Friday Asia Update: Five Stories From the Week of February 5, 2016

Ashlyn Anderson, Rachel Brown, Lincoln Davidson, Ariella Rotenberg, Gabriel Walker, and Pei-Yu Wei look at five stories from Asia this week.

1. Indian Supreme Court scheduled to review discriminatory law against India’s LGBT community. In a win for LGBT activists, the Indian Supreme Court agreed to take another look at Section 377 of the Indian Penal Code, which effectively criminalizes India’s LGBT community. After the Delhi High Court ruled in 2009 to strike out Section 377, a relic of British colonial rule, it was overturned by the Indian Supreme Court in 2013. On Tuesday, the court decided to hear a “curative petition” to the 2013 ruling. Not only is the language of the section subject to convenient interpretation—specifically outlawing “carnal intercourse against the order of nature”—but the law fuels prejudices in Indian society by labeling LGBT citizens as criminals. Ironically, India has a long tradition of sexual tolerance, as seen in ancient texts such as the Kama Sutra—it was British anti-sodomy laws that criminalized sexuality. Moreover, India’s hijra, or transgender and transsexual, community has featured prominently throughout four thousand years of Indian history. In a potential sign of recognition of the discrimination caused by Section 377, in 2014 the Indian Supreme Court ruled to create a “third gender” legal status for India’s hijras. Now, the court will consider removing Section 377 altogether, again.

2. Chinese online lender turns out to be $7.6 billion Ponzi scheme. Earlier this week, Chinese state media broadcast confessions by executives of online peer-to-peer (P2P) lender Ezubao, admitting that the company was a Ponzi scheme. More than nine hundred thousand individuals put money into the company, spurred on in part by a veneer of legitimacy lent to Ezubao by its connections with state institutions, including the National People’s Congress. While it is smaller in dollar terms than the Ponzi scheme run by New York financier Bernie Madoff, only about five thousand people invested in that case. In some ways, the scheme is not a surprise: P2P platforms have taken off rapidly in China because small and medium enterprises’ (SMEs) demand for credit is not met by Chinese banks. However, analysts have argued that the returns promised by many of these platforms—often as high as 15 percent—were unrealistic and unsustainable, and many have already had problems with repayment. The Chinese government has already taken some steps to crack down on online lending. When Chinese markets dropped precipitously last July, regulators tightened rules on offering margin financing to borrowers pledging shares as collateral, then released new rules for P2P lenders. In the case of Ezubao, more oversight was needed. However, regulators must be careful to not overly restrict an industry critical to the growth of Chinese SMEs.

3. Airstrikes in Afghanistan kill twenty-nine terrorists affiliated with the Islamic State. The United States launched airstrikes in Afghanistan that destroyed an Islamic State (IS) FM radio station, “Voice of the Caliphate,” that had been operating illegally in the eastern part of the country. In Afghanistan, a country where few people own televisions and only 10 percent of the country has access to the Internet, radio is the most important source of mass media. The now-destroyed IS radio station was broadcasting into Nangarhar’s capital city of Jalalabad.  Most news sources are reporting that twenty-nine IS terrorists were killed in the airstrikes, including five to eight who worked directly for the radio station. The U.S. Department of State recently added the Afghan IS affiliate to its official terrorist organization list, thereby granting legal authority for direct U.S. military engagement against the group.

4. Taiwan’s Foxconn sets sights on Japan’s Sharp. According to Terry Gou, CEO of the Taiwanese contract electronics giant Foxconn, the company has nearly reached an agreement to take over struggling electronics manufacturer Sharp in one of the biggest foreign acquisitions of a Japanese company. Foxconn’s offer is worth around $5.5 billion, more than double that offered by another Japanese company, which Sharp was said to be favoring prior to this week. The ailing Sharp was once an industry leader in producing display panels and is a well-known corporate name in Japan, but recently has suffered significant losses and has been bailed out twice by lenders in the past four years. With the news that Mr. Gou had met with Sharp executives, the company’s stock jumped more than 25 percent on the Tokyo Stock Exchange over the past few days. One source called the takeover a “gamble,” as Sharp’s debts will become major liabilities if Mr. Gou cannot turn the company around. At the same time, the planned purchase is a step forward for Abenomics, which aims to double 2012-level inward Foreign Direct Investment stock by 2020.

5. Marshall Islands prepares to sue nuclear powers over arms race. The International Court of Justice announced that in March it will begin hearings to determine whether it can accept cases brought by the Marshall Islands against Pakistan, India, and the United Kingdom regarding their nuclear weapons. The hearing for the United Kingdom will focus on “preliminary objections” raised, while the hearings for the South Asian states will cover whether the court has jurisdiction to hear the cases. Later, it will be determined whether the cases can proceed. The Marshall Islands, a Pacific state with a population of just 55,000, was the site of U.S. testing of sixty-seven nuclear weapons including hydrogen bombs at Bikini Atoll, which had lasting environmental and cultural repercussions. This legacy imparted a keen awareness of the impact of nuclear weapons in the Marshall Islands. In 2014, the nation filed suits against nine nations regarding failure to comply with the Treaty on the Nonproliferation of Nuclear Weapons (NPT). The case filed against the United States in the U.S. District Court of San Francisco was dismissed, although the Marshall Islands subsequently appealed. India and Pakistan are not party to the NPT, but have obligations under international law and recognize the authority of the International Court of Justice.

Bonus: North Korea sends garbage-filled balloons to South Korea amidst propaganda spat. North Korea floated balloons reportedly filled with feces, cigarette butts, and leaflets to South Korea in the latest propaganda spat between the two countries. Since January 6, when North Korea conducted its fourth underground nuclear test, tensions on the Korean Peninsula have heightened despite an inter-Korean deal in August of last year when South Korea agreed to halt the usage of loudspeakers for broadcasting propaganda across the border. The South reacted to the nuclear test by blasting Korean pop music across the Demilitarized Zone, as well as pushing for tougher sanctions against North Korea in the U.N. Around 100,000 leaflets included with the balloons denounced South Korean President Park Geun-hye as “political filth.” The balloons were intended to explode and scatter the materials via timers and small explosive devices, but some of them failed to function as planned.