Asean nations feud over South China Sea

PHNOM PENH - Southeast Asian leaders feuded on Monday over how to handle tense maritime territorial disputes with China, overshadowing talks at a regional summit meant to strengthen trade and political ties.

The leaders of the 10-member Association of Southeast Asian Nations had hoped to present a united front on the South China Sea row as they host Chinese Premier Wen Jiabao and US President Barack Obama for annual talks.

But that effort broke down just before Southeast Asian leaders were scheduled to meet Wen, amid divisions between Chinese ally Cambodia and the Philippines.

Cambodia, this year's ASEAN chair, said on Sunday that Southeast Asian leaders had agreed not to "internationalise" the disputes and would confine negotiations to those between the bloc and China.

The apparent deal would have been a victory for China, which has long insisted that it should only negotiate directly with rival countries and that the Philippines should not seek support from the United States.

However Philippine President Benigno Aquino on Monday publicly rebuked Cambodian Prime Minister Hun Sen, telling his fellow leaders no such consensus had been reached and he would continue to speak out on the global stage.

"The Philippines... has the inherent right to defend its national interests when deemed necessary," Philippine Foreign Secretary Albert del Rosario told reporters, quoting Aquino's comments to his fellow leaders on Monday morning.

The feud echoed unprecedented infighting at an ASEAN foreign ministers' meeting in Phnom Penh in July, which ended for the first time in the bloc's 45-year history without a joint communique.

The Philippines and Vietnam had wanted the communique to make specific reference to their disputes with China. But Cambodia, the hosts of the talks and a close China ally, blocked the moves.

ASEAN members Vietnam, the Philippines, Malaysia and Brunei, as well as Taiwan, have claims to parts of the sea, which is home to some of the world's most important shipping lanes and believed to be rich in fossil fuels.

But China insists it has sovereign rights to virtually all of the sea.

Tensions have risen steadily over the past two years, with the Philippines and Vietnam accusing China of increasingly aggressive diplomatic tactics to stake its claims.

Temperatures could rise again later Monday when Obama arrives in Phnom Penh to join the East Asia Summit, a two-day event also involving the leaders of Japan, South Korea, India, New Zealand and Australia.

Obama has previously angered China, and emboldened the Philippines, by calling for the rival claimants to agree on a legally binding code of conduct to govern their actions over the sea.

Analysts said he would likely repeat that call in Phnom Penh, as well as make comments highlighting the importance of freedom of navigation in the sea.

ASEAN officials had said they would push Wen during their talks on Monday to quickly start high-level, formal negotiations on a code of conduct.

But Chinese foreign ministry spokesman Qin Gang insisted that China wanted to continue with the current arrangement of lower-level talks on the issue. "We already have good discussions with ASEAN," Qin said.

Even with the South China Sea row festering, countries involved in the East Asia Summit were expected to focus on ways to expand economic ties.

ASEAN nations are set to officially launch negotiations on Tuesday for an enormous free trade pact with China, Japan, India, South Korea, Australia and New Zealand.

And despite their own territorial rows, China, Japan and South Korea are likely to hold talks in Phnom Penh on Tuesday aimed at kickstarting three-way free trade negotiations, according to Qin. - AFP

China opposes 'internationalisation' of sea row

Phnom Penh (AFP) Nov 19, 2012 - Chinese Prime Minister Wen Jiabao told Southeast Asian leaders Monday that negotiations to end territorial disputes in the South China Sea should only be held between claimant countries.

Wen stressed Beijing's position during a summit with the 10-member Association of Southeast Asian Nations (ASEAN) in the Cambodian capital of Phnom Penh, Chinese foreign ministry spokesman Qin Gang told reporters.

Qin said Wen quoted from a 2002 deal reached between ASEAN and China in which they agreed to limit negotiations to "directly concerned" countries.

Wen said that among the principles under the 10-year-old declaration is to "oppose the internationalisation of the issue".
"So Premier Wen quoted the principles... enshrined in the declaration," according to Qin.

ASEAN members Vietnam, the Philippines, Malaysia and Brunei, as well as Taiwan, have claims to parts of the sea, which is also believed to be rich in fossil fuels.

But China insists it has sovereign rights to virtually all of the sea.

Tensions have risen steadily over the past two years, with the Philippines and Vietnam accusing China of increasingly aggressive diplomatic tactics to stake its claims.

The Philippines has consistently sought wider help, such as from close ally the United States, in dealing with its more powerful Asian neighbour on the South China Sea issue.

The controversy of "internationalisation" flared again in Phnom Penh this week with the Philippines insisting it should not have to confine its negotiations to just with China.

US President Barack Obama, who arrived in Phnom Penh on Monday night for an 18-nation East Asia Summit, was also expected to raise his concerns over the South China Sea, which would anger the Chinese but embolden the Philippines.

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Australia, still an US's sheriff in the Asian Century?

Down Under and all over: Australia is still finding its place in the world, a work very much in progress. 

Reeking of Austro-centrism: The White Paper has been criticised for remaining centred on Australia’s own concerns and interests, with scant consideration for Asia. — AFP

TWO Sundays ago, Australian Prime Minister Julia Gillard released the White Paper “Australia in the Asian Century”. For many, it was a long-awaited document.

Australia’s history, polity and geography make for an odd mix. Anglophone settlers had to reconcile themselves with a strange terrain, unfamiliar Aboriginal people, isolation from mother country Britain, even conflict between allegiance to the British crown and incipient republicanism, and now a rising Asia.

White settlers “tamed” the land and established thriving outposts around the edges of the vast island. Asian immigration followed, driven by push-pull factors of a relatively undeveloped East Asia and a more developed Australia.

As the 20th century began, a racist White Australia Policy restricted non-white immigration while encouraging European settlement. It lasted half a century and took another quarter of a century to dismantle.

Meanwhile, the indigenous peoples suffered disproportionately lower levels of life expectancy, education, employment and higher imprisonment rates.

Then later in the 20th century, East Asian economies surged. Trade links with East Asia multiplied in number and volume.

The self-image of Australia, the largest country in Australasia, Oceania or the South Pacific, became more fraught. Its geography, history, politics and society were not characteristically Asian, yet it felt increasingly overwhelmed by a rising East Asia even as it experienced the prosperity.

When the Labour Party’s Paul Keating was prime minister in the 1990s, he “declared” Australia an Asian country. After he left office, he reversed that stand and admitted that Australia was not an Asian country.

John Howard of the conservative Liberal Party next became premier and distinctly identified Australia as a Western, US-led ally in the world. President George W. Bush affirmed that by saying Australia was not just Washington’s “deputy sheriff” but its sheriff.

Labour’s Kevin Rudd next became premier, and much was made of his fluency in Mandarin. This was to be an Asian Century of economic paramountcy, led by a rapidly rising China.

Interactions with Asia and Asians, parti­cularly in economics, continued and grew. But Australia remained firmly rooted in the US-led Western sphere with its geopolitical concerns.

This added to Canberra’s fuzzy regionalism and amorphous identity in relation to Asia. The more Asia grew in global stature and consideration, the more vexed Australia’s strategic relationship with it became.

Amid these rising stakes, a White Paper as an official declaration of intent assumes considerable significance. But the heightened expectations produced general disappointment instead: most of the White Paper’s 320 pages and nine chapters concerned Asia, but seen narrowly for Australia’s own interests.

Reception to the document within Australia was reportedly supportive, but criticism from various quarters was also evident. There was more agreement over the need for the White Paper for an insular Australia than with the contents of this particular White Paper.

The parliamentary opposition criticised it for being long on rhetoric but short on detailed directions. The business community found it redundant since it was already relating very much with Asia.

Evidently these business critics saw international relations only through the prism of their business deals. The social, cultural, strategic and other aspects of external relations typically escaped them.

The White Paper itself begins with a decent outline of an ascendant Asia, a vast continent with mounting prospects, growing middle classes and expanding markets combining to change Australia’s priorities and “strategic environment”. Where East Asia was once seen as the source of unwanted migrants, it is now regarded as the fount of fresh capital and trade orders.

Much of what follows is an Australia-centric diagnosis and prescription of what Australians should do to benefit from such an Asia.

That Australia itself is so moved by Asia’s rise testifies to the cross-border nature of such fortunes, yet the White Paper remains centred on Australia’s own concerns and interests, with scant consideration for Asia.

A commentary by the Australian-born veteran industrialist, technical consultant and academic Murray Hunter, who has spent a productive working life in Asia, is telling. Writing in Indonesia’s Jakarta Post newspaper, he wondered aloud whether the White Paper actually depicted Australia finding its way in the Asian Century or just getting lost in Asia.

He said the document “reeked of Austro-centrism”, one-way concerns to get what it wants from Asia, and “niggling China with its staunch loyalty to the US” even though “China saved Australia from a deep recession”.

Action spoke louder than words, he said, and “Australia needs the region more than the region needs Australia”. He said the country had to overcome its deep-set belief that its own cultural values were somehow universally accepted across the region.

Murray said “the White Paper is still haunted by Australia’s past”, with Asia “seen only as a means for Australian incomes” to rise. He found the document failed to provide the “vital key” of “accommodation of Asia to what Australia really has to offer” as an independent country “willing to put its lot with Asia and not with the US”.

A recent high-level bilateral forum organised by ISIS Malaysia in Kuala Lumpur examined several aspects of the White Paper. “Chatham House Rules” meant that speakers could not be quoted or identified, but several comments remained pertinent.

The White Paper was seen to omit, among other things, measures for building relations with Asean countries and Asean itself. Some questions were also raised.

It was then explained that the “US military base” in Darwin was more of a facility than a base, since it would host only a rotation of US troops rather than a permanent emplacement. Australia was said to respect China’s right to modernise its military, while feeling equally entitled to nurture its security with the US.

It was further explained that Australia’s role was originally to find ways to engage the US in the region. It was “in Australia’s DNA” to seek security from US involvement in the region.

In a brief exchange later with visiting Australian Foreign Minister Senator Bob Carr, I asked him how the White Paper positioned Australia differently from the past in its relations with Asia.

He said Australia now better understood that its economic future was dependent on Asia, adding that Malaysia’s development was an example of what a growing middle class in the region signified.

On how Australia could better partner with East Asian countries for mutual benefit, he pointed to good governance, a record of economic reform and an exchange programme with young Malaysian Muslims for better understanding.

Carr said Australia should seek its security in Asia but not from Asia, while accepting Asean centrality.

He alluded to Australia’s role in the peace agreement in the southern Philippines brokered by Malaysia.

When asked about policy fluctuations between the Liberal and Labour parties, he said that although Australia is seen as a country with a security relationship with the US, there was more that could be said of that. He added that a country was entitled to look after its own security with its own foreign relations (Australia with the US).

Then when asked how Australia’s foreign policy was changing in respect of Asia, Carr said the fact that he was here in Malaysia while Gillard was in Vietnam, and both of them were heading to Bali (for an Asean-convened meeting), said it all.

Behind The Headlines By Bunn Nagara

Asean facing new regional geopolitics

Asean can no longer duck difficult matters of regional security and must fashion a more pro-active strategy in the new environment.

THE Asean (Association of Southeast Asian Nations) summit, as well as other high-level meetings, notably the East Asia Summit (EAS), takes place from Nov 18 to 20 with its centrality in regional order-building under threat.

While the regional grouping is evidently disunited on how to pursue disputes four of its members have with China in the South China Sea, the cause runs deeper: the new regional geopolitics informed by a strategic contest for influence in Southeast Asia between China and the United States.

For over two years now the American strategic “pivot” towards the Asia-Pacific has arrested Southeast Asia’s strategic drift towards China.

The Asian giant’s economic rise and success not only won the admiration of Southeast Asian states, but also helped Beijing establish strong trade and financial ties with them.

Especially since the Asian financial crisis of 1997-98, when the United States was conspicuous by its inaction, China has forged deep ties with the region by addressing that crisis with regional states (not devaluing the RMB was of great help to struggling Southeast Asian economies), and by a close association now formalised in Asean + 3 (the three being China, Japan and South Korea).

In January 2010, the China-Asean Free Trade Area came into effect.

The United States had been pre-occupied with faraway military adventures in the Middle East and Central Asia, as well as, of course, with the financial and economic crisis since 2008. The pivot is a reassertion of interest to check the United States’ own drift towards sub-primacy in Southeast Asia.

In November last year, the United States joined the now 18-member EAS (comprising the Asean 10, China, Japan, South Korea, Austra­lia, New Zealand, India, Russia and America).

The previous June, at the Shangri-La Dialogue, the United States Secretary of Defence had announced the rebalancing of American naval forces in Asia-Pacific to 60% from 50% by 2020.

At a regional security conference in July 2010, Secretary of State Hillary Clinton declared American interest and commitment to freedom of navigation and the peaceful settlement of disputes in the South China Sea.

This was significant as it put China on notice which had been involved in a number of incidents at sea with smaller Southeast Asian claimant states before then, and since.

The United States has also reasserted its own economic interest in the region where American investment is still substantially larger than China’s. The strategic under-pinning is the Trans-Pacific Partnership which the United States is vigorously pursuing – and from which China is excluded.

With the contest joined, between a rising and a returning power, the new geopolitical environment presents a challenge to Asean. The grouping is premised on a regional order free of great power affiliation. Yet there was a desire for a counterweight to China which was becoming assertive in its South China Sea claims. But a counterweight to do what? Constrain, deter or contain China?

These questions and issues are discussed in a Special Report of LSE IDEAS (Centre for International Affairs, Diplomacy and Strategy), which concludes that Asean cannot any longer duck difficult matters of regional security and must fashion a more pro-active strategy if it is not to be a bystander in an essentially bipolar, even if crowded, regional space.

The conflict in the South China Sea has become the first serious test in the strategic contest between China and the United States in Southeast Asia. Indeed it is the test also of whether Asean unity will hold.

For the first time in its 45-year history, Asean foreign ministers failed to agree on a joint communique at the end of their meeting in Phnom Penh last July because of differences over how to word the incidents and disputes some of the members have with China – with specific reference to recent incidents or only generally.

China was the invisible elephant in the room. Cambodia, the chair of Asean, took Beijing’s side in only wanting a general reference. The Philippines, which was involved in a two-month stand-off with China last April, wanted specific reference to incidents which disturbed the peace – with Vietnam’s support which has had the most number of clashes with China. With no consensus, the meeting broke up in some disarray.

It is thought there are now two camps in Asean – with Cambodia, Myanmar and Laos supporting China, and the other seven opposed to Chinese belligerence in the South China Sea.

Actually, there is a soft middle of Asean states which believe the Philippines was over-emotional at the meeting and has been encouraged by the American pivot to take a firm stand. In any case, Asean is divided.

This is an uncomfortable fact Asean has to address. But it is not clear it wants to.

When the communique was not released, it was described first as a disaster.

Then as a dent to the organisation’s credibility. Later still, a setback. Finally, it became commonplace to claim the different perspectives on the South China Sea disputes do not on their own define what Asean is about. Asean is in denial.

Asean disunity will sour all other worthwhile efforts. The new geopolitics of the region has already drawn member states closer to China or the United States – whether or not they are involved in the South China Sea claims. How is Asean to find consensus, in the way it has always functioned, in this new environment?

Indonesia took the lead after the no-communique disaster to paper over the cracks by coming up with a six-point after-event agreement. Then its foreign minister worked hard on the code of conduct in the South China Sea which has eluded the region for the past decade.

Jakarta came up with what it called a “zero-draft” code, to placate Chinese sensitivities who have never been particularly keen on a specific, multilateral and binding code over an issue of “sovereign right”.

At a meeting of senior officials from Asean and China in Pattaya at the end of October, there was no agreement on the code.

It was put behind the development of guidelines to the declaration on the conduct of parties in the South China Sea, the UN General Assembly-like resolution first agreed to also all of 10 years ago.

It cannot be expected that Asean leaders at their summit this month will be able to forge a common regional perspective on the South China Sea dispute. But it must at least formally promote the Indonesian effort on the code of conduct as an Asean initiative.

Beyond this, the leaders must recognise the maritime dispute is a thorn in the flesh of regional peace and stability.

The danger of miscalculation by China, the more active Asean claimant states or, indeed, the United States could lead to a major conflagration.

Apart from the code, the leaders must launch a search for the means and paradigm that would find common benefit, based on joint development, perhaps founded on the idea of the common heritage of mankind – something which all developing countries were wedded to throughout the long and arduous negotiation of the UN Convention on the Law of the Sea.

President Obama is attending the EAS meeting following the Asean summit, underlining American involvement in the region.

So will Chinese Premier Wen Jiabao who will be stepping down next March – although continuity of China’s policy in the region and on the South China Sea is quite assured, as can be gathered from assertive statements at the 18th Party Congress.

Asean leaders would want to present as united a front as possible if they wish their organisation to be perceived as a third pole in the emerging regional balance of power.

Comment By Munir Majid

> Munir Majid, chairman of Bank Muamalat, is visiting senior fellow at LSE IDEAS. The full 90-page special report can be accessed at http://www2.lse.ac.uk/IDEAS/publications/reports/SR015.aspx.

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Engage maids directly instead of costly maid agencies in Malaysia

WHEN put in perspective, if a spouse in a Malaysian household resigns from her job as a substitute for a maid, with a conservative average monthly income of RM3,000, that is RM36,000 less on the household table.

Take into account 300,000 Indonesian maids that used to work here and you have a scenario, where families in this country will be forgoing RM11bil in potential household revenue.

It seems obvious that middlemen are trying to blatantly profit from the urgent need for maids.

On one side of the coin, you have Malaysian maid agencies who used to charge up to RM8,000 for securing a maid and when the Government announced a moratorium on fees chargeable, the Indonesia side immediately claimed the fee was too low (See article below).

Invariably, both the employer and the maid are the victims. In any employment sector, it is very unusual for a potential employee to pay a fee to be employed.

The argument for deductions put forth by maid agencies, that the deduction is for loans given to maids and for training, does not make sense.

Perhaps a holistic solution would be to allow Indonesian agents to open offices in Malaysia and work directly with Malaysian employers.

Create a maid training facility, where maids can arrive and be trained within a short period of 10 working days.

Such a facility can be co-sponsored by the Malaysian Govern­ment. All it should entail is 10 to 20 low- to medium-cost flats that can house 200 to 300 maids, with a common area that allows for training.

Concurrently, increase the maid’s salary to RM800 per month in lieu of any advance payment and no increase in the agent’s fee.

There should be no need for any advance payment with full payment to be made upon final selection, when the employer takes the maid home. Peg the agent’s fee at RM1,500, with reimbursements for other costs, from levy to travel, that must be substantiated with proper receipts.

This is similar to what is charged in Singapore.

The training programme should not cost more than RM1,500. Which means the total cost can be pegged between RM4,500 and RM5,000 at most.

Get agreement with the Indonesian government on the process for direct engagement with maids.

Maids should only be required to go through an orientation programme similar to Singapore’s SIP (Settling-In-Programme) for foreign domestic workers.

Maids should not be allowed to work for more than eight hours a day. If required to work overtime, they should be entitled to a minimum hourly rate of RM8 to RM10 per hour.

Create a toll-free number manned by agencies that will monitor the welfare of maids, to ensure their overall well-being at all times.

Souce: B. J. FERNANDEZ  Shah Alam, The Star views

Maid agencies: Fees are too low?

By YVONNE LIM  The Star

PETALING JAYA: Maid agencies are adamant that the RM4,511 fee imposed by the Government for Indonesian maids is too low, as the actual cost to recruit a maid is double the amount.

Many described the fee, which was agreed to in the Memorandum of Understanding (MoU) between Jakarta and Kuala Lumpur last year, as “impossible to meet” and said that they have been running at a loss while trying to comply with it.

An agency owner, who declined to be named, said that despite demand, his agency had stopped recruiting Indonesian maids as he would spend up to RM10,000.

He said the fees charged by Indonesian maid suppliers started at RM5,500 including training, medical check-up, transport and recruitment fees, as well as duit susu, which is a contribution paid to the families of the maids.

“If we are being charged RM5,500 per maid, how can you expect agencies to comply with a fee of RM4,511, especially now that the cost has gone up for everything, including air travel?” he asked.

He urged the Government to review the amount and consult both Indonesian and Malaysian agency representatives so that a more realistic fee could be set.

Malaysian employers had previously called for Papa to justify the increase in Indonesian maid fees by agencies by up to RM12,000 and asked for a breakdown of costs.

Some had also urged the association to pressure its members to comply with the agreed fee, saying that the high demand for maids would compensate for it.

A spokesman for another agency said her company was now charging RM9,800 per Indonesian maid.

“We have already lowered the fee, but we cannot do much as our Indonesian partners are charging close to RM6,000 per maid,” she said.

Association of Foreign Maid Agencies (Papa) president Jeffrey Foo said that prior to the morato-rium on maids from Indonesia, employers had no qualms about paying up to RM9,000 for domestic helpers.

“We voiced our disagreement on the RM4,511 fee when the Govern-ment consulted us as it is simply too low, and were shocked when they settled on that price in the MoU anyway,” he said.

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Malaysia's GDP growth dips to 5.2% in Q3, beats economists' forecast

KUALA LUMPUR: Malaysia's gross domestic product (GDP) for the third quarter ended Sept 30 expanded 5.2% year-on-year, supported by domestic demand and investment activities.

The expansion in GDP beat economists' median expectations of 4.8%. GDP growth in the second quarter was revised upwards to 5.6% from 5.4%.

Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz said at a briefing to announce the GDP data that growth in the quarter was supported by domestic demand, especially in the favourable performance of private and public sector consumption and investment activities.

She noted that growth was affected by slower external demand resulting in further decline in net real exports of goods and services.

“The world economic environment remained challenging in the third quarter.

“Growth in the advanced economies was uneven, with the US economy experiencing an improvement while several other major advanced economies continued to experience weak growth, constrained by fiscal adjustments, sluggish labour markets and impaired financial intermediation,” Zeti said.

Moving forward, Zeti said GDP growth trend in the fourth quarter was “likely to continue very much like the third quarter” but added that there were some uncertainties seen in the export sector.

“The export sector reflects the (economic) developments in the global environment. It will continue to remain weak because of the economic developments taking place in the developed world. But domestic demand is expected to continue being strong.

“And as such, the outcome (of this) is that we will, of course, be affected by external developments as we are not insulated but the anchor to our growth is from domestic demand and we expect this to continue to be strong,” she said.

On Bank Negara's growth estimates for the entire 2012, Zeti said GDP growth for the full year “would be at least 5% or better.”

“This (assumption) is given that (GDP growth in) the first three quarters have been better than expected. In the first half of the year, the exports sector was better than expected despite the challenging external environment.

“But as we entered the third quarter, we see exports became negative and it remains uncertain as how the exports sector will perform in the fourth quarter,” she said.

Bank Negara said that during the third quarter, domestic demand expanded by 11.4% (versus 14% in the second quarter) while gross fixed capital formation registered a robust performance of 22.7% from 26.1% in the second quarter (Q2), underpinned by capital spending by both the private and public sectors.

“Private sector investment was driven by capital spending in the services sector, particularly the transportation, real estate and utilities sub-sectors and the ongoing implementation of projects in the oil and gas sector,” Zeti said.

“For public investment, the capital spending by public enterprises was mainly channelled into the transportation, oil and gas and utilities sectors while the Federal Government's development expenditure was mainly channelled into the transportation, education and public utilities sectors,” she added.

Bank Negara noted that growth across most economic sectors had moderated in the third quarter.

The services sector growing by 7% from 6.6% in the second quarter, manufacturing slowed slightly with a 3.3% growth from 5.6% in the second quarter due to a moderation in export and domestic-oriented industries and the construction sector grew by 18.3% from 22.2% in the second quarter, driven by the civil engineering sub-sector such as the mass rapid transit mega project and the construction of the second Penang bridge.

Bank Negara said the agriculture sector recorded growth of 0.5% from minus 4.7% in the second quarter due to a recovery in crude palm oil production, while the mining sector contracted 1.2% from a 2.3% growth in the second quarter because of declines in natural gas production due to planned shutdown in facilities.

Economists told StarBizWeek that the third-quarter economic growth was commendable and they were unanimous that growth will most likely exceed 5% for the whole of this year.

“Malaysia's GDP growth of 5.2%, which is marginally slower than 5.6% in the previous quarter, is a gravity-defying performance. This is testament to continued consumer spending and economic transformation programme projects that have offset some external headwinds,” RAM Holdings group chief economist Dr Yeah Kim Leng said.

“My estimate for GDP growth for the third quarter was 4.5% earlier. For the full year, it is likely to be at the higher end of the range of forecast, likely above 5%. Of course, external risks still remain, given the contraction in eurozone and fiscall cliff situation in the US economy.”

Alliance Research chief economist Manokaran Mottain said that going forward, he was confident GDP growth would still be healthy at around 5% in 2013.

“This is in line with the Government's continued spending to develop infrastructure and its recently announced bonus to civil servants and cash hand-outs to targeted groups.

“The economy (in the third quarter) is still driven by domestic demand, led by private consumption and investment activities, reflecting the Government's drive to stimulate income growth, improve and develop infrastructure as well as ensuring a steady flow of foreign capital,” Manokaran said.

By DANIEL KHOO danielkhoo@thestar.com.my

Asean, an arena of superpowers

A new report sees South-East Asia as the strategic venue of a possible great game' by two superpowers - again.

CHINA'S irrepressible rise amid US continued pre-eminence has been reverberating around the globe, spewing truckloads of issues for dissection and debate.

Among these issues is South-East Asia as a regional theatre for economic integration, diplomatic engagement or military entanglement. Despite declarations of the best intentions by all, the events that result may not always be desirable.

The New Geopolitics of Southeast Asia, released this month by the London School of Economics' (LSE) IDEAS, a centre for the study of international affairs, diplomacy and grand strategy, focuses on the region in this context. So what is one to make of China-US or US-China relations in this regional “theatre”?

Part of the first section, dramatically titled “The Clash,” and the Conclusion are by Malaysian banker Tan Sri Dr Munir Majid, a doctoral student at the LSE back in 1978. Dr Munir is also the only South-East Asian among the three contributors in this section.

He begins by sketching the regional scenario as it develops: China's rise, followed by US scurrying to make up for a perceived lack of attention to East Asia after its preoccupation with West and South Asia. Washington's “relative neglect” is now embodied in its “pivot” strategy of moving 60% of its naval force to East Asia by 2020.

Interestingly, 2020 is also the target year for this region first Malaysia, then Asean as a whole, and then China to achieve peak economic performance. And there lies the rub: while East Asian planners emphasise economic development, US planners stress military force.

The economic dimension remains paramount in East Asian thinking in times of plenty and adversity. As Dr Munir notes, during the devastating 1997-98 financial crisis China stopped its planned devaluation of the renminbi as a lifeline to stricken regional economies, while the US was “conspicuous by its inaction”.

However, he also finds that US moves have not entirely neglected economics, such as Hillary Clinton's regional roadshow towards the end of 2010. Nonetheless, these efforts are still seen as belated, few and far between.

The larger issue is whether the US can accommodate China's rise with wisdom, maturity and equanimity. Prickly talk in Washington about branding China a “currency manipulator”, or a tendency to resort to military manoeuvres, is not encouraging.

Dr Munir recounts US strengths and weaknesses, but includes among the former a “military force without equal”. But having to spend half the entire world's military expenditure each year is more a weakness than a strength, particularly when the US is also the world's biggest debtor nation.

The only “strength” there resides in the US military-industrial complex, since the military sector is unproductive and can conceivably “profit” only through war and conquest. Recent developments however suggest that such gains tend to be temporary or illusory.

Meanwhile, the political strategy behind the Trans-Pacific Partnership, which includes some countries but excludes others, the latter being the newest Asean countries and notably China, is likely to weaken Asean. Such divisiveness in a supposedly economic entity is illogical, counter-intuitive and ultimately counter-productive.

But that is consistent with US refusal to adopt a more internationalist outlook on the conflicting claims in the South China Sea. Dr Munir says the US should, instead of simply repeating outdated mantras, consider the deep seabed the common heritage of mankind and form US policy on this basis.

That approach would engage China positively and win support and confidence among other countries. But in his own recent experience in Washington, senior senators and policy researchers were predictably uncreative in their approaches.

On the recent South China Sea spats between China and the Philippines and then Vietnam, Dr Munir refers tellingly to Washington's ambiguity in extending protection to security allies in the region. Where treaties or some formal understanding exist, what can the declared US “neutrality” mean or be taken to mean?

This ambiguity applies also to the East China Sea, where Japan's security treaty with the US is often assumed to cover outbreaks of conflict over the disputed Senkaku/Diaoyu Islands with China. Some US officials, like the US Congressional Research Service that informs policymakers, reject such disputed areas as distinctive national territory covered by categorical security guarantees.

Much of Dr Munir's contribution centres on issues arising from conflicting maritime claims, which represent the most likely flashpoint in today's South-East Asia, despite there being other important issues to consider. The key question is whether any country can conceive of a rising China in the context of today's realities, as distinct from ideological preconceptions and national prejudices.

Dr Munir finds the economic data showing that far from China swamping other countries by “its” exports, these are really mostly exports of its major investors based there. It is a China “at the centre of regional and international division of labour” and of regional and international economic integration.

Between 2009 and 2010, imports into Asean countries from the US declined sharply while imports from China rose even more sharply. It gives a whole new meaning to “import substitution” in South-East Asia, apart from everything else.

Complex situations framed with delicate issues require sensitive and nuanced responses. A hyperpower anxious to even the score in the region will only act like the proverbial bull in the china shop, upsetting everybody's applecarts to nobody's benefit.

The rapid pace of changes is undisputed.

Dr Munir says China's economy may become the world's biggest by 2030, but others like the IMF now put it earlier at 2016.

VIEWS By BUNN NAGARA newsdesk@thestar.com.my

 Related post:South-East Asia in the frontline of US containing China rise?

China's leadership changes

Xi will have to address a slowing of economic growth that threatens party's claim to prosperity [Reuters]

China's new Politburo standing committee, from left, Xi Jinping, Li Keqiang, Zhang Dejiang, Yu Zhengsheng, Liu Yunshan, Wang Qishan and Zhang Gaoli. Photo: Reuters
 
Ruling Communist Party unveils new seven-member Politburo Standing Committee that will govern nation for next decade.

State media says Xi Jinping is to take the reins of China's all-powerful Communist Party in a leadership transition that will put him in charge of the world's number-two economy for the next decade.

Xi, the current vice president and successor to President Hu Jintao, assumes power at an uncertain time with the party facing urgent calls to clean its ranks of corruption and overhaul its economic model as growth stutters.

His long-expected ascension as head of the ruling party took place at 0400 GMT along with the unveiling of a new Politburo Standing Committee, the nation's top decision-making body.

According to tradition, the members marched out before the media in a pecking order agreed after years of factional bargaining, a process which intensified in the months leading up to the five-yearly reshuffle.

In-depth coverage of China's Communist Party congress

Xi will consolidate his position at the apex of national politics by being named China's president by the rubber-stamp legislature next March, for a tenure expected to last through two five-year terms.

The standing committee, which had nine members under Hu has been slimmed to seven and includes Vice Premier Li Keqiang, which would set him on the path to be be appointed premier from next March.

Other members include Zhang Dejiang, Yu Zhengsheng, Liu Yunshan, Wang Qishan and Zhang Gaoli.

They will be tasked with addressing a rare deceleration of economic growth that threatens the party's key claim to legitimacy - continually improving the livelihoods of the country's 1.3 billion people.

China also bubbles with localised unrest often sparked by public rage at corruption, government abuses, and the myriad manifestations of anger among the millions left out of the country's economic boom.

The communists have a monopoly on political power in China and state appointments are decided within the party.

The process began with behind-the-scenes horse-trading and political deals.

It was essentially finalised on Wednesday when the party ended a week-long congress by announcing a new Central Committee of 205 people.

On Thursday, the Central Committee approved the higher leadership bodies, including the elite Politburo Standing Committee.

Factional politics

Observers believe two main factions have been jockeying for power, one centred largely on proteges of former president Jiang Zemin and another linked to allies of Hu.

Xi is considered a consensus figure who leans toward Jiang, while Li has long been seen as a Hu protege.

Analysts say that despite rivalries between the two camps which are largely divided on patronage lines, they broadly agree China must realign its economy away from a dependence on exports, while maintaining a firm hand on dissent.

The government has ramped up security in Beijing and on the nation's popular social media sites to prevent any criticism during the gathering.

The run-up to this year's congress was unsettled by events surrounding Bo Xilai, a political star seen as a candidate for a top post until a scandal in which his wife was convicted of murdering a British businessman.

The sensational affair torpedoed Bo's political career, he will face trial for charges of corruption and abuse of power, and added to the intrigue in the run-up to the transition.

Agencies
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