Good morning. Here's my take on some of the stories driving the debate in politics, finance and social issues across Asia today. I'm going to be taking a break for a couple weeks, so I'll see you all again on October 24:
China escalates default worries
As America's debt swells, secretaries of state are seeing an unlikely role added to their job description: investor relations. The shift began in Hillary Clinton's day. On her maiden trip to China as America’s chief diplomat in February 2009, Clinton shelved human-rights issues in favor of talking up debt. She argued to the Chinese that “our economies are so intertwined” that it would be bad for China if the U.S. couldn’t finance its deficit spending. Now it's John Kerry's turn. In Brunei this week, he's getting an earful from Premier Li Keqiang, who warned that China is paying “great attention” to the U.S. debt-ceiling issue and the rising risk of default. Everyone knew America and China needed a bonding experience. But China's $1.28 trillion of U.S. Treasuries holdings may make the relationship a little too close for comfort.
Turning swords into fuel rods?
At the same summit in Brunei, Kerry initialed an agreement to sell Vietnam nuclear fuel and technology for its reactors -- a remarkable signal of trust in the Hanoi government. While the deal doesn’t prohibit Vietnam from later producing its own nuclear fuel, the Obama Administration says it’s comfortable with the Vietnam government’s “political commitment” not to do so. Washington may also be trying to send a signal to the Iranians, who are readying a proposal for talks next week that reportedly includes a pledge to close the underground nuclear facility at Qom, suspected of being part of a covert weapons program. By buying fuel from abroad and not exercising the “right” to enrich domestically, even former enemies can stay within America’s good graces.
Wal-Mart closes shop in India
As Wal-Mart pulls the plug on India, much of the media focus is on how the world's largest retailer is stumbling. The breakdown of its six-year local partnership with billionaire Sunil Mittal shows that efforts to reignite overseas growth are sputtering. But the real story here is how India's dysfunction is turning off some of the world's biggest brands. There's a view in New Delhi that if lawmakers build a more open business environment, the world will rush to tap its 1.2 billion-person consumer market. But Wal-Mart's move is emblematic of the devastating no-confidence vote coming from the big, long-term money India needs to boost its competitiveness. And it won't be the last until New Delhi gets it act together.
Musharraf bails out
Pakistan’s top court granted bail to Pervez Musharraf in the third of three major cases against him, thus allowing the former military dictator to skip the country as soon as he posts an approximately $20,000 bond. Under house arrest since April, Musharraf still faces a series of murder charges, which his spokesmen say he’ll return to the country to fight. But the last thing Pakistan’s powerful military wants to see is their former chief in the dock. The spectacle threatened to increase grumbling in the ranks, and Musharraf knows far too much about the secretive military’s activities and assets to take the chance of having him testify in open court. Sending him back into exile -- ostensibly to visit his elderly mother in Dubai -- may just be the best thing for stability in Pakistan right now.
China joins hands with Europe
As bickering among U.S. lawmakers spooks world markets, China is making friends in very high places and advancing its long game of financial internationalization. Today, the People’s Bank of China agreed to establish a bilateral currency swap line with the European Central Bank. It not only bolsters China's access to trade finance in a huge economic area, but strengthens the global use of the yuan. “China," Stefan Schneider, Deutsche Bank economist in Frankfurt, told Bloomberg News, “is integrating itself more and more into global financial markets and such agreements are part of that.” Is Washington watching? It certainly should be.
(William Pesek is a Bloomberg View columnist. Follow him on Twitter.)