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ASIA: Weekly politics update

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Below is the weekly update of political developments across East Asia. Please do not hesitate to contact us if you want to discuss any of the countries mentioned in more detail.

CHINA: High-level rebuke of energy agency may signal fresh coal crackdown

In an unusually blunt public statement, environmental inspectors authorized by the Communist Party's Central Committee harshly criticized China's National Energy Agency (NEA) for failing to appropriately weigh environmental concerns when approving new power plants and coal mines. The high-profile rebuke is a sign that authorities may finally be getting serious about overcoming entrenched coal interests that are hindering progress on carbon emissions.

In September, President Xi Jinpingannounced an ambitious goal of reaching peak carbon emissions by 2030 and net zero emissions by 2060. Along with an aggressive ramp-up of renewable energy capacity, achieving this goal will require a politicallychallenging crackdown on coal, which remains China's largest electricity source. Coal mines and coal-fired power plants are also a crucial source of employment, GDP, and tax revenue in some regions. New coal power project approvals were frozen in 2017-18 but resumed in 2019, and new thermal power projects – a category that includes both coal and natural gas – totaled 56 GW in 2020, the highest since 2015. “New coal power capacity at key areas for air pollution was not strictly controlled, leading to what should be built was not built and what shouldn't was built,” the inspectors from the Ministry of Ecology and Environment.

The environment ministry has traditionally been bureaucratically weak, lacking the ability to enforce its requirements onto other government agencies or powerful state-owned electricity generation and grid monopolies. But the latest inspections appear to have more political weight, having been authorized jointly by the Central Committee and the State Council, China's cabinet. The latest round of inspections began in August 2020 amid concerns that local governments' efforts to rapidly revive local economies following the Covid-19 epidemic was leading to reliance on dirty industry. The inspection team told the NEA to report rectification plans to the Central Committee and the State Council within 30 workdays.

JAPAN: Vaccine arrives in Japan as government prepares to start campaign next week

The first doses of the Pfizer-BioNTech vaccine reportedly arrived in Japan on Friday, 12 February, ahead of thevaccination campaign's start next week. The Ministry of Health, Labor, and Welfare (MHLW) is expected to approve the vaccine on Friday as well. Frontline medical workers will be vaccinated first. The Suga administration plans to launch a reservation system for the elderly in March for appointments that will begin in April. Both the central and local governments, however, are still finalizing the details for distribution plans, including where vaccines are to be dispensed. MHLW had initially intended to push for vaccine distribution tolarge-scale facilities, which would have more storage capacity and enable a more efficient process. However, some localities have successfully argued for adopting an alternative model using clinics and other more individualized settings. This approach will be more logistically complicated since it would require breaking up the 1,000-person cases shipped by Pfizer and could lead to wasted doses. It is also possible that doses will be wasted due to a shortage of the syringes needed to extract a sixth dose from vials.

In the meantime, the Suga administration has opted to leave the state of emergency currently in effect in ten prefectures unchanged, despite reports that it was considering lifting the declaration in Aichi, Fukuoka, and Gifu prefectures. Although case numbers have fallen, the government remains concerned about medical capacity, particularly as the number of severe cases has remained elevated. However, the administration will continue to review data to determine whether the declaration can be partially or wholly lifted before 7 March.

US/SOUTH KOREA: Negotiators approach cost-sharing agreement, but allies face tension over joint exercises

A week after US and South Korean negotiators resumed talks for the first time since March 2020 on a special measures agreement (SMA) regarding cost-sharing for US forces in South Korea, the two governments are reportedly already nearing an agreement. The US and South Korea failed to replace the previous SMA when it expired at the end of 2018, as the Trump administration demanded an outsized and politically unpalatable increase in South Korean contributions to more than USD 5bn per year, significantly higher than the USD 870mn that Seoul accepted in a stopgap arrangement concluded in 2019 that expired at the end of that year. The Biden administration, determined to bolster US alliances regionally and globally, appears motivated to resolve a major sticking point in the bilateral relationship. While the final agreement is still being hammered out, it could be largely in line with a 13% increase in contributions offered by the South Korean government in 2020.

However, another bilateral security issue could be looming as the two governments will have to decide whether to resume bilateral military exercises suspended by the Trump administration as part of a de facto “freeze for freeze”arrangement with North Korea that was concluded when former USPresident Donald Trump met North Korean leader Kim Jong Un in Singapore in 2018. The Moon administration, including new foreign minister Chung Eui-yong, is concerned about the impact of resuming large-scale military exercises on the prospects for diplomacy with North Korea; it is unclear, however, whether the new US administration will be bound by Trump'spledge to suspend military exercises that the US military has argued are critical for allied readiness.

THAILAND: Vaccine sourcing could become entangled in political battles over the monarchy

The government's decision to rely on Siam Bioscience Ltd., the local licensee of the AstraZeneca vaccine, for the bulk of the country's vaccine supplies could become an increasingly political issue in the months ahead. This week, business owners, particularly in the healthcare and tourism sectors, asked the government to reconsider its prohibition on the private sector importing and distributing vaccines after a government official reiterated the policy. Hospitals and tourist businesses had already started their negotiations with foreign suppliers in the past months.

Under the government's plan, Thailand will receive several hundred thousand doses of imported vaccines fromSinovac and AstraZeneca through April. However, by May, it plans to source the bulk of the deliveries from Siam Bioscience. The firm will supply Thailand with an initial 26mn doses this year and plans on exporting to the rest of Southeast Asia.

Several weeks ago, opposition leader ThanathornJuangroongruangkitasserted that the government mishandledits vaccination program, saying the procurement process was opaque, late, and relied too much on Siam Bioscience. He claimed that the firm had limited capabilities and that its selection was a ploy to shore up themonarchy's popularity. Siam Bioscience is fully owned by the Crown Property Bureau. However, Health MinisterAnutinCharnvirakul Wednesday denied that the government intends to create a vaccine monopoly. Officials say the restriction will allow the government to monitor possible side effects effectively.Thanathorn has been criminally charged with violating royal defamation laws for making the claims.

These criticisms could become more politicized in the coming months if Siam Bioscience is unable to roll out vaccines at a sufficient pace and domestic perceptions increase that the country is lagging its regional peers.

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ASIA: Weekly politics update

Below is the weekly update of political developments across East Asia. Please do not hesitate to contact us if you want to discuss any