Nov 082015
 
can China save the world?

A great video by Professor Tyler Cowen on the Marginal Revolution University website looks at China’s successes, the challenges the nation faces and the economy’s likely future.

Ultimately Cowen brings the whole story down to one factor – investment. The post 1979 investment that saw the nation’s productive capacity explode, the post 2008 investments that he believes has distorted the economy and his optimism about China’s future because of investments made in the PRC’s human capital.

It’s fourteen minutes well spent in getting a basic understand of what China has accomplished in the last 40 years and the challenges the nation currently has to deal with.

Sep 122015
 

Just as I was hitting ‘publish’ on the China goes on the tech offensive‘ post two days ago, Chinese Premier Li Keqiang was delivering a speech to the World Economic Forum on the nation’s economy.

An English translation of Li’s speech is online and what’s particularly notable about it is the continual mention of “mass entrepreneurship and innovation” with the Premier pointing out over 10,000 new businesses are being registered every day in China.

In parts of the speech, Li sounds like one of the small business evangelists proselytizing on why everyone should start their own venture and coupling entrepreneurship with social justice.

“Mass entrepreneurship and innovation is effective in promoting social justice. As long as they are willing and capable, all people could establish themselves and lead a promising life through innovation and entrepreneurship. They could all have an equal chance for development and for moving up the social ladder, and could all enjoy a life of purpose and dignity.”

Probably the biggest barrier for small businesses and startups in all countries is the access to capital, something that Li flags in his speech as being part of China’s opening up to foreign investment.

Should Li and the Chinese leadership unleash the nation’s entrepreneurial spirits, it will see the country’s economy changed radically and that rebalancing towards domestic consumption accelerate.

For the rest of the world worrying about China’s influence and economic might, they could be worrying about last year’s problems.

Sep 102015
 

The most important economic relationship in today’s economy is that between China and the United States, despite bellicose chest thumping by both sides their wealth and well being of their industries is inextricably linked.

Against the backdrop of that chest thumping and a slowing Chinese economy, the Chinese and US Presidents are due to meet in two weeks time where trade and security relations between the two countries are at the top of the agenda.

China’s leaders though plan to emphasise their nation’s tech prowess and its importance to the US’s sector, something the New York Times reports has irritated the Obama administration.

What would almost further irritate the US leadership is that US tech giants including Apple, Facebook, IBM, Google and Uber have been invited to attend a Chinese tech summit hosted by Microsoft and the PRC President will be dining with Bill Gates before flying to Washington to meet Obama.

Redmond gets on board

Microsoft’s role in the China Forum is interesting, the company is extending the hand of friendship not just to nations but also to companies that were fierce rivals in the past, just last week the company announced a partnership with VMWare despite deep rivalry in recent years and CEO Satya Nadella is due to appear at next week’s Salesforce conference.

Coupled with Microsoft’s battle to keep offshore customers’ email records out of the reach of US legal jurisdiction, it’s clear Microsoft are playing a long global game with their business plans so the support of China’s initiatives isn’t surprising.

Given China’s strength as an emerging tech powerhouse and its administration’s ambition to move the economy up the value chain, it’s also not a surprise that other US technology companies are reluctant to join the politicians’ games.

Choosing Seattle

The choice of Seattle is interesting as well, while the city is a major tech centre with companies like Amazon and Microsoft based there, it’s far more integrated with the Pacific Rim economies than San Francisco and Silicon Valley. Again this is a loud message to the US tech community.

For China, the success of showing off their technological strengths is an important in sending a message to its East Asian neighbours and the US that the nation is diversifying and shouldn’t be underestimated, a process that Chinese Premier Li described as “a painful and treacherous process” at a World Economic Forum event in Dalian today.

The meeting between Xi Jinping and Barack Obama in two weeks time, and the associated events in Seattle, could well prove to be the marker of where China moved into the next phase of its economic development and its relationship with the  United States.

Jul 142015
 

Battered by a declining Chinese market for its manufacturing goods, Taiwan is having to look elsewhere for its economic growth.

Startups are one idea report Reuters News describing how the Taiwanese National Development Council set up HeadStart a year ago to create an tech entrepreneur ecosystem by relaxing regulations for registering start-ups, matching funds invested into projects and creating tech hubs.

So far HeadStart has attracted around $US 438 million in funds and now Alibaba founder Jack Ma says he wanted to set up a $300 million fund to support Taiwanese entrepreneurs.

While the Reuters piece focuses on the ecosystem built around fading smartphone maker HTC and the major computer chip fabricators, Taiwan’s strength may well lie in its small business roots as much of the island’s industrial strength has been built, like Japan’s, on its army of small family firms supplying the larger companies.

That Taiwan needs to diversify its economy is a warning to other less advanced economies that depending on a narrow band of exports leaves a nation open to external risks. It might be time for others to be looking at how to encourage their entrepreneurs.

Image of Taiwanese bronze buddha by Shirley B through freeimages.com

Jun 052015
 
stock investments.

The emergence of Chinese companies and their listing on US stock exchanges has been one of the features of the country’s rise over the last decade.

Now Reuters reports the tide may be turning as disaffected Chinese companies shift back to local stock market listings to counter what they believe are under valuations from US investors.

Two of the notable things about the Chinese stock markets have been the lack of transparency and their volatility.

It may be the current attractive valuations are part of that volatility with the Shanghai Composite stock index having more than doubled this year as opposed to the S&P 500 being up a comparatively disappointing five percent.

For Chinese companies, the relative transparency and discipline of US market listing rules also promised to raise their internal management standards.

The US markets also gained from the Chinese listings as these cemented the nation’s position as the world’s tech centre, with the attraction of American markets fading an opportunity opens for European and Asian exchanges.

Overall, the withdrawal of Chinese companies from US stock exchanges would be a shame for both countries as it makes each of them stronger.

Mar 292015
 

China doesn’t have many trams but that might change soon as the coastal city of Qingdao rolls out their new streetcar system.

What makes Qingdao’s system particularly notable is the trams will run on hydrogen with water being the only by-product of the vehicle.

The Qingdao city leaders hope the hydrogen trams will reduce the chronic air pollution the city, like most Chinese urban centres, suffers.

Should the trams be successful, hydrogen fuel cells will be another shift from mains electricity and motor vehicles. As we’re seeing, being off the grid might soon be a viable option.

Jan 242015
 

“We’re crazy, not stupid” is how Jack Ma describes his Alibaba team in an interview at the World Economic Forum in Davos, Switzerland, yesterday.

Much has been written about Jack Ma and the spectacular success of Alibaba and the WEF session with Charlie Rose is an opportunity for Ma to flesh out the story and destroy some of the myths.

One of the fascinating anecdotes Ma tells is how US cherry growers are preselling their harvests to Chinese customers through Alibaba and cites various other primary producers doing similar campaigns as how American small businesses can sell into the PRC market.

Ma’s interview is a fascinating snapshot of how global trade is going through a radical period of change, the shifting of China’s economy and where the future lies for many industries.