Paul Wallbank – Brilliant Communications

Tag: china

  • China’s investment paradox

    China’s investment paradox

    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.

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  • Riding the rails of the global economy

    Riding the rails of the global economy

    Irish economist David McWilliams reflects on how a train ride between Boston and New York illustrates how a lack of investment in the US and over capitalisation in China has affected the global economy.

    A lack of public investment is hurting the US in McWilliams view and that’s exacerbated by a reluctance of the private sector to commit to new productive assets and projects. Weak investment affects household wealth and savings, it also means the low interest rates are encouraging speculation rather than economic growth.

    Meanwhile in China, the nation’s massive expansion has created a global glut in manufacturing capacity. That makes business even more reluctant to invest in plant and equipment while creating risks for the commodities based economies like Russia, Brazil and Australia that feed that machine.

    One aspect that McWilliams overlooks is another shift in the global economy – the shift to smaller scale manufacturing and automation, “real investment tends to be in big machines that make big stuff,” he says.

    That investment in big machines may not be the economic driver they were half a century ago as building and maintaining the machines themselves are no longer labour intensive. Furthermore, the manufacturing of tomorrow may well be much more distributed and on a local, smaller scale.

    McWilliams’ points though are well made. We need to be looking at how to stimulate private investment in productive assets while looking at the public investments that will enhance our economies and improve our living standards.

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  • Peace in our time

    Peace in our time

    Presidents Obama and Xi have agreed to curb economic cyber espionage between the two countries during the Chinese Premier’s state visit to the United States today.

    It’s a welcome move, but one suspects neither country will resist the opportunity to get a commercial advantage and increasingly the divide between a state and corporate interests has become blurred.

     

     

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  • China’s entrepreneurial push

    China’s entrepreneurial push

    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.

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  • China goes on the tech offensive

    China goes on the tech offensive

    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.

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