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2017-04-13

On China's overseas investments in developing countries

Comments on David Dollar, Brookings "The future of Chinese investment", 11/04/2017

What is the criteria for investment? It would be the return to investment, or risk adjusted return to investment. Here one may find that different investors may derive different returns for the same project, potentially due to different assessment of the risks and potential returns. There are uncertainties in risks and returns of any investment, including international investments.

The second point is potentially the differences in views towards some standards, possibly between the developed and the developing worlds.

Thirdly, is the author suggesting that the US may consider to give up its World Bank leader position? The reality is likely that it will not, at least not in the foreseeable future.

But seriously, China's investment in those countries will boost the economic welfare of those countries.

The Trump Test? But what test?

Comments on Yu Yongding, CASS "The Trump test and the renminbi", 13/04/2017

Since Trump became the US president, people in some quarters have been talking about free and fair trade and the term has come to be topical.

It now seems gone are the days of America was the leader of the free world advocating and preaching for free trade and there was no mentioning of the world fair (presumably the Americans would have forcefully said free was fair).

How quick the world has changed! Where have the WTO rules governing international trade have gone?
Now we have a new version of the “Emperor’s new cloth” or a new version of the Chinese historic story of the Qin Dynasty where Zhao Gao created the case of “pointing at a deer and saying it as a horse”.

Isn’t the argument that China has been manipulate its currency to make it low to its own advantage the same as those tales? Are there any international economic justice existing now ta the present?

But to be more serious, could countries on the the receiving end of the Trump administration's new approach to international trade, investment and business, particularly those which will stand as significantly negatively affected, be able to challenge the new Trump doctrines at any international institutions and/or courts or tribunals? Or is this really the case where the strongest can bully others with no consequences at all?

2017-04-06

Comments on Darren J. Lim and Victor Ferguson, ANU: "Costs of Chinese boycotts cut both ways"
5/042017

While this post should enjoy the benefit of doubt that every argument may have its own merits or shortcomings and there is generally two sides story for nearly everything, what about the US and European sanctions of Russia in the past two years or so? Have they run any risks in losing their international leadership? Are they justified in any way?

If yes to the second question, then why China should be condemned if it takes measures in response to its own security or to an increased risks to its security? Should China simply ignore any such increased risks?

2017-04-04

Did globalisation transfer wealth from rich to poor countries of the world?

Comments on Zha Daojiong (Peking University): "How can Xi get along with Trump?" 4/04/2017

The following paragraph may need some more thinking:
“Second, China’s wish for a stable trade and investment relationship with the United States will be easier to meet if its public diplomacy can empathise with those Americans who feel left behind by the forces of globalisation. This can begin by acknowledging that the history of globalisation has been one of transfer of wealth from the rich to the poor countries of the world. At the same time, though, the delivery of lower-cost consumer products from emerging economies has helped lift the welfare of needy consumers in societies like the United States.”

It does not seem to be a sound or indeed even a correct argument that “the history of globalisation has been one of transfer of wealth from the rich to the poor countries of the world”. It is hard to understand how that transfer has ever occurred. It is likely to be a nonsensical point to argue that way.

History is likely to be full of transfers in the opposite direction, due simply to the asymmetric power between the two. How could and indeed why would the rich countries have allowed that to happen?

It is likely that some of both poor and rich countries have benefited from globalisation, even though it may also be a fact that not every country has been a significant beneficiary of that process. Further the benefits to any country are not likely to be equally shared by all members within that country. And that is likely the main source of oppositions to globalisation in some quarters.

Finally, concession for concession's sake in diplomacy and step over the appropriate boundary is likely to produce laugh stocks.

2017-04-03

Corruptions and unsustainability of economic model two very different issues in China

Comments on Dong Dong Zhang "Beneath the surface of China’s relentless rise", 2/04/2017

While obviously there were many serious problems in China, it is not obvious that the rampant corruption and the unsustainable economic development model that the author describes in the post were equally important contributing factors to the centralisation of power in the recent years.

They appear to be very different problems and issues in their nature, with the former directly endangering the very existence of the CCP as it has stood for and the latter likely a result of development stages. Yes income inequality in China has increased, but the main picture is that the living standards of almost all people have probably risen universally.

The standard measure of income inequality is the Gini coefficient and China's was 42.2 at November 2015 according to the World Bank sourced from wikipedia (click it for more information). I have heard and read that some people have argued that inequality in China has reached alarming status. However, while that measure of inequality for China has probably increased over time, that does not necessarily single China out as an particular outlier. For example, that same source also listed the Gini for the USA were 41.1 and 45.0 produced by the World Bank and the CIA respectively in the same table.

Further, the rampant corruptions were extremely unlikely a positive contributing factor to "the relentless rise of China". And corruption was unlikely to be an unavoidable part in the China development model, even though it may have seemingly appeared to be a side product of China's economic reforms and opening up to the outside world as people shifted focus towards money in that process.