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29 September 2021

With Greg Earl

Japan’s new PM

Japan’s new prime minister, Fumio Kishida, has called a snap election for 31 October, presumably to take advantage of a potentially brief increase in the government’s popularity since his appointment.

Kishida announced the election on Monday night, hours after he had assumed his role as Japan’s 100th prime minister and appointed a new ministry.

Only the foreign and defence ministers kept their posts, which will ensure the continuity of the nation’s security policies. This move may assuage foreign concerns that Japan could return to the pattern of short-term leadership that existed before Shinzō Abe’s lengthy period in office. Outgoing prime minister Yoshihide Suga only survived a year.

A third-generation politician and the head of a powerful faction in the ruling Liberal Democratic Party, Kishida was the most conventional candidate in the unusually competitive four-person leadership race. This has raised questions about his capacity to force through new ideas for managing the many challenges presented by Japan’s rapidly ageing population.

Kishida has flagged his intention to take a more interventionist or fairer approach to economic policy – a “new form of capitalism” – to distinguish himself from Shinzō Abe, who favoured deregulation.

Kishida also appointed an economic security minister – his most notable ministerial change – which may point to greater economic rivalry with China in the future, particularly in areas such as cyber security and supply-chain reliability.

Japan has become Australia’s closest defence partner in Asia in the past decade, complementing the pair’s close economic ties.

While China’s rise elevates security concerns, Kishida’s management of Japan’s pandemic recovery and economic challenges will determine its ability to play a bigger role in regional security.

Educating in Indonesia

Classes at Indonesia’s first foreign university started this week, marking a significant development for Australia’s role in international education.

The opening of Monash University, Indonesia, comes as Australia looks to bring foreign students back to Australian campuses, with New South Wales launching a plan last week to allow 500 students to return before the end of the year.

Education was Australia’s fourth-largest export in 2019, and it has been a significant part of Australia’s soft diplomacy since the original Colombo Plan brought Asian students to Australia in the 1950s. But the industry has been severely disrupted by COVID-19.

The Morrison government has warned universities and other educational institutions to avoid depending too heavily on educating international students in Australia, urging them to expand their options to include online classes and offshore operations such as the Monash venture.

Last week, the Department of Foreign Affairs and Trade also released its Blueprint for Trade and Investment in Indonesia, which focuses particularly on tertiary and vocational training opportunities in Indonesia’s changing economy.

It says Australia’s existing education and training networks with Indonesia “provide an invaluable foundation for developing new and innovative partnerships”.

Monash University, Indonesia, seems set to contribute to that work.

While establishing educational institutions in Asia involves cultural and political challenges, RMIT’s Vietnamese arm, the first foreign university in Vietnam, has been operating for twenty years and is now taking students from neighbouring countries.

Delivering Australian tertiary and vocational education on the ground in Asia will become more important as Asian countries try to improve education access and integrate it with their development aims.

China’s Pacific aid

Chinese aid spending in the Pacific appears to be declining after several years of speculation over how it might reduce Australia’s influence in the region.

The Lowy Institute’s annual Pacific Aid Map, released last week, shows that Chinese development assistance peaked at US$288 million in 2016 but fell by more than a third to US$169 million in 2019.

China was the fourth-largest donor to the region in 2019 after Australia (at US$865 million), New Zealand (US$254 million) and Japan (US$179 million). The Pacific received a total of US$2.44 billion in aid that year.

The release of the Pacific Aid Map coincided with the publication of a report by US-based AidData, which finds that Chinese lending under the Belt and Road Initiative is resulting in a sharp increase in “hidden debts” in many developing countries.

In the Pacific too, China is now offering costly lending over grants, but countries in the region appear to be more selective about the loans they take on, possibly after hearing about the experiences of other developing countries.

Declining Chinese aid to the region may also indicate it is easing back on spending now that its companies have a strong enough foothold in the region.

Many donor countries have introduced special COVID-19-related aid spending in the past year, but preliminary assessments do not show a similar rebound in Chinese spending.

Concern about increased Chinese aid to financially vulnerable Pacific countries largely prompted Australia’s Pacific step-up policy, which includes the flagship A$2 billion Australian Infrastructure Financing Facility for the Pacific.

Australia needed a new approach to its Pacific spending in response to China’s less transparent way of providing aid. Now that Beijing’s role in the region has waned, the Morrison government should be careful about getting pushed into expensive investments based on rumours of potential Chinese interest.


Why China sent a record number of fighter jets and nuclear-capable bombers into Taiwan’s defence zone

“Taiwan is one of the largest investors in China, according to the Taiwanese government, and trade between the two was worth US$149 billion ($205 billion) in 2019. However, China has begun to impose trade sanctions against Taiwan.” Max Walden & Joyce Cheng, ABC News

In defence of AUKUS

“The United States is not a resident power in Asia – it largely relies on its allies for its ability to project power there. To bolster its regional military posture, it needs more base access and fewer restrictions on the use of those facilities.” Oriana Skylar Mastro & Zack Cooper, The Interpreter (Lowy Institute)

After AUKUS – how could France reboot its Indo-Pacific strategy?

“In the Indo-Pacific, being the bearer of a ‘third way’ or ‘détente’ solution will bring France few friends and clients … France must therefore coordinate with its allies and with America for its Indo-Pacific strategy – which justifies, among other things, an association with the Quad – while maintaining a ‘European signature’.” Bruno Tertrais & Michel Duclos, Institut Montaigne


The CCP’s culture of fear

“Will the Xi juggernaut succeed? The problems are that Xi is no Mao, in either intelligence or charisma, and the society that he rules is better informed and much more sophisticated … People in the Mao era, whether in enthusiasm or in pain, took Mao’s commands to heart; in Xi’s case, the conformity is a mere shell.” Perry Link, The New York Review of Books [$]

Fallout from Evergrande crisis will reach far beyond China

“Evergrande’s obscure accounting practice means no one is certain of the true size of its liabilities, or of the exposure of the non-bank financial institutions and the millions of retail investors they represent.” David Uren, The Strategist (ASPI)

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