March 26, 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: Domestic vaccinations accelerate, but vaccine diplomacy hits snags

After a slow start, China’s domestic vaccination campaign is accelerating. Total vaccinations reached 80.5mn, or 5.7% of the population, by 22 March, up by more than 5mn from two days earlier and an average pace of around 1.8mn jabs per day in the five days through 20 March. China’s total domestic production reached 5mn doses per day by 24 March, up from 1.5mn per day on 1 February. China’s total domestic production reached 5mn doses per day by 24 March, up from 1.5mn per day on 1 February. But the pace of vaccinations will still need to accelerate significantly to reach the goal of vaccinating 40% of the population by the end of June and 70-80% by mid-2022. In one Beijing district, the local government is offering shopping vouchers worth a combined RMB 200mn (USD 31mn) to incentivize residents to get vaccinated. Residents can use the vouchers on purchases of at least RMB100 at participating supermarkets. Beijing and Shanghai have also opened the vaccine to expatriates.

In addition to supply constraints related to the tradeoff between vaccine diplomacy and domestic supply, the low risk of infection inside China and doubts about the efficacy of Chinese-made vaccines have contributed to hesitancy. A survey last year by the Chinese Centers for Disease Control found that 26% of respondents among the agency’s own staff in Beijing would not voluntarily seek vaccination, with hesitancy higher among more educated respondents. In other areas of the country, the ratio was around 10%. On vaccine diplomacy, China’s campaign has suffered setbacks. A university in Peru said that a vaccine from Sinopharm Peru was “not showing encouraging results,” and Pakistani Prime Minister Imran Khan tested positive for the virus shortly after taking the vaccine. Pakistani health authorities said Khan contracted the virus during the period before the vaccine boosted immunity.

SOUTH KOREA: New fiscal support unlikely to help ailing Democrats

The National Assembly passed a new extra budget on Thursday, 26 March, which will provide nearly KRW 15tn (USD 13.2bn) in relief mainly for pandemic-hit small businesses and the unemployed. Small business owners have vocally complained about the impact of social distancing guidelines reintroduced as South Korea faced a third wave of Covid-19 and will be the biggest beneficiaries, with KRW 7.3tn (USD 6.45bn) set aside for small businesses to receive up to KRW 5mn (USD 4,422) to offset their losses.

The extra budget, which passed with overwhelming support from all parties, will do little to improve the political prospects of President Moon Jae-in and his Democratic Party of Korea (DPK). Moon’s approval ratings have fallen to their lowest level since he took office in 2017 as the investigation into land speculation by officials at the Korea Land and Housing Corporation continues. The DPK could be facing a major defeat in the 7 April Seoul mayoral election after conservative parties agreed to unite behind former mayor Oh Se-hoon, the candidate of the People Power Party (PPP), the leading opposition party. Polls show that Oh is favored by a large margin over the DPK’s Park Young-sun. A PPP victory would confirm Moon’s lame duck status with less than a year remaining in his term and embolden the PPP heading into the campaign.

JAPAN: Government proceeds cautiously in restarting travel subsidies

The Suga administration is slowly reintroducing travel subsidies that were suspended when Covid-19 cases surged in late 2020. The Go To Travel program was introduced last summer to boost domestic tourism and helped a hospitality industry suffering from the impact of border closures, but became increasingly controversial as the third wave spiked and was suspended in late December. Now, with the state of emergency lifted and case numbers low in much of the country, the Ministry of Land, Infrastructure, Transportation, and Tourism is looking to once again subsidize the hospitality industry. The Go To Travel program itself will not be resumed but the ministry has announced that starting on 1 April, it will provide funds for localities to provide up to JPY 7000 (USD 64) per person per night for travel within one’s prefecture.

The government’s reluctance to restart the Go To Travel program highlights the cautiousness of both national and prefectural governments following the end of the state of emergency. Fears of a rebound in case numbers have led Tokyo and other prefectures to keep restrictions in place. After watching his support plunge when he was perceived of reacting too slowly to the rise in case numbers, it is perhaps not surprising that Prime Minister Yoshihide Suga is prioritizing containing the pandemic over hastening a full reopening. Accordingly, on Friday, 26 March, the prime minister downplayed speculation about a snap election and stressed he would do what needed to be done to counter the pandemic.

PHILIPPINES/INDONESIA: Differing vaccine hesitation trends

Recent surveys show different trajectories for vaccine hesitation in Southeast Asia’s two largest countries. In the Philippines, a survey conducted at the start of March but the result of which was released only on 26 March shows that only 16% of Filipinos are willing to be vaccinated, with 61% unwilling to receive the shot and 23% unsure. In December, an estimated 32% said they were willing to be vaccinated.

In Indonesia, those willing to be vaccinated were approximately 46%, with 29% against receiving the vaccine and the remaining 23% undecided. In contrast to the Philippines, this is a mixed improvement for Indonesia as those willing to be vaccinated was around 37% in December, but with only 17% unwilling to receive the vaccine.

Both the Philippines and Indonesia are attempting to ramp up their vaccination programs, although Jakarta had a six-week head start on the Philippines, having begun in mid-January. Currently, Indonesia is vaccinating around 0.18% of its population daily, versus 0.04% in the Philippines. As of 25 March, Indonesia has administered around 10mn doses (out of its 260mn population), of which roughly 25% are second shots; in contrast, the Philippines has administered around 600,000 doses (out of its 105mn population). The Indonesian government has given local authorities the discretion to impose fines or other penalties such as denial of social benefits for those who refuse the vaccine. No such penalties exist in the Philippines.

The main question, therefore, is when will both countries start to see their vaccination trajectories being affected by what still seem to be substantial levels of vaccine hesitation. Should their vaccination rates slow down later this year because of vaccine hesitancy, then their ability to open broad parts of their economies to foreign travel could be affected, as well as lift even the limited movement and business restrictions in place today. Given current trends, this may be a worse problem for the Philippines than Indonesia.

CHINA: Power shortages lead to durable market reforms

( 5 mins) Severe power rationing has led to significant long-term reforms to China’s electricity pricing system that go beyond emergency stop-gap measures. Under the new system, coal-powered generators can pass on higher coal prices to electricity users;

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ASIA: What the Quad’s evolution means for Asia

( 6 mins) The evolution of the Quadrilateral Security Dialogue into new areas of cooperation at this week’s summit has important implications for the delicate balance of political and economic relations across Asia. For Japan, the Quad represents

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