Pesek on Asia: Biden's Tense Week
Good morning. Here's my take on some of the stories driving the debate in politics, finance and social issues across Asia today:
Biden enjoys the calm before the storm
When U.S. Vice President Joe Biden was preparing for this week's trip to North Asia a few weeks back, three letters filled his mind: TPP, for the Trans-Pacific Partnership trade deal he was supposed to be hawking for the White House. Now it's these three: W-A-R, or at least the task of helping to avert one. In an interview with the Asahi Shimbun newspaper that ran today (he arrived in Tokyo last night), Biden characterized himself as “deeply concerned” over Beijing's declaration of an air defense zone over islands claimed by China and Japan. So is the rest of the world, which greatly raises the stakes, and expectations, for his meetings in Beijing beginning on Wednesday.
Chinese love their Toyota's, islands or no
Shinzo Abe and Xi Jinping may be locked in an increasingly tense bout of brinksmanship, but that's not turning Chinese consumers away from Japanese cars as feared. Rather than suffer from the crisis as in past years when a Japanese prime minister and Chinese president locked horns, Toyota’s sales surged in the first month since a fresh territorial dispute resurfaced. That could be great economic news as these things go. If Japanese brands can escape a Chinese backlash, and vice versa, then the vast commercial interests of Asia's two biggest economies may indeed rise above geopolitical squabbles.
Fresh Japanese stimulus?
Now for the bad news on so-called Abenomics. All the excitement in the world about a 20 percent plunge in the yen and 50 percent surge in stocks can't change the fact that Japanese wages have fallen for 17 straight months. Worse, stinginess in corporate boardrooms comes at a time when Japan is importing inflation through the energy markets. It's rare when economic trends are simultaneously bad for households and bond traders. Concerns that Abenomics is losing its oomph may be behind press reports his team is mulling a $53 billion stimulus package. Needless to say, 2014 will be a very interesting year in Japan.
Bird flu inflects woman in Hong Kong
Scientists and investors alike have predicted 20 of the last two pandemics that slammed the global economy, and it's entirely unclear that Hong Kong reporting its first confirmed human infection of H7N9 avian influenza is anything more than an isolated case. This same virus strain, however, has killed 45 people in China this year, and the Hong Kong victim, a 36-year-old Indonesian woman, had traveled to the neighboring mainland Chinese city of Shenzhen to buy and slaughter a chicken. At a time when pollution and other health risks in China are rising, even this one case bears watching.
Time for more than just talk in Jakarta
Few nations face what economists call the "pendulum effect" more than Indonesia: investors either love it or hate it. The wild swings in sentiment towards Southeast Asia's biggest economy from euphoric optimism to near panic turns off many investors, especially as the Federal Reserve prepares to withdraw liquidity from world markets. It's great to see Deputy Governor Perry Warjiyo assuring the Wall Street Journal here that policy makers are on top of things. It's more important that Jakarta act soon to match such words with bold action. Only then will all these economic mood swings end.
(William Pesek is a Bloomberg View columnist. Follow him on Twitter.)