The danger of global investors giving East Asia the cold shoulder

AN increasingly bizarre ritual of denial and self delusion is being played out in East Asia as countries of the region - Japan, China, South Korea and Russia - engage in war games against each other while behaving as though it's business as usual among neighbours.

The only one among their number that openly admits to its true intentions is North Korea. Pyongyang makes no secret of the fact that it is intent on joining the nuclear weapon club so that it will be taken seriously in Washington and can negotiate on equal terms. If these various nations fool themselves that this kind of brinkmanship is acceptable, it is doubtful whether the outside world will be fooled for much longer. The perception that East Asia is becoming a dangerous place to do business will take hold sooner or later.

If the East Asian situation were transposed, say, to Europe and Asians could see nations there deploying armadas of ships to shadow each other, fighter jets scrambling daily to defend national air space, and politicians railing, they might well conclude that the continent was at war. If they saw US bombers flying low over one nation (South Korea in this case) to threaten another (North Korea), and that nation firing off a barrage of ballistic missiles to demonstrate its nuclear weapon capability, they would surely conclude that Europe was indeed a dangerous place.

Yet this is precisely what is happening in East Asia even though the rest of the world somehow seems intent on averting its gaze and putting its trust in luck rather than judgement to fend off what is looking increasingly likely to be an eventual confrontation.

Consider recent events: Japan's prime minister Shinzo Abe claimed that "unprecedented" threats to the security of East Asia had arisen following North Korea's latest nuclear tests, while warning in an apparent reference to China that "military vessels are entering our waters and aircraft of unclear origin (are) entering our airspace". On the same day, it was reported Chinese bombers, fighters, and early warning and aerial refuelling aircraft flew through the Bashi Channel that separates Taiwan and the Philippines to exercises in the western Pacific. Also on that same day, China and Russia kicked off eight days of naval drills off Guangdong Province - a move whichThe Japan Times commented was "likely to further stir tensions in disputed waters". The exercises featured navy ships, submarines and aircraft, Xinhua said. The next day, the US sent two nuclear-capable strategic bombers over South Korea in a show of force to North Korea, its commitment to Seoul following Pyongyang's nuclear tests. North Korea in turn has protested at the US decision to deploy Thaad (Terminal High Altitude Area Defence) missiles in South Korea.

All this comes, of course, on top of China's increasing incursions into the South China Sea, Japan's battles to "see off" Chinese vessels around the Senkaku Island in the East China Sea, and occasional scuffles with South Korea over the Takeshima islets nearby. The world's focus - that of investors in particular - arguably needs to shift from limelight-hugging issues such as Brexit in Britain or the Crimean situation to East Asia where the idea of an Asian economic miracle is in danger of becoming the "Asian Mirage" of peace and stability.