Posts Tagged ‘currency’

Le Pen plan to jettison euro spooks French business

March 26, 2017

AFP

© AFP/File / by Daphné BENOIT | France’s National Front leader Marine Le Pen blames the euro for driving up prices, hurting exports and adding to France’s already colossal trade deficit

PARIS (AFP) – The euro — and her fervent wish to withdraw from it — is a central theme of every stump speech by French far-right presidential candidate Marine Le Pen, topping her list of 144 election pledges.

Le Pen calls the single European currency a “a knife that you stick in a country’s ribs to force it to do what its people don’t want to do”.

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The leader of the National Front (FN) blames the euro for driving up prices, hurting exports and adding to France’s already colossal trade deficit.

She has pledged that, if elected, she will throw off the shackles of the common currency and restore France’s monetary sovereignty by resurrecting the franc.

With all opinion polls showing her getting past the first round of the election on April 23, making the once-unthinkable prospect of a far-right presidency no longer completely implausible, economists and business leaders are worried.

Although Le Pen, 48, currently looks set to lose the May 7 runoff, probably to independent centrist Emmanuel Macron, no one is being complacent.

“No one knows what will happen,” said Jean-Lou Blachier of France’s Confederation of Small and Medium-Sized Businesses, referring to Britain’s surprise vote to leave the EU and Donald Trump’s shock election in the United States last year.

Le Pen argues that bringing back the franc would help retool France’s ailing industrial sector.

She believes a devalued national currency would make exports cheaper, boosting job creation.

Emboldened by Britain’s taboo-breaking Brexit vote, Le Pen also promises to hold a “Frexit” referendum, saying the EU “shuts us in, constrains us, bullies us”.

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– ‘Whole eurozone could disappear’ –

Most experts however say that scrapping the euro would be disastrous, and not just for France.

Ratings agencies have warned that the eurozone’s second-biggest economy could be headed for a default if the country converts its towering 2.2 trillion-euro debt into francs.

“If France leaves the single currency, the whole eurozone could disappear,” said Mathieu Plane of a French economic think tank, the OFCE, warning of an “unprecedented crisis”.

Benoit Coeure, who sits on the board of the European Central Bank, warned that France’s borrowing costs would rise and that prices would rise, rather than fall.

“Inflation, which would be out of the hands of the ECB, would eat into savings, fixed incomes and pensions,” he said.

“Leaving the euro would be choosing impoverishment.”

– ‘Project Fear’ –

Le Pen has dismissed the criticism as scaremongering.

“That’s called Project Fear. It was used before Brexit,” she told her conservative rival Francois Fillon during a TV debate this month when he warned her programme would trigger “economic and social chaos”.

Le Pen has said she can organise an orderly exit from the eurozone and suggested bringing back the European Currency Unit (ECU), a pre-euro basket of currencies, that businesses could use alongside the franc.

But polls show voters are still unconvinced.

Paris University economics professor Dominique Meurs said that despite the resistance, he expected Le Pen to stick to her guns.

“Leaving the euro and the EU is completely consistent with the FN’s obsession with the national identity (and) its total rejection of multilateral decisions,” she said.

Such a move would be a “dramatic break” with European convention, Meurs said.

“What she is proposing is not some small change, it’s really a big deal because she could potentially be elected.”

It is not just in France that big business is worried about Le Pen’s election pledges.

Giant Swiss bank Credit Suisse said this month a Le Pen victory in May was the biggest risk to European stability.

by Daphné BENOIT

What does a multi-speed EU mean for central and eastern Europe? — “Poland is EU’s problem child”

March 25, 2017

Central and eastern EU member states are wary that a so-called “multi-speed” Europe will relegate them to the bloc’s second tier. However, a more flexible Europe may just be the boost they’ve always needed.

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Saturday’s summit commemorating the 60th anniversary of the Rome Treaties was always going to be more than just a celebration of peace and unity. It will be a landmark for the bloc’s next leap of faith as it sets out its post-Brexit roadmap.

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Top of the bill is the proposal for a so-called “multi-speed” Europe, which is likely to form the basis of any declaration coming out of the Rome summit.

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Under this new, looser framework, EU member states will be able to cooperate on various initiatives if they so choose, while those that would rather opt out will be allowed to do so. This means, in theory, that no country will be forced to commit to any deal it deems practically or ideologically untenable.

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The notion of a “multi-speed” Europe is by no means new: the single currency and Schengen agreement can already be regarded as part of such an approach. Yet the idea has been spurred by recent policy deadlocks in Brussels, namely over defense and migration.

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German Chancellor Angela Merkel was among the first leaders to raise the prospect of a “multi-speed” EU at February’s summit in Valletta, before it quickly gained the backing of the bloc’s other founding members. Accelerated integration among some is preferred to standstill for all.

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Broken eastern promises?

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However, the prospect has made some eastern and central European nations wary that it could hollow out EU institutions and enforce larger members’ dominance.

Poland’s Kaczynski says EU on path toward disintegration

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Jaroslaw Kaczynski, the head of Poland’s ruling Law and Justice Party – currently the EU’s problem child – has decried the move, warning that it could tear apart the EU. Reports suggest that Poland could try to veto the proposal..

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“Kaczynski mentions that in Europe it is hegemony of Germany, and Merkel twists arms so that any decisions that are taken are good for Germany and nobody else,” Jakub Wisniewski, vice president of GLOBSEC think tank and Poland’s former ambassador to the OECD, told DW. “When seen through these lenses, any future integration will reinforce this trend… when other countries on the European peripheries will be deprived of rights and of their entitlements, such as money flowing from Brussels through structural funds.”

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Meanwhile, the EU’s newest member states – Bulgaria, Romania and Croatia – have voiced concerns that the EU institutions that give them clout on the continent could be hollowed out. All three countries have made tremendous efforts in their transitioning to democracy and EU values. However, if the western European economies choose their integration path, the countries could fear they will find themselves relegated to the second tier of European policy making.

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How the region benefits

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However, any protest from central and eastern members against the two-speed concept would to be self-defeating for the region.

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EU leaders discuss different speeds

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First, more flexibility would only enforce the region’s more practical approach to EU integration. “The likes of Austria and Poland already have a pragmatic attitude towards the EU,” Dina Pardijs, program coordinator at the European Council of Foreign Relations and co-author of the report “How the EU Can Bend Without Breaking,” told DW.

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“They embrace the parts that work for them and disregard the parts that don’t. More flexible cooperation, even if it weakens the EU’s structures, wouldn’t be that bad for them.”

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Second, while a multi-speed approach would see new circles of cooperation emerging, they would likely be established within the current EU treaties rather than through the formation of new structures.
“Countries are being very careful not to put any very disruptive proposals forward,” Pardijs said. “So if anything they will be too careful and probably make too small a step for the goal of breaking deadlock to be achieved.”

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Perhaps the most positive bearing will be enjoyed by the region’s EU candidate states. According to Wisniewski, any tapering within the single market or freedom of movement among the peripheral countries would dramatically lower the threshold for EU membership. It would also be less disruptive on the economy of any new state.

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Integration within the European Union finds itself at a crossroads. If a multi-speed framework comes to fruition, Western European states will likely embark on their own accelerated path for integration, while central and eastern European states will coordinate when it suits them and pursue their own initiatives.

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The end of ever-closer union may prove to be just the impetus EU integration needed.

Includes video:

http://www.dw.com/en/what-does-a-multi-speed-eu-mean-for-central-and-eastern-europe/a-38016484

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” (Poland’s Kaczynski says EU on path toward disintegration)

Germany’s ‘wise men’ reject trade surplus charge

March 20, 2017

AFP

© AFP/File | US President Donald Trump’s administration has lashed out at Germany over its surplus, as data showed that Berlin exported 253 billion euros ($270 billion) more than it imported in 2016

BERLIN (AFP) – Germany’s panel of economic experts on Monday rejected criticism that Europe’s biggest economy is running an overly high trade surplus, but said Berlin could reduce the gap by attracting more investors.

US President Donald Trump’s administration has lashed out at Germany over its surplus, as data showed that Berlin exported 253 billion euros ($270 billion) more than it imported in 2016.

The current account surplus, which also includes services, was even higher at 266 billion euros.

Trump’s top trade advisor Peter Navarro has accused Germany of exploiting a “grossly undervalued” euro to boost its exports.

But in its report to Chancellor Angela Merkel, the German Council of Economic Experts said: “The recent growing criticism against the high German current account surplus … is not substantive.”

“The German current account surplus is high, but there are no macroeconomic imbalances,” said Christoph Schmidt, the chairman of the council known as Germany’s “five wise men” even though it includes a woman among them.

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But politicians need to ask themselves “why are German companies investing a lot comparatively abroad, and not domestically,” he said.

“The government should improve the attractiveness of Germany to investors and thereby help to reduce this surplus,” added Schmidt.

The panel also predicted that growth this year will hit 1.4 percent, 0.1 percentage points up from its previous forecast, as the employment market remains healthy.

For 2018, output growth is expected to reach 1.6 percent, it said, also pointing to a positive global economic outlook.

But it repeated its criticism of the European Central Bank’s easy-money policy, saying that it is “still too expansive and that there are growing risks for financial market stability”.

“The ECB should bring about an end to its stimulus spending programmes as soon as possible,” they added.

Under President Mario Draghi, the ECB has bought well over one trillion euros of government and corporate bonds in a bid to pump cash into the financial system.

At its last meeting this month, the ECB decided to keep cheap money flowing for fear of undermining a nascent recovery.

U.S. President Trump Expected to host China’s Xi Jinping at Mar-a-Lago

March 13, 2017
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President Trump plans to host Chinese President Xi Jinping at the gold-plated Mar-a-Lago estate in Florida next month for a lowering-the-temperature summit with vast economic and security implications, Axios has learned.

No golf is planned during the meeting of the globe’s two superpowers — this will mostly be a working session, according to officials familiar with the planning. The tentative dates are Thursday afternoon, April 6, through Friday, April 7.

  • Why it matters: For a White House that views China as threat #1, Trump’s willingness to meet with Xi — and give him the Mar-a-Lago treatment, no less — will be seen as a reassuring sign by establishment powers in the U.S. and around the world.
  • The optics: Trump is an exuberant host. While a White House session could look formal and cold, pictures out of Mar-a-Lago are likely to capture the rivals in relaxed, friendly settings.
  • What’s in it for China: Xi saw that by talking on the phone with Trump, he got the reassurance on the One China policy he was seeking. Xi is worried about Trump’s threats on trade, and he thinks that by engaging the transactional leader, he can head off punitive measures.
  • What’s in it for the U.S.: Lots. The U.S. wants Chinese cooperation on North Korea (the most important), the South China Sea, currency, trade, intellectual property and more. Administration officials are looking for multiple gives.
  • Important to watch: Will Trump raise human rights?
  • Fun to watch: Each of the these leaders, in agreeing to the summit, thinks he’ll outsmart the other.

German trade surplus rises alongside US tensions

March 10, 2017

AFP

© DPA/AFP/File | Germany exported 18.5 billion euros ($19.6 billion) more than it imported, according to preliminary data adjusted for seasonal and calendar effects
FRANKFURT AM MAIN (AFP) – Germany’s trade surplus ticked upwards in January, official data showed Friday, as attacks from the Trump White House over the nation’s export strength intensify.

Europe’s largest economy exported 18.5 billion euros ($19.6 billion) more than it imported, according to preliminary data adjusted for seasonal and calendar effects from federal statistics office Destatis.

Exports increased 2.7 percent over December’s figure to 103.8 billion euros, while imports added 3.0 percent to reach 85.3 billion.

In a year-on-year comparison, exports added 11.8 percent to January 2016’s figure, slightly outpacing the 11.7-percent increase for imports.

Expanding surpluses for Germany are unlikely to calm rhetoric from the White House, which has promised to act on President Donald Trump’s complaints about seeing more German cars on American roads than American cars in Germany.

In 2016, the United States was Germany’s biggest export customer, importing 107 billion euros of goods while selling back just 58 billion.

Destatis did not issue country-by-country figures Friday, but German exports to non-EU countries picked up at 17.7 percent year-on-year in January, far outpacing intra-EU trade, which added 8.0 percent.

While the United States has long complained about German trade surpluses, the rhetoric has been ratcheted up since Trump’s inauguration.

Top White House trade advisor Peter Navarro targeted Germany and China in a speech Monday, promising action against “currency manipulation and other forms of trade cheating”.

The new US administration has argued that the euro single currency gives Berlin an unfair advantage, making its exports cheaper than they would be if the nation had its own money.

But German leaders have rejected the allegations, saying the euro is managed by the European Central Bank in Frankfurt on behalf of all 19 member nations.

German Finance Minister Wolfgang Schaeuble is set to meet US counterpart Steven Mnuchin for the first time next week, at a gathering of finance ministers and central bankers from the G20 group of industrialised and emerging economies in Baden-Baden, southwest Germany.

This Is Not The Asian Century After All: Asia’s Promise Gives Way to Its Growing List of Troubles

March 5, 2017

Riddled with economic, political and security woes, today’s Asia is more likely to produce instability and conflict than the freedom and prosperity many once hoped for

ILLUSTRATION: PEP MONTSERRAT
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Updated March 3, 2017 2:49 p.m. ET

Since Japan’s emergence as an economic juggernaut in the 1970s, experts have predicted the arrival of an “Asian century.” We should get ready, they say, for a tectonic shift in global power as U.S. influence declines, Europe’s discontents mount, and the countries of the Indo-Pacific come to dominate world politics, economics and security. Images of Asia’s rising power and prestige have embedded themselves in our imaginations, from the purchase of Rockefeller Center by Japanese investors in the late 1980s to the grand spectacle of the Beijing Olympics in 2008. Today, with more than half the world’s population living in the region, Asia looms ever larger.

But this impressive ascent has not reconfigured world affairs, and it is unlikely to. The more important Asia has become on the global stage, the more glaring have its flaws become. The region is deeply fractured, threatened by economic stagnation, political upheaval and flashpoints that could trigger new wars. And in our more integrated global society, its troubles could quickly become everyone else’s. Much of the world’s attention in the coming decades will be devoted not just to accommodating Asia’s growing power but to managing and mitigating its many serious problems.

The bad news is likely to arrive in five discrete but interrelated varieties. The first major problem is the end of Asia’s economic miracle and the failure of its economies to reform. From Japan to India, Asian countries are struggling to maintain growth, balance their economies and fight slowdowns. The worries they face include uneven development, asset bubbles, labor woes and state control of markets.

Perhaps the greatest risk is the dramatically slowing Chinese economy. When trading opened on the Shanghai Composite Index on June 12, 2015, its value had skyrocketed more than 100% since the summer of 2014. Then the bubble popped. Fueled by fears of a slowing economy, a weakening currency and an unsustainable debt bomb of some $30 trillion, China’s markets went into free fall.

In just weeks, the world began asking whether China’s glory days were over. Since then, the evidence has only accumulated that China has entered a prolonged economic slowdown, marked by a stampede of capital out of the country, totaling $725 billion last year, according to the Institute of International Finance. China’s leaders will have to craft meaningful reforms to maintain even moderate growth in the years ahead.

Asia’s advanced economies face their own problems. Japan continues to search for ways to end 25 years of economic torpor. An asset and property price bubble nearly brought down the country’s financial system in the 1990s, and the economy has limped along ever since. Most Japanese have a comparatively high standard of living, but decades of stimulus packages and a focus on exports have failed to nudge Japan beyond an average annual growth rate of barely 1%, according to World Bank data.

Japanese corporations once led the world; now they struggle with shrinking market share, growing inefficiency and waning innovation. In 2015, a Bank of Japan report noted that the country’s companies have more than $2 trillion in liquid assets sitting unused. Prime Minister Shinzo Abe’s reforms have neither changed Japan’s risk-averse corporate culture nor eliminated enough regulations to unleash entrepreneurship and innovation.

Even if Asia’s economies do muddle through, we must prepare for a far less economically energetic region than we are used to.

Asia’s second looming problem is demographic. Japan began losing population in 2011, after decades of dropping birthrates, according to World Bank data. The country’s health and welfare ministry and other experts worry that the number of Japanese, which stood at 127 million in 2014, could fall by as much as a third by 2060. One result of this failure to reproduce is that Japan, according to the U.N., “is home to the world’s most aged population,” with 33% of its citizens 60 or over in 2015; the country is thought to have more than 58,000 centenarians. No modernized society has ever faced such a challenge.

Elderly women walk through a shopping district in Tokyo, Japan, June 16, 2015. A U.N. report calls Japan ‘home to the world’s most aged population.’
Elderly women walk through a shopping district in Tokyo, Japan, June 16, 2015. A U.N. report calls Japan ‘home to the world’s most aged population.’ PHOTO: YURIKO NAKAO/BLOOMBERG NEWS
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Japan’s demographic problems today could well become those of South Korea, Hong Kong, Taiwan and Singapore tomorrow. The direst scenarios for South Korea’s population, for example, predict a drop from 50 million today to just 10 million in 2136, thanks to a low fertility rate of 1.19 children per woman. As populations shrink, these countries will struggle to maintain their labor forces, stay competitive, fund entitlement programs and reshape their societies to deal with mostly elderly populations.

China’s leaders have created another demographic problem through the Communist Party’s infamous one-child policy, promulgated in 1979. Meant to control overpopulation, the policy has prevented as many as 400 million births, China’s government says. Despite the loosening of Beijing’s draconian restrictions in 2015, China still projects that its population will begin to slide downward around 2030.

China’s one-child policy is already hurting the labor market. In 2012, the total number of working-age Chinese dropped by some 3.4 million, according to China’s National Bureau of Statistics. Between 2012 and 2014, the labor force shrank by some 9.5 million, the bureau reported, and the steady flow of migrant workers into coastal manufacturing centers has begun to dry up. These trends will increasingly pressure the government itself to provide health care and other basic social services for elderly Chinese who, because of the one-child policy, don’t have large families to support them.

At the opposite end of the demographic spectrum lie countries such as India and Indonesia. Much of South and Southeast Asia face the risk of too many people. The U.N. predicts that India’s population will surpass China’s by 2022, turning the world’s largest democracy into the world’s most populous country.

For governments, this youth boom means a growing demand for education, jobs, infrastructure and rising living standards. Though having a surplus of young people might seem like an economic asset, most poor countries have failed to turn abundant labor pools into lasting prosperity.

These demographic dangers point to a third major risk: dealing with the region’s unfinished political revolutions.

China is still decades—even generations—away from developing any sort of meaningful political liberty. The party has become ever more isolated from its citizenry, who widely (and rightly) see it as corrupt, inefficient and often brutal. The party has managed to keep a lid on dissent, but only because it has been able to point to the country’s huge economic gains. As growth wanes, unrest will increase. The distrust between citizen and state is the single greatest threat to the party’s continued rule.

To head off unrest, President Xi Jinping has consolidated his own power, making him probably China’s strongest leader since Mao. But if Mr. Xi overreaches and overturns the country’s longtime model of collective leadership, he could usher in a new era of strongman rule or unleash a power struggle among elites.

As some in Beijing worry that Mr. Xi won’t step down when his term expires in 2022, China is increasingly left in political stasis: The party cannot evolve without risking its hold on power, but the longer it resists change, the more dissatisfied citizens grow and the more sclerotic its governance becomes. The party will struggle to maintain control without becoming even more repressive, but further crackdowns could spark unrest that might sweep it from power.

Asia’s political troubles are hardly limited to its autocracies. South Korea is currently enduring its own Watergate. After weeks of demonstrations in Seoul, South Korea’s parliament decisively impeached Park Geun-hye, the country’s first female president, last December. Yet those in the streets were protesting not just Ms. Park’s alleged corruption and cronyism but also a socioeconomic system that many no longer believe in.

In Malaysia, Prime Minister Najib Razak is enmeshed in a multibillion-dollar investment-fund scandal even as liberal opposition leader Anwar Ibrahim remains in prison and the government cracks down on protesters calling for more open government. (Mr. Najib has denied wrongdoing in the fund scandal and has been cleared by Malaysia’s attorney general.) In the Philippines, disgust at government inefficiency and corruption helped to elect the populist firebrand Rodrigo Duterte as president. He made a war on drugs the centerpiece of his campaign, and police have killed more than 2,000 people in a bloody crackdown since he took office, with 5,000 more killed by alleged vigilantes. Across the region, the millions who feel left behind threaten the stability of governments.

And those governments aren’t so sturdy in the first place, which bring us to another regional problem: feeble institutions. Asia has no NATO, no European Union. It has no effective regional mechanism to tackle shared problems with joint resolve.

In large part, that is because Asia was dominated for centuries by its most powerful nations—China, Japan and India—and by imperialists from abroad. Today, the region is riven by the type of distrust and dislike among neighbors that used to bedevil Europe. Its great powers have no formal allies among their neighbors and few close partners—a legacy of their long histories as regional bullies.

This leadership gap helps to explain why Asia has never developed an effective regional community. Issues of mutual concern are either addressed in an ad hoc way or left to languish. Consider the failure of the Association of Southeast Asian Nations, or Asean—supposedly the region’s premier organization—to intervene meaningfully on behalf of the Rohingya, a Muslim minority group living in Myanmar’s Rakhine state. Myanmar’s military has been accused of violently persecuting the group, causing tens of thousands of Rohingya refugees to flee into Bangladesh or board boats for other Southeast Asian countries. The bloc’s tepid response, based in large measure on a longstanding reluctance to interfere in each other’s internal affairs, has highlighted the region’s institutional difficulties with solving shared problems.

The most profound obstacle to Asia’s continued rise is the risk of war.

 

If these four worries weren’t bad enough, they pale in comparison with the most profound obstacle to Asia’s continued rise: the risk of war. Increasingly, the region is regressing to a 19th-century brand of power politics in which might makes right. Such realpolitik is hardly reassuring in a neighborhood that includes five nuclear-armed powers: China, India, North Korea, Pakistan and Russia.

Since 1945, the U.S. has underwritten regional stability in Asia, but that post-World War II order, established by President Harry Truman and his heirs, is now under threat. The problem is both the rise of China and new, widespread regional worries that President Donald Trump’s “America First” rhetoric—despite his attempts to calm anxious U.S. allies—may mean a diminished U.S. commitment.

The new U.S. pull toward isolationism has arrived just as Mr. Xi’s China is increasingly becoming a revisionist power, bristling at any resistance—especially American—to its regional ambitions. Japan, Taiwan, India and many others fear the rise of this sort of nationalist China—a fear exacerbated by the numerous unresolved territorial disputes in the East and South China Seas. An arms race has begun in Asia and with it an accelerating cycle of uncertainty and insecurity.

The Chinese missile destroyer Guangzhou launches an air-defense missile during a military exercise near China's Hainan Island, July 8, 2016.
The Chinese missile destroyer Guangzhou launches an air-defense missile during a military exercise near China’s Hainan Island, July 8, 2016. PHOTO: XINHUA NEWS AGENCY/GETTY IMAGES
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The South China Sea is among the globe’s most vital thoroughfares. More than $5 trillion of trade passes through its waters annually, including more than $1 trillion in U.S. trade. But control of the reefs, shoals and atolls that dot the sea is hotly contested. To enforce China’s claims, Beijing has constructed artificial islands as military bases, equipped with deep-water harbors, runways and missile fortifications, according to the Pentagon. Chinese coast-guard vessels and fishing fleets harass the ships of their neighbors, as well as those of the U.S. Navy. Many in the region fear that a small confrontation could spiral into outright conflict.

Meanwhile, North Korea is a growing threat, expanding its nuclear arsenal and developing new ballistic missiles to deliver them. Pyongyang has underscored its ruthlessness by striking beyond its borders, as seems to be the case in the recent murder in Malaysia of Kim Jong Nam, the half-brother of North Korea’s dictator. After years of failed diplomacy by Democratic and Republican administrations alike, North Korea is alarmingly close to being able to strike its neighbors and the U.S. mainland with nuclear missiles.

Taken together, this panoply of problems suggests that the years ahead in Asia won’t be an era of peace, expanding freedom and accelerating growth. The region is far more likely instead to become an engine of conflict and instability.

Asia’s successes over the past decades, particularly its economic gains, shouldn’t be dismissed. The region still has an advanced manufacturing base, deep savings and a strong middle class in many countries. China, Japan and South Korea, in particular, will remain central to the global economy. But the region’s strengths are increasingly imperiled by its many problems, which have been ignored for too long.

For the U.S., these risks make it even more important to maintain longstanding American commitments to promoting security, trade and democracy in the region. Ultimately, of course, the fate of Asia will be determined by its own leaders and people. The rest of the world can only try to ensure that the region’s troubles don’t worsen and spread.

Mr. Auslin is a resident scholar at the American Enterprise Institute and the author of “The End of the Asian Century: War, Stagnation, and the Risks to the World’s Most Dynamic Region” (Yale University Press), from which this essay is adapted.

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Malaysia arrests seven for suspected links to militant groups

March 5, 2017

Reuters

Sun Mar 5, 2017 | 4:11am EST

Malaysia has arrested six foreigners and one Malaysian for suspected links to militant groups including Islamic State, the police chief said on Sunday.

The Southeast Asian nation has been on high alert since suicide bombers and gunmen linked to Islamic State launched multiple attacks in Jakarta, the capital of neighboring Indonesia, in January 2016.

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A grenade attack on a bar on the outskirts of the Malaysian capital, Kuala Lumpur, in June last year wounded eight people. Islamic State claimed responsibility for the attacks, the first of such attacks on Malaysian soil.

Malaysia has arrested hundreds over the last few years for suspected links to militant groups.

In the latest arrests made between Feb. 21 and Feb. 26, one Malaysian and one Indonesian were detained for planning to launch a large-scale car bomb attack using a “vehicle borne improvised explosive device,” before leaving to join IS in Syria, Inspector-General of Police Khalid Abu Bakar said in a statement.

The two were part of an Islamic State cell that received instructions from Muhammad Wanndy Muhammad Jedi – a known Malaysian IS fighter in Syria.

Armed followers of Yemen’s Shi’ite Houthi group sit on a truck patrolling the vicinity of a ceremony attended by fellow Shi’ites in Dhahian of the northwestern Yemeni province of Saada February 3, 2012. REUTERS/Khaled Abdullah
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One East Asian, with a fake student visa, had connections to an East Asian militant group that sends its members to Malaysia before heading to Syria to join Islamic State, Khalid said.

Four Yemenis arrested were suspected of being part of a Yemeni insurgent group. They were also part of a syndicate forging travel documents.

Police seized multiple international passports and 270,000 ringgit ($60,650) in cash in different currencies from the four.

(Reporting by Rozanna Latiff and A. Ananthalakshmi; Editing by Jacqueline Wong)

China says no intention of using currency devaluation to its advantage

February 25, 2017

Reuters

Fri Feb 24, 2017 | 9:55am EST

China said on Friday it had no intention of using currency devaluation to its advantage in trade, responding to U.S. President Donald Trump’s description of the Asian giant as the “grand champions” of currency manipulation.

Trump said in an interview with Reuters on Thursday he had not “held back” in his assessment that China manipulates its yuan currency, just hours after his new treasury secretary pledged a more methodical approach to analysing Beijing’s foreign exchange practices.

Chinese Foreign Ministry spokesman Geng Shuang said he hoped the United States could “fully and correctly” view the exchange rate issue.

“China has no intention of seeking foreign trade advantages via an intentional devaluation of the renminbi. There is no basis for the continued devaluation of the renminbi,” he told a daily media briefing in Beijing.

“If you must attach the label ‘grand champion’ to China, then I think China is a grand champion. But we are the grand champions of economic development,” Geng added.

The Foreign Ministry has no say in currency policy, but it is the only Chinese government department that holds a daily briefing that foreign reporters attend.

The central People’s Bank of China did not respond to a request for comment.

In a commentary, the official Xinhua news agency said criticising China for manipulating its currency to prop up trade was a “major myth that has been circulating in Washington for quite a long time”.

“Since July 2005, China has decided to unpeg the yuan against the U.S. dollar, and allow it to fluctuate against a basket of currencies so as to better reflect the market changes. Over the years, the renminbi has appreciated substantially against the dollar,” it said.

Trump has frequently accused China of keeping its currency artificially low against the dollar to make Chinese exports cheaper, “stealing” American manufacturing jobs.

But he did not act on a campaign promise to declare China a currency manipulator on his first day in office.

The yuan fell 6.6 percent against the dollar in 2016, its biggest annual drop since 1994, as it was pressured by worries about slowing Chinese growth and more recently by a resurgent dollar, which has spurred capital outflows from many emerging markets.

Chinese authorities have taken numerous steps in recent months to curb capital flight to support the weakening yuan currency, while trying to bring in more foreign investment.

Geng said there was no basis for the continued devaluation of the Chinese currency and he hoped “the relevant side can fully and correctly view the renminbi exchange rate issue”.

But China’s foreign exchange regulator said this month the economy still faced weak global demand and financial market volatility caused by expectations of further interest rate rises by the U.S. Federal Reserve.

(Reporting by Ben Blanchard; Writing by Philip Wen; Editing by Robert Birsel)

Merkel ally calls for Europe to retaliate if Trump imposes trade tariffs

February 25, 2017

German Chancellor Angela Merkel and Volker Kauder (L), 

German Chancellor Angela Merkel and Volker Kauder (L),  CREDIT: STEFFI LOOS/GETTY IMAGES

Europe should impose punitive tariffs on imports from the United States if President Donald Trump acts to shield U.S. industries from foreign competitors, a senior ally of German Chancellor Angela Merkel said in a newspaper interview.

Trump has already formally withdrawn the United States from the Trans-Pacific Partnership trade deal, distancing America from its Asian allies, and vowed to renegotiate the U.S. free-trade deal with Canada and Mexico.

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The tycoon-turned-president has also threatened German carmakers with a border tax of 35 percent on vehicles imported into the U.S. market, saying such a levy would help create more jobs on American soil.

poses punitive tariffs on German and European products, then Europe should also impose punitive tariffs on U.S. products,” Volker Kauder, parliamentary floor leader of Merkel’s conservatives, told the Funke media group in an interview published on Saturday.
Angela Merkel
Angela Merkel CREDIT: ODD ANDERSEN/AFP

“We cannot accept everything,” Mr Kauder added.

He said German officials would have to remind “our friends in Washington” that trade wars in the past had already shown that both sides only lost from such measures.

“We just have to say calmly and with self-confidence: If Trump carries out what he said, then Europe must react,” Mr Kauder said.

The German government has vowed to protect global free trade after Trump threatened protectionist measures and his top adviser on trade accused Germany of exploiting a weak euro to boost exports.

German Vice Chancellor Sigmar Gabriel has suggested that the European Union should refocus its economic policy toward Asia, should the Trump administration pursue protectionism.

In a sign of already shifting trade flows, China became Germany’s most important trading partner for the first time in 2016, overtaking the United States, which fell back to third place behind France, data showed on Friday.

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