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Published in APARC’s in-house series, the book is the second volume resulting from APARC’s Stanford Asia-Pacific Research Innovation project. It collects the research findings of participants at the project’s third conference that was held in South Korea in June 2019.

James Liang, a research professor of economics at Peking University and a leading scholar of demographics and social studies, opened the event by situating the discussion about population structure in the context of the U.S.-China technology race. China is quickly catching up with the United States in the quality of its talent pool and the number of its labor resources. It will continue to outpace and surpass the United States in talent and innovation power in the next 10-20 years, Liang says.

China, however, is on a demographic cliff, facing severe population aging and low fertility rates. Its population of young workers aged 25-44 year-olds is projected to decline much faster and sooner than its overall population, leveling out against the labor and innovation gains the United States makes through the inflow of international talent into U.S. universities and entrepreneurial ventures. To sustain its long-term growth in labor quality and innovation, China will need higher birth rates and additional talent gains through migration, argues Liang.

James Feyrer’s book chapter examines the macroeconomic relationship between workforce demographics and aggregate productivity in Asia. Feyrer confirms that the high-income Asian nations like Japan and Korea, and even some middle-income countries of the region, will no longer enjoy a “demographic dividend” boosting aggregate productivity. However, he finds that the negative consequences of shifting to an older population structure may be less severe than previously projected, and even weakening with time. Feyrer believes this may be a result of improved food security and better overall health experienced by old cohorts in childhood, reinforcing the long-reaching impacts of healthcare on societal well-being.

Joon-Shik Park focused on the specific challenges facing Korean society, where birth rates have dropped severely. These historic declines continue to contribute to rising social and political unevenness across Korean society today. Initially seen most visibly in rural areas and smaller villages, Park’s now sees this unevenness affecting the dynamics of medium-sized towns and more urban areas as well. Korea and other aging societies must find viable solutions to address these issues if they are to prevent demographic divides from hobbling development and innovation, Park says.

Closing the book launch event, APARC Research scholar Kenji Kushida offers perspectives from rapidly aging Japan. where the challenges of shrinking and aging populations, rural-to-urban population distribution, and labor shortages spur advances in technology and innovation. Kushida documents this trend across multiple sectors.

He shows that drone technology has increased the productivity of short-staffed surveying firms, while AI-assisted industrial machines allow a broader range of laborers to work in manufacturing. Even in traditionally human-dominated environments like nursing homes, staff increasingly use robots to help improve the physical and mental well-being of elderly patients. Rather than strictly retarding growth, Kushida makes the case that demographic challenges serve as a catalyst for the development and implementation of new technologies.

As the research collected in Demographics and Innovation in the Asia-Pacific demonstrates, the challenges facing aging Asian societies are complex, but there is reason to look to the future with optimism. As the editors of the volume state in their introduction to the book, “Few concepts are as critical for sustained improvement in living standards as innovation.” New technologies and solutions will be foundational to addressing the challenges of the new demographic frontiers many societies are now approaching.

This article by Oriana Skylar Mastro was originally published by the Lowy Institute.

Chinese exercises in the South China Sea last month, and the strong US response, show these disputed waters will not soon be calm. While the focus has largely been on military maneuvers, competition in legal positions has also been heating up. Last year, both the United States and Australia risked China’s wrath by officially stating that China’s claims in the South China Sea are unlawful. Other claimants were pleased by this change of policy, but none voiced it prominently.

The issue, however, is not that China flagrantly violates international law – it is that it does so while simultaneously creating a veneer of legal legitimacy for its position.

The conventional wisdom is that China claims sovereignty over “virtually all South China Sea islands and their adjacent waters.” Its claims are “sweeping” and more expansive than those of any other rival claimant. In 2009, Dai Bingguo, then a top Chinese official, first referred to the South China Sea as a “core interest”, a term often used for Taiwan, Xinjiang, and Tibet. While China has not been specific about the extent of its claims, it uses a “nine-dash line” which “swoops down past Vietnam and the Philippines, and towards Indonesia, encompassing virtually all of the South China Sea”, to delineate its claims.

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On the surface, it appears that Chinese leaders are relying on a historical argument to buttress their claims – China traces its interaction with the South China Sea back to the Western Han Dynasty. Thus, Beijing’s narrative about its claims begins as early as the 2nd century BCE, when Chinese people sailed in the South China Sea and discovered some of the region’s land features.

Scholars have meticulously cataloged the dubious nature of this history. And besides, the UN Convention for the Law of the Sea (UNCLOS) does not grant signatories the right make claims based on historical legacy, and the concept of “historic claims” lacks a clear basis in international law.

But this is not actually how China lays claim to 90% of the South China Sea. China’s abuse and misapplication of international law is a bit more complex. There are four levels that build on one another.

First, China claims it has the same rights as archipelagic states, those countries mainly made up of islands. One of the benefits of archipelagic status is that the waters between islands are considered internal waters, like rivers inside a country. Other countries have no right to transit these waters without permission. This archipelagic status is conferred through the UN, and only 22 nations claim it.

Spoiler alert: China is not one of them.

China is undeniably a continental country, but nevertheless, it drew straight baselines around the Paracel Islands and claimed the waters between the islands to be internal waters. Beijing has not done this explicitly for the Spratly islands area, but its reaction to the activities of other countries suggests that is its interpretation. My discussions with Chinese strategists reveal that China will likely explicitly draw baselines to claim internal waters between the Spratly Islands once it has the military capabilities in place to enforce it. (This is not an easy task, as the Spratlys’ sea zone is 12 times that of the Paracels, covering 160,000 to 180,000 square kilometers of water.)

China then claims a 12 nautical mile (nm) territorial sea from the Paracel baseline, not from the individual islands, and in the Spratlys from many features that under international law are not awarded this right, such as artificial islands. Moreover, China’s interpretation of the territorial sea is that the state has the exclusive right to make, apply and execute its own laws in that space without foreign interference. But according to UNCLOS, all ships, civilian or military, enjoy the right of innocent passage through other states’ territorial seas. Moreover, the contiguous zone is considered part of international waters, and states do not have the right to limit navigation or exercise any control for security purposes.

Lastly, China claims 200 nm from the end of the territorial sea as its exclusive economic zone (EEZ), where it claims to have the right to regulate military activity. The US insists that freedom of navigation of military vessels is a universally established and accepted practice enshrined in international law – in other words, states do not have the right to limit navigation or exercise any control for security purposes in EEZs. Australia shares this view, but not all countries accept this interpretation. Argentina, Brazil, India, Indonesia, Iran, Malaysia, the Maldives, Oman, and Vietnam agree with China that warships have no automatic right of innocent passage in their territorial seas. Twenty other developing countries (including Brazil, India, Malaysia, and Vietnam) insist that military activities such as close-in surveillance and reconnaissance by a country in another country’s EEZ infringe on coastal states’ security interests and therefore are not protected under freedom of navigation.

In other words, while international law may support the position of the US and Australia on legal behavior within the EEZs, countries need to work harder to solidify this norm more broadly.

Through these three positions alone on internal waters, territorial seas and EEZs, China lays claim to approximately 80% of the South China Sea. Then China uses the nine-dash line to cover the remaining territory and provide redundancy by claiming “historic waters” – i.e., that China has historically controlled this maritime environment – again, a view that has no basis in international law.

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The US has taken steps to challenge the false legal basis of China’s claims. This is the main purpose behind freedom-of-navigation operations, or FONOPS – to demonstrate through action that the US does not accept China’s position that areas are not international waters but internal or territorial waters. In other instances, the US is signaling that it does not accept an area to be in China’s EEZ, although China would not have the right to regulate military activity there anyway.

But undermining China’s false legal claims will take more than military operations and harsh statements. In 2016, the Hague Tribunal ruled that China’s claims of historic rights in the South China Sea lacked legal foundation, China’s actions in the region infringed on the rights of the Philippines, and features in the Spratlys are not entitled to EEZs or territorial zones. Yet Washington’s ongoing refusal itself to ratify UNCLOS undermines the general effectiveness of pushing back against Beijing with legal tools of statecraft. Additionally, Washington squandered an opportunity to support the Philippines in enforcing the international legal tribunal’s 2016 ruling in its favor, further reducing the attractiveness for other claimants to challenge Beijing on legal grounds.

The US should not make the same mistake twice. It should support other claimants that may want to pursue legal action against China (Vietnam is currently considering this course of action). Then, when the tribunal rules once more against China, the US should lead the charge to enforce the ruling.

China is using all the tools of statecraft at its disposal to gain control over this vital strategic waterway. The US and its allies should do the same.

This piece was originally published by the Lowy Institute's The Interpreter. 

To break the border stand-off between India and China in the Himalayas, some Indian analysts have advocated going on the offensive against China in the Indian Ocean. But that would be vague, illogical and imprudent, with little chance of success and significant risk of blowback. Instead, India and its partners should prioritize a more effective denial strategy in the Indian Ocean, to deter and counter any potential future coercion there.

Strategies of denial seek to reinforce defensive bulwarks so that potential aggressors are dissuaded from launching an attack – or, failing that, thwarted from succeeding. They are generally considered more effective and reliable than strategies of punishment, which rely instead on the threat of retaliation after the aggressor launches its attack. Punishment was the cornerstone of nuclear deterrence during the Cold War and since, but that strategy is considerably less reliable in the conventional and sub-conventional conflicts which India now faces.

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The False Promise of Punishment

Since May 2020, Indian and Chinese troops have been locked in a tense – and, at times, violent – stand-off in the Himalayas, after Chinese incursions into the Indian-controlled territory of Ladakh. This scenario looks likely to last for months, if not years, to come. Some Indian analyses have called for bold action hundreds of kilometers away, in the Indian Ocean. They argue that horizontal escalation would broaden the Himalayas confrontation to an arena where India enjoys clear strategic advantages, allowing it to counter Chinese coercion more effectively.

The idea of taking the fight to the oceans has superficial appeal. India sits astride some of the world’s most vital sea lines of communication in the northern Indian Ocean – on which China, like all of East Asia, depends critically for trade and energy flows. India’s Navy dominates the Indian Ocean and could, the argument goes, apply excruciating pressure on the Chinese economy. This leverage could be applied in times of crisis, such as the ongoing border stand-off, or even in peacetime as a deterrent against Chinese coercion. Surely this would be less bloody than a war between the two largest armies in the world.

But the concept is unclear. It is often framed as a vague statement of Indian power, without elucidating exactly how force should be used. Should India impose a blockade of all oil tankers bound for East Asia? Board and inspect some Chinese trading vessels? Intimidate a Chinese survey ship in the Bay of Bengal, or sink a Chinese navy ship conducting anti-piracy patrols? Some of these moves would be seen as acts of war – and most would be dramatically escalatory, especially for an Indian government that has been at pains to downplay the current crisis.

More fundamentally, such moves would have no “theory of success”. How would such pressure create the desired political effect in countering Chinese coercion? A blockade would be tantamount to an act of war – but a painfully slow war that would likely require months of stringent application and be unlikely to decisively strangle the Chinese economy. Short of a long blockade, in any realistic contingency, incremental Indian pressure in the Indian Ocean is unlikely to compel a Chinese regime that has staked its legitimacy on national rejuvenation and regional hegemony.

On the other hand, history suggests that even minor Indian naval offensives against China would invite an escalating retaliation. China would not only unleash its rapidly expanding surface and sub-surface fleet against India’s navy, but it could also impose pain elsewhere. China’s options against the Indian homeland – from long-range missile strikes to cyberattacks to more land grabs on the border – would be militarily feasible and politically devastating to New Delhi. Going on the offensive in the Indian Ocean, therefore, is likely to backfire, probably very badly.

Building “Strategic Leverage” in the Indian Ocean

While the Indian Ocean may not offer a magic bullet to resolve the border crisis, it is intrinsically important for India-China competition. China’s military expansion into the Indian Ocean poses multiple risks for India and its partners such as Australia and the United States. These like-minded partners should build their strategic leverage – political relationships and military capability – to manage these risks.

India enjoys unique advantages in the Indian Ocean, due to its geography and informal networks across the region. But rather than using its advantages to start a war it would lose, a denial strategy would be mindful of India’s limitations and focus on erecting political and military obstacles to Chinese coercion in the region.

India could focus on more actively binding itself to smaller regional states – as it already does by sharing maritime domain awareness and space-based surveillance data. Building strategic interdependence would cultivate smaller states’ desire for continued cooperation with India, and institutional resistance to Chinese attempts to coerce or bribe their political leadership.

India could also enhance its sea denial capabilities. Improving its anti-submarine warfare capabilities and expanding its stock of long-range precision missiles, for example, would help to deter the prospect of Chinese direct military intervention. This could be done at a fraction of the cost of building a small number of large capital ships. The Indian Navy is doctrinally committed to pursuing sea control, which like-minded partners such as Australia should welcome. But rapidly expanding its capabilities for sea denial would serve as a stopgap and hedge against China’s ballooning naval power, which will soon be able to contest India’s dominance in the ocean.

A denial strategy in the Indian Ocean will not resolve the current border crisis in Ladakh. But it would offer a realistic roadmap for building political influence and military power in the region. It would provide the strategic leverage necessary to deter or counter future acts of coercion in the Indian Ocean.

While U.S. policymakers and military planners have been heavily focused on China’s maritime expansion in the western rim of the Pacific Ocean and the South China Sea, Beijing has been steadily growing its capacity in the Indian Ocean region. The United States and its partners should take realistic and effective steps that address the strategic risks they face in the region and realize their vision of a “free and open Indo-Pacific,” writes APARC’s South Asia Research Scholar Arzan Tarapore in the latest issue of The Washington Quarterly.

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The United States’ strategic competition with China now extends to the Indian Ocean region, albeit it takes a different form compared with the heavily militarized territorial disputes of the western rim of the Pacific Ocean and the South China Sea. The People’s Liberation Army Navy (PLAN) fleet is increasingly designed for oceanic deployments beyond China’s near seas and is rapidly expanding its amphibious capability. The PLAN conducts frequent oceanographic survey and submarine deployments, maintaining a constant presence of at least seven or eight navy ships in the Indian Ocean at any time. Having established its first-ever overseas military base on the western edge of the ocean, in Djibouti in 2017, China continues to develop other ports from Tanzania to Indonesia under the banner of the Belt and Road Initiative. It is also expanding security cooperation with regional states.

“This military expansion poses strategic risks for the United States and its allies and partners,” argues Tarapore. “It gives China rapidly increasing capacity to use military coercion in the Indian Ocean region, both directly, through military intervention, and indirectly, by compelling changes in regional states’ security policies.” It also gives China advantages in case of a potential war in the region.

The United States and its partners have proclaimed their commitment to the “free and open Indo-Pacific” vision. However, the four powers with the greatest interest and capacity to push back on China’s inroads —namely, the United States, India, Japan, and Australia, which banded together as the “Quad” — have failed to mitigate Beijing’s challenge. Their haphazard response “does little to curtail China’s capacity to coerce small states or posture for war,” says Tarapore.

He then offers a strategic assessment and a conceptual framework by which the United States and its partners can more effectively mitigate the risks of Chinese military expansion. Their most urgent task, he claims, is to build “strategic leverage,” that is, develop their political relationships and military capabilities in ways that consolidate their advantages. By doing so, they would ideally convince Beijing that coercive policies are unworkable or prohibitively costly, which would then impede China’s capacity to coerce regional states or posture for wartime. Tarapore is convinced that India has a key role to play within this framework if the latter also accounts for India’s particular resource and policy constraints.

India is facing a mounting burden of noncommunicable diseases (NCDs) such as diabetes, cancers, and cardiovascular diseases. NCDs affect more than 20 percent of the Indian population and their prevalence is projected to expand substantially as the population aged 60 and over increases. Left unchecked, the costs of managing chronically ill and aging sectors of the population grow exponentially.

To control costs and address the growing chronic disease burden, India’s public programs must integrate curative hospital services with the most cost-effective preventive and primary interventions, argue Karen Eggleston, APARC’s deputy director and the director of the Asia Health Policy Program (AHPP), and Radhika Jain, a postdoctoral research fellow with AHPP. India must also urgently expand and improve the evidence base on economic evaluations of both preventive and curative health interventions in the country.

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In a correspondence piece published by BMC Medicine, Eggleston and Jain examine the features and limitations of a study that takes an important first step in that direction: a cost-effectiveness study of the Kerala Diabetes Prevention program (K-DPP) that adds such evidence on how to prevent diabetes cost-effectively in India and other low- and middle-income countries.

The study’s authors present a cost-effectiveness analysis of 1007 participants in the K-DPP, and their estimates indicate that K-DPP was cost-effective. Indeed, Eggleston and Jain determine that the analysis shows potential cost-effectiveness in “nudging” the participants towards a healthier lifestyle through suggestive reductions in tobacco and alcohol use and waist circumference. The results of the cost-effectiveness analysis of the K-DPP “highlight the importance of continued research on community-based promotion of healthy lifestyles,” say Eggleston and Jain.

Evidence-based approaches to chronic noncommunicable disease intervention are essential for providing cost-effective care and creating models for future programs like the K-DPP. Eggleston and Jain conclude that future studies advancing evidence-based approaches to chronic noncommunicable disease intervention — ones that cover larger and more representative populations over longer time periods — remain important for more generalizable assessments to inform policy decisions.