Category Archives: BUSINESS

Asian cooperation hanging on a handshake

Japanese prime minister Shinzo Abe and other regional leaders look on as China's President Xi Jinping shakes hands with former Indonesian president Susilo Bambang Yudhoyono at last year's APEC meeting in Indonesia. This year there is intense focus on the APEC opportunity to begin to fix the political relationship between China and Japan. (Photo: AAP).

Author: Peter Drysdale, East Asia Forum

The APEC summit is just over a week away and all stops are out in Beijing to make it an economic and diplomatic triumph, despite the huge underlying challenges in managing China’s relations with the region. The primary goals and foundations of APEC are economic — delivering on Asia’s economic development ambitions within the framework of the rules-based global economic system.

But, at its fundaments, APEC is a political construct, committed to those cooperative goals in concert, including with North America. So it’s not surprising that, once elevated to a leader’s level summit, APEC has served on the side to sort out political and diplomatic issues among its members — it provided the first venue for a meeting between a Chinese and US president after Tiananmen; it brought China and Taiwan together routinely before relations developed under their new framework; and it served as a vehicle to sort issues between Australia and Indonesia over the troubles in East Timor, for example.

This year there is intense focus on the APEC opportunity to begin to fix the political relationship between China and Japan, or more particularly the terms that might enable a handshake between the Chinese and Japanese …continue reading

    

Will Vietnam’s FDI-led economy get stuck in a middle income trap?

Author: Tran Van Tho, Waseda University

The Vietnamese economy has experienced a downturn in growth since 2008. In the past five years, the growth averaged about 5.5 per cent a year and is not expected to be much higher in the coming years. For a country of per capita income of about US$2000, that rate of growth is low. Increasing the rate of growth to somewhere in the vicinity of 8 per cent a year is imperative if Vietnam is to avoid the so-called middle income trap.

Another feature of the Vietnamese economy is that growth has increasingly been driven by foreign direct investment (FDI). FDI firms in recent years accounted for nearly half of industrial output and more than 65 per cent of exports. The contribution of FDI has been even stronger in various types of machinery, such as telephones, computers, motorbikes and home electric appliances. In addition, due to high income-elastic characteristics, machinery is now the mainstream of industrialisation and trade in the growing East Asian region.

Because of the large flows of FDI, Vietnam has been increasingly intertwined in the machinery supply chains developed by multinational corporations in East Asia. Machinery is becoming increasingly important in Vietnam’s trade structure: it …continue reading