As FinanceAsia was going to press, China’s State Council endorsed reformist agendas by central bank governor Zhou Xiaochuan and premier Li Keqiang to sacrifice short-term GDP gains in favour of reforming the economy — namely by making yuan capital account convertibility an official goal.
Part of that will revive ideas around allowing mainland citizens to invest more easily in offshore securities, probably via Hong Kong. This plus the easing of interest rate and currency controls by the central government will enable a much greater degree of private economic and investment decision-making.
It shows that the administration of Xi Jinping is finding its feet and taking very seriously the need for restructuring the economy. Chinese politics is often dysfunctional, but Beijing sometimes gets the big things right.
There is more good news in how Asian countries are governed. Japan’s new administration under Shinzo Abe has made a bold start toward reviving the economy, although the planned monetary stimulus needs to be met by real industrial reform, as explored in the supplement accompanying this edition of the magazine.
Malaysia, also featured in this month’s edition (pages 34-41), has just completed an exciting, closely fought election. The opposition won a narrow majority of the vote despite the governing party/government’s blatant manipulation of the local media and shameless use of patronage and gerrymandering. Yet the incumbent winner, Najib Razak, having lost urban (notably Chinese) hearts and minds, will have to strip back race-based preferential policies and revitalise the economy if his Malay party, Umno, is to survive.
Pragmatism rules the day in Seoul, Taipei, Manila, Jakarta and Singapore — where the ruling People’s Action Party is quickly adjusting to its falling popularity by trying to boost growth and employment. Even Myanmar is finally taking active moves to modernise its economy and society, while Bangladesh, faced with the tragedy of collapsing factories and dead garment workers, will need to find a sensible path toward maintaining its economic revival.
There are plenty of problems, fears and challenges throughout the region, from pollution to corruption to militarism. Politicians are failing India and Vietnam, for example, and even where economic reformers are ascendant (China and Japan, for example), they sometimes embody antediluvian elements. But North Korea is the only true basket case left in Asia.
This willingness by governments to be serious about grappling with their challenges is a reflection of the aspirations felt by billions of people, for some of whom the idea of a better life would have sounded like science fiction a mere generation or two ago.
This Asian pragmatism is all the more notable in the face of political dysfunction in Europe and the United States. Western governments, particularly in the eurozone, are struggling to up their game.
Our cover story, about Cnooc’s acquisition of Canada’s Nexen (page 24), proved a challenge for Canadian and US regulators, but for different reasons. Ottawa’s desire to see the deal consummated no doubt put the more hawkish Washington politicians in a bind, but in the end, pragmatism prevailed there too and the transaction was blessed.
It’s an interesting shift, seeing sensible dealmakers from Asia wielding both logic and power to achieve win/wins in the West.
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