Good morning. Here's my take on some of the stories driving the debate in politics, finance, and social issues across Asia today:
India Inc.'s 15 percent pay hike.
It's enough to ruin Raghuram Rajan's year. Since arriving at the Reserve Bank of India in September, Rajan has largely succeeded in halting the rupee's freefall and reducing default risks in the bond market. But it's early days for his campaign against inflation rates that are running ahead of India's GDP growth. Rajan's task is about to become far more difficult as companies plan to boost wages by an average 10 percent to 15 percent. Great news for many of India's 1.2 billion people, but a potential nightmare for Rajan, especially ahead of national elections due in May. Any big interest-rate hikes will instantly become fodder for politicians of every stripe.
China hits Japan with holidays.
Let's add holidays to the list of things for Japan and China to brawl about. It's taken 70-odd years to get around to it, but Beijing thinks 2014 is the time to designate national holidays to mark the Nanjing Massacre and Japan’s defeat in World War II. That would make Sept. 3 and Dec. 13 extraordinarily tense days year after year. I'll give it to Chinese President Xi Jinping. Between declaring an air-defense identification zone over disputed islands claimed by Tokyo and this, he sure knows how to rile lawmakers in Tokyo. Japanese Prime Minister Shinzo Abe, of course, knows how to return the favor. The year ahead will be anything but a holiday in Asia as tensions soar.
Korea's household debt.
As the last few South Korean presidents tried to boost economic growth, each has been confounded by excessive household debt. Prior to the 1997 Asian crisis, much of the borrowing was among the chaebol, those huge and infamous family conglomerates. After the meltdown, it was consumers borrowing with abandon. In the fourth quarter alone, household debt surged nearly $26 billion to a record $954 billion -- quite a load for a $1.1 trillion economy. The good news: Finance Minister Hyun Oh Seok pledges more aggressive steps to tackle the problem. The bad news is that no obvious or easy fix exists to reduce debt without killing growth.
How smog clouds China's agriculture.
China's newest economic indicators are chilli and tomato seeds. The South China Morning Post details a study by He Dongxian of China Agricultural University. Under artificial light in a laboratory, chilli and tomato seeds take about 20 days to sprout; at He's greenhouse farm in Beijing, where regular smog blocks out natural light, it's more than two months. Rampant pollution isn't just imperiling agriculture, which accounts for about 20 percent of gross domestic product, but China's global standing, too. The government has shifted a September Asia-Pacific Economic Cooperation meeting from Hong Kong to Beijing, probably to avoid giant protests. Some APEC officials might well be tempted to protest by staying home.
Julia Gillard sees bright future.
It's not every developed-nation leader who can say they've been derided by opposition lawmakers as an "unproductive old cow." But rather than despairing about the future of women in politics, former Australian prime minister (2010 to 2013) Gillard is decidedly upbeat in this Time magazine piece, drawn partly from a BBC interview. "It’s all part of a journey where we will over time be treating women and men far more equally," Gillard said, concluding that things will get “easier and easier” for women in politics. If anyone should know, it's Australia's first female leader, who in 2012 gave one of modern history's greatest anti-misogyny speeches.
(William Pesek is a Bloomberg View columnist. Follow him on Twitter at @williampesek.)
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