Without Reform from Beijing, ‘The World Will Endure More China Scares’

On Jan. 21, billionaire investor George Soros said he was betting against Asian currencies, telling Bloomberg Television that “A hard landing is practically unavoidable” in China. The Chinese currency has dropped 5.7 percent since August, when the central bank allowed it to depreciate. “I’m not expecting it,” he added. “I’m observing it.” Though Soros didn’t specifically mention the renminbi, China’s currency, ruling Communist Party mouthpiece People’s Daily attacked him in a Jan. 26 article for suggesting he might short the renminbi, comparing such a move to “declaring war on China’s currency.” In this ChinaFile conversation, experts discussion if Soros may be right.

CAMERON'S EU REFORMS: WILL EUROPE BUY THEM?

There will be no agreement on David Cameron’s reform plans at the European Council summit on December 17th-18th. But Donald Tusk, president of the European Council, will try to help Cameron bridge the gap between the UK and other member-states, possibly setting the stage for a final deal in February.

In a new policy brief, ‘Cameron’s EU reforms: Will Europe buy them?’, CER research fellow Agata Gostyńska-Jakubowska asks which of Cameron’s reforms might be acceptable to his European colleagues, and which member-states will be the most and least helpful in achieving them.

The battle for reform in Kyiv

Ukraine’s reformist government is achieving results. But vested interests are blocking many key reforms, and corruption remains a major problem. Mikheil Saakashvili, the controversial governor of Odessa, is dividing the reformers in Kyiv, as I discovered on my recent visit.

Ukraine’s pro-EU, pro-reform coalition has made real progress since taking office nearly a year ago. The current lull in fighting in the Donbass makes it easier for the government to work on reform. So does slightly better economic news: the government has struck a deal with its creditors to reschedule debt, while the economy may soon stop shrinking.

Modi’s tax reform: revolution by attrition

For companies looking to tap into one of the world’s largest consumer bases, it’s no secret that tax in India has long been a concerning grey area, and has served as a deterrent to free-flowing business. Rates differ from state to state, as each seeks to undercut each other as the most attractive route.

Described as potentially the biggest change in Indian taxation since independence, the Goods and Services Tax (GST) aims to simplify the colossally complex Indian tax system. Prime Minister Narendra Modi’s proposition aims to replace local taxation with a uniform federal tax, creating a single accessible market with the revenue losses to local bodies being offset by federal funds.

Japan's Intelligence Reform Inches Forward

When the Allies defeated Japan at the end of World War II, they dismantled the Japanese security apparatus and deliberately left the country dependent on outside powers. This entailed not only taking apart the military but also the extensive imperial intelligence apparatus that had facilitated Japanese expansion in Asia. As it reconstituted itself, postwar Japan opted for a decentralized intelligence system as an alternative to its prewar model. The result was more a fragment of an intelligence apparatus than a full system, with Tokyo outsourcing the missing components to its allies. This system worked through the Cold War, when Japan was more essential to U.S. anti-Soviet strategy. Since then, however, Japan has found itself unable to count on its allies to provide vital intelligence in a timely manner. The Islamic State hostage crisis in January, during which Japan depended on Jordanian and Turkish intelligence, reinforced this lesson.

In response to the recent incident, Japan's ruling Liberal Democratic Party has started drafting a proposal to create a new agency specializing in foreign intelligence. To address Japanese dependence on outsiders, the new system will shift away from a decentralized model with limited collection capacity to a centralized system with in-house capabilities. The plan would support Japan's slow normalization of its overall military capabilities in order to face new threats.

China Continues to Wrestle With the Meaning of Reform

China's Communist Party leaders convened their annual meeting of the Central Committee on Monday, with a focus on "comprehensively advancing the rule of law" as a core component of China's broader political reform process. The four-day session will garner only cursory attention from the Western media, since it is unlikely to produce substantive changes to China's judicial structure.

Moreover, since most Western observers equate political reform with democratization, and since meaningful democratization is clearly not in the cards for China, questions of political reform tend to be overshadowed by the far more tangible and obviously relevant problem of economic change in the country. The plenum will not tell us the precise shape reforms to rule of law will take going forward, how far these reforms will go or what they will mean for the business environment in China. Nonetheless, it may offer clues about how President Xi Jinping's administration intends to cope with the potentially destabilizing effects of the immense social and economic change unfolding in China today.

China's Risky Reforms

Why Beijing Has Reason to Worry

By Johan Lagerkvist

Members of the new Politburo Standing Committee wave to the press in Beijing, November 2012. (Carlos Barria / Courtesy Reuters)

Almost three months after the Third Plenum of China’s 18th Party Congress, the world is still trying to divine the country’s political future. The plenum communiqué, a road map for planned reforms over the next few years, raised as many questions as it answered. Chief among them: How will China’s economy, its political system, and its society interact in the wake of new reforms -- in harmony or with increasing friction?

Firms & Rising Inequality

Some of the most prominent theories of rising wage inequality emphasize changes in the supply of highly-educated workers, skill-biased technical change, changing labor market institutions, as well as variation in wages across occupations, industries, and geography.

David Card has highlighted some problems and puzzles for some of these prominent theories and has been focusing on the role of firms. His 2011 speech to the Society of Labor Economists highlights some of his thinking on these issues, and his recent paper with Pat Kline and Joerg Heining models and quantifies the importance of firms for rising wage inequality.

FT: Greek gambling plan branded ‘a disgrace’

By Roger Blitz, Leisure Industries Correspondent

Sportingbet has branded plans by Greece to award a monopoly in online gambling to state betting operator OPAP “a disgrace”, but said it would continue to take bets in the country for the time being.

The group, which is in the process of being bought by William Hill and its joint venture partner GVC Holdings, is one of 24 online gambling operators which signed interim licences to operate in Greece but which may now have to quit the Greek market. 

OPAP already enjoys a monopoly on offline betting, but the Greek finance ministry is now proposing to end the interim licences and extend OPAP’s monopoly to include online sports betting and other gambling products, with a licence to last until 2020.