By Frank-Jürgen Richter
At three recent conferences I attended, three topics came up time and again: the Belt & Road (B&R) initiative, Brexit and the Trans-Pacific Partnership (TPP). This was not only in programmed discussions – delegates in their panels or plenaries often returned to one topic or the other. The conferences were the Horasis China Meeting held in Sheffield, UK, and the Horasis Asia Meeting in Kolkata, India; and the third was the Fortune Global Forum in Guangzhou, South China’s Guangdong Province. Why did these subjects surface so readily? Well, they are topical, but more importantly they are of concern to global business leaders, and each topic is subtly intertwined with the other.
First, the Trans-Pacific Partnership (TPP). This was agreed after years of negotiation between Canada, the US, Mexico, Chile and Peru on one side of the ocean and New Zealand, Australia, Japan, Singapore, Brunei, Malaysia and Vietnam on the other. But just three days into his US presidency, Donald Trump reneged on the agreement.
Yet the desire to continue the trade-enabling arrangement has lived on and during the recent APEC summit in Vietnam in November, the TPP-11 – that is, the remainder of the nations in the pact – agreed to rename it as the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP). The original TPP text was revised so that it can come into force 60 days after at least six signatories ratify it after their domestic discussions. Japanese Prime Minister Shinzo Abe asked other nations to quickly ratify the new accord before the round of 2018 elections commences in Asia and in Mexico because populist-leaning governments, if elected, may denounce free trade. Looking ahead, and noting the new China-led pan-Asian groupings – the Regional Comprehensive Economic Partnership and the Free Trade Area of the Asia-Pacific – it is possible that China will cooperate with the CPTPP, but not just yet.
Next is Brexit – a situation that most find odd, even the British. Why does the nation wish to leave its place in the European Union having joined in 1973? It is difficult to achieve an amicable “divorce” after 40 years of “marriage.” But despite the confusion over Brexit, delegates at the Sheffield event in early November echoed the China-Britain Business Council, which found that “Chinese firms in the UK are broadly confident up to the point of the UK leaving the EU (by March 2019); and also afterward, as new opportunities for trade will open up.” And while the level of the UK’s manufacturing is slightly below Europe’s at present, as indicated by its Purchasing Managers’ Index (PMI) data, this may yet offer potential. It indicates that once the Brexit deal is finalized (or well on its way), UK manufacturers will reinvest in modern machines – that would greatly interest its trading partners, especially the Chinese.
Also at the Sheffield meeting, Chen Liang, managing director of China Civil Aviation Investment Fund Management, noted that the UK is a good place to be: It has fair land and office prices, and for incoming Chinese manufacturers the UK’s financial system is open, its people well trained, and the logistics infrastructure is in place for supply of materials as well as dispersal of finished goods around Europe and the globe.
Last, but by no means least, is the China-proposed B&R initiative. This is a massive project, that sought initially to join more than 60 countries and regions engaging over 60 percent of the world’s people with new trade routes and accords. Precise plans have yet to come into place, which is reasonable at this early stage. It is better to announce an overall plan and let other nations join in when they find out how globalization on this scale will work. This point was emphasized at the late-November meeting in Kolkata by Wang Dong, secretary-general of the Academic Committee of the Pangoal Institution, who said that China is sanguine about progress with the B&R. “The objective of the B&R initiative is to increase connectivity and improve infrastructure across countries,” Wang said.
Over the past few weeks, I have found many of the world’s top business leaders are concerned about the uncertainty over the TPP and Brexit, and are also surprised at the scale and vision of the B&R initiative. It is as though it is all too much to absorb in a world still recovering from the financial crash of 2007. But we are almost in 2018 and global management is being inspired by a new generation of leaders who are pushing disruptive technologies. They embrace issues like deep learning incorporating artificial intelligence and machine learning to model the human brain, which will support new forms of working and leisure. The electric vehicle revolution will disrupt the automotive industry and the oil industry, mobile payment will become ubiquitous, and robotics will play a huge role in supporting our many needs as society ages.
I think the development of the B&R initiative will, as well as offering greater chances for entrepreneurs, also open up greater scope for competition and thus choice for consumers. These changes in the coming years are already being discussed by global business leaders, and we look to our governments to free up policies that will be globally beneficial.