While your humble blogger
remains jet-lagged out of his gourd adjusts back to the Western hemisphere, he strongly encourages you to read this fantastic David Barboza story in the New York Times on the predilection in China to use cash for ... well ... everything:
Lugging nearly $130,000 in cash into a dealership might sound bizarre, but it’s not exactly uncommon in China, where hotel bills, jewelry purchases and even the lecture fees for visiting scholars are routinely settled with thick wads of renminbi, China’s currency.
This is a country, after all, where home buyers make down payments with trunks filled with cash. And big-city law firms have been known to hire armored cars to deliver the cash needed to pay monthly salaries.
For all China’s modern trappings — the new superhighways, high-speed rail networks and soaring skyscrapers — analysts say this country still prefers to pay for things the old-fashioned way, with ledgers, bill-counting machines and cold, hard cash.
Many experts say it is not a refusal to enter the 21st century as much as wariness, of the government toward its citizens and vice versa (emphasis added).
Now you should definitely read the whole thing, but a few thoughts here:
1) From a personal perspective, as the occasional visitor to China, I can confirm the wads of cash thing -- but it's a bit more complicated than Barboza suggests. First of all, for U.S. academics at least, the payment isn't in renminbi, but in U.S. dollars. Renminbi is sometimes dispensed for things like per diem reimbursements, but not for honoraria. After all, officially, the RMB is still not convertible to dollars outside of the country, so it wouldn't be very nice to get paid in a currency that is technically useless outside the People's Republic.
There are two other qualifiers here. First, at least with respect to academic honoraria, it's not just China that pays in cash -- so does Japan, for example. Second, speaking as an academic who's received the occasional honorarium, it's friggin' awesome. At some point, someone takes you aside and gives you an envelope stuffed with bills. I know it's impolite to say, but every time it happens, I feel like I'm an earner in Tony Soprano's crew. It's soooooo much more satisfying than getting a check (as is the norm in the U.S.) or receiving a bank transfer
three months later than it should be and only after haranguing someone a few times (as is the norm in Europe).
2) The more substantive point of Barboza's story is how the cash-based system reflects the degree of distrust between the government, Chinese citizens, and the financial system. From a global political economy perspective, this cuts in two directions. On the one hand, it suggests that the effects of a real estate bubble popping in China might have a muted effect on the broad mass of Chinese. After all, if they're holding their assets outside the financial system, then their bigger fear will be currency-gnawing rats (read to the end of Barboza's story) than banks closing.
On the other hand, it's worth reading articles like this whenever someone suggests that the renminbi will soon be a challenger to the U.S. dollar as an international reserve currency. For that to ever truly happen, China's capital account will have to be one hell of a lot more transparent and liberal than it is now. As it turns out, even China's Superbank isn't actually that super once one digs into the numbers. And if Chinese citizens are trying to avoid dealing with China's financial system and the renminbi, then I seriously doubt global capital markets are going to embrace the RMB as a rival to the dollar.
So China has not been shy over the past few months in expressing its territorial aspirations, going so far as to imprint them in new passports. Now on the one hand, this is a predictable reaction to the U.S. pivot from last year. On the other hand.... well, for a country that ostensibly thinks a lot about realpolitik, they sure haven't internalized the notion of cooperating under a security dilemma. Indeed, two recent stories suggest that Chinese behavior is disrupting long-held norms in the Pacific Rim.
In the South China Morning Post, Greg Torode reports that much of ASEAN is getting fed up with Beijing:
China is set to face mounting challenges from the grouping over the South China Sea as Cambodia's controversial year as Asean host and chair comes to an end. As difficult as it may have been, Cambodia's year may be as a good as it gets for Beijing - in the short term at least....
An announcement on Sunday from host Cambodia that Asean's leaders had formally agreed not to internationalise the issue "from now on" sparked a flood of questions. Asean-China talks would be the sole forum, spokesman Kao Kim Hourn added.
Given that leaders - including US President Barack Obama and allies from Japan, the US and Australia - were converging on Phnom Penh determined to raise the need to lower South China Sea frictions, it was a remarkable agreement, and a victory for Beijing's backroom lobbying.
But the consensus hailed by Cambodia lasted less than a day. The Philippine delegation, led by President Benigno Aquino, cried foul, warning there was no such deal and insisting on its rights to seek international redress if it felt that its national sovereignty was threatened.
In the rhetoric of Washington, its re-engagement across Asean is part of an effort to "shape" China's rise, forcing it to conform to international norms. With considerable discretion, it has buttressed efforts among Asean countries to co-ordinate and organise diplomatic responses to Chinese challenges.
While the Philippines stood up publicly this week, others were helping in the background, for example. ....
Just four years ago, China had successfully kept Asean nations officially quiet on the subject. The events of the last week have shown that, despite considerable efforts, the calculations are now much more complex.
If ASEAN is known for anything, it's for developing bland consensus statements. That's a key component of the ASEAN way. If that norm is breaking down, then China is having a serious impact on the behavior of member countries -- and not in a way that benefits Beijing's interests.
The other interesting story is Martin Fackler's story in the New York Times about Japan's naval activities in the Pacific Rim. Shorter Fackler: Japan is getting more active in the region. Now what's interesting about this isn't Japan's behavior; one would expect Tokyo to counter Beijing. No, what's interesting is how other countries in the region -- most of whom had a very bad experience with Japan during the Second World War -- are reacting. Which is to say, they're pretty cool with Japan exercising their naval muscle:
In a measure of the geopolitical changes roiling the region... concerns about any resurgent Japanese militarism appear to be fading in some countries embroiled in their own territorial disputes with China, like Vietnam and the Philippines, the scene of fierce fighting during the war.
Analysts there and elsewhere in the region said their countries welcomed, and sometimes invited, Japan’s help.
“We have already put aside our nightmares of World War II because of the threat posed by China,” said Rommel Banlaoi, a security expert at the Philippine Institute for Peace, Violence and Terrorism Research in Manila.
On a recent morning, 22 coast guard officials from a dozen Asian and African nations joined a training cruise around Tokyo Bay aboard a sleek, white Japanese Coast Guard cutter. The visitors snapped photos of the engine room, the electronics-studded bridge and the 20-millimeter cannon. Before the cutter left port, the foreign contingent and the Japanese crew stood at attention on deck facing each other, then bowed deeply.
“Japan is joining the United States and Australia in helping us face China,” said Mark Lim, an administrative officer from the Philippine Coast Guard who joined the cruise.
Japan is widely viewed as being the only nation in the region with a navy powerful enough to check China....
The Japanese Navy took a big step toward opening up in 2009 by holding a joint military drill with Australia — its first such exercise with a nation besides the United States. It has since joined a number of multinational naval drills in Southeast Asia, and in June held its first joint maneuver with India.
Hostility towards any Japanese great power behavior has been another longtime diplomatic staple of the Asia/Pacific. That norm also appears to be eroding fast.
Does this make any difference? Well, yes. As Fackler notes, Japan has the 6th largest defense budget in the world. India, Australia and South Korea aren't exactly defense midgets either. The more that Beijing pushes the rest of the Pacific Rim into the arms of the United States, the more Washington's job becomes one of policy coordinator rather than policy provider. In other words, China's policies are making the pivot cheaper. To repeat a point I made earlier this year:
In [Wang Jisi's essay about how the Chinese leadership views the U.S.], the United States is the chief architect of any misfortune or policy reversal that affects the Middle Kingdom. Wang notes the U.S. "pivot" without speculating why countries like South Korea, Vietnam, or even Myanmar might be so eager to welcome Washington with open arms. If Chinese policymakers truly believe that the U.S. is solely to blame for these turn of events, then they will likely continue to act in ways that alienate their neighbors in the Pacific Rim, thereby exacerbating the geopolitical straight-jacket that they disliked in the first place.
Am I missing anything?
So it turned out that this was the week that both the Romney campaign and the Obama campaign decided that foreign policy was an important thing to talk about during election season. Speaking personally, this is great!! I seem to have moved up in the Rolodex of those covering the campaign. Expect lots of juicy quotes in the months to come, and readers are warmly encouraged to proffer useful metaphors that I can provide in soundbite fashion over the next six months.
Unfortunately for the Romney campaign, this was not a great week to ramp up attacks along this line. The reasons is that, all told, the Obama administration had a pretty good foreign policy week. Not all, or even most of this, was of its own doing, but consider the following:
1) Iran has signaled a genuine willingness to talk compromise on its nuclear program in order to avoid the EU oil embargo kicking in. That might just be rhetoric, but it's interesting to note that even senior Israeli officials are starting to talk down the Iranian threat. The less Iran becomes a thing, the
lower gas prices can fall better for the administration.
2) The United States has maybe, just maybe, eliminated a major thorn in bilateral relations with Japan by finally reaching agreement on moving U.S. troops from Okinawa. We'll see if this holds -- everyone assumed that a 2006 agreement had put this problem to rest before successive Japanese governments
shot themselves in the foot raised it again, but this is the thing on this list for which the administration deserves the most credit. As an added bonus, the administration actually got some nice words from John McCain on comity with the Senate.
3) For some reason China seems to be in a more productive mood in their dealings with the United States, and Mark Landsler and Steven Lee Myers have taken notice in the New York Times:
For years, China stymied efforts to pressure Iran. Now, in addition to throwing its weight behind the sanctions effort, officials say, Beijing is also playing a more active role in the recently revived nuclear talks between Iran and six world powers — the United States, China, Russia, Britain, France and Germany. While in past negotiations, Beijing has followed in lockstep the positions taken by Russia, this time Chinese diplomats are offering their own proposals.
“One of the key elements of making this work is unity among the major powers,” said a senior administration official, who spoke on condition of anonymity to discuss diplomatic exchanges. “The Chinese have been very good partners in this regard.”
There are also signs of new cooperation on Syria. Only weeks after Secretary of State Hillary Rodham Clinton called China’s veto of a United Nations Security Council resolution “despicable,” China is supporting Kofi Annan’s peace plan for the strife-torn country and is deploying monitors to help oversee it. Even on North Korea, which China has long sheltered from tougher international action, the Chinese government quickly signed on to a United Nations statement condemning the North’s recent attempt to launch a satellite.
And there is progress on the economic front: American officials said China recently loosened trading on its currency, the remninbi, which could help close a valuation gap with the dollar that has stoked trade tensions between China and the United States during an election year.
To some seasoned observers of China, these developments are less a harbinger of a new era of cooperation between Beijing and Washington than evidence that, at least for now, the interests of the two countries coincide in some important areas.
The administration will nevertheless be happy to pocket the policy dividends.
4) Staying in Northeast Asia, it turns out that the big bad North Korean ICBMs are little more than a pipe dream -- and western analysts are starting to say that Kim Jong Un is naked in the public square:
North Korea tried to flex its military might with an extravagant parade on April 15, just three days after it admitted that its missile test had been a failure, but analysts now say that the new intercontinental ballistic missiles on display in the meticulously choreographed parade were nothing more than props.
The analysts studied photos of the six missiles and came to their conclusion for three primary reasons: 1. The missiles did not fit the launchers that carried them. 2. The missiles appear to be made out of both liquid-fuel and solid-fuel components that are unable to fly together. 3. The casings on the missiles undulate which suggests the metal is not thick enough to hold up during flight.
"There is no doubt that these missiles were mock-ups," Markus Schiller and Robert Schmucker, of Germany's Schmucker Technologie , wrote in a paper recently posted on Armscontrolwonk.com. "It remains unknown if they were designed this way to confuse foreign analysts, or if the designers simply did some sloppy work."
If the U.S. government can claim progress on Iran, China, North Korea, and Japan in one week, that's a good foreign policy week. Of course, for a lot of these issues, the administration is the beneficieary of circumstances rather that pro-active policies. Still, the administration deserves some credit for some of these development.
It's just one week, though. And I fear the most memorable statement about American foreign policy is this rather unfortunate choice of words:
NOTE TO WHITE HOUSE/CAMPAIGN SPEECHWRITERS: In the future, avoid having Biden utter any of the following: "big stick", "hard power", "pounding the enemy", "won't take no for an answer", and "smooth-talking his adversaries".
Am I missing anything?
As I noted previously, compared to his GOP rivals, Mitt Romney has some actual foreign policy thinking going on. On the other hand, as Dan Trombly points out, doing better than Herman Cain or Rick Perry is a really low bar. So, looked at objectively, what's my assessment of Romney's foreign policy white paper?
I could go through it line by line, but James Joyner already did that for The Atlantic. As it turns out, I'm reaching a course called The Art and Science of Statecraft that will require students to write a grand strategy document. Sooo.... if Mitt Romney was one of my students, how would I grade him? See below:
You and your study team have clearly put a lot of work into "An American Century." It's cogently written and organized. Your basic statement of purpose -- "advance an international system that is congenial to the institutions of open markets, representative government, and respect for human rights (p. 7)" -- fits perfectly within the mainstream of American foreign policy thinking. You've done an excellent job of demonstrating an awareness of the complexity of threats that face the United States in the 21st century. I liked it on p. 6 when you noted that:
In the highly dynamic realm of national security and foreign policy there are seldom easy answers. Discrete circumstances in disparate regions of the world demand different kinds of approaches. There is no silver bullet for the problem of securing the United States and protecting our interests around the world.
You've also demonstrated an appropriate awareness that American power rests on more than a strong military. When you note that a Romney administration would "apply the full spectrum of hard and soft power to influence events before they erupt into conflict (p. 8)," I caught myself nodding along.
Some of the details are intriguing as well. I need to look more into these "Reagan economic zones" that you mention a lot, but applying them to Latin America and the Pacific Rim make a great deal of strategic and economic sense. I'm not fully persuaded that your notion of creating regional envoys to organize all "soft power resources" is all that different from the foreign policy czars or special envoys of administrations past, but this kind of argument fits well with your management background.
That said, there are some logical flaws and major gaps in this draft that will have to be corrected if you want to earn a better grade. The first problem is the style. I recognize that you've written this as a campaign document, so you're never going to completely eliminate the
unadulterated horsheshit allegations about the current president going on an apology tour. Maybe you could do it a bit more subtly in the future, however?
Secondly, there's a lack of historical awareness in some parts of the document. For example, on page 7 the paper says:
[A] Romney foreign policy will proceed with clarity and resolve. The United States will clearly enunciate its interests and values. Our friends and allies will not have doubts about where we stand and what we will do to safeguard our interests and theirs; neither will our rivals, competitors, and adversaries.
Now, reading this, I kept thinking back to the Bush administration and its repeated assetions that that there would be no hypocrisy in foreign affairs. Much like Bush, reality turned out to be trickier. I suspect you know this, from the other excerpts noted earlier. So get rid of this fluff: I'm sure statements like this play well in a management consulting boardroom, but it's not going to cut it in the real world.
Similarly, for someone who says that, the Obama administration is "undermining one’s allies (p. 3)" in contrast to you, who will "reassure our allies (p. 13)", you don't actually talk about America's treaty allies much at all. True, you do talk about expanding America's alliance system to include India and Indonesia. Mexico gets some face time. Israel gets a lot of face time. On the other hand, NATO is not mentioned once in this entire document. Neither is the European Union. Japan and South Korea get perfunctory treamtment at best. Turkey is a major treaty ally but you treat it like a pariah state. For someone who's claiming that the U.S. will reassure its major allies, you didn't seem to give them much attention at all. This is a really important problem, because Japan and Europe have been crucial allies in a lot of major American initiatives -- and they're getting weaker. Even in discussing new possible allies, I'm kind of gobsmacked that Brazil is never mentioned.
Another big problem is that your approach to China is so shot full of contradictions that I don't know where to begin. Do you seriously believe what you wrote on p. 3:
The easiest way... to become embroiled in a clash with China over Taiwan, or because of China’s ambitions in the South or East China Seas, will be to leave Beijing in doubt about the depth of our commitment to longstanding allies in the region.
Really? See, I'd say the easiest way to get embroiled in a clash with China is to write Taiwan a blank check on their defense needs. The second easiest would be to publicly bluster on about Taiwan to a Chinese leadership that feels increasingly insecure and will be tempted to stoke the fires of Chinese nationalism by creating another Quemoy and Matsu crisis.
Furthermore, you talk explicitly about supplying Taiwan with "adequate aircraft and other military platforms (p. 18)" in supposed contrast to the Obama administration. You also talk about strengthening relationships with other countries that neighbor China in an effort to preserve American dominance. Now, this might be a bit provocative, but I get the rationale. Here's the thing, though -- you can't simultaneously do this and assert that you will "work to persuade China to commit to North Korea’s disarmament (p. 29)." Really? How exactly are you gonna persuade them on this point? Do you really think that arming Taiwan to the teeth and blasting its human rights record will do the trick?
If the section on China is contradictory, then your discussion of Pakistan is worse. You state on p. 31-32:
It is in the interests of all three nations to see that Afghanistan and the Afghanistan/ Pakistan border region are rid of the Taliban and other insurgent groups.... Pakistan should understand that any connection between insurgent forces and Pakistan’s security and intelligence forces must be severed. The United States enjoys significant leverage over both of these nations. We should not be shy about using it.
There are at least two assertions in the quoted section that are highly dubious -- I'll let you find them on your own.
One final point, should you choose to revise this draft strategy -- you need to prioritize the threats you discuss in the paper. You list a whole bunch of them -- rising authoritarian states, transnational violence, failing states, and rogue states. If you have to prioritize, which threats merit greater attention? This should actually be pretty easy, since you absurdly overhype the threats posed by some of these countries (Venezuela, Cuba and Russia in particular).
I look forward to reviewing your later work.
Last night a fellow International Studies Association 9isa0 attendee sent me the following request:
Hey, aren't you supposed to be providing pithy commentary on events of the last week for the rest of us ISA survivors? Get on that!
Sigh... it's back to the blogging salt mines. [Welcome back.... now get to work!!!--ed.]
Let's start off with an easy meta-point. So far, 2011 has been one of those years when it seems like a lot has been going on in international affairs -- but is that reality or just perception?
Hey, turns out it's reality:
Propelled by revolution in the Middle East and radiation in Japan, television news coverage of foreign events this year is at the highest level since the Sept. 11 terrorist attacks 10 years ago, news executives in the United States say....
The busy season for foreign news started in January in Tunisia and quickly spread to Egypt, where networks and newspapers deployed hundreds of journalists. According to the Project for Excellence in Journalism, which conducts a weekly accounting of news coverage by national outlets, foreign news added up to 45 percent of all coverage from mid-January through mid-March. In the four years that the accounting has been done, foreign news has averaged about 20 percent of coverage....
But despite extensive coverage of Libya and Japan, the television networks have had major blind spots. Last week, none of the broadcast networks had correspondents in Bahrain, where the United States Navy's Fifth Fleet is based, when security forces crushed the protest movement there, nor in Yemen when forces there killed dozens of protesters. The dearth of coverage of Yemen is largely because of its government’s refusal to grant visas to journalists....
So, cui bono? Here we get to a veeeerry interesting detail:
If there is any media beneficiary, it is CNN, a unit of Time Warner, which has the most robust international staff levels of any network based in the United States. CNN has paired its domestic and international channels for hours on end, and last week it scored several rare — though probably fleeting — ratings victories against Fox News.
“This is the time when the judicious investments we’ve made in a proper international infrastructure are paying off,” Mr. Maddox said.
Say, isn't it convenient that CNN had all these assets in place and now gets to use them? Can anyone out there prove that network hasn't played an instigating role in some of these crises?
I didn't think so. I'm gonna start paying very close attention to Anderson Cooper for the rest of 2011. [Yeah, that doesn't sound weird at all!--ed.]
Back in the nineties, the Economist ran a very provocative end-of-year essay on voluntary human extinction, concluding with the notion that, "the tricky question is not whether to extinguish, but when."
While I don't think that this concept has gained much traction in most of the world, I'm beginning to wonder if the government of Japan is embracing it on the sly. I've blogged before about that country's stout resistance to immigration. Today the New York Times' Hiroko Tabuchi has another front-pager on the barriers to entry for even well-trained immigrants. Shorter Times: the situation is unchanged from 18 months ago:
Despite facing an imminent labor shortage as its population ages, Japan has done little to open itself up to immigration. In fact … the government is doing the opposite, actively encouraging both foreign workers and foreign graduates of its universities and professional schools to return home while protecting tiny interest groups.…
In 2009, the number of registered foreigners here fell for the first time since the government started to track annual records almost a half-century ago, shrinking 1.4 percent from a year earlier to 2.19 million people -- or just 1.71 percent of Japan's overall population of 127.5 million.
Experts say increased immigration provides one obvious remedy to Japan's two decades of lethargic economic growth. But instead of accepting young workers, however -- and along with them, fresh ideas -- Tokyo seems to have resigned itself to a demographic crisis that threatens to stunt the country's economic growth, hamper efforts to deal with its chronic budget deficits and bankrupt its social security system.…
Japan's demographic time clock is ticking: its population will fall by almost a third to 90 million within 50 years, according to government forecasts. By 2055, more than one in three Japanese will be over 65, as the working-age population falls by over a third to 52 million.
Still, when a heavyweight of the defeated Liberal Democratic Party unveiled a plan in 2008 calling for Japan to accept at least 10 million immigrants, opinion polls showed that a majority of Japanese were opposed. A survey of roughly 2,400 voters earlier this year by the daily Asahi Shimbun showed that 65 percent of respondents opposed a more open immigration policy.
If you talk to Japan-boosters about this issue, they'll usually respond with some equation of older workers + hi-tech robots = healthy Japan. OK, but it turns out that Japan has fewer old people than the government originally thought, and I'm worried that when the robots get too smart, Will Smith will be too old to stop them.
Seriously, this seems to fall into that set of problems, like, say, climate change, where most people recognize that there's a serious long-term problem but the short-term incentives to do something about it are close to nil.
Am I missing anything?
Keith Bradsher reports on the latest move in Chinese economic statecraft:
China, which has been blocking shipments of crucial minerals to Japan for the last month, has now quietly halted some shipments of those materials to the United States and Europe, three industry officials said this week.
The Chinese action, involving rare earth minerals that are crucial to manufacturing many advanced products, seems certain to further intensify already rising trade and currency tensions with the West. Until recently, China typically sought quick and quiet accommodations on trade issues. But the interruption in rare earth supplies is the latest sign from Beijing that Chinese leaders are willing to use their growing economic muscle.
"The embargo is expanding" beyond Japan, said one of the three rare earth industry officials, all of whom insisted on anonymity for fear of business retaliation by Chinese authorities.
They said Chinese customs officials imposed the broader restrictions on Monday morning, hours after a top Chinese official summoned international news media Sunday night to denounce United States trade actions....
The signals of a tougher Chinese trade stance come after American trade officials announced on Friday that they would investigate whether China was violating World Trade Organization rules by subsidizing its clean energy exports and limiting clean energy imports. The inquiry includes whether China's steady reductions in rare earth export quotas since 2005, along with steep export taxes on rare earths, are illegal attempts to force multinational companies to produce more of their high-technology goods in China.
Despite a widely confirmed suspension of rare earth shipments from China to Japan, now nearly a month old, Beijing has continued to deny that any embargo exists.
Industry executives and analysts have interpreted that official denial as a way to wield an undeclared trade weapon without creating a policy trail that could make it easier for other countries to bring a case against China at the World Trade Organization.
So far, China seems to be taking a similar approach in expanding the embargo to the West.
Hat tip to Will Winecoff, who asks, quite reasonably, "What in samhell is China thinking?"
Assuming that the New York Times story is accurate, there are three ways to think about what Beijing is doing. First, this could just be all about domestic politics. Bradsher notes that the decision was made after a Central Committee meeting. It's possible that as the currency wars heat up, and as the U.S. starts complaining to the WTO, there was a need to assuage some nationalist outrage. Of course, no one really knows what Chinese domestic politics looks like, so who the hell knows how much validity to give to this argument.
The second way to look at it is that China's leaders have been reading The Sanctions Paradox. I argued in that book that high expectations of future conflict between the sanctioning and the sanctioned state would lead to frequent episodes of economic coercion, but each attempt would yield only minimal concessions. So far, this model holds up: the past month of China's rare earth export controls have yielded them exactly one returned fishing boat captain. Maybe they are hoping that extending the ban to the United States will force Washington to back down in their WTO complaints. Given rising conflict expectations, that's about the most they're going to get from this action.
The third way to think about it is that China is being ridiculously short-sighted in their use of economic coercion. As Patrick Chovanec notes at Seeking Alpha:
[China] really shot itself in the foot. By flexing its muscles so eagerly, over a relatively minor incident, it alarmed its customers and possibly frightened them off, when a softer approach might have lulled them into continued and deepening dependence. There's no question that China can extract rare earths at the cheapest price, in purely monetary terms. But now China's trading partners must be seriously wondering, what could the real price amount to, when the bill eventually comes due?
China's foreign economic policies with respect to raw materials suggests that Beijing doesn't think market forces matter all that much -- what matters is physical control over the resources. This is a pretty stupid way of thinking about how raw materials markets function, and it's going to encourage some obvious policy responses by the rest of the world. Non-Chinese production of rare earths will explode over the next five years as countries throw subsidy after subsidy at spurring production. Given China's behavior, not even the most ardent free-market advocate will be in a position to argue otherwise.
More importantly, China's perception of how economic power is wielded in the global political economy is going to have ripple effects across other capitals. If enough governments start reacting to China's economic statecraft by taking similar steps to reduce interdependence with that country, then China will have created a self-fulfilling prophecy in which geopolitics trumps economics. Another possibility is that the rest of the world will operate as before in dealing with each other, but treat China differently, developing CoCom-like structures and fostering the creation of explicit economic blocs.
That really would be the worst of both worlds for Beijing. China is growing, but the economic weight of countries that prefer market-oriented ways of doing business is still much, much larger.
In going for the short-term gain, China is inviting a long-term containment policy. That might allow for some rally-round-the-flag support at home, but it's going to be a massive net loss for their economy.
A few days ago Brazil's finance minister mentioned the phrase "international currency war." The Financial Times' Jonathan Wheatley and Peter Garnham are all over it.
An “international currency war” has broken out, according to Guido Mantega, Brazil’s finance minister, as governments around the globe compete to lower their exchange rates to boost competitiveness.
Mr Mantega’s comments in São Paulo on Monday follow a series of recent interventions by central banks, in Japan, South Korea and Taiwan in an effort to make their currencies cheaper. China, an export powerhouse, has continued to suppress the value of the renminbi, in spite of pressure from the US to allow it to rise, while officials from countries ranging from Singapore to Colombia have issued warnings over the strength of their currencies.
“We’re in the midst of an international currency war, a general weakening of currency. This threatens us because it takes away our competitiveness,” Mr Mantega said. By publicly asserting the existence of a “currency war”, Mr Mantega has admitted what many policymakers have been saying in private: a rising number of countries see a weaker exchange rate as a way to lift their economies.
A weaker exchange rate makes a country’s exports cheaper, potentially boosting a key source of growth for economies battling to find growth as they emerge from the global downturn.
The proliferation of countries trying to manage their exchange rates down is also making it difficult to co-ordinate the issue in global economic forums.
South Korea, the host of the upcoming G20 meeting in November, is reluctant to highlight the issue on the gathering’s agenda, also partly out of fear of offending China, its neighbour and main trading partner.
On the other hand, South Korea is putting together an awesome ice sculpture for the summit. Seriously.
The FT's Alan Beattie details the abject lack of policy coordination and its implications in further detail:
Aside from China, whose intervention is one of the main causes of the global currency battle, several big economies have been intervening for some time. Switzerland started unilateral intervention against the Swiss franc last year for the first time since 2002 and did not sterilise it by buying back in the domestic money markets what it had sold across the foreign exchanges.
In common with several east Asian countries, South Korea, host of the Group of 20 summit, has been intervening intermittently to hold down the won during the course of this year. Deliberately weakening a currency while running a strong current account surplus has raised eyebrows in Washington.
Recently it was revealed that Brazil itself, which has been expressing concern since last year about inflows of hot money pushing up the real and unbalancing the economy, had given authority to its sovereign wealth fund to sell the real on its behalf.
The resort to unilateralism bodes ill for US hopes of assembling an international coalition of countries at the forthcoming G20 meeting to put pressure on China over its interventions to prevent the renminbi rising. While most of the countries currently intervening would be likely to welcome a revaluation of the renminbi, few emerging market governments seem to want to stand up to China publicly – barring sporadic criticism such as that from Brazilian and Indian central bankers earlier this year.
Last week Celso Amorim, Brazil’s foreign minister, said that he did not want to become part of an organised campaign. Following a meeting of the Brics countries – Brazil, Russia, India and China – in New York, he told Reuters: “I believe that this idea of putting pressure on a country is not the right way for finding solutions.”
Mr Amorim added: “We have good co-ordination with China and we’ve been talking to them. We can’t forget that China is currently our main customer.” Brazil exports commodities to China. (emphasis added)
It's also possible that Brazil and others fear a security dilemma kind of response from China. Either way, this demonstrates that, on the economic front, China's deterrent power is formidable (even if its compellence power has been exaggerated).
Now, there are some who argue that this kind of beggar-thy-neighbor policy could be a blessing in disguise, because it might amount to massive monetary easing. I tend to side with Michael Pettis, however:
[W]e know how that game ends. In 1930, following France’s very successful 1928 devaluation and Britain’s tightening of trade conditions within the Commonwealth, the world’s leading trade-surplus nation passed the Smoot-Hawley tariffs in a transparent attempt to gain a greater share of dwindling global demand. This would have been a great strategy for the US had no one noticed or retaliated, but of course the rest of world certainly noticed, and all Smoot-Hawley did was accelerate a collapse in global trade which, not surprisingly, hurt trade surplus countries like the US most.
We seem to be following the same path, and in a beggar-thy-neighbor world any country that does not participate in retaliatory policies will suffer. The only question is which retaliatory policy. I suspect that countries that can intervene in the currency and manipulate domestic interest rates will select those polices as the most efficient way of intervening in trade. Countries that cannot will almost certainly resort to trade tariffs. And it is probably too late for global policy coordination to make much of a difference.
To be fair, the demand for global policy coordination since 2008 has been much higher than normal. That said, it seems that on this issue, the G-20 has fallen flat on its face.
Developing … in a very depressing way. Literally.
Hey, remember last week, when I was blogging about how China was threatening Japan with a rare earth ban because the Japanse government had a Chinese boat captain in custody? And remember how I said that, "given the spate of flare-ups between Japan and China as of late, the last thing Tokyo will want to do is back down in the face of Chinese economic coercion"?
Japanese prosecutors have released the captain of a Chinese fishing boat, two weeks after a collision in disputed waters sparked a dramatic deterioration in ties between Beijing and Tokyo....
Prosecutors on the southern Japanese island of Okinawa, where Zhan was detained, said they would monitor both governments' response to their decision before deciding whether to indict him, but that course of action is looking increasingly unlikely.
They said the row caused by Zhan's detention and the possible impact on Japan-China ties had been a factor in their decision....
Japanese officials had earlier warned that the swift deterioration in bilateral ties posed a threat to the economies of both countries.
China was Japan's largest trading partner last year and Japan was China's third largest. Bilateral trade reached $147bn (£93.6bn) in the first half of this year – a jump of 34.5% over the same time last year, Japanese figures show.
"A cooling of relations between Japan and China over the Senkaku problem would be bad for Japan's economy, but it would also be a minus for China," Japan's finance minister, Yoshihiko Noda, said.
"It's desirable that both sides respond in a calm manner."
A few commentors to my last post took this opportunity to tell me to
go suck a lemon the errors of my ways. To which I must respond.... not so fast.
I had four points to make in that post:
A) Japan was unlikely to bow to economic pressure from China;
B) China's use of a rare earths export ban was not likely to have much leverage;
C) China was overestimating its overall ability to translate economic power into political leverage; and
D) Because of these actions, the rest of the Pacific Rim was going to start getting much closer to the United States.
Now, let's go through these in the context of this Associated Press story about the latest in this Sino-Japanese kerfuffle:
Tension between China and Japan bumped back up a notch Monday when Tokyo asked Beijing to pay for damages to patrol boats hit by a Chinese fishing vessel in disputed waters, countering China's demand for an apology over the incident.
The diplomatic back-and-forth shows that nationalistic sentiments stirred up by the incident — and the territorial dispute behind it — are not fading even after Tokyo released the ship's captain Friday amid intense pressure from China.
Welcoming the skipper home as a hero, China stunned Japan over the weekend by demanding an apology and compensation over his arrest, a move that reflects Beijing's growing self-confidence and its attempts to test the resolve of key neighbors like Japan, Washington's closest ally in the region.
Criticized at home for caving in to Chinese pressure, Prime Minister Naoto Kan's government responded by issuing its own demand for compensation and calling on Beijing to decide whether it wanted to repair frayed ties.
"At this point, the ball is now in China's court," said Chief Cabinet Secretary Yoshito Sengoku....
Some experts saw China's demand for an apology as overreaching — and bad publicity in a region where neighbors are already concerned about the nation's expanding military and political clout. China is embroiled in several other territorial disputes.
"Beijing has scored an own-goal here. It really reflects badly on them," said Jeff Kingston, director of Asian studies at Temple University's Tokyo campus. "All that smile diplomacy, reassuring regional neighbors that the rise of China is unthreatening, has just gone up in smoke."
More broadly, the dispute and others like it has created openings for greater U.S. engagement in Asia as China begins to vie with the U.S. for dominance in the region.
On Friday, President Barack Obama and Southeast Asian leaders sent China a firm message over territorial disputes, calling for freedom of navigation and peaceful resolution of disputes in seas that China claims as its own. Obama said the U.S. plans to "play a leadership role in Asia."
Hmmm.... well, Japan did hand over the captain, so it seems that I was pretty wrong on (A). That said, this story also suggests I'm a little right on (A) and very right on (C) and (D). China overreached -- again -- in demanding compensation and an apology (though looking past this latest episode, there are some indications that China recognizes its overreaching vis-a-vis the USA). This caused Japan to dig in its heels. And, finally, all of this is pushing the region closer to the United States.
[What about the rare earth lever?--ed.] Damien Ma knows more about this than I do:
Given the expansive universe of Japanese high-tech sectors, Japan depends on China for the bulk of its RE supplies. Now, China produces roughly 95% of global RE supplies, but has only about 1/3 of the world's total reserves. Having such immense control over a particular resource naturally leads to suspicion, especially among buyers, that China could wield "supplier leverage" to manipulate prices and supplies, much like how a cartel would behave....
China's supply dominance was driven by market dynamics in the first place. Other RE mines closed production, in part because of environmental issues, while China continued to produce at a low price. Now that price is rising in China, it might be more cost-effective to start mine development elsewhere. If China really is trying to be the "OPEC" of rare earth elements, then global markets would react to cartel-like behavior, probably by accelerating development, eventually undermining Chinese monopoly on supply. Problem is, development takes time, so for now, it's tough to get off Chinese supply.
At worst, I was slightly wrong on (B) in the short term -- and this doesn't get into Japan's stockpiling of rare eaarths. Furthermore, I am going to be much less wrong about this over time. China's market power over rare earths is clearly temporary. Regardless of whether they were trying to use their monopsony power to extract concessions from Japan, the perception of China's economic statecraft is going to encourage a lot of countries to subsidize their domestic supply.
So, to sum up: I was more right than wrong. I hereby dare my thoughtful and cantankerous readers to
go suck two lemons demonstrate the error of my interpretation yet again in the comments section.
There's been a lot of oh-my-God-China-is-eating-America's-lunch-have-you-seen-how-pretty-their-infrastructure-is?-kind of blather among the commentariat. And, to be sure, China has had a good Great Recession. But one of the points I've been making on this blog repeatedly is that, for all of China's supposed deftness, "China's continued rise seems to be occurring in spite of strategic miscalculations, not because of them."
Now, I had also assumed that China's leadership would quickly move down the learning curve and practice a more subtle form of statecraft. After reading Keith Bradsher in the New York Times today, however, I guess I was wrong:
Sharply raising the stakes in a dispute over Japan’s detention of a Chinese fishing trawler captain, the Chinese government has blocked exports to Japan of a crucial category of minerals used in products like hybrid cars, win turbines and guided missiles.
Chinese customs officials are halting shipments to Japan of so-called rare earth elements, preventing them from being loaded aboard ships this week at Chinese ports, three industry officials said Thursday.
On Tuesday, Prime Minister Wen Jiabao personally called for Japan’s release of the captain, who was detained after his vessel collided with two Japanese Coast Guard ships about 40 minutes apart as he tried to fish in waters controlled by Japan but long claimed by China. Mr. Wen threatened unspecified further actions if Japan did not comply.
Is this effort at economic statecraft going to accomplish Beijing's objectives? In a word, no. True, according to Bradsher, "China mines 93 percent of the world’s rare earth minerals, and more than 99 percent of the world’s supply of some of the most prized rare earths."
It's also true, however, that Japan has been stockpiling supplies of rare earths. Furthermore, this kind of action is just going to lead to massive subsidies to produce rare earths elsewherein the world (including the United States) and/or develop rare earth substitutes. Oh, and one other thing -- given the spate of flare-ups between Japan and China as of late, the last thing Tokyo will want to do is back down in the face of Chinese economic coercion.
Don't get me wrong -- if China persists in this ban, there will be come economic costs to the rest of the world. Those costs just won't translate into any political concessions. [UPDATE: The Wall Street Journal has an excellent follow-up story suggesting that China is not imposing a ban.]
It is hardly surprising that (reported) actions like these are leading the entire Pacific Rim right to Washington's door:
[R]ising frictions between China and its neighbors in recent weeks over security issues have handed the United States an opportunity to reassert itself — one the Obama administration has been keen to take advantage of.
Washington is leaping into the middle of heated territorial disputes between China and Southeast Asian nations despite stern Chinese warnings that it mind its own business. The United States is carrying out naval exercises with South Korea in order to help Seoul rebuff threats from North Korea even though China is denouncing those exercises, saying that they intrude on areas where the Chinese military operates.
Meanwhile, China’s increasingly tense standoff with Japan over a Chinese fishing trawler captured by Japanese ships in disputed waters is pushing Japan back under the American security umbrella....
“The U.S. has been smart,” said Carlyle A. Thayer, a professor at the Australian Defense Force Academy who studies security issues in Asia. “It has done well by coming to the assistance of countries in the region.”
“All across the board, China is seeing the atmospherics change tremendously,” he added. “The idea of the China threat, thanks to its own efforts, is being revived.”
Asserting Chinese sovereignty over borderlands in contention — everywhere from Tibet to Taiwan to the South China Sea — has long been the top priority for Chinese nationalists, an obsession that overrides all other concerns. But this complicates China’s attempts to present the country’s rise as a boon for the whole region and creates wedges between China and its neighbors.
This latest rare earth ban is just going to accelerate this trend. The ironic thing about this is that it's not like U.S. grand strategy has been especially brilliant. The U.S., however, has two big advantages at the moment. First, it's further away from these countries than China. Second, Washington's actions and rhetoric have been far more innocuous than Beijing's.
In yet another New York Times story, David Sanger provides a small clue as to whether Beijing either knows or cares about the blowback from its recent actions:
Early this month Mr. Obama quietly sent to Beijing Thomas E. Donilon, his deputy national security adviser and by many accounts the White House official with the greatest influence on the day-to-day workings of national security policy, and Lawrence H. Summers, who announced Tuesday that he would leave by the end of the year as the director of the National Economic Council....
[O]fficials familiar with the meetings said they were intended to try to get the two countries focused on some common long-term goals. The Chinese sounded more cooperative themes than in the spring, when two other administration officials were told, as one senior official put it, that “it was the Obama administration that caused this mess, and it’s the Obama administration that has to clean it up.”
Well, that is learning, but it's of a very modest kind.
Now, it is possible that Beijing has simply decided that its internal growth is so big that it can afford the friction that comes with a rising power. My assessment, however, is that they're vastly overestimating their current power vis-a-vis the United States, and they're significantly undererstimating the effect of pushing the rest of the Pacific Rim into closer ties with the United States (and India).
More significantly, and to repeat a theme, China is overestimating its ability to translate the economic interdependence of the Asia/Pacific economy into political leverage. With these misperceptions, however, China is risking some serious conflicts down the road.
Am I missing anything? I'm serious -- this problem ain't going away anytime soon.
Half-reformed after prison, Gekko is more anti-hero than villain this time. He is still dazzled by lucre, but also determined to give warning of the dangers of excessive leverage. The real baddies are Bretton James and the securities firm he runs, Churchill Schwartz—perhaps the least disguised fictional name ever. Executives at Goldman Sachs are said to be unamused....
As the financial crisis unfolded, the story was reworked to cast Goldman in a more nefarious light. In the original version, the villain was a hedge-fund manager. But script advisers from the financial world persuaded Mr Stone that an investment banker would be more realistic, since it was banks and securities firms, not “alternative” money managers, that had blown up the system.
Among his counsellors were James Chanos, a well-known short-seller, Anthony Scaramucci, another hedge-fund man, and Nouriel Roubini, an economist who predicted the crisis. Each was rewarded for his efforts with a cameo. Dr Roubini appears as the suitably gloomy Dr Hashimi.
Now I respect Roubini a lot, and in this case he was correct to redirect Stone's ire away from hedge funds and towards the investment banks.
Still, this information makes me juuuuust a bit wary of the film. The history of political economy advisors for film and fiction is pretty short and undistinguished. The only other instance I can think of in which this occurred was Daniel Okimoto's cameo in Michael Crichton's Rising Sun. That novel -- the first of Crichton's to feature a bibliography, if memory serves -- was written at the peak of hysteria about Japan, Inc. Okimoto's contributions were spot-on, but the book itself was absurdly over the top in terms of Japanese nefariousness (intriguingly, Philip Kaufman's screen adaptation of Rising Sun holds up better than the novel because it tamped down the Japan-bashing in favor of adding some film noir moodiness).
I don't like generalizing from one case, but I do wonder whether political economy advisors are used to give film/fiction the patina of intellectual respectibility, thereby allowing the writer/director to go over the top. [What about documentaries? -- ed. I'll outsource that to Will Winecoff.]
This week Japan has provoked the ire of the United States and Europe by unilaterally intervening in currency markets to depreciate the yen against other major currencies. Japanese Prime Minister Naoto Kan has responded to these criticisms by
telling the US and EU to go suck a lemon stating that further "resolute actions" would be taken on this front.
This comes on the heels of mounting U.S. frustration with China's "go-slow" policy on letting the yuan appreciate against the dollar. [What do you mean by "go slow"?--ed. Let's put it this way: the tortoise thinks that China is being pokey on this question.]
So, is this the beginning of beggar-thy-neighbor? Will other countries start intervening in foreign exchange markets to gain a competitive advantage for their export sectors?
The New York Times' Hiroko Tabuchi thinks not, because Japan can't unilaterally devalue its currency like in the old days:
It is unlikely, though, that intervention by Japan alone will sway currency markets in the long term. The global volume of foreign exchange trading has grown rapidly in recent years, which prevents intervention by a single government from countering bigger market trends.
Other countries are unlikely to help Japan’s cause, because they need to keep their own currencies weaker to bolster exports. A weak currency makes a country’s exports more competitive and increases the value of overseas earnings.
Much of the yen’s weakening came from investors selling the currency on expectations that the Japanese government would be more active in keeping the yen in check. Japan did not disclose how much it had spent in currency transactions, but dealers put the initial amount at 300 billion to 500 billion yen ($3.5 billion to $5.8 billion).
But as Switzerland found this year, a single government’s efforts to weaken its currency can prove futile. Switzerland abandoned that effort, after its central bank had lost more than 14 billion Swiss francs ($14 billion) in foreign currency holdings in the first half of the year, after a fall in the euro’s value ate into the bank’s reserves.
The Swiss franc is also seen by investors as a relative haven and has also strengthened amid global financial unrest. This month, the franc hit a record high against the euro.
Hmmm.... maybe. Japan's economy is much larger than Switzerland, so I'm not sure the comparison holds up. The real problem, however, appears to be that countries perceived of as "safe havens" wind up with overvalued currencies.
This little parable also makes me wonder whether we might see beggar-thy-neighbor policies in a different guise this time around. This is going to sound a little crazy, but here goes: rather than explicit exchange rate intervention, what if countries decided to play fast and loose with Basle III and other measures to strengthen financial integrity?
This really does sound crazy -- it suggests that governments would be willing to tolerate a higher risk of domestic banking collapse in order to avoide being a "safe haven" status for capital. That said, think of how much Europe benefited from the depreciation of the euro due to the Greek crisis. Basle III, by taking so long for banks to meet standards allow those countries with more insolvent financial institutions **cough** Germany **cough** to take their own sweet time in having them meet new capital adequacy standards. This would allow Germany to have the euro stay relatively cheap without abandoning its anti-inflationary zeal.
Now, in all likelihood, not even the Germans would purposefully do this. This is crazy talk. What I'm suggesting, however, is that there is more than one way for a country to have its currency depreciate, and these policies are substitutable. Looking only at explicit exchange rate intervention might be just a bit too narrow. And if more countries find more ways of keeping their currency undervalued, well then, the days of beggar-thy-neighbor would have arrived.
I'm late to this party, but two quick thoughts on Obama's Tokyo speech:
1. Last week a sharp foreign policy observer -- and a former campaign advisor for Obama -- made an interesing lexicographical observation to me about the Obama administration's foreign policy rhetoric to date. They use the word "partnership" a hell of a lot more often than they use the word "alliance." That's not terribly surprising, given their emphasis on talking with adversaries, forming great power concerts, etc. Still, there are times when it's important to reach out more to one's allies than one's rivals.
The Tokyo speech was one of those occasions, and I'm happy to report that Obama used "alliance" 12 times and "partnership" only 9 times. Perhaps this says more about the lay of the land in the Pacific Rim than anything else, but it does suggest that the adminstration is sensitive to regional nuances.
2. That said, I was underwhelmed with the trade outreach of the speech. Some reports suggest that Obama announced that the U.S. would join the Trans-Pacific Partnership, an APEC trade forum comprising, at the moment, of Brunei, Singapore, Chile and New Zealand (with Vietnam and Australia thinking about joining).
What Obama actually said, however, was:
The United States will also be engaging with the Trans-Pacific Partnership countries with the goal of shaping a regional agreement that will have broad-based membership and the high standards worthy of a 21st century trade agreement.
So what exactly does that mean? Helene Cooper points out the ambiguities of that language in the New York Times:
Although Mr. Obama did open the door during his speech in Tokyo on Asia policy, he did not explicitly say that the United States would join the pact. A formal announcement that the United States is beginning negotiations would undoubtedly kick off criticism from free-trade opponents in the United States and pushback from Congress.
Mr. Obama spoke, instead, of “engaging the Trans-Pacific Partnership countries with the goal of shaping a regional agreement that will have broad-based membership and the high standards worthy of a 21st century trade agreement.”
That line left many trade envoys already in Singapore scratching their heads: did Mr. Obama mean that the United States would begin formal talks to join the regional trade pact, which presently includes Singapore, Brunei and New Zealand, and could later include Vietnam — an addition that could lead to more Congressional pressure at home?
Many regional officials have been waiting for the United States to join the initiative as a demonstration that Washington will play a more active role in the region. But the Obama administration has yet to establish a firm trade policy, as it is still reviewing its options.
White House officials were not much clearer on what Mr. Obama meant when they were pressed on this after the speech. Michael Froman, an economics expert on the National Security Council, said that what Mr. Obama meant was that he would engage with the initiative “to see if this is something that could prove to be an important platform going further.”
Wow, that's some real enthusiasm coming from the G-20 sherpa.... not.
For an administration that likes to pride itself as savvy in the ways of foreign policy subtleties, I still don't think they grasp the fact that trade policy is now embedded into foreign policy in the Asia/Pacific Region.
It looks like the Democratic Party of Japan (DPJ), which used to be the Socialist Party, is poised for victory in next month's elections. And they're proposing some pretty radical stuff, according to the FT's Mure Dickie:
The party’s manifesto pledges to end “bureaucrat-led” government by posting about 100 party Diet members to government ministries and agencies, setting up a national strategy bureau under the prime minister and taking control of senior bureaucratic promotions.
Cabinet meeting agendas would no longer be set by unelected administrative vice-ministers, while the practice of amakudari, or descent from heaven, where elite bureaucrats are parachuted into jobs at government agencies or private companies, will be banned.
“When all this is done, we will have realised a new politics for all: no longer a politics of the bureaucrats, by the bureaucrats and for the bureaucrats, but of the people, by the people and for the people,” said Yukio Hatoyama, DPJ president.
This is pretty radical stuff by Japanese standards, changing practices that have been around for more than half a century. And even though this is coming from a left party, I wonder whether this would lead to an entrepreneurial boom in Japan.
Japan has always funneled its best and brightest into Todai law school, and then to the economic bureaucracies, and then amakudari. If that system ends, will Japan's brightest minds even go into government service? Will they stop going to Tokyo law school? Might they -- gasp -- go into business instead?
Maybe not -- entrepreneurs do not necessarily come from the ranks of the elite. But it's going to be a veeery interesting social science experiment if the DPJ does what it says.
One could quibble a fair amount with Steve Walt's post about countries punching above and below their weight in world politics (if North Korea and Israel are influential because of their ability to make mischief, then Pakistan and Iran are punching way above their weight class).
However, Walt's inclusion of Japan as a country that has less influence than it should is beyond dispute. And the New York Times' Hiroko Tabuchi has a story today that provides another data point for this categorization. Apparently, Japan is trying to kick out some of the the paltry number of immigrants it currently has in its territory:
Rita Yamaoka, a mother of three who immigrated from Brazil, recently lost her factory job here. Now, Japan has made her an offer she might not be able to refuse.
The government will pay thousands of dollars to fly Mrs. Yamaoka; her husband, who is a Brazilian citizen of Japanese descent; and their family back to Brazil. But in exchange, Mrs. Yamaoka and her husband must agree never to seek to work in Japan again....
Japan’s offer, extended to hundreds of thousands of blue-collar Latin American immigrants, is part of a new drive to encourage them to leave this recession-racked country. So far, at least 100 workers and their families have agreed to leave, Japanese officials said.
But critics denounce the program as shortsighted, inhumane and a threat to what little progress Japan has made in opening its economy to foreign workers.
“It’s a disgrace. It’s cold-hearted,” said Hidenori Sakanaka, director of the Japan Immigration Policy Institute, an independent research organization.
“And Japan is kicking itself in the foot,” he added. “We might be in a recession now, but it’s clear it doesn’t have a future without workers from overseas.”
That last quote is pretty much accurate -- which is why this is such a puzzling maneuver.
In terms of demographics, about the best thing one can say about Japan is that at least it's not as bad as Russia.
Daniel W. Drezner is professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University.