Today Trends

Author: Editorial Board, ANU The security thinking that’s now captured Washington calls on allies and partners everywhere ‘to reinforce, renovate and buttress a world order that favours freedom’. The US Indo-Pacific strategy is shaped around the idea of integrated deterrence which US Secretary of Defense, Lloyd Austin, says means ‘using every military and non-military tool in our toolbox, in lockstep with our allies and partners’. One element of integrated deterrence aims to deepen force interoperability through military-to-military arrangements among close allies and select partners. This will be achieved through the acquisition of US military hardware, personnel exchanges and placements, base location and joint training. In the US alliance relationship with Australia, these elements have long been present, as they have too in the US alliance relationships with Japan and South Korea. What’s different in the Australian case is the commitment to lifting them to another scale, a pr

Author: Mary E Lovely, Peterson Institute for International Economics When he withdrew the United States from the Trans-Pacific Partnership, former president Donald Trump tore up the playbook for American economic engagement with Asia. In February 2022, his successor, Joe Biden, offered his own strategy for the region — one that blends broadly defined security and commercial interests while sharing Trump’s refusal to engage in new comprehensive trade agreements. American partners in Asia welcome many aspects of President Biden’s Indo-Pacific Strategy. The Biden framework recognises the region’s security and prosperity as vital to American security and prosperity. It acknowledges that its economies will drive the lion’s share of global growth and that cooperation within the region is essential in the fight against climate disruption and COVID-19. It suggests new initiatives in military cooperation and shared technology development and governance. It recognises infrastructure needs wi

Author: Joshua P Meltzer, Brookings US President Joe Biden will launch the Indo-Pacific Economic Framework (IPEF), his administration’s key initiative for economic engagement with the Indo-Pacific, in April 2022. Since former president Donald Trump withdrew from the Trans-Pacific Partnership — now the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) — China has, in part through its RCEP membership, strengthened its economic links throughout the region. With Beijing now seeking membership of the CPTPP, US economic leadership and credibility are at stake in the Indo-Pacific. While the Biden administration recognises the urgency of an affirmative economic strategy in the region, its approach reflects US political constraints. It is unclear where the Republican Party stands following its turn away from free trade since 2016. The Biden administration also seems determined to bring labour unions along with new trade initiatives, so it is avoiding the agreemen

Author: Jiao Wang, University of Melbourne China’s economy had another extraordinary year in 2021, experiencing strong growth despite the worldwide COVID-19 pandemic. But sustaining that growth in 2022 will require some balancing, likely at the expense of much-needed reforms. China’s average two-year growth was 5 per cent and 5.5 per cent in the first two respective quarters of 2021, discounting the low base from 2020. Growth slowed a bit in the second half of the year, with 4.9 per cent in Q3 and 4 per cent in Q4 year on year. Overall, this better-than-most-expected GDP performance was driven by booming demand as part of the global rebound from the economic downturn caused by COVID. The trade sector also did well in 2021 — total exports rose 29.9 per cent from a year earlier, hitting their highest level since 2011. The strong growth of exports was underpinned by a domestically well-managed COVID situation that allowed factories to re-open and workers to return. China’s trade als

Authors: Gideon Lasco, University of the Philippines and Vincen Gregory Yu, Ateneo de Manila University In the wake of the Omicron variant, many countries in Southeast Asia are warming to the idea of living with COVID-19, as a manageable, endemic illness, and that guiding populations to live under this ‘new normal’ is the most realistic way forward. Manila’s notorious traffic jams are back after Philippine authorities reopened public establishments at full capacity. Cinemas in Hanoi resumed operations after a nine-month closure. And in Singapore, more countries were added to the ‘Vaccinated Travel Lane’ scheme, which permits the entry of fully vaccinated travellers without quarantine. But as the region begins to move past the pandemic, there are lessons to be learned from how countries responded to the pandemic. In many countries, the burden of transmission mitigation has been placed squarely on the shoulders of ordinary people. This has shifted focus — and primary accountability

Author: Anushka Wijesinha Sri Lanka is facing unprecedented political turmoil, and with the economy in a tailspin it is in its weakest state in decades. The country is staring down the barrel of a sovereign debt default and is exposed to external shocks. Usable foreign exchange reserves are at just a few weeks of imports (estimated at below US$200 million), and there are shortages of fuel, gas and electricity. Banks and businesses are short of dollars for trade transactions and households are struggling to get basic food items. President Gotabaya Rajapaksa announced his request for support from the International Monetary Fund (IMF) in March 2022 as a precursor to pursuing a sovereign debt restructure. He has appointed a three-member group of eminent experts to advise him on multilateral engagement. Ensuring that the government can come to an agreement with the emergency lender — with political consensus and public acceptance — is crucial. Political consensus around economic polic

Author: Xiaoli Guo, ANU Since the start of the Russia–Ukraine crisis on 24 February 2022, questions about China’s stance on the conflict have proliferated. So far, China’s preference is clear — to not side with either country. Assume that China did absolutely support Russia politically. Such a move may allow China to further deepen its diplomatic ties with Russia and is in line with the current Chinese strategic mindset that alliances should be formed with strong powers to ease pressure from the United States. But from the Chinese perspective, this is not the right track to ensure stable development. China clearly prefers a multilateral international order with China, Russia, Europe and the United States being the four major powers to determine future world affairs. This is because no single actor out of the four can independently dominate current and future international relations and greater economic development is possible by avoiding zero-sum games. Some analysts contend t

Author: Cyn-Young Park, ADB Russia’s invasion of Ukraine and the subsequent energy price fallouts are testing Asia’s economic and financial resilience. Recent surges in global oil prices have fuelled inflation concerns and SWIFT sanctions have driven demand for US dollar liquidity. Meanwhile, the US Federal Reserve (Fed) has increased interest rates for the first time since 2018 to curb inflation. COVID-19 has left a large imprint on the Fed’s balance sheet. Since early 2020, it has pumped liquidity into the financial system to cushion the impact of fiscal stimulus on interest rates. Its balance sheet has ballooned to nearly US$9 trillion from a pre-COVID-19 pandemic level of US$4 trillion. On 16 March 2022, the Fed raised interest rates from 0.25 per cent to 0.5 per cent. The US economy continues to show resilience with a strong labour market despite the war in Ukraine and high energy prices. Given the elevated inflationary pressures, the Fed will likely continue to gradually reve

Author: Xu Mingqi, CCIEE China is undoubtedly facing dramatic changes in the global arena. The United States is increasingly mobilising resources and alliances in the Indo-Pacific region and strengthening strategic competition to combat what it sees as a ‘rising China threat’. The Biden administration has deviated from or abandoned almost all of its predecessor’s policies, except for its China policy. Trump-era tariffs and export controls on Chinese imports continue and the legacy of Trump’s Indo-Pacific strategy endures through the elevation of the Quad and the formation of the AUKUS security arrangement to combat China’s influence. Chinese policymakers recognise these measures as challenges in China’s external environment, stability in which is of utmost importance to the development of the Chinese economy. However, China remains optimistic and believes in the prevailing strength of common interests with its trade and investment partners. China maintains that US-led decoupling w

Author: Debashis Chakraborty, Indian Institute of Foreign Trade. After pursuing an active regional trade agreement (RTA) policy since 2005 , India changed course in November 2019. Having participated in Regional Comprehensive Economic Partnership (RCEP) negotiations since 2013, with the goal of elevating its regional economic integration, India decided not to sign the agreement. This came after India had joined a number of trade agreements spanning East and Southeast Asia, particularly since 2010–11, for trade and investment promotion . RCEP seemed to align with India’s long-term engagement strategy , and its desire to integrate the regional economy with regional value chains. But the decision to withdraw from RCEP negotiations cited potential conflicts with economic interests and national priorities . India’s decision was largely influenced by its trade balances. From 2011 to 2015 , India’s average trade deficit with RCEP members stood at US$38.75 billion. This increased to US$44