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March 5, 2021

Asia

ASIA: Weekly politics update

BY Bob Herrera-Lim, Gabriel Wildau, Tobias Harris

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( 6 mins)

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: Inner Mongolia to ban bitcoin mining on energy concerns

Northern China’s Inner Mongolia region plans to ban bitcoin mining, after the central government singled out the region last year as the only one among 30 province-level administrative regions under review to miss energy saving targets for 2019. Chinese regulators banned bitcoin trading in 2019 over concerns about financial risk and capital flight, but bitcoin mining was still permitted. Regions with cheap electricity from solar and hydroelectric power, like Inner Mongolia, Xinjiang, and Sichuan were popular locations for mining operations. But since President Xi Jinping announced goals in September to reach peak carbon emissions by 2030 and net zero emissions 2060, followed by additional targets on carbon intensity and renewable energy in December, pressure is mounting to cut wasteful energy use.

The move against bitcoin mining marks a policy shift. As recently as 2019, a senior ex-financial regulator suggested that Sichuan province leverage its cheap and plentiful hydropower to promote bitcoin mining, in line with President Xi Jinping’s call to accelerate development of blockchain technology and implement it into China’s economy. China’s annual parliament session will publish details of the 14th Five-Year Plan later this month. New energy conservation and emissions reduction targets in that plan may force other provinces to follow Inner Mongolia in restricting bitcoin mining. Beyond bitcoin mining, Inner Mongolia’s plan also calls for the closure of steel, ferroalloy, and coke factories that use outdated and inefficient technology by the end of 2021. Data centers will also be restricted, though not banned entirely.

JAPAN: State of emergency will be extended in greater Tokyo as decline in cases slows

On Friday, 5 March, Prime Minister Yoshihide Suga is expected to announce that he will extend the state of emergency still in effect in Tokyo, Chiba, Saitama, and Kanagawa prefectures – which was scheduled to expire on 7 March – until 21 March. Suga did not necessarily want to extend the state of emergency, but faced pressure from prefectural governors and medical experts, who are concerned that the decline in case numbers has slowed and that medical facilities remain stretched. It appears that Tokyo Governor Yuriko Koike, with the support of the other regional governors, played a decisive role in forcing the government’s hand. Although there was some discussion about introducing new measures to strengthen the impact of the state of emergency, it appears that the government will leave the terms of the declaration unchanged.

The process by which the decision was reached may do little to bolster Suga’s authority within the ruling coalition but extending the state of emergency is unlikely to hurt Suga’s political standing, since polls suggest that the extension is supported by an overwhelming majority. As such, the fundamental political dynamics of the pandemic remain unchanged. The public continues to prefer that the government “overreact” to the pandemic, even as businesses fret about the impact and look to political leaders to find a way to mitigate the economic impact of public health measures.

SOUTH KOREA: Vaccines distributed faster than expected despite anxieties

Prime Minister Chung Sye-kyun announced on Thursday, 4 March that the government would investigate the deaths of five people who died after receiving the first dose of the AstraZeneca vaccine. It is not clear that the deaths were the result of the vaccine, as these cases involved individuals in long-term care facilities with underlying health issues. Nevertheless, these cases will complicate the Moon administration’s efforts to reassure the public about the safety of Covid-19 vaccinations as the vaccination campaign ramps up. The conservative opposition has questioned the safety of the AstraZeneca vaccine after the administration decided not to administer it to people aged over 65 due to a lack of data about the impact of the vaccine on the elderly. Pushing back against the opposition, President Moon Jae-in, who is 68, indicated Thursday that he would have no problem taking the AstraZeneca when it was his turn, and may in fact be vaccinated before attending the G-7 summit in London in June.

Despite the anxieties surrounding the vaccine, the government reported that after the first week of vaccinations, the program is proceeding faster than expected. South Korea has thus far inoculated roughly 155,000 in the first priority category – medical workers and long-term care facility residents under 65 – which is nearly 50% of the population of the priority group. The bulk of this population received the AstraZeneca vaccine; only a small share of the Pfizer doses South Korea received from the COVAX facility have been distributed thus far.

PHILIPPINES: Timing a reopening

President Rodrigo Duterte provided a better idea of his timeline for further easing the quarantine level in and around the Philippine capital, two weeks after frustrating businesses by insisting that the current restrictions would remain until there was a substantial vaccine roll out. In doing so, he rejected the recommendations of city mayors and his own Covid-19 task force that an easing of restrictions could be done by March. The greater metropolitan Manila area accounts for roughly 40% of the country’s GDP, but it has been kept under the so-called general community quarantine (GCQ), one notch above most of the country. The restrictions limit public transport capacity, indoor recreation and prohibit seniors and those below 15 years of age from going to malls and restaurants, among others.Businesses have been complaining that the limits act as a severe disincentive to several types of family and group activities upon which consumption is dependent.

On Thursday, Duterte said that the capital could transition to the modified GCQ once 2mn vaccine doses have been rolled out. Given the current doses available of 1mn combined Sinovac and AstraZeneca vaccines(although an additional 1mn has been ordered according to the health minister) and Indonesia’s experience of taking roughly six weeks to reach 2mn doses, it might take the Philippines from 12 – 15 weeks to reach the same level, with expectations more on the higher side. So far, the Philippines has been able to vaccinate around9,000 people in three days, well below the pace needed.However, the number of daily vaccinations should rise quickly as more vaccines are distributed. Given this, the Philippines is likely to exit around Mayfrom its current quarantine, with the timeline possibly also affected by private importations should they arrive. The Philippines received 487,200 doses of the AstraZeneca vaccine from the Covax initiative on 4 March, supplementing the 600,000 Sinovac doses donated on 28 February by the Chinese government. An additional 400,000 Sinovacdoses will be arriving in the next few weeks, according to the Philippine government.