Park et al (eds ) asian responses to the global financial crisis; the impact of regionalism and the role of the g20 (2012)

Asian Responses to the Global Financial Crisis M2931 - PARK TEXT.indd i 03/07/2012 10:39 M2931 - PARK TEXT.indd ii 03/07/2012 10:39 Asian Responses to the Global Financial Crisis The Impact of Regionalism and the Role of the G20 Edited by Jehoon Park University of Incheon, South Korea T.J Pempel University of California, Berkeley, USA Geng Xiao Fung Global Institute, Hong Kong Edward Elgar Cheltenham, UK • Northampton, MA, USA M2931 - PARK TEXT.indd iii 03/07/2012 10:39 © Jehoon Park, T.J Pempel and Geng Xiao 2012 All rights reserved No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise without the prior permission of the publisher Published by Edward Elgar Publishing Limited The Lypiatts 15 Lansdown Road Cheltenham Glos GL50 2JA UK Edward Elgar Publishing, Inc William Pratt House Dewey Court Northampton Massachusetts 01060 USA A catalogue record for this book is available from the British Library Library of Congress Control Number: 2012935324 ISBN 978 78100 390 04 Typeset by Servis Filmsetting Ltd, Stockport, Cheshire Printed and bound by MPG Books Group, UK M2931 - PARK TEXT.indd iv 03/07/2012 10:39 Contents List of contributors Preface vii ix Northeast Asia in the multipolar world-system Immanuel Wallerstein The other 80 percent: understanding economic drivers of global transformation Geng Xiao, Sean Quirk and Jing Yang 13 Asian capitalism: Beijing Consensus as an economic development model for the 21st century Edward K.Y Chen 24 The renminbi debate: a review of issues and search for resolution Yoonbai Kim and Gil Kim 36 Weathering the financial storms: the government of China Jing Ma and Lihui Tian The global financial crisis and its implications for East Asian financial integration Pilhyun Kim 55 67 The G20 and the role of Asia in the future Deok Ryong Yoon 85 The G20 and Asian monetary cooperation Woosik Moon 104 APEC: the future prospects for a bridge spanning the Pacific Tomoyoshi Nakajima 120 10 The ASEAN economic community and East Asian economic integration Taeyoon Kim 135 v M2931 - PARK TEXT.indd v 03/07/2012 10:39 vi Asian responses to the global financial crisis 11 Global financial regulation: G2 or G20? T.J Pempel 158 12 East Asian community building Wei Pan 170 13 Sino–US relations: possible trends and implications for the East Asia community Liu Yongtao 176 Middle powers and the building of regional order: Australia and South Korea compared David Hundt 193 The utility and limits of the ‘European Model’ for the regional institutionalization of East Asia Richard Higgott 212 Conclusion: from the Asian community to the world economy government Jehoon Park 261 14 15 16 Index M2931 - PARK TEXT.indd vi 275 03/07/2012 10:39 Contributors Edward K.Y Chen is Distinguished Fellow of Centre of Asian Studies at University of Hong Kong Richard Higgott is Vice Chancellor, Murdoch University, Western Australia, Australia David Hundt is Senior Lecturer in International Relations at Deakin University, Australia Gil Kim is Professor of Economics at California State University, USA Pilhyun Kim is Research Fellow of Korea Economic Research Institute Taeyoon Kim is Associate Research Fellow of Center for Emerging Economies Research/Southeast Asia at Korea Institute for International Economic Policy Yoonbai Kim is Professor of Economics at University of Kentucky, USA Jing Ma is Associate Professor of Economics at Teda College, Nankai University, China Woosik Moon is Professor of Graduate School of International Studies at Seoul National University, Korea Tomoyoshi Nakajima is Senior Research Fellow of Economic Research Institute for Northeast Asia, Japan Wei Pan is Professor of School of International Studies at Peking University, China Jehoon Park is Secretary General of Asia Economic Community Forum and Professor of School of Northeast Asian Studies at the University of Incheon, South Korea T.J Pempel is Professor of Political Science at the University of California, Berkeley, USA Sean Quirk is Research Fellow at Columbia University’s Global Center | East Asia, China vii M2931 - PARK TEXT.indd vii 03/07/2012 10:39 viii Asian responses to the global financial crisis Lihui Tian is Professor of Finance and Acting Dean of the Institute of Finance and Development at Nankai University, China Immanuel Wallerstein is Senior Research Scholar of Yale University, USA Geng Xiao is Director of Research and Senior Fellow of Fung Global Institute, Hong Kong Jing Yang is Graduate Student of HSBC School of Business at Peking University, China Liu Yongtao is Professor of International Relations at Fudan University, China Deok Ryong Yoon is Senior Research Fellow of International Macroeconomics at Korea Institute for International Economic Policy M2931 - PARK TEXT.indd viii 03/07/2012 10:39 Preface This book is the product of the second conference of the Asia Economic Community Forum which was held on 7−9 November 2010 at Songdo Convensia in Incheon, South Korea The Asia Economic Community Foundation (AECF) was established in 2008 with the goal of eventually establishing an Asia Economic Community The main activity of the foundation to date has been organizing the annual Asia Economic Community Forum (AEC Forum) with the eventual goal of transforming that forum into ‘Asia’s Davos Forum’ One of the co-editors of this volume, Professor Jehoon Park, is Secretary General of the AEC Forum Even though the AEC Forum is benchmarking the Davos Forum as its model, the conference was initiated by academics with the participation of business and political leaders The theme of the forum is ‘Creating One Asia Together’ In 2010, the theme of the second conference was ‘Post Crisis New World Order: Asia and G20’ considering the fact that the G20 Summit was to be held in Korea on 11–12 November right after the forum In that sense we could say that the second AEC Forum became a pre-G20 forum There were three plenary sessions: ‘Grand Debate About the 21st Century Capitalism’, ‘Grand Compromise among the US, China and the EU’ and ‘Grand Dialogue between Asia and the West’ More than 1300 official participants actively shared their interests and views concerning the future of Asia and the roles of the G20 There were 25 sessions where more than 80 papers were presented This book collects the 14 best papers from among those 80 The three co-editors of this volume are all core members of the AEC Forum This book deals with various issued related to Asian responses to the global financial crisis It focuses on two aspects One is regionalism in Asia The other is the G20 Many Asian countries actively participate in the G20 as member countries So the G20 is becoming a global institution showing the increasing powers and roles of Asian countries in global issues While interest in regional integration and regionalism in East and Northeast Asia has been increasing recently, most publications have been written in national languages and hence are limited in their inclusion and in their audiences Some are written in English, but mainly by Western ix M2931 - PARK TEXT.indd ix 03/07/2012 10:39 x Asian responses to the global financial crisis scholars This book includes contributions by Asian scholars as well as Western writers The book also has a unique feature in that contributions are made from an interdisciplinary approach covering economics and political science The book deals with various issues such as the World System analysis, the debate over the Washington Consensus versus the Beijing Consensus, the roles of the G20, the roles of middle powers like Korea and Australia, and applications of European experiences to Asia as well as perspectives of each country from the region and perspectives from outside the region (the United States) Jehoon Park, T.J Pempel and Geng Xiao 2012 M2931 - PARK TEXT.indd x 03/07/2012 10:39 280 Asian responses to the global financial crisis economic drivers of global transformation 17–22 economic growth 13–15, 16 and G20 (Group of Twenty) 85, 88, 93–4 globalization 13, 17 industrialization 13, 14, 17, 19 liquidity 108–9 new theory of international relations 173 population 13, 14, 15 urbanization 13, 17, 18, 19 dispute settlement 174, 190, 223, 224, 242 disputes 10, 166, 171, 173, 186–7, 244 see also dispute settlement; historical legacy of conflict; territorial disputes; wars distribution of material capabilities, international relations 178, 179, 183–4, 185 diversity in East Asia 247 divestment 6–7 Doha Round 85, 125, 127, 234 dollar (US) depreciation 19 exchange rates 71, 72, 105–8, 110, 112, 160–61 foreign exchange markets 77, 78 military power 7–8, Northeast Asia in the multipolar world-system primary alliance with Northeast Asia 10, 11 primary alliance with Western Europe 10–11 as reserve currency 6–7, 164–5 RMB (renminbi) valuation model 423 see also Washington Consensus domestic demand 62, 68, 95, 108, 135, 136, 146, 244 domestic markets 17, 62, 75, 95, 147 domestic politics 217 Dunaway, Steven Vincent 40 East Asia and APEC 120, 124, 127, 128, 130, 131, 132 economic development model 27 M2931 - PARK TEXT.indd 280 economic drivers of global transformation 18 economic growth 28, 73–4, 135 export-oriented strategies 28–9, 74–5, 145–7, 230 foreign policy 232 free trade agreements (FTAs) 135–6, 170, 174 government intervention 57 institutions 220, 223, 226, 227, 241–2, 248–9 international relations 180–82 international trade 241 regional financial cooperation 83–4, 174 security 182, 184–5, 186–7, 188, 189, 239 sovereignty 226, 234, 248 see also APEC (Asia-Pacific Economic Cooperation); ASEAN; East Asia-Pacific; global financial crisis and its implications for East Asian financial integration; leadership in East Asia; ‘new regionalism’: lessons for and from East Asia; regional institutionalization of East Asia East Asia-Pacific 14, 15, 16, 20, 21, 22, 127 East Asia Summit (EAS) 141, 143, 146, 147, 204, 205, 206, 207, 233, 236, 246 East Asian capitalism 26 East Asian Community (EAC) 142, 170–71, 174–5, 245–6 East Asian Economic Caucus (EAEC) 206, 242 East Asian Free Trade Area (EAFTA) 79–80, 129, 130, 132, 142–3 economic cooperation 240–41 see also APEC (Asia-Pacific Economic Cooperation); ASEAN; free trade agreements (FTAs); global economic cooperation/coordination; regional economic cooperation economic decline China 55, 58–9 developed countries 15 03/07/2012 10:39 Index developing countries 15 Japan 36, 38, 40, 49, 166 United States 166, 187, 241 economic development ASEAN 139, 141, 143–4, 145–6, 156–7 East Asian model 27 G20 (Group of Twenty) agenda 87, 88–90, 94, 95, 142 economic diversity 99, 143–4, 147 economic drivers of global transformation 17–23 economic growth ASEAN 125, 144 Asia 94–5, 105 China 4, 27, 28, 55, 57–8, 74, 97, 135, 165–6, 174, 185 developed countries 13–14, 15, 16, 74 developing countries 13–15, 16 East Asia 28, 73–4, 135 free market economy 56 G20 (Group of Twenty) agenda 87, 88–90, 94, 95, 158 Japan 4, 74, 135 Northeast Asia in the multipolar world-system 4, Singapore 135 South Korea 4, 74, 107, 135 economic interdependence 97, 159, 164, 165, 194, 197–201 economic policy 84, 114, 239, 240, 241 economic power China 166–7, 170–71, 185, 200, 219, 233, 241, 243 United States 198, 251, 252 economic prospects, Northeast Asia in the multipolar world-system 4–5, 11 Economic Review and Policy Dialogue (ERPD) 84, 114 education 22, 61, 62, 138, 174 Eichengreen, Barry 40–42, 52 emerging countries see developing/ emerging countries employment 2, 4, 13, 19, 39 see also labor supply; unemployment; unskilled labor; wage rates M2931 - PARK TEXT.indd 281 281 energy resources 10, 11, 20, 21, 64, 95, 155, 181, 186, 243, 244, 245, 271 entrepreneurial capitalism 25 equitable economic development, ASEAN 139, 141, 143–4, 156–7 equity 29, 30 equity investment 73 euro 19, 50, 74, 108, 115, 118, 264 European capitalism 25 European Court of Justice (ECJ) 216, 224 European Union bond markets 75, 76 currency depreciation 19 East Asian Community building 170 economic cooperation with South Korea 115, 117 free trade agreements (FTAs) 225, 229 hegemony 238 institutions 223–5, 226, 227 leadership 238 membership 233 monetary policy 50 regional problem-solving 229 regionalism model 215, 217–18, 223–5, 226, 227, 230, 249 (see also regional institutionalization of East Asia) role in Asian regional integration 270 sovereignty 223, 225, 226, 249 and United States 239 exchange rate risk 38, 77–8 exchange rates Asia 86, 95 Chinese Economic Model (CEM) 30–31 dollar (US) 6–7, 71, 72, 106, 110, 112 G20 (Group of Twenty) 89 responses to the global financial crisis in East Asia 71, 72 won 71, 72, 105–8, 110, 112 see also exchange rate risk; fixed exchange rates; flexible exchange rates; fundamental equilibrium exchange rate (FEER); nominal exchange rate; real exchange rate 03/07/2012 10:39 282 Asian responses to the global financial crisis experimental projects, Chinese Economic Model (CEM) 30, 32 export-oriented strategies 28–9, 30–31, 32, 74–5, 86, 105, 145–7, 230 exports 36, 49, 57, 58, 59, 68, 69, 74–5, 228, 241 external demand 74, 75, 79, 135 Federal Reserve Board (US) 72, 110, 111, 115, 158, 164 financial crises G20 (Group of Twenty) 85, 86, 87, 88, 92–3, 101, 104, 109, 113, 118, 158–9, 168 global financial safety net 104, 105–9 global governance 271–2 international financial institutions, responses of 232 regionalism in East Asia, effects on 218–20, 236 South Korea 104, 105–8, 109, 110, 111, 112 financial institutions 161, 162–3, 164 see also international financial institutions (IFIs) financial integration see global financial crisis and its implications for East Asian financial integration financial liberalization 31, 32, 56, 90, 163–4, 218, 219, 220, 230, 240 see also investment liberalization financial regulation 31, 32, 232 see also global financial regulation financial sector 31, 32, 68–74, 75–8, 89, 159–64 Financial Stability Board (FSB) 90, 159, 167 firms 24, 227 fiscal policy 28, 51, 61–2 fixed exchange rates 31, 38, 42, 50, 51, 160–61, 164 Flexible Credit Line (FCL) 92, 109, 110, 113 flexible exchange rates 31, 36, 37–8, 49, 50, 51 foreign currency reserves 241 foreign direct investment ASEAN 139, 140, 145–6, 151, 236 Asia 96, 97, 160 M2931 - PARK TEXT.indd 282 China 58–9, 62, 64, 65, 166, 200–201, 243 Chinese Economic Model (CEM) 31 developed countries 160 Japan 243 ‘new regionalism’: lessons for and from East Asia 230 South Korea 117 foreign exchange control liberalization 31 foreign exchange markets 77–8, 84, 108, 110, 112, 159, 160 foreign interest rates 42 foreign investment openness 26, 27 foreign military bases foreign policy 186, 201, 225, 232, 234, 236, 239, 243, 251 foreign reserve stock 86, 95, 102, 107, 108, 161, 166 formal regionalism 215–16, 227, 229, 230, 246 Framework for Strong, Sustainable and Balanced Growth (G20) 87, 88–90 Frankel, Jeffrey 39, 41, 51 free market economy 25, 28, 55–7, 64 free trade agreements (FTAs) APEC (Asia-Pacific Economic Cooperation) 128, 129, 131, 132, 230 ASEAN 79–80, 135–6, 141–2, 145–7, 157, 229, 231, 232, 233, 235–6 ASEAN+3 79–80, 97, 135–6, 142–3, 202 East Asia 135–6, 170, 174, 249–50 European Union 225, 229 security 198–9, 200, 234 United States 198–9, 234 see also bilateral free trade agreements (FTAs); free trade areas; preferential trading arrangements (PTAs); individual FTAs free trade areas 216, 217 FTAAP (Free Trade Area of the AsiaPacific) 120, 124, 125–8, 131, 132, 231 fundamental equilibrium exchange rate (FEER) 39–40, 41 funding bailouts 104, 112, 158, 164 03/07/2012 10:39 Index G2 (Group of Two) 165–7, 182 G7 (Group of Seven) 165, 166, 167 G8 (Group of Eight) 86, 87, 93 G20 (Group of Twenty) and Asia 86, 94–101, 102 conditions to fulfil its role 93–4 emergence and future role 85–93, 104, 105, 158 financial crises, role in 85, 86, 87, 88, 92–3, 101, 104, 109, 113, 118, 158–9, 167, 168 global financial regulation 89, 90–91, 101, 158, 167–8, 272 representativeness 93–4, 168, 242, 247 and South Korea 96, 98, 100–101, 102, 104, 113, 118, 142, 197 G22 (Group of Twenty-Two) 167 GATT (General Agreement on Tariffs and Trade) 85, 125, 127, 230, 234 GDP APEC (Asia-Pacific Economic Cooperation) 121, 125 ASEAN 135, 144 Asia 95, 105 China 13, 14–15, 57–8, 59, 165–6 developed countries 13, 14, 15 developing countries 13, 14–15 East Asia 74, 135, 241 United States 166, 241 Gerschenkron, A 56 global capital markets 159–64 global competitiveness 218 global coordination deficits 23 global economic cooperation/ coordination 94, 101–2, 115–17, 158, 167, 168 see also global macroeconomic coordination global economic governance 271–2 global economic integration 139, 157 global effective demand 4, 5, 11, 64, 68 global financial crisis and its implications for East Asian financial integration immediate aftermath 68–74 policy recommendations 79–84 what is wrong with East Asia’s economy 74–8 M2931 - PARK TEXT.indd 283 283 global financial regulation G2 (Group of Two) 165–7 G20 (Group of Twenty) 89, 90–91, 101, 158, 167–8, 272 global capital control 164–5 ungoverned and interconnected global finance 159–64 global financial safety net 89, 92–3, 101, 104, 105–9, 110, 118, 159, 168 global governance 247, 271–2 global interconnectedness/ interdependence 85, 86–7, 159–64, 165, 217, 249 global macroeconomic coordination 85, 88–90, 91, 101 global macroeconomic imbalance 161 global networks 93–4, 164 global order 226, 249 global problem-solving 11, 220–22, 223, 229, 247, 248–9, 251 see also counter-terrorism; global financial safety net; nuclear antiproliferation global problems 188, 190 see also carbon emissions; financial crises; global problem-solving; nuclear proliferation; terrorist attacks globalization developing countries 13, 17 G20 (Group of Twenty), reasons for emergence 85, 86–7 global financial crisis 2007–2010, effects of 15–16 institutions, importance of 220–21, 226, 232 ‘new regionalism’: lessons for and from East Asia 228–9, 232 new theory of international relations 172–3, 175, 188 regional economic integration 215, 218, 219 regionalism, relationship with 233 versus regionalization 227–8 Goldstein, Morris 40, 41 governance 224, 241, 271–2 government intervention 24, 25, 26, 27, 55–7, 61–2, 63–5, 198 government policies 224, 227, 228–9, 230 03/07/2012 10:39 284 Asian responses to the global financial crisis see also competition policy; economic policy; fiscal policy; macroeconomic policy; monetary policy; trade policy governments, autonomous geopolitical centers gradual approach, Chinese Economic Model (CEM) 30–31, 32 Greater Mekong Subregion (GMS) program 138, 141, 142, 144 Haas, Ernst B 217 Hall, P.A 24, 33 Han, Seung-soo 205 Hanoi summit of APEC (14th) 125, 126 hegemony European Union 238 international relations 178–9, 181, 183–4, 187, 188, 189–90, 195, 196 leadership in East Asia 238–41, 251, 270 Higgott, Richard 198, 215, 218, 219, 221, 225, 227, 231, 236, 237, 239, 242 historical legacy of conflict 3, 96, 99, 102, 187, 207, 243–4, 247, 270 Hong Kong 3, 19, 27, 69, 72, 75, 78, 82, 114, 116, 243 housing markets 161–4 ‘hub and spoke’ security alliances 188, 193, 196, 239 human capital/human capital deficits 77, 138, 141, 144, 152 hyperglobalization 226 IMF (International Monetary Fund) 27, 28, 56, 69, 70, 72, 83, 84, 86, 87, 89, 90, 91, 92, 93, 104, 105, 109–13, 114, 115, 116, 135, 144, 165, 166, 167, 168, 221, 248 see also Washington Consensus income per capita, ASEAN 143, 144, 147 India 8, 18, 78, 94, 95, 98, 145, 171, 196, 198, 204, 246, 265, 270 see also ASEAN+6; BRIC/BRICS countries M2931 - PARK TEXT.indd 284 Indonesia 27, 68, 69, 70, 72, 74, 75, 79, 82, 98, 101, 114, 116, 138, 140, 143–4, 145, 158, 160, 161, 198, 203, 204 see also ASEAN; Bogor Goals industrial production 68, 70 industrial projects, ASEAN 137 industrialization 13, 14, 17, 19, 31 inequality, distributional 5, 23 inflation 18–19, 38, 51, 144 informal regionalism 215, 227, 229, 230, 234, 246 information and communications technology (ICT) 138, 139, 140, 141, 144, 155, 156 information sharing 84, 222, 223 infrastructure development 4, 16, 19, 57, 61–2, 77, 81, 138, 139–40, 144, 154–5 Initiative for ASEAN Integration (IAI) 137, 139, 143–4, 156–7 institutional investors 77 institutions 24, 93, 101–2, 118, 220–27, 232, 235, 237, 241–2, 248–9, 250 see also financial institutions; regional institutionalization of East Asia instrumental regionalism 229, 231 intellectual property rights (IPRs) 130, 139, 140, 146, 153 inter-regional cooperation 225, 227, 248–9 interest rates 19–20, 59, 61, 62, 161–2, 164, 167 international financial institutions (IFIs) 87, 89, 90, 91, 93, 114, 158, 159, 167, 219, 232 see also individual financial institutions international organizations 32, 76, 88, 90, 93, 94, 113, 147, 248, 253 see also international financial institutions (IFIs); individual organizations international relations 1–2, 9–11, 171–3, 177–82, 183–6 see also Australia–China relations; China–Japan relations; China–South Korea relations; China–United States relations; 03/07/2012 10:39 Index middle powers and regional order: Australia and South Korea; United States–Australia relations; United States–Japan relations; United States–South Korea relations; United States–Soviet Union relations international trade APEC (Asia-Pacific Economic Cooperation) 121 Asia 95 China 57–9, 74–5, 79, 80, 166, 243, 249–50 East Asia versus United States 241 East Asian Community building 170 G20 (Group of Twenty) 167 global financial crisis and its implications for East Asian financial integration 74–5 Japan 243 Northeast Asia in the multipolar world-system responses to the global financial crisis in East Asia 68, 69 see also bilateral free trade agreements (FTAs); exports; free trade agreements (FTAs); free trade areas; intra-regional trade; non-tariff barrier (NTB) reduction; preferential trading arrangements (PTAs); tariff barrier reduction intra-regional trade 74, 96, 97, 139, 141, 143, 147, 152, 167, 227–8, 230 investment 3, 6, 89, 227 see also bond markets; divestment; equity investment; foreign direct investment; investment liberalization; portfolio investment; stock markets; treasury bonds investment liberalization APEC (Asia-Pacific Economic Cooperation) 120, 121, 122, 124, 127, 130–31, 132 ASEAN 139, 140, 141, 151 Chinese Economic Model (CEM) 31 ‘new regionalism’: lessons for and from East Asia 230, 231 M2931 - PARK TEXT.indd 285 285 Japan and APEC 120, 121, 122, 124, 126, 128, 129, 130, 131, 132, 242 ASEAN–Japan Comprehensive Economic Partnership 79, 80, 136, 141, 145, 246 and ASEAN+3 117, 141, 145, 202–3, 246 and ASEAN+6 79, 245, 246 and Asian Monetary Fund (AMF) 113, 218, 242 bipiolar power 181 current account imbalance 37, 44, 49 deflation 38, 49 and East Asia Summit (EAS) 143, 246 economic decline 36, 38, 40, 49, 166 economic growth 4, 74, 135 foreign direct investment 243 and G20 (Group of Twenty) 96, 98, 100–101, 102 historical legacy of conflict 207, 243–4, 245, 270 international trade 243 leadership in East Asia 239–40, 242, 243, 244, 245, 246, 250–51, 270 regional cooperation/integration 96, 98, 100–101, 102 regional free trade agreements 79–80, 249–50 see also China–Japan relations; G7 (Group of Seven); G20 (Group of Twenty); United States–Japan relations; yen Kawai, Masahiro 114, 142–3, 147 Keohane, Robert 220, 221 Keynesian economics 56, 61–2 Khong, Yuen Foong 194, 195 Kim, Yeong-ho 202, 203 Koh, Tommy 205 Korea see North Korea; South Korea labor supply 24 Lake, David A 194, 195 Lardy, Nicholas R 40, 41 Latin America 14, 28, 29, 55–6, 57, 70, 105, 170, 173, 217, 251 Latin America and Caribbean 15, 16, 19, 20, 21, 22 03/07/2012 10:39 286 Asian responses to the global financial crisis leadership 99, 100, 238, 270–71 leadership in East Asia China 240, 241, 242, 243–7, 250–51, 252 geopolitics, leadership and East Asian cooperation 241–3 overview 237–8 regulatory regionalism 245, 247–52 United States 238–41, 250, 251, 252, 270 Lee, C.J 142–3, 147 Lee, Myung-bak 199, 200, 201, 202, 204–5 legal system 24, 224 Lehman Brothers’ collapse 68, 72, 127, 158, 159, 166 lenders of last resort 109–15 Lewis, Michael 161, 163 life quality, Beijing Consensus 29, 30 liquidity 20, 37, 63–4, 81, 83–4, 90, 92, 108–9, 114 see also Chiang Mai Initiative (CMI); Chiang Mai Initiative multilateralization (CMIM) London Summit of the G20 87, 101, 109 MacIntyre, Andrew 161 macroeconomic mismanagement 27 macroeconomic policy 19, 27, 38, 159, 167 Malaysia 69, 70, 72, 75, 79, 81, 82, 116, 158, 160, 161, 206, 242 manufacturing sector 17–19, 39, 74, 75, 117, 141, 234 market confidence 59, 64, 65, 70–71, 135 markets 24, 25, 26, 28, 55–7, 64, 227, 230 see also bond markets; capital markets; common markets; domestic markets; market confidence; property markets; single market and production base; stock markets material-normative perspective on international relations 179–80, 181, 182, 183–6, 188, 189, 190 materialist perspective on international relations 177–80, 181, 183–4, 185, 188, 189, 190 M2931 - PARK TEXT.indd 286 McKinnon, Ronald 38, 40 Middle East 21, 70, 73, 245, 268, 269, 270, 271 middle powers 197, 270 see also middle powers and regional order: Australia and South Korea middle powers and regional order: Australia and South Korea Asia-Pacific community 203–6, 208 economic interdependence 197–201 ‘new Asian diplomacy’: working with ASEAN 201–3, 205–7 order and the role of middle powers 194–7, 206–8 military alliances 172, 174, 188, 198–9 military power China 171, 174, 183 international relations 172, 178, 179 Northeast Asia 187 United States 7–8, 9, 173, 183, 188, 198–9, 251 military situation, Northeast Asia in the multipolar world-system 7–9, 11 Milner, Anthony 196, 204, 205, 206 monetary policy 38, 50, 51, 57, 61, 62, 63–4, 236–7 Moon, Woosik 108, 115 moral hazard 56, 84, 91, 113 mortgages 162, 163 multi-core model of Asian regional integration 269, 271 multilateral free trade agreements (FTAs) 225 multilateral security in East Asia 182, 184–5, 186–7, 189, 194, 196 multilateral swaps 104, 110–11, 114–15 multilateralism 220–21, 222, 225, 229, 249 multipolar world-system 1–2, 11–12, 115, 178, 182, 187, 251, 261, 265 see also Northeast Asia in the multipolar world-system Murphy, Cherelle 75, 77 Mutual Assessment Process (MAP) (G20) 89–90 mutual recognition agreements (MRAs) 139, 140, 151 03/07/2012 10:39 Index Myanmar 116, 136, 137, 138, 140, 143, 144–5, 149 nationalism 3, 9, 207, 217, 232, 243–4, 245, 248 NATO (North Atlantic Treaty Organization) 7, 196 natural resources 32, 200, 271 see also energy resources; natural resources’ scarcity natural resources’ scarcity 20, 21 neo-functionalist perspective on regionalism 216–17 neoliberal government policies 228, 230 ‘new Asian diplomacy’ 201–3 New Growth Strategy (Basic Policies) (APEC) 126, 128 ‘new regionalism’: lessons for and from East Asia bilateral trade policy and regional theory 233, 234–6 described 227–33, 249 monetary regionalism and cooperation 231, 233, 235, 236–7 trends in East Asian regionalism 233 New Zealand 78, 111, 126, 130, 145, 198, 245, 246 see also ASEAN+6 NIE (newly industrialized economy) model 32 nominal exchange rate 38, 39, 42, 43, 44, 45, 46, 47, 48, 49 non-member countries (G20) 93, 98 non-state actors, ‘new regionalism’: lessons for and from East Asia 228, 229 non-tariff barrier (NTB) reduction 28, 139, 149 non-tradable goods and services 17, 18, 39 normative perspective on international relations 179–80, 182, 183, 184, 185, 188, 189, 190 norms 221, 222 North, Douglass 220 North Atlantic Free Trade Area (NAFTA) 96, 97, 129 North Korea 3, 8, 174, 188, 200, 202 M2931 - PARK TEXT.indd 287 287 Northeast Asia 186–7, 246, 267, 270–71 see also Northeast Asia in the multipolar world-system Northeast Asia in the multipolar world-system as center of geopolitical autonomy 1, 12 currencies 5–7 economic prospects 4–5, 11 internal strains 2–3 military sphere 7–9, 11 primary alliances 9–11 nuclear antiproliferation 8–9 nuclear proliferation 8, 173, 180, 183, 188 Ohmae, Kenichi 226 Open Regionalism 120, 121, 124, 125, 131, 132, 242 order 194–7, 206–8, 226 see also global order; middle powers and regional order: Australia and South Korea; regional order organizations 221–2, 227 see also international organizations; regional organizations outsourcing 18 Pakistan 8, 111, 166, 269 Park, Jehoon 267, 269, 271 peace 172, 173, 182, 185, 204, 205, 244 Pempel, T.J 236, 237, 244 Philippines 27, 70, 72, 73, 75, 79, 82, 116, 136, 144, 158, 160, 161 Pitsuwan, Surin 196 Pittsburgh Summit of the G20 87, 93, 101 political integration 3, 216–17 political power Asian capitalism 26, 27 China 166–7, 171, 174, 180, 181, 182, 185, 195–6, 270 international relations 178 regional order 194–5 United States 1, 7–8, 9, 180, 181, 187, 195, 196, 198, 249 political power decline, United States 182, 187, 196, 241 03/07/2012 10:39 288 Asian responses to the global financial crisis politics 219, 227 population 13, 14, 15, 94, 95, 167 portfolio investment 70, 71, 73, 74, 91, 139, 151, 203–4 poverty reduction 85, 95 Precautionary Credit Line (PCL) 92, 113 preferential trading arrangements (PTAs) 137–8, 198, 231, 232, 233, 234–5 premier economic forum, G20 (Group of Twenty) 88, 101 primary alliances, Northeast Asia in the multipolar world-system 9–11 priority integration sectors 139, 150, 152 private capital inflows, responses to the global financial crisis in East Asia 73 private credit, responses to the global financial crisis in East Asia 73 private ownership 24, 25 private–public partnerships (PPPs) 26 private sector 25, 31, 57, 61, 64, 82, 94, 137, 161, 268 privatization 31, 32, 55–6 problem-solving 11, 221–2, 223, 229, 247, 248–9, 251 property markets 17, 18, 59, 64–5, 161–4 property rights protection 24, 28, 56, 130, 139, 140, 146, 153, 222 public opinion, autonomous geopolitical centers public sector 24, 25, 61, 64, 82, 94, 224 purchasing power parity (PPP) 39, 40, 41, 55, 243 Rajan, Raghuram G 161, 164 Ramo, J.C 29–30, 33 Ravenhill, John 198, 206, 213, 218, 230, 236 real capital prices 19 real capital scarcity 19, 20 real exchange rate 38, 39, 40, 42, 43, 44, 47 real income 37, 42, 43, 44, 45, 46, 47–9 real money supply 42, 43, 44, 45, 46, 47, 48 regional bond markets 75–7, 81–3, 231 M2931 - PARK TEXT.indd 288 regional cooperation 96–101, 102, 243–7 see also inter-regional cooperation; regional economic cooperation; regional financial cooperation; subregional cooperation regional economic cooperation 96–7, 102, 113–15, 144 see also APEC (Asia-Pacific Economic Cooperation); ASEAN; regional financial cooperation regional economic integration 98–101, 102, 127, 215–18 regional financial cooperation 83–4, 96, 97, 104, 174 see also bilateral swap agreements (BSAs); Chiang Mai Initiative (CMI); regional monetary cooperation regional free trade agreements (FTAs) 79–80, 96, 97, 99, 120, 127, 135–6, 140–43 regional identity 197, 207, 219 regional institutionalization of East Asia leadership (see leadership in East Asia) ‘new regionalism’: lessons for and from East Asia (see ‘new regionalism’: lessons for and from East Asia) regionalism in Asia after the financial crises 218–20 theorizing regionalism: Europe and Asia compared 215–18 regional interdependence 97–8, 113, 194, 197–201, 207, 237 regional monetary cooperation 231, 233, 235, 236–7, 248 see also Asian Monetary Fund (AMF) regional order 194–7, 206–8, 219 see also middle powers and regional order: Australia and South Korea regional organizations 228, 248–9 regional policy coordination 248 regional problem-solving 229 regionalism 197, 212, 232–3 03/07/2012 10:39 Index see also regional institutionalization of East Asia regionalization 197, 207, 212, 227–8 regulations 224 see also conditionality; deregulation; financial regulation; regulatory regionalism regulatory regionalism 245, 247–52 relative price ratio 39, 42, 43, 44, 45, 46, 47, 48, 49 representativeness in the global community 93–4, 168, 242, 247 reserve currency 6–7, 164–5 responsibility sharing, Asia’s role in the G20 (Group of Twenty) 95, 102 RMB (renminbi) appreciation 18–19, 36, 37, 39–40, 48, 49, 50, 51 currency appreciation 18–19, 36, 37–8, 39–40, 48, 49, 50, 51, 71, 72, 167 fixed exchange rates 38, 50–51, 62 flexible exchange rate 36, 37–8, 49, 50, 51 overvaluation 37–8, 41, 49 undervaluation 36, 39–40, 41, 49 valuation model and empirical evidence 40–43, 44, 45, 47–50 Rose, Andrew 40–42, 52 Roubini, Nouriel 37–8, 43 Rudd, Kevin 204–5, 207 Ruggie, John G 222 rule of law, European Union 224 rules of origin (ROO) 117, 139, 143, 147, 149 rural industrialization 31 Russia 1, 10, 11, 105, 121, 143, 147, 166, 173, 174, 180–81, 182, 184, 246, 251, 261, 270, 271 see also BRIC/BRICS countries; United States–Soviet Union relations Sakakibara, Eisuke 137 Santiago summit of APEC (12th) 125, 126 Sappington, D.E 56 Scollay, Robert 126, 130, 131, 133 sectors 122, 123, 139–40, 141, 150, 152 M2931 - PARK TEXT.indd 289 289 security APEC 242 ASEAN+3 201, 202, 207 Beijing Consensus 29–30 disputes with China 166, 171, 200 East Asia 182, 184–5, 186–7, 188, 189, 239 East Asia Community building 174 free trade agreements 198–9, 200, 234 international relations 178 international relations in East Asia 182, 184–6, 188, 189 regional economic integration 218 US 180, 181, 182, 183–4, 185, 186, 187, 188, 189, 190, 198–9, 200, 231, 234, 239, 240 see also middle powers and regional order: Australia and South Korea; order security communities 182, 184–5, 186–7, 188, 195 self-determination, Beijing Consensus 29–30 Seoul Summit of the G20 87, 88, 89, 92, 94, 104, 113, 118, 142, 167 sequential approach, Chinese Economic Model (CEM) 30–31, 32 services sector 139–40, 141, 150–51, 236 shared values 179, 182, 183, 184, 185, 188, 189, 190 Sheng, Andrew 161, 163 short run forecasting see Northeast Asia in the multipolar worldsystem Singapore 27, 68, 69, 70, 72, 75, 78, 79, 82, 114, 116, 117, 130, 135, 141–2, 143–4, 145, 174, 198, 204, 205, 235 Singapore summit of APEC (17th) 126, 128 Singapore summit of ASEAN (13th) 139 single market and production base 139, 146, 147, 149–52 small and medium-sized enterprises (SMEs) 122, 139, 140, 156 Smith, Adam 14 03/07/2012 10:39 290 Asian responses to the global financial crisis social exchanges, East Asia Community building 174, 175 social identity 179, 184, 189, 196 social relations 179, 182, 183, 184, 185, 189 Soskice, D 24, 33 South Asia 14, 15, 16, 20, 21, 22, 170, 174, 267–8, 269, 270, 271 South Korea and APEC 121, 124, 125, 129, 130, 131 and ASEAN 117–18, 201–3 ASEAN–Korea Free Trade Agreement 79, 80, 136, 141–2, 145 and ASEAN+3 117–18, 141–2, 145, 201–3, 207, 270 and Australia 197 bilateral free trade agreements (FTAs) 115, 117, 141–2, 145, 198, 199–200 bond markets 81, 82 currency swaps 104, 105, 108, 110, 111, 112, 115 economic growth 4, 74, 107, 135 financial crises 104, 105–8, 109, 110, 111, 112, 114, 158, 161 foreign direct investment 117, 160 foreign exchange markets 77, 78, 108, 110, 112 full employment 19 and G20 (Group of Twenty) 96, 98, 100–101, 102, 104, 113, 118, 142, 197 global economic cooperation 115, 117 leadership in regional integration 270 Northeast Asia in the multipolar world-system 3, 4, regional cooperation/integration 96, 98, 100–101, 102, 114 regional free trade agreements 79, 80 responses to the global financial crisis 68, 69, 70, 71, 72 see also China–South Korea relations; middle powers and regional order: Australia and South Korea; United States– South Korea relations; won M2931 - PARK TEXT.indd 290 Southeast Asia 270 Southeast Asian capitalism 26 sovereignty 166, 178, 187, 223, 225, 226, 234, 248, 249 special drawing rights (SDRs) 110, 111 special economic zones 30, 31 spillovers 216–17 state governance 224, 241 state-owned banks 62–4 state-owned firms 25, 26, 57, 62–3, 64 state power 225–6 Stiglitz, Joseph E 27, 33, 56 stock markets 59, 60, 64–5, 70–71, 72, 73, 74, 161 stock prices 106, 108 strategic alliances 182, 185, 186, 189, 195 Strauss-Kahn, Dominique 7, 109–10, 168 structural inflation 18–19 subregional cooperation 138, 141, 142, 144 Sugawara, Junichi 125 summits APEC 122, 124, 125, 126, 128, 130, 131, 132, 231, 242 ASEAN 139, 141, 202 East Asia Summit (EAS) 141, 143, 146, 147, 204, 205, 206, 207, 233, 236, 246 G20 (Group of Twenty) 87, 88, 89, 92, 93, 94, 98, 101, 104, 109, 113, 118, 142, 167 Northeast Asia 246, 270 regional economic integration in Asia 100, 102 supranational governance 224 Taiwan 3, 8, 27, 68, 69, 70, 72, 75, 78, 146, 240 Tan, Seng Chye 205 tariff barrier reduction 28, 117, 130, 137–8, 139–40, 142, 145, 149, 234 Taylor, Brendan 194, 196 technical cooperation 121, 157 technological innovation 13, 22, 62, 226 Terada, Takashi 122–5 territorial disputes 99, 174, 178, 187, 245, 247 03/07/2012 10:39 Index terrorist attacks 122, 124, 143, 172, 186, 218 see also counter-terrorism Thailand 27, 69, 70, 72, 75, 78, 79, 81, 82, 105, 110, 113–14, 116, 136, 138, 144, 145, 158, 160, 161, 198, 235 Tian, Lihui 64 Toronto Summit of the G20 87, 89 Tow, William T 193, 194, 195, 196 tradable goods 17–19, 39 trade liberalization APEC (Asia-Pacific Economic Cooperation) 120, 121, 122, 124, 125, 127, 130–31, 132 ASEAN 141, 149–51 Asian capitalism 26, 27 China 57 Chinese Economic Model (CEM) 31 free market economy 56 G20 (Group of Twenty) agenda 89 institutions, importance of 220 ‘new regionalism’: lessons for and from East Asia 230, 231 reforms, G20 (Group of Twenty) agenda 89 regional economic integration 215, 218 trade policy 224, 225, 233, 234–6, 240 trading-partner real income 42 Trans-Pacific Partnership (TPP) 126, 128–31, 132, 145, 199 transaction cost reduction 221, 222 treasury bonds 6, 76 trust 175, 185, 222 uncertainty 172, 173, 175 uncertainty reduction 220, 221, 222 unemployment 4–5, 19–20, 36, 38, 49, 55, 59, 61, 158, 161 United Kingdom 19, 77, 78, 83 see also G7 (Group of Seven); G20 (Group of Twenty) United Nations (UN) 85–6, 160, 165, 181, 197, 204, 221, 272 United States and APEC 120, 121, 122–30, 199, 231, 236, 237, 242, 270 and Asian Monetary Fund (AMF) 113, 218, 242 M2931 - PARK TEXT.indd 291 291 bond markets 6, 75–6 carbon dioxide emissions 21 consumption 161, 166 currency swaps 104, 105, 108, 110–13, 115 current account imbalances with China 36, 37, 38, 39, 47, 49, 50, 239 deflation 19 and East Asia Summit 143, 147 East Asian Community building 170, 171 economic cooperation with East Asia 240 economic decline 166, 187, 241 economic policy 239, 240, 241 economic power 198, 251, 252 and European Union 239 foreign policy 201, 234, 236, 239, 251 free trade agreements (FTAs) 198–9, 234 global financial crisis 2007–2010 158, 161–4, 166, 199–200, 251 international relations in East Asia 180–82 international trade 241 leadership in East Asia 238–41, 250, 251, 252, 270 military power 7–8, 9, 173, 183, 188, 198–9, 251 political power 1, 7–8, 9, 180, 181, 187, 195, 196, 198, 249 political power decline 182, 187, 196, 241 security 180, 181, 182, 183–4, 185, 186, 187, 188, 189, 190, 198–9, 200, 231, 234, 239, 240 wars 7–8, 9, 172 see also China–United States relations; dollar (US); Federal Reserve Board (US); G2 (Group of Two); G7 (Group of Seven); G20 (Group of Twenty); United States– Australia relations; United States–Japan relations; United States–South Korea relations; United States–Soviet Union relations 03/07/2012 10:39 292 Asian responses to the global financial crisis United States–Australia relations 193, 197, 198, 199, 200, 206–8 United States–Japan relations 207, 239–40, 244 United States–South Korea relations 11, 115, 117, 193, 197, 199–200, 206–8 United States–Soviet Union relations 8, 181, 187, 193, 195, 201, 239, 251 unregulated global capital markets 159–64 unskilled labor 5, 17, 18 urbanization 13, 17, 18, 19, 20 Uruguay Round 127 varieties of capitalism 24–6, 198 see also American capitalism; Asian capitalism; European capitalism voice for Asia/East Asia 219, 237, 247 wage rates 4, 5, 17, 18 Wallerstein, Immanuel 1, 2, 4, 56 wars 7–8, 9, 172, 195, 240, 241 see also Cold War; ‘currency wars’; disputes; historical legacy of conflict; peace Washington Consensus 28–9, 30, 31, 32, 55–6, 64, 105 Washington Summit of the G20 87, 101 Weberian model of Asian regional integration 267–9 Wei, Shang-Jin 38, 51, 52 M2931 - PARK TEXT.indd 292 Weinberg, M 24 Western Europe 1, 10–11 Wignaraja, Ganeshan 142–3, 147 Williamson, John 28, 40, 41 won 71, 72, 105–8, 110, 112 Woolcott, Richard 204 World Bank 14, 15, 16, 20, 21, 22, 28, 30, 56, 57, 71, 72, 86, 89, 90, 91, 165, 167, 221, 248 see also Washington Consensus ‘World Economy Governance’ 271–2 WTO (World Trade Organization) 85–6, 125, 127, 221, 224, 230, 234, 242 yen appreciation 36, 38, 40, 44, 46, 49 currency appreciation 36, 38, 44, 46, 49, 71, 72 foreign exchange markets 77, 78 full employment 19 Northeast Asia in the multipolar world-system 3, 4, 8, 11 primary alliance with United States 11 responses to the global financial crisis 69, 70, 71, 72 valuation model 43–6, 49 see also yen Yokohama summit of APEC (18th) 126, 128, 130, 131, 132 Yoon, Deok Ryong 95, 96 Zingales, L 25, 33 03/07/2012 10:39 M2931 - PARK TEXT.indd 293 03/07/2012 10:39 M2931 - PARK TEXT.indd 294 03/07/2012 10:39 ...M2931 - PARK TEXT.indd ii 03/07/2012 10:39 Asian Responses to the Global Financial Crisis The Impact of Regionalism and the Role of the G20 Edited by Jehoon Park University of Incheon, South... Ma and Lihui Tian The global financial crisis and its implications for East Asian financial integration Pilhyun Kim 55 67 The G20 and the role of Asia in the future Deok Ryong Yoon 85 The G20 and. .. needed to meet the challenges of tremendous demand for real capital by the 80 percent of the world’s population, and the large volume of liquidity and financial capital created artificially by the