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Subscribe to this list via RSS Blog posts tagged in China

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My time in Asia over the past decade has been dotted with epidemics and epidemic scares. These have mainly involved different varieties of the ‘flu, but also other less deadly but still quite bothersome ailments, such as dengue fever. Having just experienced the latter myself – although admittedly a rather mild bout according those in the know – your occasional correspondent is now back in business and eager to share some thoughts on the topic!

Here in Singapore, we are currently experiencing the worst year for cases of dengue fever since 2005. The city state’s approach to risk management includes a commitment to transparency and public information, and a great deal of public involvement.  The government has a dedicated website to inform the public about outbreaks and prevention measures (where we have learned that one major cluster literally surrounds our children’s school…). With newly infected cases exceeding 500 per week at the end of April, the national dengue campaign “Do the Mozzie Wipeout” was launched, calling on everyone in the community to do their bit to prevent the spread of the disease. Volunteers have even been mobilized to pick up rubbish that may hide breeding grounds for the dengue-carrying Aedes mosquitoes. Scientific studies over the past decade indicate that climate change and rising temperatures are contributing factors to an increased incidence of dengue. Although the jury is still out on the exact causes of the current surge in Singaporean infections, the public health response of choice here is transparency and public information. And this healthy trend seems to be spreading.    

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The Yale Center for the Study of Globalization through its YaleGlobal online service has just launched an ebook A World Connected: Globalization in the 21st Century which is well worth the read for anyone interested in how globalization has – and will in future – impact our world, lives and work.  It’s a seminal collection of essays collated from over ten years of work by scholars, practitioners, politicians, and experts in the study of globalization. 

One of its most compelling points is its broad scope, covering the complex array of ways in which globalization is changing our world – often discussions of globalization narrow in to areas of economics and trade, or to the global capital markets which have had such an impact in recent years, or to the geopolitics of a new world order. With the notions of interconnectedness and interdependence as its lenses, the book not only explores these topics, but also the many ways in which globalization touches all of our lives and interweaves communities, countries and continents – including how cultures and societies develop, how we seek security, how ideas moving around the world are impacting creativity, how rising inequalities are changing societies, how China’s rise is impacting the world, and how we as people interact around the world.

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The winds of reform are blowing in Asia at the moment. Or so it seems when one reads the headlines. Are the loosening of the authoritarian regime in Burma (sometimes called Myanmar) and the recent protests by Chinese journalists really manifestations of openness in these countries? 

To first check out the longer term trends, your occasional correspondent turned to the internationally recognized indices relevant for political governance. It turned out to be depressing reading. In terms of press freedom, both Burma and China score in the bottom five percent of the Reporters Without Borders’ Press Freedom Index over the past decade. The Freedom House Index, measuring political rights and civil liberties, shows similar results. In terms of corruption, represented by Transparency International’s corruption perception index, China’s result is near the middle among the world’s countries, whereas Burma is consistently cited as one of the three most corrupt countries in the index since 2004.

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Note to self: Stay here! Singapore is buzzing. There is no other way to describe the activity and creativity visible in every corner of this miniscule adopted home country of mine. And it is buzzing in a sort of planned and structured way that makes you feel as if everything is moving onwards and upwards. Therefore, the fact that Singapore scores among the top third in this year’s Global Innovation Index and at the top of the Global Innovation Policy Index comes as no surprise.

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We are delighted to welcome Malin Samuelsson as our occasional correspondent from Singapore, who will be sharing her insights about trends -- from political to economic and social -- impacting and being driven from Asia. Malin is a political scientist and linguist with deep experience in the region and has worked with the UNDP, NGOs and government agencies, from China to Mongolia, Sweden and Switzerland. In her first blog she explores the Chinese leadership transition from a Singaporean perspective.

As an old China hand returning to Asia a couple of months ago, I was looking forward to immersing myself in up-to-date and insightful accounts of the forthcoming transition of power to the fifth generation of post-revolutionary leadership in China. Clearly these imminent changes must be a topic of interest here in Singapore? The greatest changes in three decades are expected at the very top of the ruling Communist Party – 14 of the Politburo’s 24 members are expected to step down, along with seven of the nine members of its powerful Standing Committee. A huge change.

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It did not escape the notice of my partner as we walked down Nathan Road in Hong Kong that the local couple ahead of us were carrying a plethora of bags from Gucci, Chanel and a host other top designers, while our bag bore the Chinese logo of one of the local emporiums. Having sought out in vain the great local goods and technology deals we used to find here just a few years ago, we had reluctantly came to the conclusion that we were standing in the next great bastion of high end consumerism.  Gone are many local shops and outlets, replaced by designer names on every corner and giant shopping malls that offer soft music, stores-in-stores and richly designed aesthetics.  Just like you would find in New York, Paris, London or Tokyo – only more expensive in many cases! With 10 Gucci stores/stores-in-stores in Hong Kong (home to 7 million people), the density of stores per capita is already higher than in London or Tokyo.  

gucci queue hk

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Happy New Year!  Just back from a fascinating trip to Vietnam and Hong Kong, so a few reflections to share…

vietnam motos

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The headlines have been full of numbers recently, particularly as we have just passed a milestone where the 7 billionth person has now joined the world’s population (give or take a few million and a few months either way).  So let’s start there in terms of looking at some important numbers that will impact the world in the next decades.

1.  7 billion: The world’s (estimated) population at the end of 2011

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NASA reported today that the final voyage of Space Shuttle Endeavour, originally planned for Friday, would be delayed by several more days due to technical problems.  The Space Shuttle was originally to be retired in late 2010, but has been extended until 2011, with the final launch of Atlantis scheduled to herald the end of a 30 year era in June 2011. This leaves the US Space Agency with a void in terms of next generation space passenger vehicles after last year’s cancellation of Project Constellation which was developing a new spacecraft to serve the International Space Station (ISS) as well as voyages beyond Earth’s orbit to the Moon and even Mars. The interim solution for the ISS will be for US astronauts to hitch a ride on Russia’s state-run Soyuz spacecraft.  As for homegrown options, the future looks commercial.  The privatization of space is starting – at least in the US, even as rapidly developing countries including China and India ramp up their space efforts under state banners.  As space becomes more commercial what will this mean for nations and businesses?

Under Obama’s new space policy, the transportation of crew and cargo to the International Space Station will be turned over to the commercial sector. The change came into effect with the signing by President Barack Obama of the NASA Authorization Act 2010 last October.  Obama has proposed to devote US$6 billion over the next five years towards commercial spaceflight.  In the last two weeks the first of this money has started to come through, with NASA offering US$270 million of funds to four firms to help them push forward designs for new orbiting vehicles. 

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Now the world’s second largest economy, a critical geopolitical player, home to the largest population on earth and the world’s largest consumer of raw materials, how China charts its future will have a major impact on the rest of the world. China’s National People’s Congress met this week to approve China’s new five year plan to 2015, outlined by Premier Wen last weekend.  The key objectives: Slower more sustainable growth to help deal with the issue of rising domestic inflation; more renewable energy sources and greater energy efficiency; and more inclusive growth to help address social imbalances and boost domestic consumption. So what does this mean in practice for both China and the rest of the world?

Economic growth: China’s guideline GDP target growth rate has been reduced from 7.5% to 7% per annum.  Bear in mind of course, that China has exceeded its growth targets by a significant amount over the course of its last five year plan, growing 10.1% last year, so 7% is the least we could expect. Let’s put this in context – or rather allow Goldman Sachs to do so: If China grows around 10% in US$ terms this year – which is highly likely, an underestimate as this would be achieved with no inflation, 7 pct real GDP growth and a 3% annual rise of the renminbi against the Dollar), China will create more than another Indonesia or Turkey next year. The implications: More Chinese goods coming on to world markets, but also the creation of large potential consumer markets in China as incomes are distributed.

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The eyes of the world remain on the violence in Libya and the ongoing unrest across North Africa and the Middle East, with oil prices reacting to the potential disruptions to a critical resource.  Further south, the countries that offer some of the world’s richest reserves of minerals are also undergoing fundamental changes, BRIC-style. As the world enters a period of potential resource scarcity, the scramble is on to secure future supplies of critical raw materials.  Africa has plenty to offer (as an FT graphic shows): Oil, timber, coal, copper, bauxite, gold, diamonds, uranium, gas and more. And despite significant economic and social development improvements in the last decade, many economies on the continent still suffer poverty, skills deficits and high levels of unemployment – making the context right for wealthier nations to come in and help boost African development, often in exchange for resources.  As China, India and increasingly Brazil compete to seize the opportunities, a phrase originally used by Warren Buffett in 2003 to describe the US trade deficit comes to mind, “colonized by purchase rather than conquest.” Is this a risk for African nations (and potentially other resource-rich countries)?  What are the implications?

A February report on Brazil’s investment in Africa by Reuters highlights the fact that in sheer financial terms and companies on the ground, China leads the pack by a long way in the scramble for Africa’s resources.  In 2010 China’s trade with Africa reached US$107 billion (source: IMF) versus US$32 billion between Africa and India, which has also been boosting its position in recent years.   This puts Brazil, with US$20 billion in trade in 2010, in third place, with Russia trailing a distant fourth among the BRIC with just US$3.5 billion of trade with Africa.  China too dominates in terms of overall investments in Africa. South African consultancy Frontier Advisory quoted in the Reuters report suggests that by 2007, cumulative Chinese foreign direct investment (FDI) in Africa had reached US$13.5 billion, or 14% of all Chinese FDI. In contrast Brazilian FDI in Africa between 2001 and 2008 is estimated at US$1.12 billion.  This is not surprising – China has a much weaker overall resource position than Brazil, plus much deeper coffers in terms of foreign exchange reserves to underpin its investments. Since 2000, China has established a series of resource-backed deals, with strong government support and financing, in which African nations handed over oil, bauxite, iron ore and copper and cobalt in exchange for dams, power plants and other infrastructure projects worth billions of dollars.  The aim: Secure future access to resources to power China’s continued rapid economic expansion.  On the back of these investments, some 2,000 Chinese firms are now operating in Africa, building infrastructure and helping to fuel the renewed economic growth of the continent.

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The Wall Street Journal has set tech and investment banking pulses racing today with an article suggesting that Twitter may be a prime takeover target.  Although reported talks with Facebook and Google have been “low-level” and don’t seem to be going anywhere fast, the article has well and truly put Twitter on the block at an estimated valuation of US$8 to 10 billion. Round numbers are so much easier when we are talking tech-based financial excitement, don’t you think? So let’s make it easy and stay with the 10 figure.  Based on the report, that’s 222 times reported 2010 revenues of US$45 million or 100 times estimated 2011 revenues of US$100 million.   And the reason it made a loss in 2010 is that it was investing in growth, both of data centers and employees. With 175 million users worldwide (more than the WSJ and New York Time and growing) plus new advertising revenues (and growing too), it sounds like a good deal, right?

Last time I had these sorts of conversations was about ten years ago.  That’s when various friends and family were comparing notes about the Caribbean islands they were thinking about retiring to.  We don’t live on a Caribbean island today, neither do they.  So why are we back in bubble-land? (By the way since my last post on bubble or no bubble reports of secondary trading of Facebook suggest it is valued at more than Amazon now. Meanwhile the Huffington Post is being acquired by AOL for US$315 million.) There is no financial calculation that can make sense of these estimated valuations and yet venture-capital firm Andreessen Horowitz (of Andreessen/Netscape fame) said it bought more than US$80 million of Twitter shares through exchanges for private-company stock.  They have been there and done that, so why are they along for the ride?

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