,667 per degree recipient per year.

The actual average would be subject to whether or not every degree holder pays, payments are limited to some certain number of years post conclusion and whether one elements in the type and level of degree. The average would additionally depend on how it is scaled to income, the total number of college students in the system and the number of students that complete and discover jobs.

For the most part, move on unemployment rates are much lower compared to the rest of the population. However, emigrants might disproportionately benefit from such a tax, potentially exacerbating brain drain, and the taxes could create disincentives to the immigration law of skilled labour.

Despite possibly exacerbating brain drain, a higher education tax is a practical solution. It allows for both “private” returns in order to education and “social” returns to education. For example, social workers are paid less, and, consequently, could be taxed at a reduce rate, while accountants generate more, and could be taxed at a higher rate.

Furthermore, it embodies the concept that education is an investment in our future.

However, many potential pitfalls to “additional taxes” remain. Without a doubt, the combination of the needed tax increases and the pure magnitude would substantially deteriorate disposable income. It would additionally lead to significantly weaker development.

How South Africa could fund steeper higher education costs is republished along with permission from The Conversation

EM starts the week on an uncertain footing. Commodity prices were off sharply until comments by Saudi Arabia lifted them, reversing the trend in commodity-sensitive property. The dollar is also back again on the rise, pressuring EM FX even while a December FED backpack is now just about fully listed in. In South America, the actual victory of the market-friendly candidate within Argentina and better political winds within Brazil have also given the area some hope for the near term, which could help sentiment more broadly.

South Africa reports Q3 GDP Tuesday, and expects it to grow 1.3% y/y versus. 1.2% in Q2. The SARB rate hike last week will be an additional headwind on the economy, and occurs top of fiscal tightening too. We think risks to development are on the downside. The big real question is how much more the SARB can tighten up in the coming months?

Turkey’s central bank meets Wednesday and expects it to keep rates steady at Seven.5%. Unfortunately, President Erdogan is once more talking about monetary policy. After being surprisingly quiet during the election period, he is once more pressuring the central bank to ease, despite Turkey’s chronic rising cost of living problem. He called for the financial institution the cut rates to closer to historical lows of 4.5%, from back in 2013. Risks to central bank self-reliance in Turkey have been an adverse factor in market confidence for some time, and it doesn’t look to be getting any better.

Mexico reports mid-November CPI Tuesday, and expects it to rise 2.48% y/y. October trade will be documented Friday. Q3 GDP came in stronger than expected, up Two.6% y/y vs. 2.4% consensus along with a revised 2.3% (was 2.2%) in Q2. Some may look for a possible Banxico rate hike at the next meeting December 17, which is a day after the FOMC meeting and likely Fed lift-off. We think it is unlikely, as officials seem to be tilting a little more dovish lately. More appear to want to see the impact of a Fed hike before deciding on South america rates.

Brazil’s COPOM meets Wednesday and expects to keep rates steady at 14.25%. Earlier in the day, it reviews October PPI. Brazil then reports October current account and FDI on Thursday. November IGP-M wholesale inflation will be documented Friday, and we expect it to rise 10.66% y/y vs. Ten.09% in October. Pipeline cost pressures are still building, and will keep upward pressure on consumer prices as well.

The Philippines reports Q3 GDP Thursday, and that we expect it to grow Six.3% y/y vs. 5.6% in Q2. The country appears to be avoiding the downturn that most in the region are experiencing. Rising cost of living was 0.4% y/y in Oct, well below the 2-4% target variety. However, there are upside dangers to inflation due to El Nino, and thus we think monetary policy seems balanced right now.

Singapore reports October IP Thursday, and wants it to be -4.9% y/y vs. -4.8% in Sept. The data continue to come in gentle, and so we expect the actual MAS to ease again at its next policy meeting within April. We would not rule out an intra-meeting move, as it do this January.

Colombia’s main bank meets Friday and expects to hike rates 50 bp to 5.75%. This would follow a larger than expected Fifty bp hike last month. Nevertheless, the market is somewhat split. Of the 18 analysts polled through Bloomberg, 11 see a 50 bp hike, 6 see a Twenty five bp hike, and 1 sees no hike. Inflation continues to move higher. At 5.9% y/y in October, it’s the highest since March 2009 and above the 2-4% range for that ninth straight month. As such, further tightening seems most likely as we move into 2016.

Emerging Markets: Examine of the Week Ahead is republished along with permission from Marc to Market

Since President Joko Widodo (Jokowi) took office, he has been clear and constant in explaining his international policy priorities, enunciating the principle of putting ‘national interest’ first. Putting national interest first isn’t surprising in a leader’s foreign coverage. What has been notable is the way that Jokowi has defined ‘national interest’. Put simply, Indonesia’s policy has shifted from one based on values to one based on economics.

Jokowi’utes first speech on international affairs signalled the change in strategy, at the Association of Southeast Asian Nations (ASEAN) summit within November 2014. While agreeing upon ASEAN’s importance, he stressed that ‘We have to make sure the national interest cannot be lost’. He restated the principle before visiting Singapore in July 2015, saying that ‘national interests would be the motivation for cooperation with other countries’.

This is a significant policy shift compared to his predecessor, former president Susilo Bambang Yudhoyono (known as SBY). Indonesia’s technique under SBY was to raise its international status by upholding values such as human legal rights and democracy, and by playing an energetic part in global government through institutions like the United Nations (UN). ASEAN was seen as a way of achieving greater leverage for Indonesia’s diplomacy. The economic aspect of national interest was very fragile in 2005.

In 2004–2005, when SBY began his first phrase, the Bush administration’s battle against terrorism was at its peak. The Bali bombings and Jemaah Islamiah’s activities showed that Indonesia also had a security problem. Along with security concerns dominating worldwide politics, preventing foreign politics or military intervention what food was in the top of Indonesia’s diplomatic agenda. Its strategy was to emphasise that it hadn’t been a country of extremists, but the nation of moderate as well as modern Muslims, and a successful democracy.

This had been why SBY projected its image in terms of values rather than the economic climate. In contrast, Jokowi came to office throughout a major economic power shift. He had to project a picture of Indonesia as a cautious economic player that would not really easily fall behind.

Three elements stand out when we examine the new foreign policy.

First is the Indonesian people’s frustration in the final years of the SBY administration. Unfortunately, towards the end of his presidency, SBY’s ‘million friends and zero enemies’ policy sounded more like an excuse to prevent taking responsibility to advance domestic demands than anything else.

Jokowi and the team were aware of these frustrations. It appeared the new president’s plan to overcome the shortcomings of his predecessor’s platform was to reveal the diplomatic dividend with the individuals. The easiest way to do that would be by sharing the economic benefits of trade, investment and employment.

The restrictions of value-based or ‘democracy’ diplomacy has been the second key factor in changing international policy. One milestone associated with SBY’s diplomacy was establishing the actual ASEAN Charter. This not only institutionalised the association and raised its trustworthiness but, with strong inspiration from Indonesia, ASEAN also embraced the idea of shared political ideals: human rights and democracy. Winning agreement from the politically diverse regular membership was a significant achievement.

Shared-value diplomacy additionally had a strategic purpose, for this was designed to create greater international leverage both by improving ASEAN’s strategic value and increasing Indonesia’s global status as the de facto leader.

However, the limits of value-based diplomacy became clear following the coup in Thailand in Might 2014, after the ASEAN charter had taken effect. As the charter prohibits buying of power by extra-constitutional indicates, the coup violated it’s principles.

SBY and then foreign reverend Marty Natalegawa demanded that Myanmar, the 2014 ASEAN chair, issue a statement criticising or indicating serious regret about the occasions in Thailand. However, unsurprisingly, Myanmar had been quick to acknowledge the Thai junta and the importance of the military’s need to intervene at times. Cambodia followed suit, acknowledging the actual junta because the monarchy endorsed it, the common source of legitimacy between the two countries.

Failure to condemn the Thai hen house weakened the charter as well as Indonesia’s diplomatic influence in making it. It showed the bounds of what Indonesia, despite to be the group’s de-facto leader, could hope to achieve through its diplomacy in ASEAN and through value-based diplomacy.

Third, the shift in the direction of a greater economic focus fits within the current administration’s broader views on global dynamics along with a shift in economic power to the actual East. As Jokowi’s thought of the regional and global order is fundamentally moored in economics, it was organic for him to see Indonesia’s national interest in the same terms. The aim is to ensure that Indonesia’s economy is in the winner’s circle as global dynamics alter. Looking forward, there is no hint which Jokowi’s foreign policy and it is economic focus will change.

Optimists and pessimists alike will agree this focus is good for Indonesia’s potential customers. Optimists consider that, with Indonesia’s demographic bonus, there is great potential for it to be the next Asian development engine. Emphasis on economic nationwide interest will therefore promise a gain in Indonesia’s worldwide political power. Pessimists will see Asia’s growth slowing and protectionism establishing. In this scenario, the government might gain credit for trying to secure Indonesia’s economic curiosity by crafting a friendly local and global environment.

The economic turn in foreign policy is more structural than based on management. Given how similar Jokowi as well as Prabowo Subianto’s comments were within pre-election debates on foreign policy, it seems likely that even when Prabowo had won the presidential political election, he would have defined ‘national interest’ in similar terms. Domestic economic benefits will continue to be electorally popular and critical in Indonesia as well as define what is and isn’t in the national interest. Consequently, it will continue to drive Indonesia’utes foreign policy — at least before the next turn.

Indonesia’s international policy takes an economic turn is republished with permission through East Asia Forum