The Great Debate UK

from The Great Debate:

The short and long of emerging markets

Fickle investors have spurned emerging markets in recent weeks, but this rout has obscured a more alluring vista out on the horizon.

Developing economies now account for 50 percent of global output and 80 percent of economic expansion and are projected to continue growing far faster than developed nations. They are expected to possess an even larger share of global growth, wealth and investment opportunities in years to come. So much so that the labels investors use to classify some of these nations will change as the developing develop and the emerging emerge into more potent economic powers

But this long-term view has been lost on many of those who look to emerging market assets for a higher yield in the short term. Their ardor cooled when the Federal Reserve signaled it may soon ease the stimulus that has kept credit cheap, signaling higher interest rates ahead. That was coupled with signs of slower growth in key emerging markets like China and Brazil.

Still, the developing world’s gross domestic product growth of 5 percent this year and 5.4 percent next, as projected by the International Monetary Fund, will far outpace the advanced economies’ 1.2 percent and 2.1 percent. Developing countries are now also better armed to keep panic at bay, with more foreign exchange reserves than before and less aggregate debt than developed nations. Many have put their economies on firmer foundations.

US-China research ties should be a wake-up call to Europe

-

–Dirk Jan van den Berg is President of Delft University of Technology, and was formerly the Dutch Ambassador to China and the Permanent Representative to the United Nations in New York. The opinions expressed are his own.–

Despite much media attention on disagreements, ranging from Taiwan to alleged cyber-attacks, as Chinese President Xi Jinping and U.S. President Barack Obama prepare for their first major summit meeting in California, there is a relatively new and growing basis for warmer ties: scientific and technological collaboration. 

from The Great Debate:

Addressing China’s ‘soft power deficit’

Xi Jinping (L) met with President Barack Obama in the Oval Office of the White House in Washington, Feb. 14, 2012.  REUTERS/Jason Reed

As Chinese President Xi Jinping prepares for his landmark summit with President Barack Obama in California Friday and Saturday, the critical mission of improving China’s image in the world could well be uppermost in his mind.

from The Great Debate:

China as peacemaker

Nuclear escalation on the Korean Peninsula demands creative solutions. With a 2,200-year history of non-aggression, China is in the best position to take the lead — and relieve the United States of a burden it has shouldered for too long.

In fact, no other nation  has had as stable a pattern of world citizenship. Over two millennia, China has not attempted to conquer its neighbors or spread its system of government on any scale remotely comparable to the Romans, Mongols, British, Germans, French, Spanish, Russians, Japanese or even Americans. China does brutally resist the secession of Tibet, which it considers part of its ancient patrimony. But it has not grasped for lands beyond its historical borders.

from The Great Debate:

‘Post-Communist’ Russia and China remain remarkably the same

For a Russian to live in Beijing is to experience time travel. Things long gone in Russia, or stuffed into kitschy theme bars to draw tourists, still appear in China with no sense of irony. There are endless displays of hammer-and-sickles, Red stars, and exhortations to Obey the Communist Party. There’s the rhetorical deification of the worker and the peasant. “Public-security volunteers,” elderly men and women with red arm-bands and a lot of time on their hands, lounge on little folding stools, sizing up passers-by. There are five-year plans, and front-page headlines screaming “Socialist path reaffirmed”.  I thought I left all of this in the 1980s’ Leningrad. But no, it’s all still here in Beijing, instantly recognizable even behind Chinese characters that give it  a new spin. All of which makes it tempting to think how  Russia and China have changed over the last 20 years.

But in fact the opposite is true: their political systems  remain remarkably similar. Both ditched Communism a while back. The only difference is Russia ditched the trappings while China held onto them. The system that emerged in both places operates with fewer overt ideological constraints but with a singular mission: the self-perpetuation of the ruling elite.

How much longer can China carry on like this?

-

–Laurence Copeland is a professor of finance at Cardiff University Business School. The opinions expressed are his own.–

Breakneck economic growth alongside staggering (and rising) inequality, much of it attributable to blatant corruption, seems like an explosive mixture, but until very recently, I would have said that there was at least a 50-50 chance that China could stay on track for another generation (albeit with some slowing in its growth rate). In recent months, however, I have noticed one or two straws in the wind to suggest that the odds may have tilted against the maintenance of the status quo.

from The Great Debate:

How should liberal democracies deal with China and Russia?

Twenty years after the end of the Cold War, we face a new challenge: how to conserve liberal freedoms once our citizens feel safe enough to take them for granted. Totalitarianism of the left and right, which defined liberalism throughout the 20th century, is no longer there to remind us how precious freedom is. It is up to us all to remember who we are, why liberty matters, why it is a discipline worth keeping to, even when our own sinews tell us to relax.

Today, liberal democracy’s decisive encounter is with post-communist oligarchies – Russia and China – that have no ideology other than enrichment and are recalcitrant to the global order. Predatory on their own societies, Russia and China depend for their stability, not on institutions, since there are none that are independent of the ruling elite, but on growth itself, on the capacity of the economic machine to distribute enough riches to enough people. They are regimes whose legitimacy is akin to that of a bicyclist on a bicycle. As long as they keep pedaling, they keep moving; if they stop, they fall off.

from MacroScope:

Is U.S. economic patriotism hurting?

Any Americans believing that their country is being bought up by the Chinese might want to pay heed to a new report from the Vale Columbia Center on Sustainable International Investment. It says that China is a minimal player in terms of foreign direct investment in the United States and that Washington should in fact be doing a lot  more to get it to gear up its buying.

To start with, look at the magic number.  In 2010, the last year for which numbers are available, only 0.25 percent of FDI into the Untied States came from China.  Switzerland, Britain,  Japan, France, Germany, Luxembourg, the Netherlands,  Canada were all far bigger. In the U.S. Department of Commerce's report on the year, China, numbers were so small they were lumped into a category simply called  "others".

Céad míle fáilte for the new Chinese leader

-

China’s vice President could have chosen state banquets in Berlin or Paris for his recent trip to Europe. This wasn’t just any visit – it was the introduction of Xi Jinping, the man tipped to become the next Chinese leader, to the world. But instead of either of those venues he chose to tour Croke Park in Dublin indulging in a spot of Gaelic games on the way. After heading to the US, en route to Turkey, Jinping went to Ireland.

The official Chinese itinerary is extremely telling. Beijing chose one of the smallest nations in the currency bloc for Jinping’s visit and this will be followed with a trip by Irish Taoiseach Enda Kenny to China scheduled for next month.

from Ian Bremmer:

Fallout is just beginning in North Korea

By Ian Bremmer
The opinions expressed are his own.

There are many surprising things about Kim Jong-il’s sudden death, not the least of which is that it took two days for the rest of the world to hear about it. Yet most surprising is the sanguine reaction of the global and especially the Asian markets. On Monday, or actually Sunday as we now know, the world woke up to its first leaderless nuclear power. Coming as close as anyone could to filling his seat was his youngest son, who is in his late twenties. There’s no way these facts were accurately priced into markets that took just a relatively minor dip as a first response. The news from North Korea appears to have been taken far too lightly, and just a few days out, it’s disappearing from the front pages.

While Kim Jong-un’s status as heir apparent seems to tie a nice bow around the situation, let’s get real for a moment. The son of the elder Kim only appeared on the North Korean stage after a stroke necessitated succession planning in Kim Jong-il’s regime in 2008. Consider that founder of the country Kim Il-sung put his son, Kim Jong-il, in front of the citizenry as his heir for more than a decade before his 1994 death. That decade was precious time; time Kim Jong-il spent consolidating power and putting his own people into high government office— and he was over 50 years old when his father passed away. Kim Jong-un has been deprived of that head start; he’s got to rely on whatever ground his dead father managed to clear for him since his 2008 stroke. A couple of years at his father’s side -- and a promotion to four star general -- is scant time for the younger Kim to have developed a real plan for ruling, or real allies in government.

  •