China-ASEAN Monitor Weekly

Politics and Security

ASEAN Struggles to Unify Against China
ASEAN’s weak ability to manage security and tackle sensitive diplomatic issues was on display this week when top diplomats from China and ASEAN met over territorial disputes in the South China Sea. Discord emerged after the 14 June meeting over how the proceedings should be presented to the public – between China and ASEAN, and among ASEAN members themselves. Singapore’s foreign minister, who co-chaired the meeting, pulled out of a joint news briefing with his Chinese counterpart on due to disagreements. Malaysia then released a strongly worded statement on behalf of ASEAN that voiced “serious concern” over recent tensions and opposed China’s “militarization” and land reclamation in the region. Hours later, Malaysia retracted the statement. Several ASEAN countries have released their own statements.

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Taiwanese government loosens visa rules for ASEAN states
Taiwan announced on 15 June a series of changes and plans to simplify visa applications for visitors from the ASEAN nations. By September this year, travellers from Laos, Cambodia and Myanmar will be given visa privileges that others from their fellow ASEAN member states now enjoy. ASEAN travellers to Taiwan reached 1.42 million in 2015 and the government aims to boost this number by at least 20% this year.

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The Chinese Economy

China’s Investors Shifting to Global Commodities, Marex Says
China’s cash-rich investors are increasingly looking to trade on offshore commodities markets after a regulatory crackdown and amid fears over the depreciation of the yuan, according to Marex Spectron Group. “The enormous amount of wealth creation in China in the past 10 years is now demanding access to markets, access to investment tools, and access to return,” Simon van den Born, the broker’s global head of metals, said on 15 June. “It’s that money that’s looking for opportunities.”

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MSCI Rebuffs Chinese Equities for Third Time in Blow to Xi
China’s domestic equities were denied entry into MSCI Inc.’s benchmark indexes for a third time, a setback for President Xi Jinping’s efforts to raise the profile of mainland markets and turn the yuan into an international currency. MSCI, whose emerging-market index is tracked by investors with US$1.5 trillion in assets, said additional improvements were needed on the accessibility of the A share market. It will reconsider inclusion in its 2017 review, while not ruling out an earlier announcement.
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China’s debt is 250% of GDP and ‘could be fatal’, says government expert
China’s debt has ballooned to almost 250% of GDP thanks to Beijing’s repeated use of cheap credit to stimulate slowing growth, unleashing a massive, debt-fuelled spending binge, Li Yang, a senior researcher with the leading government think-tank the China Academy of Social Sciences (CASS), has told reporters, warning that debt linkages between the state and industry could be “fatal” for the world’s second largest economy. While the stimulus may help the country post better growth numbers in the near term, analysts say the rebound might be short-lived.

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