POSTED: 1:30 a.m. HST, Jan 30, 2011
The past year for Asia was one characterized by high economic growth and increased international tensions, with China at the center of both trends.
China's economic performance helped refuel sharp growth in Singapore, Taiwan and South Korea, but a harder tone in China's defense and foreign policies increased regional political nervousness.
In the coming year, look for continued growth and, if early harbingers can be trusted, an improve- ment in the political atmosphere. The United States has worked hard to strengthen its policy leadership and will continue to do so.
The global financial crisis is over in most of Asia. Now, the biggest economic question in the region involves potential overheating. In China, burgeoning investment-led growth and other factors have pushed prices up, led by food, housing and resources costs.
China's leaders, always sensitive to threats to social harmony, are concerned about this, but not enough to take the step that could have the most immediate impact: allowing a faster rise in the value of its currency, the yuan. Apparently, China fears this would hurt Chinese exports, causing job losses and even unrest, and, moreover, would suggest a caving in to foreign pressures.
In the U.S., imported products from Asia are likely to become slightly more expensive, whether through inflation or depreciation of the dollar against Asian currencies. This obviously affects Hawaii, but for our state the more powerful effect of the depressed dollar is its positive stimulus to tourism.
On the security side, deadly incidents and saber-rattling along the disputed maritime border between the two Koreas created concern that escalating actions on both sides might erupt into a more general conflict, provoking a frenzy of diplomatic activity by China and the United States to urge restraint.
Meanwhile, China's own more-assertive diplomatic posture, coming after years of a well-advertised "charm offensive," were warily regarded around the region as an indication of how China might be tempted to use its growing economic weight and military power.
In recent weeks, however, there have been hopeful signs. Shortly after Chinese President Hu Jintao's state visit to the U.S. last week, North Korea proposed military talks and South Korea agreed. The conditions for the resumption of talks or a breakthrough in U.S.-North Korean relations have not been achieved, but both may have some chance.
In 2011, two important Asia-Pacific summits will reflect the economic and security architecture of the region. By the time of the APEC meeting in Honolulu in November, the Obama administration hopes to have a preliminary agreement on a transpacific trade partnership of eight or nine countries.
In the meantime, APEC is working on other economic themes, including greater convergence of the national regulatory environments affecting cross-border business, and "green growth" initiatives.
Shortly afterward, the U.S. will for the first time participate at the presidential level in the East Asia Summit meeting in Jakarta. While APEC is confined to economics, the EAS deals more with security issues, and it also includes India.
Both of these meetings will offer the U.S. important opportunities to demonstrate what Secretary of State Hillary Clinton said in Honolulu last fall, that the administration is committed to "forward-deployed" diplomatic policies in Asia based on "strengthening our leadership, increasing our engagement and putting into practice new ways of projecting our ideas and influence throughout this changing region."