Australian dollar, industry policy and economic transition

Comments on Shiro Armstrong "Asian integration a key part of Australia’s economic transition", 29/05/2016

The author argues that “As the dollar strengthened and productive resources shifted to the mining sector, manufacturing became less competitive and many industries suffered or shut down.”

That can only be partly true, as the falling Australian dollar in recent two years will not in any way to stop the closure of the only remaining car manufacturing plants in Australia.

As a result, there are more important factors than the fluctuating Aussie dollar in determining manufacturing in Australia.

The issues with the future submarines to be manufactured by the France, possibly with some part of that making process in Australia, may not necessarily represent a good policy, if Australia can not maintain a car manufacturing plant while attempts to be part of manufacturing and maintaining submarines. It may be actually a loss if Australia does not have that comparative advantages in doing the submarines, if the standard trade theories are to be believed!

It could be an example of poor industry policy at the taxpayers expense.

Australia do need to find its comparative advantages!

China still searching for an effective governance system

Comments on Neil Thomas "The Cultural Revolution will not be revived", 1/06/2016

The statement by the author that “‘What the Cultural Revolution did was to teach the Party not to trust its own people’”, does not seem to be a correct characterisation of the Party’s official line. The party’s official line on the key lessons from the Cultural Revolution has been to prevent excessive personal power and authoritarian at the expense of collective leadership style, at all levels, particularly at the very top level of party leadership. It was Mao’s huge popularity with the people and with people’s trust through the revolutionary struggle against Guomingdang regime led by Jiang Jieshi and the establishment of the PRC that made it possible for Mao to launch the Cultural Revolution in the mid 1960s.

However, personal power has the power of addiction, not just in China but also in the west (e.g. JH’s stay as the prime minister until he lost his seat and the changes to prime ministership in the past few years in Australia, as good examples), even though the Communism system has made it much easier to occur. The person, whoever is on the top, would like to continue that power.

Having said that, China has developed and established a system of power transition at the party’s very top, as the past three transitions indicate. It will still be a long way to go for China to have a complete system where power transition is not just a matter for the elites but the people to have a true and more effective democratic voice in deciding who will be the leader or in the leadership team.

No system is perfect and that is why we have see the Trump factor in the USA now and surprises many people have and have expressed worldwide.

The above mentioned changes in the prime ministership in Australia, in conjunction with the difficulties for the government to carry out much needed reforms to further raise living standard and improve equality, also reflect some shortcomings in the west system.

China is still searching for an effective and stable system of governance. How long it will take to have it is a question of interests by many.

China's SOEs should be seen in factual light

Comments on Paul Hubbard "China’s global economic impact is no longer state-owned", 5/05/2016

Thank you Paul Hubbard for a fact based, balanced and well argued article in this particular field.

The point on China’s SOEs’ overseas investment reflected in the following statements are excellent:

“Foreign engagement with SOEs provides an opportunity for Chinese state business to experience and be subject to the discipline of competitive markets, without special privileges, in well-regulated economies.

“Foreign investment into China helped align China’s nascent private sector with the rules of the global trading system. Likewise, Chinese state investment overseas can be a channel to take back to China international standards for transparency, corporate governance and market behaviour.”

I highly appreciate and commend this article.

PS: More importantly, the point on the fact that SOEs exist in virtually all countries including advanced western economies. The differences are a matter of degree not a matter of having or not.

Understandably, there have been a privatisation process in many countries, particularly in advanced western economies. In Australia, for example, a number of big former SOEs have been privatised, such as the Commonwealth Bank of Australia, Qantas, Telstra (formerly Telcom).

Notwithstanding the privatisation process, there are still SOEs in western economies.

In Australia, for example, you still have SOEs including Australia Post, Medibank Private and Defence Housing at the national level, some electricity and water enterprises owned by the State and Territory government at the state level. The Snowy Mountain hydro electricity is jointly owned by the federal and some state governments. Some ports, rails and buses in Australia are government owned entities.

Poor understanding on China’s e-commerce rules

Comments on Ryan Manuel "Why China’s e-commerce rules have exporters in a flurry", 4/05/2016

They, exporters to China. should not be worried, because the new rules, as you described, just aims at close loopholes, so importers, particularly consumers are treated the same whether the purchases are from special zones or not, as long as China imposes duties on those imports.

I don’t see any reasons for concerns. It is no worse and arguably better than the fact that Australia is imposing GST on online imports, because GST is a sales tax and the sales didn’t happen in Australia.

There is no need to exaggerate on what China does and to paint it to something it is not.

The title of this post, understandably, reflects a poor interpretation of the China’s e-commerce rules at its best, and is more likely at its worst to show the potentially China bashing sentiments in some circles in the West. It is regrettable at least.

I am surprised it is from the Australian Centre on China in the World, The Australian National University. It may reflect very poorly on the poor understanding of the author on China.

RCEP conducive to Asia’s next growth frontier

Comments on Peter Drysdale "Asia’s next growth frontier", 5/05/2016

The current participants of the RCEP, particularly those excluded by the TPP, should have some sense of urgency to accelerate the negotiation processes, so they are not too disadvantaged by their exclusion by the TPP.

I would suggest that they should aim at conclusion as early as possible and have provisions that whichever member countries ratified it, they could apply to those countries, so to avoid unnecessary delays in the ratification processes, in case some countries encounter difficulties of some sort.

Given the fact some of the RCEP members are also TPP members, all members must be aiming at helping the conclusion of RCEP and avoid any drag for other purposes.

And by achieving a non-regional exclusive and growth enhancing RCEP as early as possible, it will be not only for the region and members but also for the whole world.

In the context of maintaining continued and rapid regional economic growth, I appreciate the title of this post.