Political risk in Asia: An expert outlook

China

The Chinese Communist Party (CCP) officially launched a year-long “mass line” campaign in June after it was announced in late April 2013. It focuses on anti-corruption and improving the CCP’s relations with the masses, two key reform efforts under President Xi Jinping.

Given the prominent coverage of the new campaign, it seems likely that “mass line” will be an important slogan, much like “scientific development” or “harmonious society” under former president Hu Jintao. This is an ideological reference to the Mao-era phrase mass line, intended to reinforce that the CCP follows the Maoist principle of “from the masses, to the masses”.

The campaign itself is not a departure from what Xi Jinping has been pushing since assuming leadership of the CCP in November 2012. Nevertheless it is significant for two reasons: it indicates that this anti-corruption push will probably be more effective than previous campaigns have been, and that the anti-corruption campaign will remain high profile for the foreseeable future.

Xi is clearly concerned about the distance that has been created between the CCP and the people, and corruption is seen as the most serious problem creating this division.

Officials have been more cautious since Xi first initiated the anti-corruption campaign in November 2012. So far the campaign has not eliminated extravagance, but only moved activities deemed extravagant underground.

Given this, some officials are likely to be expelled from the CCP under the campaign for the improper work styles of formalism, bureaucratism, hedonism and extravagance.

Another area where the anti-corruption campaign has a potential impact is the country’s growing luxury-goods market. So far, it has arguably only had a slight impact on the luxury market, and the mass line campaign is unlikely to significantly change the situation.

Indonesia

Extremist Islamist groups first targeted Westerners in the 2002 Bali bombing. Counterterrorist police have since succeeded in disrupting various cells and killing or capturing key militants. There have been subsequent attacks on Western targets including the 2009 Ritz-Carlton and Marriott attacks in Jakarta. However, we assess that the new generation of militants will probably change this pattern.

Cells are now more dominated by new recruits that are less experienced and more locally focused. These recruits have backgrounds in vigilante groups and are unlikely to have trained in Afghanistan or the Philippines, reducing their capability to create crude improvised explosive devices.

As they are less connected to the global jihadist movement, they are less likely to follow the traditional jihadist target pattern, that is, Western diplomatic and commercial interests. Rather, target sets will probably include “un-Islamic” assets (including alcohol and music stores, bars and nightclubs), security forces, local government assets, and central and local government officials perceived to be opposed to an Islamic state.

Overall, this reduces the risk to commercial assets such as hotels and shopping malls, which fall outside the target set of most cells.

Thailand

Thai politics is divided into groups allied to two political factions: the Red Shirts, who support exiled former Prime Minister Thaksin Shinawatra, ousted by a military coup in 2006; and the anti-Thaksin Yellow Shirts.

Previous protests, both by the Puea Thai Party-aligned Red Shirts and anti-Thaksin Yellow Shirts, resulted in substantial loss of life as well as property damage to commercial and government assets in Bangkok. In May 2010, the army forcefully ended protests by 100,000 Red Shirts, resulting in 91 deaths, while protesters set fire to more than 30 government and commercial properties, including the Central World Shopping Mall, causing about $1bn in damage.

Since the election of the Puea Thai government in 2011, with Thaksin’s sister Yingluck as prime minister, the risk of widespread violent protests has decreased.

In March 2013, Thaksin urged the Puea Thai government to approve amnesty laws that would forgive Red Shirt supporters the crimes committed during the 2010 violence, which the party is likely to follow, given Thaksin’s overarching influence over the party. This is likely to provoke largely peaceful anti-government demonstrations by Yellow Shirts in the Dusit diplomatic district.

There is a high risk that this will be followed by counter-demonstrations by Red Shirts, leading to fighting between both groups and an increase in death and injury risks to bystanders.

Red Shirt protests are likely if prominent Yellow Shirt members avoid convictions for their perceived roles in the 2010 coup. Government buildings and commercial assets owned by Red Shirt leaders, such as the Amarin Tower and the Grand Hyatt Erawan, would face the greatest risk of property damage. Renewed Red Shirt protests could involve the occupation of Phuket, Krabi, and Songkhla airports.

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