from Asia Unbound

Friday Asia Update: Top Five Stories for the Week of August 14, 2015

August 14, 2015

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Ashlyn Anderson, Rachel Brown, Lincoln Davidson,  Lauren Dickey, Ariella Rotenberg, and Gabriel Walker look at the top stories in Asia today.

1. China’s central bank allows currency to devalue. The renminbi (RMB) declined by more than 4 percent this week as the People’s Bank of China (PBOC) set the currency’s daily benchmark lower for several days in a row. The drop may help strengthen the domestic economy, which has faltered in recent months; the PBOC’s willingness to allow the currency’s market rate to drop may suggest that the Chinese economy is doing even worse than some indicators suggest, which could spell trouble for countries that rely on China’s commodity imports. Declines in the currencies of neighboring economies and rising wages in China have damaged the competitiveness of the country’s labor-intensive manufacturing sector, a central pillar of the economy. While foreign critics have charged in the past that China manages its currency to strengthen its export industry, earlier this year the IMF dropped its claim that the PBOC deliberately undervalues the RMB. This week’s drop instead may be a sign that the Chinese government is willing to be true to their claims that they intend to give the market a deciding role in the currency’s value. However, it’s unclear whether the PBOC will stick with moving the currency in the direction of the market, or have a change of heart when the market value of the RMB inevitably moves back up again; regulators’ mixed response to last month’s stock market drop suggest the latter.

2. Worst flood in decades hits Myanmar. While Myanmar is used to flooding during monsoon season, recent floods were made worse by cyclone Komen, causing mudslides that wiped away homes and infrastructure. At least 103 people have been killed and more than one million critically affected by the flooding, making it the most devastating natural disaster since cyclone Nargis in 2008. President Thein Sein visited the areas hit hardest by flooding, declaring four areas as disaster zones amid rampant criticism from the media for his failure to mobilize sufficient relief efforts. Opposition leader Aung San Suu Kyi took a different approach, using a wooden boat to travel the flood areas outside of Yangon as she handed out donations of rice and potable water. The Red Cross and United Nations have also scaled up their aid efforts to provide emergency food assistance.

3. Deadly explosion at a container port in Tianjin, China. Early Thursday morning in the port city of Tianjin, several explosions rocked the city killing at least fifty people and hospitalizing more than five hundred with dozens of firefighters still missing. Official reports say that the explosion occurred in a warehouse for toxic chemicals. According to one firefighter who was among the first responders to what was initially a small fire, they had not been told it was a chemical fire; it has now been uncovered that some of the stored chemicals produce flammable gas when wet. The quoted firefighter is currently hospitalized, and twelve of his colleagues were killed by the blasts that occurred after they had rushed to respond to the initial emergency call. Rescue operations have been temporarily suspended until chemical teams are able to understand the extent to which any remaining toxic chemicals may cause more damage as well as the potential impact of airborne toxins. The Chinese government seems to be closely controlling media coverage of the accident by deleting social media posts that criticize the government and showing Korean soap operas on the city’s main news channel.

4. Indonesia’s president reshuffles cabinet. Indonesian President Joko Widodo changed six positions in his cabinet on Wednesday in an effort to improve Indonesia’s economy by introducing new leadership. Widodo’s political party, the Indonesian Democratic Party of Struggle, has been encouraging Widodo to reshuffle his cabinet and remove poorly performing ministers since May. Four ministers were removed from the cabinet entirely and two were placed in lower positions. The new appointees include Darmin Nasution, a former governor of Bank Indonesia who will serve as the economy minister, and Thomas Lembong, a former private-equity executive who will serve as the trade minister. Following his inauguration in October, President Widodo was hailed as a reformer who could address corruption and reinvigorate his nation’s economy, the largest in Southeast Asia. However, this year Indonesia’s GDP growth has fallen to a six-year low and the changes to the cabinet occurred on the same day that the Indonesian currency, the rupiah, fell to its lowest level against the dollar since the 1997 Asian financial crisis.

5. Japan ends de facto freeze on nuclear power. On Tuesday morning, less than a week after the seventieth anniversary of the bombings at Hiroshima and Nagasaki, a reactor at the Sendai Nuclear Power Plant became the first to restart operations after more than four years of inactivity following the Fukushima Daiichi nuclear disaster. Although Japanese public opinion on abandoning nuclear power completely has been mixed, and demonstrators gathered around the Sendai plant earlier this week, the pro-nuclear Abe administration supports restarting reactors that meet updated safety standards as part of a broader push to improve the country’s lagging economy. Since the temporary shutdown of nuclear power plants began in 2011, Japan has become the world’s largest importer of liquefied natural gas and the second-largest importer of coal behind China, and power generation costs have risen trillions of yen. Although reactivating Japan’s forty eight nuclear power plants would dramatically cut these costs, only five have been declared safe under new safety standards and some are too old to consider retrofitting.

Bonus: China steals The Bean. China just unveiled a knock-off of the famous bean-like sculpture that reflects the Chicago skyline to the dismay of sculptor Anish Kapoor. Chinese officials dispute the copycat accusations, pointing to the main difference between Chicago’s “Cloud Gate” and China’s “Big Oil Bubble”: the Bean reflects the sky, while “Big Oil Bubble” reflects the ground. The Chinese sculpture also features LED lights underneath the structure. Kapoor intends to sue the responsible parties in China, although the Chinese artist is currently a secret.

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