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Forecast 2014: Northeast Asia 





An Opaque North Korean Power Struggle 

cc Times AsiThough the internal workings of North Korea, and by extension their impact on the hermit state’s external behavior, are a perennial staple for any forecast, they loom even larger than usual as 2013 draws to a close. Jang Sung-taek, Kim Jong-un’s uncle and a powerbroker behind the scenes, was dramatically stripped of his official position and executed in early December. The motivations behind this decision remain predictably hazy, with some claiming that the purge came in response to Jang’s attempts to monopolize the country’s coal export business. Either way, the string of executions surrounding Jang and his inner circle has opened a power vacuum where once there was a staunch supporter of Kim Jong-un.  In the aftermath of these events, it wouldn’t be surprising to see the young leader default to the time-tested strategy of military brinkmanship as: A) a way to shore up support within the armed forces, or B) a reflection of the fact that military hardliners are now in the ascendance in North Korean politics. According to one unnamed senior South Korean government official, the odds of a North Korean military attack are “100%” and it will happen sometime before April.


A Nationalist in Tokyo?

The world was prepared for a more assertive and nationalist Japan when Shinzo Abe was elected by a comfortable margin in 2012, but perhaps not this assertive. The Japanese prime minister closed out 2013 with arguably the most incendiary gesture possible short of military action: a visit to the ever-controversial Yasukuni Shrine. It was the first such visit by a sitting prime minister in seven years.

Though the Abe visit will serve to justify and perpetuate anti-Japan attitudes in China, it is still somewhat of a non-event given that bilateral relations between the two countries are already at a nadir. Much more noteworthy, however, is how the Yasukuni visit will impact relations between Japan and South Korea - another country for which such visits are extremely provocative. Abe’s visit will frustrate US efforts to get Japan and South Korea to “play nice” within the context of the wider US alliance system and Washington’s stated pivot towards the Asia Pacific region. 2013 was not a particularly positive year for Japan-South Korean relations (with high-profile spats over intelligence sharing and the Dokdo islands), and it looks like 2014 is set to continue this trend.




China’s Reforms in Focus

China’s Third Plenum in early November unveiled a series of reforms that split expert opinion. To some, they represented a bold move towards a more market-oriented economy where SOEs and state intervention fade into the background. To others they were a vague set of goals that, ambitious or not, would likely be watered down by a bureaucracy resistant to their proper implementation.

These questions aside, there is a general consensus that the Xi Jinping administration is committed to moving China along a conventional path of economic development; that is, away from low-cost, mass employment manufacturing and towards a more service and consumption-driven model. This would imply that the administration is committed to broad economic reform, if not political, and the burning question is how to make it happen without causing upheaval within the Party (from those who stand to lose) and wider societal unrest.

Bearing this in mind, 2014 will be an important test for the reforms introduced at the Third Plenum, particularly those facing the greatest resistance from entrenched interests within the state bureaucracy (SOE reform, land rights reform, and market/financial reforms aimed at allowing private corporations to compete with public ones). But while there may be some pushback and painful market adjustments in the meantime, China will be pushing forward with its long-running transition towards a market economy through 2014 and beyond. We will also likely see several new measures meant to promote the renminbi as an eventual international reserve currency as well.


The Winding Road of Abenomics

Japan’s Nikkei index grew 50% in 2013 thanks to a devalued yen and a committed burst of quantitative easing from Japan’s central bank. As we stand at the juncture of 2013 and 2014, it’s hard to argue that Prime Minister Shinzo Abe’s “Abenomics” has not met with some immediate successes. But any celebration over the positive indicators of the present (including an elusive upward swing in inflation) should be tempered by the fact that Abenomics naysayers have generally focused their criticism not on the market euphoria of the moment, but the question of what will follow it. As it stands right now, the windfall of Abenomics’ additional tax revenue is paradoxically being used to fund more Abenomics (bond purchases), which means Japan’s national debt remains the highest in the industrialized world. Even taking into account the two-tiered sales tax increase that is meant to rein in public finances, projections of Japan’s future GDP-to-debt ratio can be downright harrowing (it will reach 240% this year, with some projecting 500% by 2050). And of course, this growing debt burden will be shouldered by a Japanese population that is both graying and shrinking.

There is another interesting question surrounding Abenomics in 2014 – that of how other countries perceive the fairness of a policy which devalues the yen and makes Japanese exports more competitive overseas. Recall that there were a few dissenters to the policy within the G20 in early 2013, and their complaints were swept aside by tacit US support for the program and the argument that Japan was facing some sort of watershed moment where to do nothing would be more damaging to the global economy. As time goes on and Abenomics becomes more entrenched, this argument of the exceptional nature of Japanese quantitative easing will increasingly ring hollow, meaning there is a possibility for friction between Japan and its trading partners in 2014.




The Senkaku/Diaoyu Island Dispute

Military posturing between China and Japan continues to intensify, and given the presence of a potential flashpoint in the Senkaku/Diaoyu Islands, the possibility of military clashes and even war in 2014 should not be discounted.

The Japanese government has made several moves in 2013 meant to demonstrate its resolve on the island issue.  For one, Tokyo has increased defense spending for the first time in 10 years, and some of the procurements singled out in the outlay are very telling, particularly the purchase of amphibious vehicles and the establishment of a marine unit that could storm islands. More recently, Japan has ended a longstanding spat with its US ally by agreeing to relocate the Futenma airbase in Okinawa to a more sparsely populated location. When questioned over why he broke his own election promise and caved on an extremely important issue for the local population, Okinawa governor Hirozaku Nakaima replied, “Regardless of the will of the Okinawa people, tension is heightening on the international front. Okinawa needs to play a certain role for that.” Or to put it another way, recent Sino-Japanese animosity is so pronounced that the base relocation plan got pushed through after decades of local resistance and stalled negotiations.  

China will not back down on the island issue, as it has been absorbed into the core ethos of the Party to such a degree that wavering would risk popular upheaval. As such, Beijing has been moving to shore up its own position within the dispute by declaring an air defense identification zone over the islands and launching patrols that frequently skirt Japanese airspace.

If history is any guide, obstinate governments deploying militaries in close proximity run a real risk of coming into conflict. And once this conflict occurs, a chain of events can be triggered that is beyond the control of rational minds.  For these reasons, the Senkaku/Diaoyu dispute looms large as a serious potential flashpoint in 2014. 


Zachary Fillingham is a contributor to 

Tags:  Military - Politics - Economy - Asia - East - United States - Korea, Republic of - Korea, Democratic People's Republic of - Japan - China - US-Japan Alliance - US-China Relations - Chinese Military Power


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Posted by adifarid on January 17th, 2014 at 5:50 am EST
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Pyongyang actually n equally 'powerful' regime to strike fear against the western powers n certainly among major military players in the eastern pacific region n they're able to launch missiles into Seoul n tht Beijing wouldn't want to support to ths conflict anyway; n for the shenkoku islands its actually a secret military base for maritime purposes its like a short stint in the pacific ocean should there be any international war conflicts n Tokyo or Beijing is playing a 'strategy-political' war-games so to speak it doesn't matter which govt gets the islands n its been years tht these players are making the pacific seas their 'deadly minefield' for their main purposes.....

Posted by Fedorov Andrei on January 3rd, 2014 at 1:33 pm EST
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There is no power struggle in North Korea now. Kim is strong enough to carry his own course with certain changes coming in 2014 both in domestic and foreign policy. Some steps have been already done and will be visible soon. During my last visit to DPRK two months ago I have seen first signs of it. The key problem is to understand that it is not an easy process there and these changes could not happen overnight. Some formal statements in the spirit of the past by Kim are targeted at local public more than on South and USA. Lets wait some months for first concrete steps of a new course.
Andrei Fedorov
Director, Center for Political Research and Consulting

Posted by D Taplin on January 1st, 2014 at 2:03 pm EST
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It is my belief the goal of China/Russia/N. Korea/Iran is the destruction of USA. I believe China or Russia will covertly assist Iran, to avoid retaliation, with the tools necessary to launch nukes from non-flagged cargo ships in the next 4+ years to create an EMP above the USA. This attack would not kill Americans via radiation but via destruction of the power grid and most electronics. This would result in the death of approximately 80% of the American population over the course of a year. Please read congressional reports of feasibility of EMP and the fictional book "One Second After". This attack would fulfill Iran's killing of the "Great Satin" and open the door for invasion by China or Russia to "help" America. Of course, China and Russia would then have to sort things out between themselves. This would be Pearl Harbor in the extreme but is a real plausible end game.

Posted by Chucky Cheesy on January 1st, 2014 at 1:45 pm EST
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"Japan’s future GDP-to-debt ratio can be downright harrowing (it will reach 240% this year,"..

As a former college mathematics instructor, I realize Americans are math and logic challenged, so with a tender touch I bring the writer's attention to the above quote. It is wrong as stated and should read:

Japan's future "Debt to GDP ratio".... will reach 240%. Yes, the position of the numerator and denominator DO MATTER! lol

Posted by Chucky Cheesy on January 1st, 2014 at 1:40 pm EST
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The US ~$94 Billion per month in 2013, $9 Billion per month more than the $85 Billion stated. The Fed buys 80% of the US Treasuries now... "Tapering?"... who are these idiots trying to kid?

Tapering $10 Billion from the $94 Billion per month spent only brings the QE down to $84 Billion.

So, with the US siding with our ally, Japan, and acknowledging the fact that BOTH China and Japan loan us money each month at the treasury auctions AND the fact that BOTH have larger US Treasury reserves that may or may nor be rolled over OR SOLD, Obama better tread lightly in our relations with both countries given the fact that he continues to spend beyond America's means of paying!

Posted by K H Lange (website) on January 1st, 2014 at 5:10 am EST
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One aspect of the Chinese - Japanese dispute is often overlooked: The higher the tensions the more the USA is obliged to underline security guarantees vis a vis Japan and the more US support is guaranteed in times of crises the less is there a need and justification for Japan to develop its own nuclear potential which would be a gruesome nightmare for the Chinese. In short: By maintaining tensions the Chinese reduce the probability that Japan goes nuclear to the degree to which the US nuclear umbrella`s relevance is conjured up.

Posted by Victor Maresh on December 31st, 2013 at 2:43 pm EST
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In Far East 1948-51 including service in the 23rd Inf Rgt Korea as an Inf Intel @ Recon Chief...prior to that in Tokyo in GHQ. Your article verifies the problems of Obama policy leading to misreading by the Chinese and others in that region....believe similar confusions contributed to the Korean conflict of well as the Chinese entry into that conflict! Clarity of policy as well as a firm position could go a long way to preventing unnecessary war!

Posted by Nicolas J S Davies on December 31st, 2013 at 11:44 am EST
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"Military action" is not synonymous with "military attack". There is already enough fear-mongering in the US foreign policy establishment without such weak analysis from one more think tank. I have unsubscribed. - Nicolas J S Davies, author of Blood On Our Hands: the American Invasion and Destruction of Iraq.

Posted by Ludwig Csepai on December 31st, 2013 at 10:06 am EST
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Aside of ommitting that Japan made an offer for negotiations in summer and was rejected, a very interesting analysis, especially this observation of a dangerous commitment to brinkmanship.
"China will not back down on the island issue, as it has been absorbed into the core ethos of the Party to such a degree that wavering would risk popular upheaval."
A very important Point most of the West chooses to ignore `cause of the ignorance that China is a party dictatorship. A dictatorship never acts that rationally as Western media want to make us believe.

Posted by Adrian Villanueva (website) on December 31st, 2013 at 7:56 am EST
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Posturing by China and Japan might turn serious and could lead to skirmishes between the naval and air forces over Senkaku/Diayyu in 2014. Both sides are not expected to back down - Confucianism embedded in the culture of both countries will not allow the "loosing of face" as it would be absolutely degrading. It now depends what the US would do either militarily or diplomatically to settle the antagonistic behaviour of the 2 parties concerned. However, Nationalistic feelings in China & Japan could also encourage either party to observe who will "blink" first under dire circumstances.

Posted by John mcclafferty on December 31st, 2013 at 2:42 am EST
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The present challenges to American Allies and America are proportionate to the estimate of our determination to defend our policies. The current administration is a great danger to America. The lack of focus and consistency of this administration can mis- lead our protagonists.
I wish Obama well but it is he that is shooting himself and us in the foot.
Clarity and consistency are critical especially to our adversaries. We do not have that now and North Korea, Iran, and China are more likely to mis read our history and patterns of reactions until some maturity returns to our foreign policy.

Posted by Andres on December 30th, 2013 at 10:19 pm EST
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Good evening,

Two comments:

1) After reading many websites related to geopolitics and military affairs, I learned not to take seriously those articles that refer to "unnamed intelligence officers" or "unnamed government officials". Mossad's does it all the time, and after a few years warning of "inminent military attacks against Iranian nuclear facilities" it loses its punch.

Unless that "unnamed official" refers to a light skirmish, it's really hard to take seriously a 100% chance of significant military clashes between the Koreas. 70% maybe, but why 100%? What evidence makes such officier to assure that military attacks will take place anyway? Many bureaucrats related to defense and intelligence justify their poshy salaries and perks by overly magnifying dreadful military threats, threats that of course need their advise to be properly handled.

2) We Westerners have to learn to take preconceptions appart when analyzing foreign regimes. For instance, BBC commits a serious contradiction when writing:

"As usual, glimpses inside Pyongyang's political machine only seem to highlight how little we know.

The reams of news coverage churned out by North Korea give an unusual impression of instability at the heart of the North Korean regime."

If we know very little, what makes us perceive as instability those events that we don't understand? Is there a real instability or do we want to perceive instability? Our wishes of seeing the North Korean regime collapse once and for all alter our perception of events.



Posted by Torsten (website) on December 30th, 2013 at 7:54 pm EST
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Point of grammar, quote:
"These questions aside, there is a general consensus...."
'Consensus' means general agreement, so the word 'general' is tautological.
Thank you for the post.

Posted by Roger Haney on December 30th, 2013 at 5:35 pm EST
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Good summary, a useful read.

Posted by D A Strongin on December 30th, 2013 at 1:57 pm EST
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Thank You

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