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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
Reasons for optimism about the long term
By Frank-Jürgen Richter
Business Times, 29 January 2016
 

Not only is the planet’s rotation slowing down because of tidal forces between Earth and the Moon, so is its economy. Roughly every 100 years, the day loses about 1.4 thousandths of a second, but perhaps more urgently for us the International Monetary Fund (IMF) forecasts a lowering of global GDP growth next year – down to 3.4 per cent, compared to a 3.6 per cent forecast last October. In both cases these are small changes, but small is important – as China’s proverb about butterfly wings’ movement suggests.

At present, the great issue for the world’s economy is overcapacity. As every manufacturer knows, for each of their products, supply chains are difficult to design. But globally, the chains from minerals to delivery of consumer products as well as delivery of fuels to heat our homes and factories is nigh on impossible to align perfectly. I will illustrate this via the world’s shipping industry.

Bulk carriers for minerals like metal ores or coal are retired and new ones built on a cycle. Over 2010-2013, there was too little capacity; now, huge new ships are too large to berth at most ports and through recent launchings there is now overcapacity. According to the Baltic Dry Index (a data tracking firm), such ships can be hired for £3,000 (S$6,130) per day – a price well below operating costs, yet accepted by owners just to keep the supply chains moving.

At the end of the manufacturing chain are the container ships delivering to ports and thence to the end-consumers. In 2005, there were 171million gross tonnes of shipping; now, there are 410 million tonnes afloat and looking for work, of which there is little on offer. Some shipping lines scrapped or sold on their older vessels and commissioned new ones capable of carrying nearly 20,000 containers. They cited economies of scale and lower fuel consumption per container, and thus lower per end-item cost, as design factors.

And in the middle of the long chain of manufacturing to end-sales are the fuel transporters – of which there were too few, and now too many. Yet energy trade remains buoyant as we all continue to demand more oil, LPG and gas as fuels for our heating, transportandfor electricity generation for manufacturing.

All in all, world trade volume grew in 2014 by 2.8 per cent – similar in fact to the growth in world GDP, whereas trade volumes used to exceed GDP growth by about 2 percentage points per year.

Many commentators point fingers at China for causing this slowdown. And, naturally, as the second biggest (maybe now the top) global economy, its economic performance matters to the world of investors. But this present economic slowdown is global and has been caused, not by unique events – like the US-initiated global financial crash of 2008, which was weathered by China – but by a wide range of issues. These have all caused investors to be anxious.

The very short-term financial worry concerns contagion and, consequently, a rapid selloff of shares across the world. I have mentioned elsewhere that the Chinese indices of manufacturers’ sentiment, while under the 50-level (that is, the boundary between growth and recession) has been growing slowly long-term since 2010. Notwithstanding fluctuations within statistical boundaries, new monthly data causes undue alarm in the media. But we must look at trends, not monthly data.

The focus on micro data has shifted attention away from long-run developments, and typically household survey data and micro data in general. The “long run” based on these sources is quite limited, usually covering less than the last couple of decades. Such a relatively short time span is unfortunate since analyses of economic development and structural change require a much longer time horizon.

Moving on, successive Chinese ministers have stressed their country’s long-term outlook. More recently, we have seen China build 200 or more massive new towns, and heavy investment in a vast transport infrastructure. An extension of its investment has been its One Belt, One Road (OBOR) initiative announced by President Xi Jinping when he visited Central and Southeast Asia in September and October 2013.

Now, we read of his further commitment to infrastructure investment, in Egypt and generally across the Persian Gulf nations. In a speech to the Arab League in Egypt on Jan 21, he said “the key to overcoming difficulties is to accelerate development”, stressing that issues in the Middle East may have arisen because of a lack of development capacity. So a solution could depend on development.

Clearly, business managers have noted the relative lack of market response to central bankers’ economic stimuli following the financial crash. And they have noted the lack of lending- on of cash hoarded by retail banks. Even so, they have not invested their own firms’ money in new capital development. Thus firms, as well as banks, are guarding piles of cash and so hinder GDP growth predicated on a more efficient infrastructure. What they are waiting for is someone who indicates firmly that growth, not recession, will indeed take place – and that someone seems to be President Xi.

China’s expansion of its own infrastructure – with its foray overland with the OBOR across Central Asia and also by sea to help modernise several ports by linking them to hinterland transport renovation, and now its support for the Gulf region’s infrastructure – must shore up hope. China has a large coffer of sovereign wealth but it is not an infinite stock; other nations should support this initiative – such as the US, which needs to modernise its own massive transport infrastructure installed as far back as the 1960s.

Infrastructure development is perhaps the province of governments. But, following on, entrepreneurial innovators should avail themselves of the new flow lines and develop efficient modern factories, hospitals and schools to regenerate for the future. I am quite optimistic of the longer-term future; let’s hope that hotheads don’t upset the short term.

 

The writer is founder and chairman of Horasis, a global visions community

 


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