Yes, and the reason why it is necessary is because Putin invaded Ukraine and so to respond to a war aggression without escalation, the resorts left are economic aggression via financial sanctions and export controls.
Right?
Right?
The question I asked in the panel in response to this is that what alternatives would the West have? As in, if it didn't respond, would it not encourage Putin to go beyond Ukraine? Wouldn't it encourage large powers to conquer smaller ones and ignore international rule of law?
Meaning, while sanctions are a form of war, basically a cold war & financial war, it is necessary to deter further aggressive acts as well as show a strong reaction.
I am not sure what the alternatives are even if sanctions have consequences of pushing Russia closer to China.
I am not sure what the alternatives are even if sanctions have consequences of pushing Russia closer to China.
Or to put it another, to push Russia towards a Chinese system (Unionpay vs Visa for example) as it's clear that Putin already CHOSE that path by invading Ukraine and ignore international rule-of-law. What's clear is that it's a strategically poor decision by Putin as China looms.
By pushing away the West and leaning closer to China, Putin puts Russia in a corner that is more isolated and fewer negotiating chips with China.
China can get resources cheaper & more importantly it's become a relatively much stronger &more powerful neighbor as Russia weakens.
China can get resources cheaper & more importantly it's become a relatively much stronger &more powerful neighbor as Russia weakens.
Yes, China is a winner in this conflict for 2 reasons: 1) Russia weaker & better access to resources that China needs; 2) The West distracted, esp the US, to pivots towards Asia.
Not sure China is clearly a winner. Why? Actions also creates conflicts w/ the West, its key client.
Not sure China is clearly a winner. Why? Actions also creates conflicts w/ the West, its key client.
While in the short-term the West may not have sanctions on China for obvious reasons that it needs manufactured goods from China and also taps into its domestic market for growth, longer term, you can imagine that they will slowly diversify and wean away from concentration risks.
And so if China avoids sanctions, which I think it will (said that in the panel), the medium term consequence is that it will need more friends in Asia and the world if the West is less friendly towards China.
Seeks out places like ASEAN both for strategic & economic reasons.
Seeks out places like ASEAN both for strategic & economic reasons.
And while in in the short term, emerging Asia, except Indonesia & to a lesser extent Malaysia due to net commodity exporting, loses from higher commodity prices and supply chain risks, they will gain from being that "hedge" that China, the US, Russia, the EU, and North Asia needs
So the current account may be worse, the capital account will likely receive flows.
And moreover, the lessen here is that we are all important in the global supply chain, not just manufacturers of goods but also commodity exports that are key.
So plenty of negotiating power.
And moreover, the lessen here is that we are all important in the global supply chain, not just manufacturers of goods but also commodity exports that are key.
So plenty of negotiating power.
And it's not just hard security like defense that's required a strategic look - supply chain security is key.
Whether it's energy, food, commodities necessary for key items like nickel for EV etc, market access, Asian economies need to DIVERSIFY risks and prepare for the worst.
Whether it's energy, food, commodities necessary for key items like nickel for EV etc, market access, Asian economies need to DIVERSIFY risks and prepare for the worst.
Lessons from Covid & Ukraine/Russia are the same:
a) Diversified economy & not rely too much in one partner (Thailand for Chinese tourists)
b) Competent technocrats for all sectors (Covid is healthcare & Ukraine/Russia is supply chain security)
c) Security encompasses all & key.
a) Diversified economy & not rely too much in one partner (Thailand for Chinese tourists)
b) Competent technocrats for all sectors (Covid is healthcare & Ukraine/Russia is supply chain security)
c) Security encompasses all & key.
As in we learn from the EU too much dependency on Russian gas (>40%) & inability in the short-term to wean away from it is that we CAN'T rely on an unreliable partner for strategic needs. National security is not just having an army but encompasses all from supply chain to cyber
And of course, Covid teaches us that HEALTHCARE matters, and by that it compasses public health systems.
That is a national security issue. If you have a sick population, you don't have economic security and national security.
Those that heed these lessons will do better.
That is a national security issue. If you have a sick population, you don't have economic security and national security.
Those that heed these lessons will do better.
And yes, I do think ASEAN and India will come out winners in this, not China like many would think, which is a more obvious conclusion that people make. Being a "hedge"/"diversification" gives you options. Gives you leverage. Gives u access to markets/invesment/investors/capital.
In Asia, China may be too big to be ignored, but investing in China has risks from its own political mandates that can crush sectors at will (tech, education), geopolitical risks with worsening relations with the West, & leave investors vulnerable & too dependent.
ASEAN & India.
ASEAN & India.
ASEAN & India have demographics, geopolitics (smaller & seen less as a threat but a "hedge"/"diversification" or the alpha to the beta), and also increasingly a WILL to develop as it looks to China becoming more powerful economically and geopolitically in its own backyard & must.
What about North Asia? Also investable but I argue for EM Asia because it's likely that North Asians like the South Koreas and Japanese, which more aging and savings, move offshore than the other way around.U will also see movements in capital allocation. China too will "hedge"
China upgraded its relationship with ASEAN to Comprehensive Strategic Partnership. Why?
Well to have more influence but why? Well, it needs it for reasons argued above. A good thing as it means ASEAN has more leverage & whether it will use it well is up to it. I think it should
Well to have more influence but why? Well, it needs it for reasons argued above. A good thing as it means ASEAN has more leverage & whether it will use it well is up to it. I think it should
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