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2017
Asia Needs more Dialogue
Solutions to urban pollution may prove complex
Spread of ESGs could herald new global movement
Investing in quality education is imperative if India wants to reap demographic dividends
China needs to lead in new multi-stakeholder world
China’s B&R initiative leading a resurgence of Asia
Education is key - but long-term: Can we survive?
New wave of robots will be beneficial to all
China needs to continue with its ‘heavy lifting’
Time is right for Chinese firms to invest in Europe
Robots to the rescue for China?
Asian Multinationals are Going Global, But to Where?
China ratchets forward with energy efforts
China’s calm necessary for globalization push
Bridging managerial gaps involves trust-building
China well-placed to power its future through green technology advances
China's new 'springtime' is here
2016
China’s moves show it’s banking on the future
Mindset for action at the G20 summit will be determined by Chinese presidency
Chinese head-hunting intensifies for rare managers that can steer overseas firms
US talk of isolation jars with growing links in Europe and Asia
Electoral rhetoric on global trade not in sync with reality
Is it time to be prudent and consider austerity policies again?
What will we do if we have no oil?
Unlock talent by finding the right fit for a person
The benefits are real and tangible
Trade along China’s ‘One Belt, One Road’ won’t succeed without the currency of trust
Reasons for optimism about the long term
2015
Can big oil go green and win?
Poorer Nations Could Sway Climate Talks
Combating Idleness and Deprivation
How China can be a model of food sustainability for the developing world
Kyoto II – Is it a Done Deal?
A meeting of the two largest economic powers
Why China will experience a 'soft' landing
Beware of superstitions
The Elephant and Dragon move ahead
G-7 target on fossil fuels raises many questions
Why Battle for Net Neutrality in the US Matters Globally
China’s resurgence – the ‘normal new’
Wanted: A managerial culture that embraces cultural differences
China's early education plan a smart investment in the future
The New Normal for China and India
2014
China's infrastructure push offers a sure track to better growth
US-China climate pact a good start, but not quite enough
Rethink the human’s place in the ‘digital revolution’
China springs a carbon surprise
Infrastructure - the invisible hand in full view
Dialogue vital for survival of Iraqi nation
China must nurture a new generation of beautiful minds
Great expectations in China and India
GM Cereals – The Pros and Corns
Time to be Honest about Our Energy Prospects
Weathering the Storm of Climate Change
Making a Big Decision? Beware of Your Biases
West Deserves Better Logistics Infrastructure
Digital Currencies do Represent the Future
From 'Printed' Houses to Wooden Skyscrapers
It’s time to bail out our schools, not our firms
Solution to India’s housing shortage – print new ones!
And the most promising green technologies of 2014 are ...
Transport infrastructure key to domestic, export growth
Oil stopgaps: Not worth risking
2013
Why the US should grant Edward Snowden amnesty
May we be more optimistic!
China headed for another massive social experiment?
A dialogue that worked
Yes, politicians deserve vacations - because we benefit
NPOs, NGOs invaluable as creators of dialogue
Look closer and ask: Is America reinventing itself?
Boston bombings case underlines need for dialogue
Millennium Development Goals or own goals?
As usual it's about balance - and timing - of course
Chinese strategists make right moves for growth
2012
Preparing for tomorrow
Austerity or growth?
Japan in danger of becoming 'just a place to fly over'
Beware of the business cycle?
An inconvenient truth
Limited offer sale: Buy a country
Where did our money go?
Leading from behind - a year of elections is almost over
Driving towards a green future
Waiting for springtime
Preserve or Perish
Startlingly similar Asia policy for Obama, Romney
Globalisation remains an irresistible trend
Google has the edge in smartphone war
U.S. Braces for China's Rise
Mankind’s General Scourge
The summer holidays are over and nothing has changed!
Put the hidden trillions to work
Making sense of India’s woes and wonders
Storm in a teacup!
Let’s give bad bankers a venue to admit their sins
News is about depth, not puff or velocity
Booming India, but too few toilets
Delayed Court decisions doesn't mean one may continue to play 'Great Game'
We need media to reflect on data and offer public a balanced view
Big polluters can lead in forging common purpose
The weighty issue of choosing a leader
EU-India Relations - Facing similar challenges
Educating with a goal
The Judicial Malaise
We are growing out, but not growing up
EU´s retrenchment enigma
Urbulence in the Eurozone and the effect on SMEs
Skolkovo May Help Russia to Diversify
Make things more effective
Tapping into the Commonwealth connection
Innovative models for public finance
Facebook revolution but Indian style
The feel-good factor
Asian investors - a private equity opportunity
India needs to be taller and stronger
China´s low sales volume...
Nations playing leapfrog
Shafts of sunlight
What webs we weave
As performers go to Davos, the circus steals the show
Can we control the politicians?
 
2011
Europe’s reminiscence
China firms should go for win-win in overseas ventures
Of procrastination...
Making sense of profiteering
Truth about financial mess must be laid bare
Small is also beautiful
China can help Europe with debt crisis
Excising the cancer of global corruption
Education, a critical asset
Arab uprisings set in motion forces of creative destruction
A new era of change
We must ensure better education for all
Beijing wary of bankrolling a lost cause
Asean's re-emergence as a local and global leader
Why India's Role in the Global Economy is Still Work in Progress
Its the leadership, stupid!
Reverse globalisation: The new buzzword
A meeting of the two largest economic powers
By Frank-Jürgen Richter
Business Times, 23 September 2015
 

Chinese President Xi Jinping is visiting the US and meeting US President Barack Obama in the White House this week. They met in Beijing last November when they agreed on stronger voluntary efforts against atmospheric pollution – hopes again run high for new agreements to be made. Of course there will be a public agenda, but their many aides will hold wide discussions, some will focus on trade and on the Trans-Pacific Trade Agreement.

World trade volumes faltered after the financial crash of seven years ago but there are signs of renewed optimism as earlier initiatives come into operation. The expansion of the Suez and the Panama canals are virtually complete and will allow the largest of ships to pass through. And, well-timed, more ships carrying up to 19,000 containers are being deployed, as well as massive bulk ships and car carriers like the Hoegh Autoliner that can carry 8,500 cars. They epitomise high economies of scale and a belief in the future of global trade.

Up to the 1970s the world was generally in balance with respect to trade and its monetary implications, and then gradually there was massive change. The US achieved a large deficit of US$820 billion in 1990 which has now been reduced to US$700 billion. In Europe, Germany was long its economic powerhouse and has a national trade surplus of US$50 billion. And China, which was roughly in balance until the 1990s, now has a US$90 billion surplus. Most imbalances take a few years to smooth out because they are subject to both national and international forces which take some time to work through their respective economies. National governments, officials and business leaders need to be cajoled into greater efforts, new processes and training needs to be instigated and the processes of marketing, manufacturing, transporting and selling finalised before the national finances are seen to move.

For example, in Germany with its large trade balance (which is very much greater than China’s when compared per person) it is suggested that it increase infrastructure spending, raise wages and undertake fiscal reforms to permit greater inward purchases. These changes will take time to enact. Yet we see that China has already undertaken these macro-economic suggestions – it has massively invested in all its transport systems (road, rail and air-, river- and sea-ports across the nation), in river-flow diversions (to bring more fresh water to the dry northern areas) and in housing (200 new large towns are being built). It is allowing greater inward investment and simplifying many regulations. These changes will help balance its money-trade fluctuations. The US, however, is somewhat mired in its internal politics and little will be changed to substantially alter its economic activity (which is still high as it remains the world’s largest economy) until perhaps a year after its presidential election in November 2016.

Many economists suggest that it is not the macro but the micro-economy that rules: it is the work of ordinary people that determines local wealth and thus national wealth so benefitting the balance of trade in the longer term. But a nation has to create the massive infrastructures that aid enterprise – China has followed the earlier examples of the US (1960s interstate road building) and Europe (the long-distance road and rail integration from 1990 onwards). We expect now that China will rapidly raise its productivity in its new inland development regions with everyone working smarter to live a richer life.

Total Factor Productivity (TFP) measures output against input and the efficiency of conversion. Of course it is not an exact measure but it is used to measure the relative efficiencies of nations, and over time can be used to judge how smartly entrepreneurs are working. Researching TFP at current purchasing power parity (a useful way of equating monetary exchange rates) and comparing with the US base = 1.0 we find the TFP for Germany rose steadily from the 1950s as it redeveloped after the last World War through youth education and investing in top-class machinery. By 1980 it was as efficient as the US, but has since fallen to 0.82 by 2010 (the last data year reported by FRED in St Louis, US). China on the other hand grew from a low base to reach 0.5 by about 1958, then falls a level between 0.3 and 0.4 to the present day. Last year China was the world’s largest market for industrial robots and one factory in Dongguan, perhaps extreme, has reduced its 650 workforce to 60 while its robots produce parts for mobile phones. Moving to smart working will benefit inland China and the wealth of its people.

Germany’s wealth derived within its townships and its small and medium enterprises who were administratively guided to be entrepreneurial and export-oriented developing its so-called Mittelstand. China did not permit such private SMEs until after its “opening up” from the late 1980s. The IMF notes Germany’s economic growth was almost linear from a modest base of US$ 4,300/capita in 1950 to become US$47,600/cap by 2014. China in comparison had a GDP of only US$614/cap in 1950 and has grown to US$7,600/cap by 2014 – though its base did not lift much until 1990 when further coastal Special Economic Zones (SEZ) were created. Now, with its vast new infrastructure China is well poised to re-ignite its entrepreneurial spirit, developing more goods truly made in China (not simply assembled). To do this effectively it will need to buy more high-tech engineering goods from, say, Germany so aiding the latter’s trade balance.

The meeting this month in the US between the heads of the two largest economic powers will have many beneficial outcomes for all nations. I wonder what surprises the leaders may offer to us.

 

The writer, Frank-Jürgen Richter, is founder and chairman of Horasis, a global visions community.


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