Visiting U.S. Defense Secretary Leon Panetta on Monday urged Japan and China to peacefully resolve the intensifying territorial dispute over the Senkaku Islands, expressing concern the diplomatic row could result in a military clash over uninhabited islets in the East China Sea. ”It is extremely important that diplomatic means on both sides be used” to avoid further escalation, Panetta said… [H]e also repeated that the United States will “stand by treaty obligation” with Tokyo, which includes defending Japanese soil, based on the Japan-U.S. security treaty…The Japan-U.S. security treaty obliges the U.S. to defend Japan if an area under Japanese administration is attacked by another country. But observers say if a remote island is attacked, it would likely be up to Japan to respond first, not the U.S. military…

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It might seem unlikely that this situation could evolve into major confrontation, there are signs that tensions between Japan and China could get worse if some sort of solution is not found. This information comes as anti-Japanese protests in China spread and claims to certain Southeast Asian islands by members of the Association of Southeast Asian Nations (ASEAN) are voiced. Hopefully, this situation will be resolved peacefully and to the benefit of all concerned.

Meanwhile, it would appear that the Malaysian and Singaporean stock exchanges are set to link up in an effort to provide more trading opportunities and capabilities on each of those respective platforms. To shed further light upon these developments it is necessary to quote from the official website of Live Trading News, LiveTradingNews.com:

The Malaysian and Singaporean stock exchanges are seeking to attract individual investors and boost volumes by offering cross-border trading, the 1st step in creating a Southeast Asian platform. Singapore Exchange Ltd. (SGX) and Bursa Malaysia Bhd. (BURSA) start offering the services Tuesday…

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These developments could result in future interest in Southeast Asian Securities from investors abroad. Concurrently, it would appear that Thailand’s stock exchange is prepared to provide more integrated services for ASEAN investors, to quote further from the aforementioned article:

[T]he Stock Exchange of Thailand is set to join the link-up between the Association of Southeast Asian Nations members next month…The trading platform is part of a push by Asean Exchanges to boost regional capital markets and lure more investors to exchanges whose companies had a combined market value of $1.98-T at the end of March, according to the group’s website…

Although the results of these efforts remain to be seen, there is good reason to speculate that these developments could lead to further investment in Southeast Asia both by domestic investors as well as investors from outside the region.

BEIJING – China saw a trade deficit of 1.02 billion US dollars from January to March this year, the first quarterly trade deficit in six years, according to figures released Sunday by the General Administration of Customs (GAC).

In comparison, there was a trade surplus of 13.91 billion US dollars in the first quarter of last year.

China’s exports increased 26.5 percent year on year to 399.64 billion US dollars in the first three months this year, while imports soared 32.6 percent to 400.66 billion dollars from a year earlier, figures from the GAC showed.

From January to March, the total value of imports and exports increased 29.5 percent year on year to 800.3 billion dollars, said the customs administration, adding that China reported a small trade surplus of 140 million dollars in March, on the basis of a deficit of 7.3 billion dollars in February.

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There is little doubt that this news will have a direct impact upon the business environment in China as well as a possibly indirect impact upon the Nations which comprise the Association of Southeast Asian Nations (ASEAN). Meanwhile, this announcement may also have an impact upon the economy of the United States of America and the American business environment as well. It would appear, at least at the time of this writing, that the American economy is likely to continue to show signs of turbulence as time moves forward, but some economists may see positive implications for the American economy from this recent news. That said, the trade deficit currently being maintained by the Chinese, as noted above, is not particularly large in relative terms as only one year ago the Peoples’ Republic of China maintained a substantial trade surplus with the United States of America.

This news comes at a time when Chinese and Thai authorities have announced that a large trading complex will be erected in Thailand to provide a platform for Sino-Thai trade. Concurrently, it would also appear as though plans continue for a high speed rail link connecting Thailand, particularly Bangkok, directly to Southern China.

It would appear that although China is currently maintaining a trade deficit, that country remains economically vibrant and still on track to become the largest economy in the world as previously noted on this blog when referencing a statement made by the CEO of the American Company General Electric (GE).

Meanwhile, it was recently noted that many of the stock exchanges in the ASEAN region have made deals to act in concert in an effort to create a combined market with a projected capitalization of 1.8 trillion USD. To quote directly from a recent posting on the website TheHinduBusinessLine.com:

Seven stock exchanges in the ASEAN region collaborated on Friday with the launch of ASEAN Brand Identity, ASEAN Exchanges Web site and ASEAN Stars, with the aim of jointly developing regional capital market estimated worth $1.8 trillion…The ASEAN Exchanges collaboration members are Bursa Malaysia, Hanoi Stock Exchange, Hochiminh Stock Exchange, Indonesia Stock Exchange, The Philippine Stock Exchange, Singapore Exchange and the Stock Exchange of Thailand.

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As Southeast Asia continues to show signs of an increasing economic dynamism the effect of such events upon large economies such as the US economy and that of China remains to be seen, but it is clear that the business and economic environments in Southeast Asia are considered by many to be becoming increasingly robust as evidenced by the fact that there is a possibility that a combined ASEAN market could have such a relatively substantial capitalization.

For related information please see: business in China.