Pesek on Asia: One-Robot Policy?
Good morning. Here's my take on some of the stories driving the debate in politics, finance and social issues across Asia today:
Bernanke complicates Japan's deflation fight
Haruhiko Kuroda is running into an unexpected speed bump on the road to generating Japanese inflation: Ben Bernanke. In April, Bank of Japan Governor Kuroda launched an unprecedented doubling of the monetary base to meet a 2 percent inflation target within two years. Yet his efforts to create expectations for higher living costs have been complicated by Fed Chairman Bernanke's decision to delay tapering stimulus. With the U.S. still more biased toward sluggish growth than healthy recovery, the BOJ may have to do more to convince markets that it's capable of winning Japan's 15-year deflation battle.
China Inc.'s robotic future?
Asia investors fretting about aging populations tend to obsess over Japan and South Korea, where adult diapers can often outsell those for babies. But China's demographic timebomb could have far bigger implications globally if the world's factory floor runs out of able-bodied workers. Are robots the answer? Here again, those eyeing a revolution in non-human labor tend to think of Japan well before the most populous nation. But as wages soar and the labor force ages, manufacturers are hoping that a new generation of cheaper, more versatile robots could transform China's massive assembly lines and most importantly, keep them humming.
Indonesia's quest for a “Good Housekeeping" seal
Faced with billions of dollars of capital outflows and ugly international-media headlines about a coming crisis, Indonesia is opting for a little Asian brotherhood. It may sign currency-swap agreements with China and South Korea and boost an existing one with Japan for a total of almost $40 billion. This isn't a solution to the current-account deficit and political paralysis spooking markets. Still, it bestows a “Good Housekeeping” seal on Jakarta at a time when its economy is attracting more negative attention than it deserves. In an increasingly brutal global climate, Indonesia's swap deals are a wise move.
Singapore's increasing immigration curbs
As much as Singapore is a city-state of 5.3 million people, it's a laboratory for the pros and cons of globalization. For many nations, this phenomenon is about the free movement of goods and capital across borders and semi-porous immigration curbs. For tiny Singapore, the free movement of labor is just as vital as the trade and money flows, if not more so. Its population has jumped by more than 1.1 million since mid-2004, driven largely by an influx of foreign workers. Rising prices and competition have sparked a growing backlash against overseas talent, prompting the government to require firms to show that they've tried to hire locals before they can hire foreigners for the same jobs. Clearly, globalization's growing pains are only just beginning.
Is Raghuram Rajan India's Paul Volcker?
Days after Raghuram Rajan shocked markets with an interest-rate hike, traders are buzzing about yet another. Right out of the gate, the Reserve Bank of India governor seems to be looking to establish himself as the nation's answer to Paul Volcker, the Federal Reserve chairman whose aggressive rate actions in the late 1970s and early 1980s defeated runaway inflation. Markets still question whether Rajan has the gumption -- or the clout with lawmakers -- to risk a sharp slowdown in the short run to defeat inflation in the long run. Another hike would go a long way to buttress his inflation-slayer credentials.
(William Pesek is a Bloomberg View columnist. Follow him on Twitter.)