When Minister Shinzo Abe opted for an early election in December 2014, he did so with the stated aim of affirming his government’s popular mandate to proceed with an ambitious program of reforms dubbed Abenomics. The reforms were designed to lift the economy out of the low gear in which it has been stuck for more than two decades.
China’s stock markets and currency recently incurred precipitous declines. These problems are reflective of much bigger issues that have allowed many Chinese to confuse a rising stock market with a healthy one — and an economic system with a sustainable one. Moving forward, China’s brand of one-party capitalism will continue to incur inescapable difficulties. What does this mean for the future of China? And how does it impact the United States?
China’s decision to abruptly devalue its currency against the dollar is being sold as a move toward a more market-determined exchange rate. But it is sure to infuriate those in Congress who have long argued that China is a currency manipulator. When Chinese President Xi Jinping visits Washington, he will face a more hostile Congress, even if the International Monetary Fund supports the new currency arrangement whereby market forces have a greater role in setting the daily central parity for the yuan-dollar exchange rate.
Before this year, nobody would have mentioned Greece, Puerto Rico and Illinois in the same breath. At one time they had little in common. Now they are linked by failed economies. The modern Greek state, which was established in 1830 following the war of independence from the Ottoman Empire, traces its roots to the civilization of Ancient Greece some 4,000 years ago.
Many are unaware that Bloomberg predicts the Philippines to become the second fastest growing economy in the world in 2015 — a stunning achievement for a country that has for many years been considered an under performer. Since 2010, GDP growth under President Benigno S. Aquino III was an average of 6.2 percent — the highest in four decades, and coinciding with the Great Recession.
The U.S. response to the ever deepening political and economic crisis in Venezuela, and the regime’s increasingly aggressive behavior toward its neighbors and the international community, is compelling evidence that the Barack Obama administration is sincere in respecting the sovereignty of nations of Latin America and the Caribbean, and allowing the region to address its own governance issues.
Monetary policy has become a slave to boosting asset prices. Sound money has given way to speculative impulses as major central banks suppress interest rates and investors search for yield by taking on more risk. The disconnect between the real economy and financial markets is evident not only in China but in the United States, Japan and Europe.
Contrasting Chinese and American perspectives were on display at the recent Shangri-La Dialogue, during which Defense Secretary Ashton Carter challenged Beijing over its island expansion program. Privately the possibility of war has emerged as a serious topic in Washington. Both nations should draw back from their increasingly dangerous game of chicken.
The Permanent Court of Arbitration (PCA) at The Hague has announced that in July it will be holding the first hearing on the 2013 arbitration case the Philippines filed against China questioning the legal validity of China's '9-dash line' claim over the South China Sea. Since China has refused to participate in any way in the proceedings, Philippine government officials are hopeful that an initial favorable ruling concerning jurisdiction and admissibility of the Philippine case will be the result.
With this week’s visit by People’s Republic of China Primer Li Keqiang to Brazil, Colombia, Chile and Peru, some analysts have suggested that the PRC may be turning away from concentrating its engagement with Latin America and the Caribbean on the less market-friendly regimes of the Bolivarian Alliance. I beg to differ. Premier Li’s visit is nothing more and nothing less than the continuation, with ongoing adjustments, of China’s growing multidimensional engagement with the region.
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