Friday, January 30, 2015
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Author: Fu-Kuo Liu, National Chengchi University

The results of Taiwan’s local elections, held in November, came as a big surprise to many not only in Taiwan. The ruling Kuomingtang (KMT) was defeated by an unprecedented margin. The results were a sharp reversal from those of the 2012 presidential election, won by the KMT. In the municipal mayoral elections, the KMT came away with only one out of six municipalities and five out of sixteen municipal cities and counties. The results have significantly changed Taiwan’s political landscape. But they should not be considered a referendum on cross-strait relations.

Taiwanese President Ma Ying-jeou speaking at a campaign rally before Taiwan's local elections. President Ma resigned from his position as chairman of the Kuomingtang soon after the election results were confirmed, leaving the party in chaos. (Photo: AAP).

While most surveys conducted prior to the election predicted a likely loss for the KMT, none envisioned a defeat on such a scale. Many are wondering why the ruling government was so badly crushed. Importantly, the outcome breaks the pattern of traditional party strongholds at the local level in Taiwan. It may directly impact the 2016 presidential election and result in a possible change of course in cross-strait relations, which have been flourishing.

President Ma Ying-jeou resigned from his position as chairman of the KMT soon after the election results were confirmed, leaving the party in chaos. Ma’s unpopularity plagued the party during the campaign. His administration has been seen as indecisive, capricious, ineffective, weak, lacking momentum, and short-sighted. Two important groups of swinging voters determined the election: frustrated KMT supporters who chose not to vote and uncertain young voters who turned out in unprecedented numbers.

The Sunflower Movement, which began as a student demonstration in March 2014, clearly reflected the public’s concerns about the future of the nation and the future course of cross-strait relations. The government mishandled the occupation of the Legislative Yuan by students for over a month last year. Worse still, the government has not actively responded to students’ requests for a transparent and constitutional procedure for legislative scrutiny of cross-strait deals. The legislature’s decision not to ratify the Cross-Strait Service Trade Agreement (CSSTA) between China and Taiwan has been interpreted as a clear sign of rising anti-China sentiment in Taiwan society.

The crux of the political impasse, however, is the rivalry between President Ma and the speaker of the Legislative Yuan, Wang Jin-pyng, who is also a vice chairman of the KMT. Although the KMT has held a majority of seats for six years, most of Ma’s policy efforts have been crippled in the legislature. Ma’s tendency to circumvent legislative scrutiny on cross-strait deals has meant that legislators, dissatisfied with Ma’s methods, have boycotted proposed legislation. KMT supporters are frustrated with the ineffective and weak governance of Ma and his party. This election was definitely a vote of no confidence in the Ma administration.

Taiwan’s political landscape is always sensitive to cross-strait relations and regional security. While the decision of swinging voters to opt for the DPP won’t necessarily be permanent, it does add to the unpredictability of the future of cross-strait relations.

Following the KMT’s defeat, Beijing has tried hard to figure out what exactly is happening in Taiwan and is questioning whether it should adjust its present course, characterised by a relatively benign cross-strait policy. Similarly, the US government was surprised to learn that Ma has become such an unpopular figure among voters but has declined to make any clear comments on the future of cross-strait relations. It also stresses that the US continues to encourage both sides to improve relations.

All this has led some commentators to suggest that the vote was essentially a referendum on cross-strait relations. But this is mistaken. The elections were held at the local level and cross-strait issues were not touched upon at all throughout the campaign. Even the DPP quickly made clear that it would be wrong to interpret the election as a referendum on the KMT’s mainland policy. The election results should not be interpreted either as a failure of China’s or the KMT’s cross-strait policy.

Some worry about the increasing tendency towards anti-China sentiments rising up from Taiwan’s grassroots. It is true that the political changes in motion may add more unpredictability to cross-strait relations. In order to convince voters that it deserves their support, the DPP has to commit to finding common ground with China in the next few months. This is by far the greatest challenge to the independence-oriented party and its leadership.

The KMT’s defeat signaled an end to Ma’s exclusionist way of conducting cross-strait relations. But while the loss was a serious blow to the KMT and to the morale of its government, it does not mean that victory is out of reach in the 2016 general and presidential elections. The KMT will soon elect a new chairman to lead the party out of the woods. The big question is not how Beijing and Taipei should move forward quickly but how Taiwan’s leaders can convince its people to support further cross-strait economic development.

Fu-Kuo Liu is a professor at the Institute of International Relations, National Chengchi University, Taiwan.

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Taiwan’s shifting political landscape

Author: Peter McCawley, ANU

An embarrassing fact about ASEAN governments that is generally avoided in public policy discussions is that the capacity of most ASEAN states is quite limited — much more limited than they, and the international community, generally wish to admit. Until it is recognised that state capacity is limited, it will be hard to understand the implications for public policy.

A construction worker builds iron reinforcement column at a high rise office building construction site in Indonesia's capital Jakarta on April 22, 2013. Asia-Pacific growth will edge up this year on the back of a recovery in the US and emerging nations, a United Nations study said April 18, 2013, but it urged governments to take bolder steps to lift millions out of poverty. (Photo: AFP)

It is not easy to measure the capacity of a state. Essentially, the concept is closely related to the power it can exercise. Power, in turn, can be measured and exercised in various ways — including politically, coercively through the military and police, legally, and administratively.

Levels of taxation and expenditure are two important measures of the capacity of a state. The level of taxation is a good measure because it reflects the power of a state to collect revenues from citizens to provide public goods. From another point of view, expenditures are a better measure because the size of expenditures indicates the ability of a state to respond to the expectations of citizens and to provide the goods and services that citizens expect from their governments.

Surprisingly, statistics on levels of taxation and expenditure in ASEAN are somewhat opaque. The key data are not readily accessible. Having comparable figures on the fiscal capacity of ASEAN states more widely available would be a useful first.

Figures for government spending across ASEAN throw up some startling facts. As a benchmark, the average level of government spending in Australia and New Zealand in 2012 was around US$16,800 per person. By comparison, the average level of government spending across ASEAN in the same year was around US$730.

The figures for government spending across ASEAN naturally vary from country to country. In oil-rich Brunei the government spent over US$15,000 per person in 2012. Government spending in Indonesia, the largest country in ASEAN, was slightly below the average, at about US$600 per person. And in Myanmar, the fiscal capacity of government was very limited indeed, with annual spending at around US$40 per person.

These extraordinary differences in per capita government spending may be interpreted in different ways. One view is that the different levels are not surprising because they reflect, naturally, the different levels of income per capita in the different countries. While this is doubtless true, it is also true that the expectations of ordinary citizens across ASEAN in a globalising world are increasingly influenced by international comparisons. While state capacity is limited, expectations of the state are not.

Another view is that international comparisons of this kind need to be adjusted for purchasing power parity (PPP) differences between countries. But while it is true that notable price differences exist between countries, these differences often reflect large disparities in the quality of goods and services. And PPP measurements often fail to allow for the fact that the prices of many goods on which governments spend their money are set in international markets. The world price of building infrastructure (quality-adjusted) is often quite similar in different countries.

This picture of the limited economic capacity of governments in most ASEAN countries is worrying. It suggests that it would be useful to undertake the painful and controversial task of reassessing strategies of state management and of public service delivery. What are the implications for policy and for the delivery of public programs? More broadly, what should the state’s role be when resources are so sharply constrained?

Three main steps seem to be needed. First, there needs to be discussion of the generally-accepted paradigm of a strong economic state which, among other things, promises to protect the populace from the ravages of uncaring market forces. In fact, market forces are often dominant in poorly-regulated informal economies across ASEAN. Governments frequently try to impose regulation on these markets but generally fail.

A second step, therefore, would be to recognise the problems that arise when there are excessive expectations about the role that the state can play. Clearly ASEAN states cannot provide the range of services that are available in the OECD welfare states. It would be best if the challenges of designing governments to live with very limited budgets were more widely discussed.

It is hard to avoid the impression that, at least in the low-spending ASEAN states, many branches of government are badly over-stretched. Too often political leaders over-promise and under-deliver. Put simply, governments are trying to do far too much with far too little. The result is a vicious circle: citizens become disillusioned with governments and see little reason for paying taxes or even user charges for government services, thus exacerbating the problem of limited resources for the public sector.

A third step towards reconsidering the role of the state is to define the role of government carefully. To be effective, this would need to go well beyond the dozens of programs of public management reform which have been outlined for ASEAN governments in recent years. The measures that are needed to match the functions of governments more closely would be controversial. Governments should identify strict economies in the range of services they provide, improve revenue collection procedures at all main levels of government (including by state-owned enterprises through higher user charges), and systematically simplify administrative services. They should also review the scope of their activities to design an approach where governments ‘steer, not row’ and strengthen their ability to regulate the outsourced provision of services to communities.

Reconsidering the role of the state is needed not as a response to Western pro-market ideology but because, quite simply, states in the region are trying to do too much with too little. And both government failure and market failure are the result. Government failure often exacerbates market failure because overstretched governments cannot perform even basic regulatory functions properly. A pragmatic and determined approach to reform is needed to strengthen the operations of both governments and markets in the region.

Peter McCawley is a Visiting Fellow at the Crawford School of Public Policy at The Australian National University.

This article appeared in the most recent edition of the East Asia Forum Quarterly, ‘The state and economic enterprise’.

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Strengthening the state and market in ASEAN

Author: Benedikt Buechel, Seoul National University

Since Prime Minister Shinzo Abe’s return to power in December 2012, Japan’s diplomatic relations with South Korea have continuously worsened. Abe’s persistent stance on the Yasukuni Shrine, the Dokdo/Takeshima territorial dispute and the ‘comfort women’ issue has elicited fierce opposition from the South Korean government. While no rapprochement on any of these conflicts has been achieved, the Japanese government should be aware that its hawkish and revisionist rhetoric is hurting Japan’s reputation and risks driving the country into international isolation.

Japanese lawmakers visit the Yasukuni Shrine to pay respect to the war dead on the day of the 69th anniversary of the end of the World War II, in Tokyo , Friday, 15 August 2014. (Photo: AAP)

Abe’s politics towards these issues appears to be influenced by Japan’s diplomacy during Democratic Party of Japan (DPJ) governance from 2009–12. A major policy of Abe’s predecessor Yukio Hatoyama, in power from 2009–10, was to embrace Japan’s neighbouring countries to build a stronger East Asian community. But the policy failed. It seemed that neither China nor South Korea was ready to be embraced by Japan. Instead, both countries used the opportunity to assert stronger claims on disputed territories. Abe’s current stance, in line with his overall political agenda of making Japan strong again, is a response to these events.

Abe often seems to have a dual personality: one pragmatic and the other nationalistic. On visiting the Yasukuni Shrine in December 2013, he emphasised that it was not his intention to hurt the feelings of Chinese and South Korean people. While reconfirming the Kono Statement in a speech in May 2013, he broke with tradition by not mentioning those killed by Japanese soldiers during World War II in another speech in August that year. In 2014, on the 69th anniversary of Japan’s defeat, Abe did not visit the Yasukuni Shrine, sending only a ritual offering. He also refrained from going to the shrine for the autumn festival.

This flip-flopping behaviour has been interpreted as an attempt to calm critics prior to the bilateral meeting with Chinese president Xi Jinping at APEC. Yet even Abe’s ostensibly pragmatic rhetoric and offerings to Yasukuni in lieu of personal visits still left a bitter taste and drew harsh responses from China and South Korea.

The South Korean government, for its part, seeks to capitalise on public anti-Japanese sentiment, especially toward politicians. Surveys have shown that Japan and Abe are perceived almost equally as bad as North Korea and Kim Jong-un.

The latest expression of this strategy could be seen when Kato Tatsuya, the Seoul bureau chief of the right-wing Sankei Shimbun, was charged for supposedly libelling South Korean president Park Geun-hye. Tatsuya had speculated about why it took Park seven hours to show up at the Central Disaster Management Headquarters on the day of the tragic Sewol ferry disaster. The president’s daily log, which was later released to public, only stated her absence but said nothing about what she had been doing. Moreover, the recent actions by the South Korean government have created a climate in which South Korean journalists can hardly write anything positive about Japan.

The aggressive rhetoric being pushed by Japan’s right-leaning media further compounds the Japan-ROK tensions. Japan’s biggest daily newspaper, the conservative Yomiuri Shimbun, has criticising the more liberal Asahi Shimbun for their coverage of the ‘comfort women’ issue. Their loud criticism targeted several Asahi reports that were based on the subsequently false testimony of Seiji Yoshida, a novelist and soldier in the Imperial Japanese Army.

While the Yomiuri Shimbun is right in discrediting these particular reports of women being forcibly taken, this does not fundamentally change the core of the issue. But the mistakes made by the Asahi Shimbun have been used as an opportunity to do exactly that.

After the UN rejected efforts by the Japanese government to revise a 1996 report which determined that so-called ‘comfort women’ had served as sex slaves, the Yomiuri Shimbun recently published three booklets on the issue. The arguments contained within them are quite disturbing. It is alleged that Korean men also sexually attacked Japanese women during the war, a line of thought also advanced by the extremely nationalistic Japan Institute for National Fundamentals. It is concerning that not only is this obscure think-tank prominently advertised by the Yomuri Shimbun but also that a number of professors and journalists support and contribute to it.

It is time that Japan’s liberal internationalists raise their voices to drown the loud noises of the growing revisionist camp. China and South Korea should actively support such efforts instead of continuously criticising, but this would mean the end of capitalising on anti-Japanese public sentiment. For Japan, there would be nothing worse in its quest to revitalise it economy than being isolated any time in the near future.

Benedikt Buechel is a graduate student at the Seoul National University.

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Liberal Japan needs to drown out revisionist voices

Taiwan’s ruling Nationalist Party is poised to lose ground in local elections Saturday. But if China feels antsy about the prospect, they have kept it well under wraps.

Reforms started in the late 1970s with the phasing out of collectivized agriculture, and expanded to include the gradual liberalization of prices, fiscal decentralization, increased autonomy for state enterprises, the foundation of a diversified banking system, the development of stock markets, the rapid growth of the non-state sector, and the opening to foreign trade and investment.

The government vowed to continue reforming the economy and emphasized the need to increase domestic consumption in order to make China less dependent on foreign exports for GDP growth in the future.

The country’s per capita income was at $6,567 (IMF, 98th) in 2009.

Some economists believe that Chinese economic growth has been in fact understated during much of the 1990s and early 2000s, failing to fully factor in the growth driven by the private sector and that the extent at which China is dependent on exports is exaggerated.

The two sectors have differed in many respects.

The technological level and quality standards of its industry as a whole are still fairly low, notwithstanding a marked change since 2000, spurred in part by foreign investment.

China’s increasing integration with the international economy and its growing efforts to use market forces to govern the domestic allocation of goods have exacerbated this problem.

Globally, foreign investment decreased by almost 40 percent last year amid the financial downturn and is expected to show only marginal growth this year.

In this period the average annual growth rate stood at more than 50 percent.

China is aiming to be the world’s largest new energy vehicle market by 2020 with 5 million cars.

China’s challenge in the early 21st century will be to balance its highly centralized political system with an increasingly decentralized economic system.

Since the late 1970s, China has decollectivized agriculture, yielding tremendous gains in production.

China is the world’s largest producer of rice and wheat and a major producer of sweet potatoes, sorghum, millet, barley, peanuts, corn, soybeans, and potatoes.

Sheep, cattle, and goats are the most common types of livestock.

China is one of the world’s major mineral-producing countries.

There are large deposits of uranium in the northwest, especially in Xinjiang; there are also mines in Jiangxi and Guangdong provs.

China also has extensive hydroelectric energy potential, notably in Yunnan, W Sichuan, and E Tibet, although hydroelectric power accounts for only 5% of the country’s total energy production.

Although a British crown colony until its return to Chinese control in 1997, Hong Kong has long been a major maritime outlet of S China.
Rivers and canals (notably the Grand Canal, which connects the Huang He and the Chang rivers) remain important transportation arteries.

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China Being Reticent Ahead of Taiwan Local Elections

Authors: Cassandra Shih, Victoria University of Wellington, and Benedict Xu-Holland, ANU.

So far 20 countries have taken up China’s open invitation to found the Asian Infrastructure Investment Bank (AIIB). Notably absent at the signing were Australia, Indonesia and South Korea, who did not definitively respond to the invitation. Until a week before the signing it seemed likely that Australia would join, but it eventually withdrew, citing ongoing transparency concerns similar to those voiced by US officials. The US likely sees the new bank as a threat to the US and Japan’s status as the regional norm-shapers of development finance.

The AIIB presents an opportunity for New Zealand to amplify its impact in the region. Though not a member of the AIIB, New Zealand is in a prime position to help manage future Pacific projects that attract AIIB backing. New Zealand’s small size and relative lack of geopolitical alignment allow it to pursue partnerships with both the US and China, while experience working in the Pacific makes its input on projects valuable.

China's President Xi Jinping walks with New Zealand's Prime Minister John Key after attending a meeting with the New Zealand-China Council in Auckland on November 21 2014. (Photo: AAP)

At its core, the establishment of the AIIB is a product of China’s dissatisfaction with existing US-dominated development finance institutions. China’s share of the vote in the Asian Development Bank (6.47 per cent) and the World Bank (5.17 per cent) does not reflect its economic power. Current levels of lending by the ADB and the World Bank fall far short of meeting the region’s acute demand for infrastructure investment. Loans from these institutions are also burdened by extensive transparency and good governance requirements.

China, on the other hand, has an interest in promoting a set of development norms based on political non-interference. China also stands to gain favour with its neighbours if its investment model can successfully spur regional development.

China has made large commitments to the New Development Bank (NDB) and the AIIB. So far China has taken responsibility for supplying around 40 per cent of the NDB’s US$100 billion contingency fund, more than twice the amount put forward by the other members, and half the AIIB’s initial US$100 billion capital fund.

The suspicion with which some view China’s expansion into multilateral development finance is unwarranted. While Beijing is attempting to increase China’s influence in the Asia Pacific, its actions amount to economic and political common sense. China has previously been criticised for being a passive power and demonstrating lacklustre leadership on international issues. Its significant capital reserves must be mobilised if the region’s infrastructure needs are to be met.

China wants to increase regional prosperity, boost its global leadership credentials, procure financial wins for Chinese state-owned enterprises and secure votes in organisations like the UN. China therefore has strong incentives to act as a responsible power.

Until recently, China has been averse to pooling its aid money with others for fear of losing autonomy. In 2012 it turned down an invitation from Australia to join the Cairns Compact to promote transparency in aid flows in the Pacific. A senior Chinese delegate Wang Yongqiu said, ‘We have different approaches and practices from Western developed countries. We feel it is unnecessary to accept this multilateral coordination mechanism, but we need time to study it’.

Now that China has established multilateral coordination mechanisms of its own, New Zealand should seek ways to contribute to the AIIB’s success, at least where the Pacific is concerned. The lack of involvement by other Western countries in the AIIB should not deter New Zealand. Indeed, New Zealand has a track record of firsts when it comes to China. New Zealand was the first developed country to sign a free trade agreement with China in 2008. It was also the first developed country to announce a trilateral development project with China in the Asia Pacific, with a NZ$50 million (US$38.5 million) project to improve water quality in the Cook Islands in 2012.

Of course, successful collaboration depends on clear-eyed risk assessment. Internationally, New Zealand has an iconic brand built around its reputation as a fair, independent, green and safe country. Threats to this brand are taken very seriously, with the memory of the 2008 Sanlu milk scandal still raw in the New Zealand political and business psyche. New Zealand must therefore be selective in the projects it chooses to become involved in.

Another risk for New Zealand is whether China–New Zealand development cooperation might inadvertently cool New Zealand’s recently strengthened security relationship with the US. In 2010, the Wellington Declaration was signed, symbolically patching the rift caused in 1984 by New Zealand’s anti-nuclear policy. Following the signing, the former US secretary of state, Hillary Clinton, described the US–New Zealand relationship as ‘stronger and more productive than it has been in 25 years’. Ironically, US appetite to re-engage with its traditional allies in the region is partly motivated by a desire to reinforce its sphere of influence in the face of a rising China.

Whether it is worth stepping back from this progress with the US to pursue opportunities created by the AIIB will depend on how willing New Zealand is to use the full policy space available and engage independently with its partners.

A successful New Zealand foreign policy depends on working with all significant powers in the Asia Pacific. A reliance on the economic goodwill of China and on informal security relations with its traditional partners means that New Zealand must walk a tightrope between the two. Remaining flexible and agile will be key to ensuring that New Zealand benefits from a rising China, while being able to advance Pacific development and the credibility of its independent brand.

Cassandra Shih is a recent graduate from the Victoria University of Wellington.

Benedict Xu-Holland is a student and Education Officer at the College of Arts and Social Sciences, the Australian National University.

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Why the AIIB presents an opportunity for New Zealand

Author: Heng Pheakdey, Enrich Institute

After the global recession in 2009, Cambodia’s economy recovered steadily with its GDP growing at an average rate of 7 per cent per year in 2010–13. It is expected to maintain its growth rate of 7 per cent this year.

But despite these rosy short-term prospects, Cambodia’s long-term growth prospects might be hampered by its low competitiveness. It has persistently underperformed in the World Economic Forum’s Global Competitiveness Index. In 2014, Cambodia ranked 95 out of 144 countries, down from 88 in 2013. Weak institutions, poor infrastructure, low-quality higher education and training, and lack of innovation inhibit Cambodia’s overall competitiveness. Apart from Myanmar, Cambodia was the lowest ranked country in the region. Singapore, Malaysia, Thailand and Indonesia were all in the top 5.

 Cambodian garment workers buy fish in front of a factory in Phnom Penh on 12 November 2014. The Cambodian government on 12 November raised the minimum wage for its garment workers by 28 percent, following a series of strikes and protests over pay and conditions, to the dismay of unionists. (Photo: AAP)

Corruption and weak institutions hold Cambodia back from becoming truly competitive. Cambodia remains one of the most corrupt countries in the world. Despite adopting the Anti-Corruption Law in 2010, corruption is still widespread in Cambodia. Corruption weakens the judiciary, the police force and other state institutions. Favouritism by government officials and impunity is commonplace. The lack of a clear distinction between the courts and the executive branch of government has also led to deep politicisation of the judicial system.

The lack of infrastructure is one of the biggest challenges for Cambodia’s growth and overall competitiveness. Cambodia’s infrastructure is less developed than its neighbouring countries. Only half of its 2-digit national roads and only 15 per cent of provincial roads are paved. The railway system is underdeveloped and under-utilised. Only 6 per cent of the population uses the internet, and access to electricity is still limited and expensive.

Cambodia also underperforms in delivering high-quality higher education and training. While the enrolment rate has increased, the sector is still plagued with numerous challenges. Most universities lack learning and teaching resources and facilities, and qualified academic staff are in short supply. Higher education programs are largely driven by commercial interests, focusing on a few business-related courses; while mathematics and science subjects are lacking. Soft skills training is missing and research activity is limited.

Perhaps the biggest challenge Cambodia faces is the lack of innovation. Cambodia’s ability to innovate is just a little above that of Myanmar’s but below the rest of its neighbours’. The main barriers are the lack of quality scientific research institutions, the limited number of scientists and engineers, the lack of resources dedicated to research and development, and insufficient collaboration between industries and universities for research and development activities.

The lack of competitiveness could be a larger problem when Cambodia faces off against its neighbours following the ASEAN economic integration. Unless Cambodia enacts comprehensive, effective and timely polices to improve its competitiveness, it will lose the competition, affecting its long-term development. There are three keys to unlocking Cambodia’s growth.

First, Cambodia should take action to ensure that state institutions function effectively. The government’s anti-corruption strategies and agencies need to be strengthened to minimise rent-seeking and nepotism. The judicial system should be made fully independent to conduct objective evaluation and application of the law.

Second, Cambodia needs to invest in key infrastructure such as roads, railways, energy supplies and internet access. It needs to rehabilitate high-priority road networks and bridges to facilitate the growth of agriculture, tourism and trade in rural areas. Cambodia’s existing infrastructure around its ports and airports should be efficient enough to handle forthcoming increases in production and trade.

Third, Cambodia needs to improve the quality of its higher education. Higher education plays a vital role in building up a competitive workforce for Cambodia. Improving  the quality of higher education would ensure that Cambodia meets its current and future human capital needs, and allow Cambodia to benefit from the ASEAN integration in 2015. Cambodia needs financial resources to improve education infrastructure, update the curriculum and teaching methods, and recruit well-qualified teaching staff. Research should also be promoted, and internal quality assurance should be the top agenda for all higher education institutions.

Strengthening institutions, modernising infrastructure and enhancing the quality of education would contribute to improving innovation and Cambodia’s overall competitiveness. More needs to be done to create an enabling environment to support innovators. For example, Cambodia should enact policies to stimulate technological development and promote collaboration in research and development activities. Cambodia must make an effort to remove bureaucratic and regulatory obstacles to entrepreneurial activities, which can stifle innovation.

Cambodia has come a long way in terms of growth and poverty reduction. Now it’s time for the country to focus on improving its competitiveness to sustain long-term economic and social development. If Cambodia gets this right, it would be on track to fully integrate itself into the region and the world.

Heng Pheakdey is the founder of Enrich Institute, a Phnom Penh-based human resource development organisation

 

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Three keys to unlocking Cambodia’s growth

Author: Satoshi Amako, Waseda University

Xi Jinping has tackled serious domestic and foreign policy challenges since he assumed leadership in November 2012. He has put great effort into an astonishingly large-scale domestic anti-corruption campaign and has invested diplomatically in enhancing China’s image as a major country and leader in the region.

Xi’s mission, emphasised repeatedly after the 18th Communist Party Congress, is realising the ‘Chinese dream’. This dream involves a ‘great revitalisation of the Chinese race’ by building a rich and powerful nation that is prosperous and happy. The party announced that it would promote the noble-minded enterprise of peace, tolerance, international trust, justice and cooperation. Yet, in security and diplomacy, political reports from the 18th Party Congress have emphasised building ‘powerful armies in accordance with [China’s] status in international society’ and that China should resolutely defend its maritime resources and ‘build a strong maritime nation’.

Wellwishers greet Xi Jinping, then China’s Vice-President, at Haneda airport in December 2009. As president, Xi has the responsibility for promoting peace, tolerance and international trust, and at the same time building ‘powerful armies’ and a ‘strong maritime nation’. (Photo: AAP).

This line has led to an extremely delicate balance that Xi must maintain between international cooperation and a hard-line foreign policy. But as long as China’s priority is to become a great power, it is expected that strengthening national defences and protecting resources will be prioritised.

Ten years have passed since China became the second-largest economic power in the world, and over this time the country has also rapidly strengthened its military muscle. Following the increase of economic and military power and the heightened self-awareness as a superpower, political leaders, think-tanks, scholars and young people have started to argue that China’s diplomatic strategy taoguang yanghui (biding one’s time while strengthening oneself) should be abandoned.

China over the past few years has increasingly asserted its ‘core interests’, in the South China Sea, and is embroiled in territorial disputes with South Korea, Japan, Vietnam, Malaysia, the Philippines, Brunei and Taiwan.

China’s shift from passive diplomacy was first highlighted in its dealings with Japan. China took an extremely hard-line diplomatic stance over the maritime collision in disputed waters near the Senkaku/Diaoyu islands in September 2010. After a Chinese trawler collided with Japanese coast guard patrol boats, China summoned the Japanese ambassador to Beijing six times (and once at midnight). Communication and tourism between the countries was seriously affected, and official meetings were cancelled. Vigorous protests broke out in both China and Japan—and China issued a travel warning for Japan after Chinese tourists were attacked in Fukuoka.

During this time Wang Jisi, Dean of the School of International Studies at Beijing University and one of the top brains at the Ministry of Foreign Affairs, had maintained that taoguang yanghui was still valid and that ‘things should proceed in a discreet manner’. However, he changed to a more aggressive tone after Japan’s nationalisation of the Senkaku/Diaoyu islands in 2012, saying, ‘now, the occasion to use taoguang yanghui is only limited to when we refer to the attitude toward the US’.

A clearer picture of China’s vision for the 21st century international order was put forward by President Xi Jinping at his meeting with President Barack Obama in June 2013. He proposed a special or Group of Two (G2) relationship of superpowers and started to demand that the US recognise their relationship as the only relationship of world superpowers. Obama did not make any comment on this, but China would repeatedly demand it going forward.

At this same meeting between Obama and Xi Jinping, Xi also stated, ‘in the Asia Pacific region, there remains broad space that China and the US can share’.

The way that China has treated its relationship with Japan starkly contrasts with its relations with the US. In October 2013 senior Japanese statesmen, including former prime minister Yasuo Fukuda, gathered in Beijing and met Chinese senior officials in order to break the stalemate in the bilateral relationship. In the meeting, Tang Jiaxuan, chairman of the China-Japan Friendship Association (and a former member of the State Council) insisted that ‘Japan should clarify whether it stands on the Western world or Asia’. This is in line with comments by hardliner Yan Xuetong — that if Japan defines itself as a Western country there will be fewer ‘shared interests’ — and is related to the idea of a ‘Greater China Zone’, which China has been promoting as it extends its influence in economics, politics, culture and the military.

But here there is a paradox. The more China emphasises the ‘China model’ and the theory of ‘China’s uniqueness’, the more it conflicts with universal, widely accepted concepts in international society. If this is the case, the world will not accept the ‘China model’ or the theory of ‘China’s uniqueness’ even if China does catch up with the US in an economic and military sense.

China took the same path as other developed nations, of modernisation and industrialisation, by fully leveraging the advantages of being a developing country.

If China accepts reality and agrees to developing the current international order, rather than trying forcefully to create a new international order, international society will welcome it. China itself has expressed the need for such a framework.

Former Chinese president Hu Jintao asserted that ‘injudicious use of force does not create a beautiful world’. This statement positions China’s path of survival in the current international order. Hu Jintao continued: ‘We advocate the spirit of equality, mutual trust, tolerance … Cooperation and “win-win” mean to advocate the idea that all humans share the same destiny, pay attention to other countries’ legal rights while pursuing his/her own country’s interests, work together to overcome difficulties, share rights and responsibilities, and increase common benefits’.

This is in line with China’s position since the end of the Cold War, emphasising the principle of international collaboration. In this argument, Hu advocates an international strategy in which China should contribute from the universal perspective, not from the perspective of the theory of ‘China’s uniqueness’.

If China can lead the new international order, accepted and respected by other countries, it would fulfil the first criterion for becoming a true world leader.

Satoshi Amako is Professor and formerly Dean of the Graduate School of Asia Pacific Studies at Waseda University in Tokyo.

This article appeared in the most recent edition of the East Asia Forum Quarterly, ‘A Japan that can say ‘yes’’.

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Hard line or soft line? Xi Jinping’s diplomatic choices