Northeast Asia, where the interests of three major nuclear powers and the world's two largest economies converge around the unstable pivot of the Korean peninsula, is a region rife with political-economic paradox. It ranks today among the most dangerous areas on earth, plagued by security problems of global importance, including nuclear and missile proliferation. Yet, despite its insecurity, the region has continued to be the most rapidly growing on earth for over five decades—and it is emerging as an identifiable economic, political, and strategic region in its own right. As the locus of both economic growth and political-military uncertainty in Asia has moved further to the Northeast, a need has developed for a book that focuses analytically on prospects for Northeast Asian cooperation within the context of both Asia and the Asia-Pacific regional relationship. This book does exactly that, while also offering a more general theory for Asian institution building.
Northeast Asia, where the interests of three major nuclear powers and the world's two largest economies converge around the unstable pivot of the Korean peninsula, is a region rife with political-economic paradox. It ranks today among the most dangerous areas on earth, plagued by security problems of global importance, including nuclear and missile proliferation. Yet, despite its insecurity, the region has continued to be the most rapidly growing on earth for over five decades—and it is emerging as an identifiable economic, political, and strategic region in its own right. As the locus of both economic growth and political-military uncertainty in Asia has moved further to the Northeast, a need has developed for a book that focuses analytically on prospects for Northeast Asian cooperation within the context of both Asia and the Asia-Pacific regional relationship. This book does exactly that, while also offering a more general theory for Asian institution building.
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Overview
Northeast Asia, where the interests of three major nuclear powers and the world's two largest economies converge around the unstable pivot of the Korean peninsula, is a region rife with political-economic paradox. It ranks today among the most dangerous areas on earth, plagued by security problems of global importance, including nuclear and missile proliferation. Yet, despite its insecurity, the region has continued to be the most rapidly growing on earth for over five decades—and it is emerging as an identifiable economic, political, and strategic region in its own right. As the locus of both economic growth and political-military uncertainty in Asia has moved further to the Northeast, a need has developed for a book that focuses analytically on prospects for Northeast Asian cooperation within the context of both Asia and the Asia-Pacific regional relationship. This book does exactly that, while also offering a more general theory for Asian institution building.
Product Details
| ISBN-13: | 9780804775052 |
|---|---|
| Publisher: | Stanford University Press |
| Publication date: | 08/16/2010 |
| Series: | Studies in Asian Security |
| Sold by: | Barnes & Noble |
| Format: | eBook |
| Pages: | 368 |
| File size: | 3 MB |
About the Author
Read an Excerpt
The Making of Northeast Asia
By Kent Calder Min Ye
Stanford University Press
Copyright © 2010 Board of Trustees of the Leland Stanford Junior UniversityAll right reserved.
ISBN: 978-0-8047-6921-1
Chapter One
Northeast Asia in Global Perspective
Northeast Asia, where the interests of three major nuclear powers and the world's three largest economies converge around the unstable pivot of the Korean peninsula, is a region rife with political-economic paradox. It ranks today among the most dangerous areas on earth, plagued by security problems of global importance, including nuclear and missile proliferation. Despite its insecurity, the region has continued to be the most rapidly growing on earth for more than five decades. In 1960, the Northeast Asian economy-including Japan, Mainland China, Taiwan, and Korea-accounted for only 4 percent of world GDP, compared with 37 percent for the United States, Canada, and Mexico. By 2008 its GDP, as a proportion of the world total, had reached 17.7 percent, compared with 22.4 percent for the European Union (EU) and 27.6 percent for the North American free trade agreement (NAFTA).
This globally consequential share of world output is concentrated in a remarkably compact and densely populated area. As Figure 1.1 suggests, the heart of Northeast Asia's political economy centers around the East China Sea, now plausibly called the Shanghai Circle: major cities in Japan and Korea, Hong Kong, Taiwan, Mainland China, and Macao, within three hours' flying time of Shanghai. Within that circle, roughly the size of the United States east of the Mississippi River, live more than 1.3 billion people, who generate nearly one-fifth of global economic production.
Using purchasing power parity indicators, for many purposes a more accurate measure of economic significance than nominal GDP, Northeast Asia looms as an even more substantial entity in global economic affairs. In 2008, as indicated in Table 1.1, this area's GDP on a purchasing-power parity (PPP) basis was $14.9 trillion, compared with $17.5 trillion for NAFTA and $15.1 trillion for the EU. Northeast Asia's share of global total GDP in PPP terms was thus 21 percent, comparable to 24.7 percent for NAFTA and 21.3 percent for the EU.
Northeast Asia has also become the world's second largest trading region, with its share of global trade, at 18.3 percent, conspicuously ahead of NAFTA's share at 15.7 percent and the EU's share, at 11.1 percent. The region's trade/ GDP ratio is also much higher than that of either NAFTA or the EU, suggesting that trade has been an important policy determinant for the countries involved. The growing importance of intraregional trade since the 1997 Asian financial crisis and recent challenges from the global economic downturn have thus influenced and will continue to significantly impact regional integration in Northeast Asia.
Why Not a Broader Asian Calculus?
Much scholarly attention has been given to the broader geographical concept of "East Asia." Why then the significantly narrower Northeast Asian focus that is adopted here? We take this approach because the nations of Northeast Asia are by an overwhelming margin the largest economically and the most potent militarily and technologically in the entire East Asian region, which stretches from Burma in the Southwest to Hokkaido in the Northeast.
As noted in Figure 1.2, Northeast Asia generates more than 80 percent of the total gross national product of that sprawling region, and supplies more than 70 percent of its military manpower. The Association of Southeast Asian Nations (ASEAN), although by no means insignificant, is much smaller, economically and politically, even in aggregate, than the Northeast Asian region. ASEAN has thus far played a remarkably substantial role in regional integration for its size, as we shall see. Yet its heretofore salient role is an embedded Cold War artifact, with a geopolitical logic now receding, that obscures momentous subregional developments elsewhere. ASEAN has steadily been eclipsed of late by the increasingly cohesive Northern powers, in a subtle evolution vested with fateful long-term global significance, that remains inadequately understood.
A second reason for our focus on Northeast Asia, related to the first, is that the resolution of these nations' delicate mutual relationships, however difficult, has profound implications for global war and peace, because of the sheer scale, technological sophistication, and complementarity of the parties involved. Their estrangement from one another became a commonplace of international affairs, from World War II through the Cold War and beyond, quietly leveraging America's dominance in Asia. Yet it can no longer be taken for granted.
If China, Japan, and Korea can find a peaceful, collaborative resolution to their historically rooted differences and their geopolitically driven dilemmas, the region will become a locus of global political, military, and financial power to an unprecedented degree. If, conversely, Northeast Asians cannot resolve their differences, vicious cycles of political-military rivalry that threaten global stability may well be unleashed. The future of this Northeast Asian triangle, in short, is a major critical uncertainty for the United States, and indeed for the world as a whole, giving much greater long-term geopolitical significance to the nuances of conflict and cooperation among them than is generally understood.
A third reason for our focus on Northeast Asia is that intraregional linkages have deepened sharply and dynamically over the past decade. Mutual interdependence has reached an unprecedented level among the Northeast Asian economies, even as reliance on the United States has slowly begun to decline. Social interactions among Japan, Korea, and Greater China have also come to greatly outnumber those between the subregion and other parts of Asia, making Northeast Asia an increasingly coherent and connected entity. And the deepening interaction is not purely social. Policy networks, linking top-level politicians, local governments, epistemic communities, and corporate elites to an unprecedented degree are actively engaging their counterparts across national boundaries in Northeast Asia. These diverse multilevel networks not only produce ideas for Northeast Asian cooperation but also generate concrete proposals for common action. Thus, although Southeast Asia still appears salient in many formal dimensions of East Asian integration, as an embedded consequence of Cold War struggles dating from the Vietnam War and the invasion of Cambodia, behind the scenes, Northeast Asian nations increasingly set the agenda and parameters for Asian regionalism more generally, in addition to pursuing closer trilateral cooperation among themselves. Since December 2008 they have been routinely holding full-fledged trilateral summits, independent of ASEAN.
A fourth reason for our Northeast Asian focus, in preference to a broader East Asian treatment, is that Northeast Asia stands uniquely on the cusp of historic geopolitical change, as Southeast Asia did in the 1970s. Change in Northeast Asia's subregional alignments could sharply alter the anomalous estrangement that has prevailed there since World War II. The dimensions and possible immediacy of Northeast Asia's fateful impending transformation urgently need to be appreciated, since intraregional commonalities and complementarities are so deep. Dramatic breakthroughs are occurring across long-frozen lines of Cold War cleavage, not least across the Taiwan Straits, allowing deep underlying complementarities to be realized for the first time in well over half a century.
Why Not Just China?
The pronounced recent transnational dynamism and deepening integration of Northeast Asia, particularly across the East China Sea and the Taiwan Straits, are becoming increasingly clear. This deepening integration is a complex, synergistic phenomenon involving the interaction of three large, proud, and suspicious-yet highly complementary and increasingly interdependent-countries. Many nevertheless ascribe the remarkable transformation of Asia in recent years largely to China alone, or to a "China Circle" of Sinic affiliates with a southern bias.
Our analytical orientation is decidedly different. Without denying the dynamism of China itself, or the historic character of the recent detente across the Taiwan Straits, we highlight the transnational production networks, financial markets, security dialogues, and economic-policy consultations that are developing much more broadly, and the new transnational synergies among long-standing adversaries that are emerging as traditional political barriers fall across the dynamic expanse from Hokkaido, Manchuria, and the two Koreas southward to Taipei and the Vietnamese borderlands. Northeast Asia overall, we argue, is far more than the sum of its parts, with Japan and Korea, as well as the various components of China, having key roles in the emerging overall regional political-economic equation. And those roles subtly enhance one another, pulling the locus of Asian dynamism ineluctably northward from its earlier ASEAN focus, as historical suspicions in the Northeast gradually fade and common interests steadily rise.
To be sure, country-specific thinking-about China, Japan, or Korea-for many years made perfect sense as the central focus of political-economic analysis. The dark shadow of history distorted the political economy of Northeast Asia, dividing individual countries into separate, fiercely distinctive units, making potentially promising intraregional dialogue or steps toward policy coordination difficult even among nominal allies. Japan and South Korea, for example, could not even bring themselves to establish diplomatic relations with each other until 1965-twenty years after the end of World War II, despite parallel and intimate alliance relations that both enjoyed separately with the United States. China was aloof, suspicious, and poorly integrated with the others. Japan did not normalize relations with China until 1972, and South Korea not until two decades after that. China also loomed large on the Cold War stage, as a tacit strategic partner of the United States.
China continues to be important, of course-indeed, increasingly so, from a global perspective. Yet it has grown quietly interdependent with its neighbors, as well as politically conciliatory, in new ways that have not yet been adequately presented in most previous analyses. It is to capture that new reality-the broader regional context in which a rising China is increasingly embedded, that we cast a wider net.
Northeast Asian Fusion
Beginning in the early 1990s, Northeast Asia began to grow steadily more interdependent, connected, and cohesive in socioeconomic terms, its bitter historical and geopolitical differences of that period notwithstanding. Between 1990 and 2004, intraregional commerce among Japan, South Korea, and China doubled, to 12 percent of those nations' total world trade, while transactions with the United States accounted for only 18 percent of their collective global total. The importance of trans-Pacific trade continued to decline. In 2008, the trade with the U.S accounted for less than 13 percent of the three countries' global commerce, while trade among themselves was 11 percent. Historic post-Cold War developments in trade and investment also in turn began to drive sociopolitical reconciliation forward. Intraregional economic ties then further deepened and began to broaden, generating new economic interests that in turn transformed political affairs, as was clearly evident, for example, in cross-Straits and Sino-Japanese relations.
Adding Hong Kong and Taiwan to the trade equation, intraregional commerce has already vastly surpassed trans-Pacific commerce. In 2008, total trade among Japan, China, South Korea, Hong Kong, and Taiwan reached $1.25 trillion, while their aggregate trade with the United States was only $780 billion. The share of intraregional trade within Northeast Asia, with Hong Kong and Taiwan included, was almost 20 percent of the partners' collective total in 2008, while the share of trans-Pacific trade was slightly over 12 percent of the total.
At the country level, combined trade with Northeast Asian neighbors surpassed transactions with the United States for each of these three countries during 2003. China surpassed the United States as South Korea's largest export market during 2004, and Japan's in 2006. Meanwhile, U.S.-Japan trade was actually contracting in absolute terms from 2000 to 2004. Since then, bilateral trans-Pacific trade has modestly rebounded, yet remains significantly smaller than Japan's intraregional trade with China and South Korea.
Corporate production networks are also deepening substantially across Northeast Asia, capitalizing on economic complementarities, as well as the remarkable concentration of industry within the compact physical space that constitutes the core of the region. Nowhere are production networks more dynamic today than across the Taiwan Straits, with Taiwanese investment on the Mainland exceeding $100 billion in 2005, and rising substantially since then. Those growing cross-Straits activities are intensifying regionwide competitive pressures that compel Korean and Japanese firms to expand cross-border production activities also, with a catalytic impact on regional integration. They are also making cross-Straits political rapprochement easier, creating a virtuous political-economic cycle of declining tensions.
East-central China, with its rapidly growing consumer market, together with its expanding manufacturing and trading capacities, is steadily emerging as the center of gravity for these regional production networks. These networks converge especially-due to geographical proximity, organizational efficiency, and resource complementarity-on Shanghai, giving birth to the Shanghai Circle described above. They have important financial, technology, and marketing linkages, however, that connect them with far-distant parts of the world as well.
The strategic focus of major Japanese, Korean, and overseas Chinese companies that have established long-term investment sites in China is assembly and processing. Canon, for example, built its largest factory anywhere in the world at Suzhou, China, during 2001. By 2004, Canon had also established operation centers in Beijing, Shanghai, Guangzhou, and Dalian-at the heart of China's four major economic regions. Mitsui, meanwhile, concluded more than 110 joint ventures in China. Matsushita runs about fifty factories and is adding more. The auto giants Honda and Toyota are both likewise becoming major manufacturers and marketers in China, giving their leaders new stakes in the reduction of regional political tensions.
"Korea, Inc." is investing even more aggressively in China than is Japan. Leading South Korean firms such as LG, Samsung, and Hyundai have made rapid progress recently in the People's Republic of China (PRC), although they were late entrants into the Chinese market, long inhibited by Cold War political barriers and tensions that are now largely dissipated. Hyundai-made passenger cars, for example, entered the Chinese market only in 2003 but soon gained the lion's share of Beijing's taxi business, accounting for more than half of all new taxis commissioned during Beijing's preparation for the 2008 Olympics. Small, efficient Hyundai autos have also penetrated taxi markets in other major Chinese cities.
In electronics, LG did $10 billion in China business during 2004, a level that even the most prominent Japanese brands have rarely reached. In 2005, Samsung employed 50,000 Chinese workers at its twenty-nine Chinese affiliates. In that year, China became the third largest Samsung market worldwide. The company strategically positioned China not only as a major market but also as a key production site for its global operations. Many small and medium-size Korean electronics companies have also moved manufacturing to the PRC, cooperating with Chinese companies in marketing, technology alliances, and manufacturing, in efforts to make inroads there.
(Continues...)
Excerpted from The Making of Northeast Asia by Kent Calder Min Ye Copyright © 2010 by Board of Trustees of the Leland Stanford Junior University. Excerpted by permission.
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Table of Contents
Contents
Preface....................xivA Note on Conventions....................xvii
Flashback....................xviii
Abbreviations....................xix
1 Northeast Asia in Global Perspective....................3
2 Theories of Asian Institutional Development: Changing Context and Critical Junctures....................27
3 The Organization Gap in Historical Perspective: War in Korea and the First Critical Juncture....................57
4 Overcoming the Organization Gap: Crises and Critical Junctures (1994-2008)....................80
5 Visions of a More Cohesive Regional Future....................105
6 A Deepening Web of Regional Connectedness....................129
7 The Transformation of China's Regional Policies....................163
8 Catalysts: Korea and ASEAN in the Making of Northeast Asia....................184
9 Japan's Dilemma and the Making of Northeast Asia....................204
10 The United States and Northeast Asian Regionalism....................225
11 Summing Up....................251
Notes....................273
Bibliography....................313
Index....................325