Pesek's View From Asia
Good morning. Here's my take on some of the stories driving the debate in politics, finance and social issues across Asia today.
Asia cheers as Chinese economy impresses.
You know that big slowdown Chinese Premier Li Keqiang said he was engineering so he could restructure the economy? Well, forget it. The longer growth stays above 7 percent, the less Beijing is doing to engineer the downshift necessary to reduce overcapacity and debt. Li, in a Financial Times Op-Ed, said Beijing “will maintain its sustained and healthy growth,” with expansion around a 7.5 percent “lower limit” intended to ensure steady growth and employment. The longer China continues fanning growth, the bigger and costlier its eventual reckoning will be. Until then, the fanning continues.
Australia's Abbott misreads election mandate.
Two days after winning the elections, Prime Minister-elect Tony Abbott is already pulling Australia in the wrong direction. His plan to scrap the nation's carbon-pricing system and a mining tax meant to spread the benefits of growth will help billionaires more than the middle-class voters who supported his Liberal-National coalition. Australia's problem isn't the pace of growth, but a two-speed economy: The commodities-rich western states and Queensland raced ahead on China’s once insatiable demand for metals, while the rest of the country lags behind. Abbott's mandate is to create more sustainable and fairer growth, not coddle wealthy miners.
History's biggest urbanization is only beginning.
If you want to take the pulse of an Asian economy, you could do worse than hang around a train station or two. Be it in Jakarta, Mumbai or Shanghai, the increasing hordes of people arriving at downtown rail stations may offer investors more insights than government statistics or the financial pages. Over the last two decades, the urban population of the Asia-Pacific region has risen from 33 percent to 42 percent. By 2050, about two-thirds of Asia-Pacific's population might be urban, says John West, executive director of the Asian Century Institute. In a timely new article, he details ways for Asia to see that urbanization is "smart," "green" and, ultimately, sustainable.
Is Japan about to gamble on casinos?
Tokyo's staging of the 2020 summer Olympics has casino giants Las Vegas Sands and MGM Resorts eyeing sites in the nation of 126 million people. Vegas moguls hope Prime Minister Shinzo Abe will consider what gaming has done for economies from Singapore to Macau, and champion a law legalizing gambling resorts in Tokyo. Place your bets!
Krugman warns of Chinese "ponzi scheme."
Nobel laureate Paul Krugman may find it harder to get Chinese travel visas thanks to some provocative comments he made about the planet's second-biggest economy. As the world frets about India and Indonesia, Krugman says it's China "I'm frightened about." Specifically, he worries that China isn't producing enough consumers or finding new overseas markets to justify increasing investment. "In a way, it's almost like a ponzi scheme," he said. "Who's buying enough to make use of all of this capacity? It's largely going to produce investment goods used to make more capacity." Good luck with that travel visa, professor.
(William Pesek is a Bloomberg View columnist. Follow him on Twitter.)