Perception can often trump facts in politics, and the topic of security in East Asia isn’t exempt from this reality, exemplified by the dominance of China’s “rise” and Japan’s  “ramped up” defense posture in current policy debates. Yet, those dynamics create a need as well as an opportunity for increased multilateral engagement, says Thomas Fingar, the Oksenberg-Rohlen Distinguished Fellow at the Freeman Spogli Institute for International Studies.

“Developments in China and Japan should be viewed as creating new opportunities and imperatives to deepen multilateral co-operation,” Fingar writes in a Global Asia essay.

“It would be a mistake to view them only as the cause of eroding confidence in the co-operative mechanisms that remain critical to peace and prosperity in the region.”

China’s rise has actually been a result of policies supported by the United States and other countries, despite prevailing commentary that they are intended to “contain” China, he says. In fact, Beijing’s rise was achieved by working within the rules-based international system, not outside of it.

China’s actions and growing power, especially military power, are compelling other regional actors, notably Japan, to reconsider their strategic situation. The reinterpretation of defense policy guidelines proposed by the Abe government is a long-delayed response to China’s military buildup, not an effort to remilitarize as a popular narrative holds. Fingar says the proposed relaxation of self-imposed policy constraints on Japan’s military forces could help pave the way for a future collective security arrangement in Northeast Asia.

So, where does this leave the U.S.-South Korea relationship?

He says the two countries can maintain their bilateral commitments while also deepening partnerships with, and between China and Japan. Both the United States and South Korea can help push for improved ties on trade and regional security issues. 

“We need continued bilateral – and increased multilateral – co-operation,” he says, particularly, “to mange the challenges of a nuclear-armed North Korea.”

The full article can be viewed on the FSI website.

Economic and demographic transition pose major challenges for countries worldwide, particularly in large developing countries like China; however, strengthening social welfare programs can offset negative effects and help promote a sustainable future, according to Karen Eggleston, a scholar of Asia health policy at Stanford University.

“Unprecedented economic growth in China spanning the last three decades has lifted hundreds of millions out of poverty and restored China to the prominence in the world economy that it once enjoyed centuries ago,” said Eggleston, who is a Center Fellow at the Walter H. Shorenstein Asia-Pacific Research Center.

“Demographic change not only shapes the trajectory of [its] development, but interacts with macroeconomic and microeconomic forces” in numerous ways.

Eggleston, who presented “China’s Demographic Change in Comparative Perspective: Implications for Labor Markets and Sustainable Development” at the Jackson Hole 2014 Economic Symposium “Re-evaluating Labor Market Dynamics,” says a combination of societal changes makes China distinctive, and that the country can offer insights in comparative perspective. She joined two other experts for a panel discussion on demographics during the three-day conference led by the Federal Reserve Bank of Kansas City, which draws dozens of central bankers, policymakers, academics, and economists from around the world.

The research stems from a project that Eggleston heads on policy responses to demographic change in Asia. The initiative, which is a part of the Asia Health Policy Program, grew out of a 2009 conference cosponsored by the Global Aging Program at the Stanford Center on Longevity. Its outcomes have included the publication, Aging Asia, a special issue of the Journal of the Economics of Aging focused on China and India co-edited with David Bloom of Harvard University, and two forthcoming books on urbanization and demographic change in Asia.

China in flux

China is the most populous country in the world with more than 1.3 billion people. Its sheer size alone creates heavy demands as demographics change, and the economy continues its shift from a centrally-planned system to a market-based system.

China’s population age 60 and older is projected to increase from one-tenth of the population in year 2000 to a staggering one-third by year 2060. Simultaneously, the population age 14 and under is projected to decrease by one-third between years 2010­ and 2055 (Figure 2).

Eggleston, and others who closely watch the situation, say these demographic changes will bring a myriad of challenges to the labor market and to cultural norms related to intergenerational support, work and retirement.

China’s low birth rates have largely been influenced by family planning campaigns that begun in the early 1970s, and later, the “one child policy,” a population control policy that allowed for the birth of only a single child in many families. Recently, the government has relaxed that policy, and analysts believe the change will eventually help to balance the population age structure and infuse the workforce with new employees, filling the void caused by retiring workers in the coming years.

In the meantime, preparing support structures for the older generations’ departure from the labor market is essential. Social welfare programs, including health insurance and retirement and childcare services, will see significant demand, and require restructuring to handle the influx.

China’s aging population experience is similar to other countries in Asia. Japan, South Korea and India are also projected to see significant increase in median age over the next 30 years (Figure 1). 

Eggleston says China has made positive steps toward restructuring its institutions, including establishing government-subsidized health insurance programs and reforming pension systems. Most notably since 2002, China took a large step towards universal health care by implementing the New Rural Cooperative Medical Scheme for rural residents. Now, nearly all citizens have access to basic medical care, which can support healthy aging as well as mitigate large “precautionary savings” and help those struck by medical conditions requiring significant services.

A pension system for people in China’s rural areas, developed by the government in 2009, also set up a supportive system by providing increased transfers for seniors, and, interestingly, supporting labor markets by easing the worries of adult children who migrate to urban areas for work.

China has been forward thinking with its related public policies, but it certainly can do more, Eggleston says. Integrating technology into its health systems, and making its services more fiscally responsible could improve efficiency, and expand access to care.

The full paper and handout from Eggleston’s presentation at the conference are available on the Federal Reserve of Kansas City website.

Stanford researchers have introduced a major new study on North Korea policy at a hearing at the South Korean National Assembly. Entitled “Tailored Engagement,” the report concludes that South Korea is the only country today that may be both willing and able to try a new approach toward the worsening North Korea problem.

“There is considerable urgency for Seoul to act,” according to the report released by the Korea Program at the Walter H. Shorenstein Asia-Pacific Research Center (APARC) in the Freeman Spogli Institute for International Studies, which comes in response to increasing tensions and heightened nationalism in Northeast Asia.

“Only the Republic of Korea has both the need and the potential influence to change this dangerous trajectory on the Korean Peninsula.”

Published by Gi-Wook Shin, the director of Shorenstein APARC; David Straub, the associate director of the Korea Program; and Joyce Lee, the research associate for the Korea Program, the report is the culmination of more than a year of intensive research activities at Stanford University, including three international conferences focused on Northeast Asia’s security and political situation.

During the past year, North Korea continued to develop nuclear weapons and North-South Korean relations worsened, while increasing U.S.-China strategic mistrust has made it less likely that those two countries can cooperate to change North Korea's behavior.

Image

“I was very impressed by the concern that the Korean Congressmen showed about the current situation on the Korean Peninsula and by their interest in our reasoning and recommendations,” Shin said. “Almost all of the Committee’s 18 members attended, and engaged in a lively exchange of views during the three-hour-long hearing.”

In their report, Shin, Straub and Lee propose a process that involves a series of increased exchanges with North Korea. This would be applied in a principled, systematic way, based largely on expanding a domestic consensus in South Korea that treats South Korean engagement of the North as necessary for improving the situation on the peninsula, not as incompatible with maintaining pressure on Pyongyang to abandon its pursuit of nuclear weapons.

The report lays out four main steps that South Korea can implement to reduce the risk of regional conflict, while also creating a foundation for peaceful unification with North Korea.

• Focus on the pursuit of mutual interests and benefits rather than on symbolism and appeals to national sentiment.
• Apply market principles and international standards in economic activities.
• Collaborate with other countries and third-party companies in both economic and people-to-people projects.
• Be pragmatic and flexible in pursuing engagement at both the state-to-state and grassroots levels in complementary ways. 
  Image

  

South Korea is well suited to engage the North because of their shared history, and its status as a major middle-power status has also increased its sway with both China and the United States.

No longer a “shrimp among whales,” South Korea has transformed since democratization, leaving that modest proverb behind and gaining an influential role in the region.

Now the country has an opportunity to begin to bridge the gap with North Korea, but first, it must create an internal structure that supports engagement.

In implementation

The North Korea problem is complex and wrapped in a varied history of engagement efforts by South Korea and other countries. Lessons of success and failure from past administrations provide important insight, the report says.

“The main impediment to South Korea’s assuming a greater international leadership role on the Korean question is not a lack of national power,” the report states, “but a lack of domestic political consensus about how to deal with North Korea and the consequent inconsistency in ROK policy across administrations.”

The South Korean government changes executive leadership every five years, and with it, there has been great inconsistency between conservative and progressive policies. The current administration that assumed office in 2013, led by President Park Geun-hye, pursues a North Korea policy of trustpolitik, wherein the government aims to build trust through a step-by-step process.

According to the report, the tailored engagement approach can inform and build on President Park’s policy. Three main actions can be taken by South Korea’s administration to implement productive engagement, the report states:

• Reorganize the Korean government itself to facilitate a more coordinated formulation and implementation of North Korea policy.
• Achieve much more consensus within South Korea on how to deal with North Korea.
• Seek to win support of the major powers, especially the United States and China for its approach to North Korea.

Developing trust is essential to de-escalate tension between the Koreas. Without progress in confidence-building, the two countries can hardly collaborate on even straightforward projects, such as expanding the existing Kaesong Industrial Complex, a bi-lateral industrial park located just north of the North-South border.

Solving more basic issues and participating in joint initiatives can help pave the way toward inter-Korean reconciliation during President Park’s administration, and the next.

“Reconciliation and convergence would improve many aspects of the situation on the Korean Peninsula, including eventually facilitating North Korea’s abandonment of its nuclear weapons program and the achievement of unification,” the reports says.

Asia Economy Daily wrote an article (in the Korean language) about the research team's presentation. A version of this article was also carried as a news release by the Stanford News Service. NK News, a news oufit focused on North Korea-related news, also wrote an article (in the English language) and can be found on NKNews.org. The Voice of America covered the presentation by Shin and Straub at the Brookings Institution. The article, written in Korean, can be accessed on the Voice of America online.