The Week in Asia

Asia House Advisory weekly round up

The Week in Asia


In The Week in Asia, Asia House Advisory takes a look at the top five developments in Asia this week affecting trade, investment and public policy.


Friday 15 February 2019


This week the Thai elections took another turn and US-China tensions continued to play out as other nations pursue economic progress in an uncertain global environment.    


1. Thai Princess banned from running in election 

The excitement at Princess Ubolratana’s election nomination was short-lived, as the Election Commission disqualified her on the basis that her nomination is ‘considered hostile to the constitutional monarchy’. The constitutional court is now assessing whether the Thai Raksa Chart party that nominated her will be dissolved. Ubolratana’s disqualification is a boost to the ruling junta, as she could have proven strong opposition. Dissolution of Thai Raksa Chart would also be a boost for them, as one less Thaksin-aligned party will make it harder for the opposition to gain a majority in parliament. Elections are currently scheduled for 24 March 2019.


2. US-China trade talks offer little progress so far 

Another round of US-China trade negotiations took place in Beijing this week, with US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin meeting Chinese Vice Premier Liu He. Mnuchin said the meetings were ‘productive’, however few official details have been released. There are reports that China agreed to end market distorting subsidies. This is not official, however, and there is no indication of how and when they would act on this, with the lack of clarity being a perpetual sticking point in the ongoing trade tensions. President Xi Jinping is expected to meet with US officials on Friday evening, after which further details may be released.  


3. European Parliament approves Singapore free trade deal 

The European Parliament voted through a landmark free trade agreement with Singapore, which will gradually eliminate nearly all tariffs on both goods and services over the next five years. Aside from lowering the cost of doing business and opening new opportunities for businesses on both sides, the European Union-Singapore Free Trade Agreement (EUSFTA) will allow EU firms to compete for public procurement contracts in Singapore. The UK will not see these benefits if it leaves the EU without a deal.  


4. Ant Financial acquires WorldFirst in US$700m deal  

China’s Ant Financial has agreed to acquire British payments group WorldFirst for around US$700 million, marking the biggest push by a Chinese firm into western financial services markets. Ant Financial is affiliated with the Alibaba Group and is the most valuable tech start-up in the world, worth US$150 billion. Ant Financial’s previous attempt to enter western markets failed when its acquisition of US company MoneyGram International was blocked on national security grounds, in line with a trend of US pushback against Chinese companies operating internationally.   


5. Japan’s economy rebounds to growth  

According to Japan’s Cabinet Office, GDP returned to growth in Q4 last year, with an annualised growth of 1.4 per cent. This suggests Japan’s economy is robust enough to deal with the external pressures of lower demand from both Europe and China. Two factors to watch this year on Japan’s economy are whether it can successfully transition to greater reliance on domestic consumption for growth, and if it can weather the impact of a consumption tax hike in October which will increase from eight per cent to ten per cent.




Looking ahead to next week, here are a couple of events to look out for:  


Second Indonesian presidential election debate scheduled for this weekend. Presidential incumbent Jokowi and his running mate Ma’ruf Amin will face off against challenger Prabowo and running mate Sandiaga Uno in the second of five live election debates. This round will focus on infrastructure, the environment, natural resources, food and energy. Infrastructure is an area of particular interest for foreign investors, as billions of dollars have been sought by Jokowi’s government to fund large infrastructure projects. You can read an Asia House briefing on the elections here.   


Singapore’s pre-election budget to be released. Finance Minister Heng Swee Keat will deliver the budget on 18 February. It is likely to promise a high amount of spending due to both a possible election later this year and the need to counter the effects of US-China trade tensions. Singapore must hold its next election by early 2021, however the Prime Minister has hinted it could be this year.   


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Friday 8 February 2019


This week Germany renews its push for multilateralism, the Thai elections take an interesting turn and President Trump continues to dominate the headlines.


1. German Chancellor Merkel met Japan’s Prime Minister Abe to discuss G20 priorities

Merkel visited Japan in pursuit of an alliance of multilateralists to counter both Trump’s America First approach to trade and China’s perceived pursuit of its own national interest. After advocating a ‘win-win’ approach to international relations in her Davos speech last week, Merkel spoke with Abe about prioritising free trade, climate protection and multilateralism. Emphasising the close relationship with Japan comes as the Federation of German Industries (BDI) has called on Berlin and Brussels to better deal with the challenges posed by a ‘state dominated Chinese economy’.


2. Thai princess runs in election against military

In an unprecedented royal foray into politics, Princess Ubolratana, sister of the Thai King, was announced as a Prime Ministerial candidate for the Thai Raksa Chart party, which is aligned with former Prime Minister Thaksin Shinawatra. She will run against Sudarat Keyuraphan from the Pheu Thai party, also aligned with Shinawatra, and against military junta leader Prayut Chan-o-cha, who confirmed today he was running in next month’s election with the pro-military Palang Pracharat party. This dramatically shakes up the election dynamic, which was previously seen as a contest between the Thaksin-aligned populists and the royalist-military establishment.


3. Indian central bank unexpectedly lowers rates

The Reserve Bank of India unexpectedly lowered interest rates by 25 basis points to 6.25 per cent, in an attempt to boost the slowing economy following a sharp slowdown in the inflation rate. It also changed its stance from ‘calibrated tightening’ to ‘neutral’ and revised down predicted growth rates from 7.5 per cent to 7.2 – 7.4 per cent for April – September. Lower interest rates will be welcome news for Modi, who has promised to increase spending and cut taxes to appeal to voters ahead of the election in May.


4. US-China trade deficit narrows

According to the US Department of Commerce, the US trade deficit with China fell by US$2.8 billion in November to US$35.4 billion, based on a decline in US imports of consumer goods, such as mobile phones and cars. This is likely to please President Trump, who has been vocal in his opposition to large bilateral trade deficit and can only be good news going into further trade negotiations.


5. Trump picks his nominee to lead the World Bank

President Trump has nominated his pick for the World Bank Presidency, David Malpass – Under Secretary of the Treasury for International Affairs and Trump loyalist who claimed on the eve of the Global Financial Crisis that people shouldn’t panic as “housing and debt markets are not that big a part of the US economy.” By convention, the US President’s nominee assumes the role of World Bank President, and it is expected that Malpass will reform the institution by increasing private sector involvement and reducing lending to high growth markets, such as China.




Looking ahead to next week, there are a couple of events to watch out for:


US officials head to Beijing for further trade talks. High level trade talks between the US and China will resume in Beijing next week. With the 1 March deadline looming, officials are hoping for progress so that the US does not have to follow through on its threat to raise tariffs from 10 per cent to 25 per cent on US$200 billion worth of Chinese goods.


US-North Korea Summit upcoming in next two weeks. US President Trump announced during his State of the Union address on Tuesday that he is scheduled to hold his second summit with Korean President Kim Jung-un in Vietnam towards the end of February. The two leaders first met in Singapore in June of last year, during which they agreed on a framework for future negotiations including North Korea’s progression towards “complete denuclearisation.” While North Korea has refrained from testing missiles or nuclear devices since the two leaders last met, observers remain sceptical due to the lack of a detailed agreement on what “denuclearisation” actually entails.


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Friday 1 February 2019


This week US-China trade talks restarted amid growing tensions over Huawei, and there was a win for free trade between the EU and Japan.


1. US-China trade talks resumed in Washington

According to both sides the talks held on Wednesday and Thursday this week went well. The concrete agreement coming out of the talks is that China will import five million tonnes of US soy beans, and increase imports of US agricultural products, energy products, industrial manufactured goods and service products – a concession to President Trump’s desire to reduce the trade balance between the two nations. Despite the positivity on both sides, fundamental differences over the structure of the Chinese economy, its openness to US firms and IP issues remain. Considering a draft framework for a potential agreement has not even been drawn up, a lot remains to be done before the 1 March 2019 deadline, when Trump plans to more than double punitive tariffs if an agreement is not reached.


2. US files criminal charges against Huawei and its CFO

The criminal charges brought by the US Department of Justice against Huawei, Meng Wanzhou and two Huawei affiliate companies include multiple counts of bank and wire fraud, obstruction of justice, theft of trade secrets and conspiring to violate trade sanctions against Iran. China’s Foreign Ministry has condemned the charges as ‘unfair and immoral’ and politically motivated. Although the US is hoping to keep this issue separate from the broader trade talks, as the Foreign Ministry’s comments indicate, China is likely to take them into account during the negotiations.


3. EU-Japan Economic Partnership Agreement comes into force

The landmark Economic Partnership Agreement between the EU and Japan comes into effect today, 1 February. It is the EU’s largest bilateral trade deal by market size and will create the world’s largest free trade zone. Eventually the deal will remove 99 per cent of tariffs applied by the EU to Japanese goods, and 97 per cent of tariffs applied by Japan. The EU and Japan’s commitment to strengthening rules based free trade stands in contrast to the ongoing tensions between the US and China.


4. Thailand’s opposition party picks Thaksin loyalist to run in elections

The Pheu Thai Party – which was democratically elected in 2011 and then ousted by the military coup in 2014 – has picked Sudarat Keyuraphan to run against the pro-military party, likely to be headed by current leader Prayuth Chan-ocha. Sudarat is a close ally of Thaksin Shinawatra, a long-time leading figure in Thai politics, who was overthrown by a military coup in 2006. Thaksin himself is banned by electoral law from influencing the campaign, one of a number of laws enacted by the current leaders to restrict election campaigning.


5. India releases budget; markets uncertain ahead of general election

Market uncertainty has been increasing ahead of the general election in India as investors are wary the government will overspend in its election campaign. A budget released today, Friday 1 February, has not had a large effect either way – as expected the budget included giveaways for rural India (where discontent has been rising over low agricultural incomes and unemployment) and the fiscal deficit is predicted to be an on-trend 3.4 per cent for 2019 -2020. Nevertheless, caution is likely to continue among investors who hoped for fiscal consolidation in the emerging market.




Looking ahead to next week, there are a couple of events to look out for:

Details of further US-China trade talks. Aside from the promise by China to import more from the US and vague announcements on planned Chinese reforms, little further details were released about the negotiations this week. We can expect those details to emerge next week, as well as information about future planned negotiations. The US has been invited to send a delegation to Beijing in mid-February to continue talks. President Trump has stated that any final agreement would have to be agreed by both himself and Chinese President Xi Jinping, so we can also expect a meeting between the two within the next month.


Details of the planned Trump-Kim summit. According to US Secretary of State Mike Pompeo, a Trump-Kim summit will be held in Asia at the end of February. US officials are somewhere in the region now in order to organise the summit and lay the foundations for further negotiations. Singapore, which hosted the US – North Korea summit last June, and Vietnam have both been mooted as possible locations for the second summit.


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Friday 25 January 2019


This week, evidence of the effects of the US-China trade war became clear, and regional election campaigns are shaping up.


1. Thai elections declared

Thailand’s military junta has announced that national elections will be held on 24 March 2019. It will be the first elections in eight years and will end the military rule that has been in place since the 2014 coup that took power from a Pheu Thai Party-led government. This is one month later than initially scheduled. It is still unknown when the election results will be announced, however the current government has assured investors that regulations and incentives enacted under their rule related to foreign investment will remain in place.


2. China’s slowest growth since 1990 confirmed

Data released by China’s National Bureau of Statistics this week confirmed the nation’s slowing pace of growth, at 6.6 percent growth for 2018. The cooling growth is related to China’s transition away from an export-led economy towards domestic consumption-led growth – what Beijing would refer to as a focus on quality rather than quantity and an attempt to create a modern, sustainable economy. Slowing Chinese economic growth, however, is one of the biggest risks to the global economy in 2019, as discussed at this weeks World Economic Forum meeting in Davos.


3. Priyanka Gandhi enters politics to reinvigorate India’s opposition party 

Priyanka Gandhi – whose father, grandmother and great-grandfather were all Prime Ministers of India – was appointed the Congress Party General Secretary in charge of eastern Uttar Pradesh, widely considered India’s most politically important state. Gandhi’s brother, Rahul Gandhi, is Prime Minister Modi’s main opposition for the upcoming elections, likely to be held in May. Priyanka Gandhi’s appointment is seen as a move by the Congress party to attempt to inject momentum into the party ahead of the elections, after it suffered an emphatic loss in 2014.


4. South Korean economic growth slows

Despite beating expectations in the fourth quarter, South Korea’s economic growth for 2018 was recorded at 2.7 per cent, the slowest growth for six years. This reflected both the global economic slowdown and South Korea’s exposure to China, which is being impacted by the ongoing US-China trade tensions. Due to this, the outlook for next year doesn’t look promising as weakness in exports are expected to continue.


5. ASEAN Secretary-General visits the UK and confirms importance of post-Brexit relationship

ASEAN Secretary-General Dato Lim Jock Hoi’s two-day visit to the UK resulted in a confirmation of the strong commitment of both sides to forming a stronger relationship. Future co-operation is likely to focus on key sectors, including fintech, green finance, the development of smart cities, cyber security, education and defence. UK investment throughout Southeast Asia exceeds investment in India and China and its importance is increasing as Britain looks towards post-Brexit opportunities. Cooperation between the EU and Southeast Asia also ramped up this week, as EU Trade Committee MEPs gave the green light to progress with the EU-Singapore free trade agreement.




Looking ahead to next week, there are a couple of events to look out for:


A Chinese delegation will visit the US for trade talks, after Vice-Premier Liu He accepts an invitation to visit Washington. He is expected to meet US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin. It is hoped the talks will lead to a breakthrough in the US-China Trade War, which has been in a state of temporary truce since the G20 summit in December last year.


The official blueprint for China’s ‘Greater Bay Area’ is due to be released soon. China’s plan is for the development to become an innovation and technology hub to rival Silicon Valley. The ambitious project forms one of the main centres of China’s infrastructure and economic development plans and includes Hong Kong, Macau and Guangdong. It is also likely to have a large impact on the relationship between Hong Kong and China, as Hong Kong is integrated further into China’s mainland economy.


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Friday 18 January 2019


This week saw domestic and international tensions continue to play out across Asia.


  1. Indonesia presidential debates

The first of five live Indonesia presidential debates between incumbent Jokowi, his running mate Ma’ruf Amin, and third time challenger Prabowo and his running mate Sandiaga Uno took place on Thursday evening (17 January). The candidates debated over issues related to law, human rights, corruption and terrorism – all hot button issues in the populous democracy still attempting to rid itself of corruption, radicalism and create meaningful equality. The candidates are vying for the votes of approximately 10-15 per cent of the population that are undecided. So far it hasn’t impacted the polls much, where Jokowi remains in the lead with the most recent surveys giving him 47.7-54.9 per cent of the votes, and Prabowo getting 30.6-35.5 per cent.


  1. Thai elections postponed by a month

Thailand’s military junta has postponed scheduled elections again, saying the move is necessary so elections do not clash with preparations for the coronation of the new King, Maha Vajiralongkorn, in May. There was no objection from the two largest opposition political parties, but the pro-election movement is still calling on the government to issue a Royal Decree on the election, which would confirm it is going ahead. The junta had last month lifted a ban on political activities, allowing political parties to campaign. The postponed date is still to be confirmed, however the ruling junta prefers 24 March.


  1. China’s Vice-Premier to visit US following preparation talks in Beijing

China’s Commerce Ministry announced that Vice-Premier and ‘economic tsar’ Liu He will visit the US at the end of January for another round of trade negotiations with the Trump administration, most likely with US Trade Representative Robert Lighthizer and US Treasury Secretary Steven Mnuchin. Last week lower level negotiations were held in Beijing, the first talks since the temporary truce announced at the G20 summit in December. Discussions ran over an extended three-day period, indicating that talks went well, however nothing concrete has been announced. The US is still seeking large-scale structural changes in China’s economy, so prospects for a breakthrough remain muted.


  1. Asian governments prepare for Brexit

After Theresa May’s Brexit deal was decisively voted down in the UK parliament, reactions from Asian governments highlight the risks and opportunities in Brexit. Japan, which has billions invested in the UK through more than 1,000 companies, said that it would support its companies in order to minimise the impact of Brexit. South Korea, who has a FTA with the EU, will continue to look into the possibility of a similar arrangement with the UK. Similarly, Australian companies have taken Brexit contingency measures and the government is looking to set up a trade working group for free trade discussions with the UK.


  1. Huawei faces increased resistance in the West

Following tensions arising from the arrest of Huawei CFO Meng Wanzhou in Vancouver last month, Chinese ambassador to Canada warned there would be ‘repercussions’ if Huawei was banned from Canada. The US has been pressuring allies to halt contracts with Huawei amid allegations of spying and corporate espionage. A number of countries have done so, with Germany just announcing that they are considering a ban.





Looking ahead to next week, there are a couple of events to watch out for:


The World Economic Forum’s annual meeting takes place between 22 and 25 January in Davos, Switzerland. Trump, who stole the headlines at last year’s event, has cancelled US participation due to the Government’s partial shut-down. Theresa May has also cancelled her trip due to Brexit negotiations and Emmanuel Macron is staying in Paris to deal with the ‘yellow vest’ protesters. Nevertheless, discussions on free trade, global growth slowdown and trade tensions are likely to dominate discussions.


High level Malaysia and Singapore ministers will meet over airspace and maritime tensions.  Tensions rose between the two nations at the beginning of this week over airspace management and territorial water disputes. However, Malaysia’s Foreign Minister said communication with Singapore remained open and discussions over the issues are ongoing. Simmering tensions over the issues escalated in December, but officials insist relations are ‘still good’.


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