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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

One should consider China's security too

Comments on Darren J. Lim and Victor Ferguson, ANU: "Costs of Chinese boycotts cut both ways"
5/04/2017

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.

大美帝国衰落的开始

美国在二战以来一直高居世界领袖地位,特别是在西方自由世界,无论是政治,军事,经济或是技术方面其领头羊位置无容置疑。这种局面从二战结束后一直持续于二十世纪。尤其是在前苏联解体,和东欧阵营消失后,美国更有一种世界永久领袖之感,认为以其为领袖并主导的西方自由民主体系将长期主宰世界。

然而,在迈入二十一新世纪不久,随着中国经济及其贸易借其加入世贸组织的长劲东风后的迅速崛起,加上美国长期陷入于伊拉克及阿富汗战事但不能彻底控制局势而制胜,更有美国政府过于相信自由市场的作用而缺乏对其金融信贷的有效管控,金融危机因三管齐下而于2007-08爆发,不但导致美国经济危机且几乎危机整个世界。

美国及世界金融危机后长期复苏疲软,由此引起公众对其现有领导精英层失望而丧失信心,结果是去年美大选以现任总统意外成为白宫的新主人。

美国金融危机及川普当选总统这两件事非同小可,极有可能作为美国衰落的重要标志(一是经济二是政治)而载入史册。现在看来,美国在世界经济上的领导地位已明显丧失,其美国第一的政策虽在短期内可能对美国内经济和就业有一些影响,但由于该举违背美国的在国际上的比较优势而种下长期的恶果,无非是搬起石头砸自己的脚,加剧美国经济相对衰落的速度与进程,损人而不利己。

而其在世界政治体系中老大哥地位也极可能由于白宫新主人的不按常规行事不顾其他世界领袖人物面子的独特风格而摇摇欲坠,日薄西山也指日可待。

数年后,美国很可能仅仅保持其军事和技术的领先地位。其军事开支巨大,不仅长期是世界老大,遥遥领先,而且为其后约前五至十名也就是世界第二到到第五也许第十名国家之和。这种局面不会在短期内有所改变,尽管中国军事开支也随着其经济的崛起而迅速上升。

在技术上美国科技人才济济,其较宽松自由的体制会继续引聚大量的高科技人员,科技创新会继续。

如果由于美国在经济和政治上的衰落而实行自我封闭的话,其后果必然对其军事和技术有长期不利影响,导致自我衰落。自我封闭的长期效果只能是搬起石头砸自己的脚。按照当前白宫主人的独特风格,这个日子还会有太远吗?