Pesek on Asia: China's Plenum Flops
Good morning. Here's my take on some of the stories driving the debate in politics, finance and social issues across Asia today:
China's third plenum is a dud
What a difference four days make. On Saturday morning, as Communist Party leaders began a much-anticipated conclave to plot economic reforms, investors were joyous. The hope was this would be a Deng Xiaoping moment like the one that launched China's economic boom in 1978. Hardly. All we got was vague propaganda about how markets will now play a “decisive” role in allocating resources, whatever THAT means. Disappointed investors pushed Asian stocks down today. Markets were troubled that the rather dry communique from the four-day summit also said the state will remain “dominant” in the economy. Next time, gents, I'm thinking conference call.
The Indonesia-Malaysia remittance boon
We can debate the pros and cons of remittances, of people being among any country's biggest exports, in the long run. But developing nations like Indonesia sure are benefiting from a source of financing that could surpass $2.5 trillion over the next five years, according to the U.N.'s International Fund for Agricultural Development. In 2012 alone, Indonesians working in Malaysia sent home nearly $1 billion through legal channels and lots more through the black market, presumably. Remittances from elsewhere -- like Singapore and Hong Kong -- are offering an underappreciated shock-absorber for economies like Indonesia on the front lines of volatility in global markets.
Korea's Kia heads to Georgia
Director Ron Howard's 1980s film "Gung Ho" tapped into Americans' fears of Japanese automakers stealing U.S. jobs. Michael Crichton got a novel -- 1992's "Rising Sun" -- out of fears about Japanese economic imperialism. That was then. Asian automakers have gone full circle in the U.S. -- from pariahs to job creators. These days, 70 percent of Japanese-branded vehicles sold in North America are made there, supporting local growth. Kia Motors plans to open its first U.S. factory 80 miles outside Atlanta. The $1.1 billion that the facility will pump into the local economy will be a plus for Korea's soft power in the world's biggest economy.
Japanese billionaire sues Abenomics
Hiroshi Mikitani isn't one to go quietly, as Prime Minister Shinzo Abe is being reminded the hard way. The billionaire founder of e-commerce giant Rakuten is an outspoken critic of Japan Inc.'s clubby and insular ways, which Abenomics pledges to address. Now, one of Mikitani’s sites, Kenko.com, is filing a lawsuit against Abe's government to fight restrictions on the online sale of some drugs. Mind you, scrapping these bans was a pillar of Abe's push to increase competition. But like all too many of Abe's pledges, this one has fallen by the wayside. Bravo to Mikitani for holding the prime minister's feet to the fire.
China's too-big-to-fail bank
Every Chinese bank is too big to fail, which is really the problem. Sure, Western bankers are quite adept at gambling with other people's money because they think the government will bail them out if they lose. China, though, has raised this moral hazard to a whole new level. Not only do its banks assume they're safe, but so do state-owned enterprises. Now China has a bank that's considered systemically important globally. The U.S. Financial Stability Board added Industrial & Commercial Bank of China to its too-big-to-fail list. It sure would be nice if China's banking and political systems were more transparent so we had some idea when that prospect might be looming.
(William Pesek is a Bloomberg View columnist. Follow him on Twitter.)