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Dear Friends


Technology is very challenging to me. I am sending out three links which I think are significant. Excuse my lay out.




The first is an article from China economic review – short but pithy.


China’s reliance on exports may fall below India


China is set to fall behind India in terms of its reliance on exports this year for the first time since it opened up to the world in 1979. The shift highlights the growth in the domestic economy, which could make Beijing better able to withstand trade tensions under President Donald Trump, who has threatened to hit the country with punitive tariffs. China exported $1.65tn of goods and services in the first three quarters of 2016, a 7.2% fall from the same period a year before. During the same period the country’s ratio of exports to gross domestic product fell to just 20.2%, compared with a 2006 peak of 38.6%, according to Financial Times calculations. Its export intensity is now a fraction above that of India, which had a comparable figure of 19.4% in the first nine months of 2016. 


We followed the trend away from dependency on exports to the USA and Europe from about 8/9 years ago. This confirms a drop in dependency on exports. It suggests that China may have been expecting, or preparing, for a trade war a long time back. that is to say they built their new economy foundations on low cost exports, built reserves to later invest in brands and technology, and prepared for a cut in export dependency. The pc drop in exports as a pc of gdp is halved in 10 years. It suggests that arguments that the Chinese must drop the RMB to maintain exports is misplaced. The change in the RMB is more to do with adjusting to the rise of the dollar.


This is very significant data.





The second is an article I found from Der Spiegel online. I give you the link as the article is long but very readable and very illuminating. We must all remember that many assessments affect global policies and reactions. Here we see the great significance of the German Russian dynamic. Trump is seen as playing in a very deep place. German Ostpolitik and Russian interest in Europe as an energy market and threat from the North Europe Plain makes USA release of shale oil and gas a trump card with both.


Asian regionalisation is based on Free Trade and not a single currency or any kind of construction of political institutions, other than for consultation, unlike the European Parliament, and no unifying of national fiscal policies.


Europe went much further, probably as a reaction to the collapse of the Soviet Union , and tried to tie in the new nations. Those new members are now the prime candidates to join a British exit from the EU, as Trump suggested. 


I think Der Spiegel Online is an interesting read on this debate. This is of great interest to China as they try to visualise the Trump moves and its likely effects.


Can China and the USA find an accommodation, and what does China take from the UK moves to move from China to the USA as its prime partner for economic development?




The third is from the Financial Times which suggests that the UK has long been planning a reconstruction of its priorities. Some say that the UK went the wrong way when it prioritised the building of a financial core to the UK economy and slashed the British industrial economy. This article which suggests a move away from financial capitalism of Thatcher and Reagan, which some say was inadequately regulated and led, inevitably, to the financial crisis of 2008.. 


First the connection to the new UK industrial approach


It has a sense of the Chinese plan to transition their economy into a new place. China will be studying this carefully to identify potential synergies and to compare priorities.




Is this article in today’s Telegraph


This suggests a move towards the USA of the type that when contemplated with China led to concerns about our absorption. I think in both cases the worry about foreign domination is overstated and clearly there are historical synergies for the British to feel more comfortable with the USA. This also suggests that London could remain a world financial centre based on American support, viewing London as great intermediary into Europe and the Far East.



Enjoy reading what I think China’s researchers study.


It all sets very complex issues for MNC senior executives to develop national, regional, and global strategies.


But when all is said and done it is only Africa and the New Silk Roads that offer routes to global growth. That requires cooperation across the globe. The USA and China need each other and the UK and China can do things together that the USA and UK cannot.


I am hopeful the UK and China will find a path in this new world. China will be looking to work with the UK, even as the UK moves closer to the USA.


And perhaps that is the lesson Trumpists took from the political era of Washington. Too much time spent on tactics and not enough on the big picture. It took reality TV to change the game in the USA and the UK, and that skill is well honed. In China they never took their eye off the big picture.



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