China’s pivot to America could overshadow the US’s pivot to Asia

Not so much a shift in policy but a growing trend

There has been so much discussion of the United States pivot to Asia that few people have stopped to consider the implications or the success of China’s own pivot to America.

China already wields enormous influence in Asia through its size and its adroitness at negotiating, buying or bullying its way to goodwill among its partners – much like every other player on the geopolitical landscape. It has or is part of free trade agreements that include just about every country in the region.

The all-but-certain death of the Trans-Pacific Partnership (TPP) opens another door for China to step in with its own Regional Comprehensive Economic Partnership (RCEP) that includes India, Japan and most countries in Southeast Asia. China also has plans to push for the Free Trade Area of the Asia Pacific (FTAAP), that would include some 21 countries in Asia and America.

Meanwhile, the U.S. pivot has been one of the key shifts in global economics and policy over the last couple of decades. It had the promise of helping the world continue along the path towards greater globalization.

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A China-US trade war is not likely to be

The “man on the street” will be the biggest loser

All the talk that has erupted in the past couple of weeks about possible trade wars between the United States and China has been interesting in the way that a soap opera is interesting: lots of drama with little link to reality.

Sure, it is easy to use China as a scapegoat. A place that is conveniently far away and too big to understand. It is easy to say “look, it is China’s fault and we will put the hurt on them and things will be lovely all around”. If only that were true.

For once, it has been China that has responded with a measure of restraint. An editorial in the reactionary Global Times newspaper outlined the likely response from what is now the second largest economy in the world: “A batch of Boeing orders will be replaced by Airbus. US auto and iPhone sales in China will suffer a setback, and US soybean and maize imports will be halted. China can also limit the number of Chinese students studying in the US.”

Multinationals would certainly lose in a trade war but so would people in the US and possibly elsewhere by paying a lot more for items that are now treated as disposable commodities.

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Poverty, growth and baseless anger

The economics of misplaced anger

Fast growing Asian countries have “eliminated” poverty at an astonishing speed, bringing people out of extreme poverty into mere gut-reaching poverty.

At first blush, the numbers are suggesting of a hopeful future. In 1990, about a third of the people in the world lived on less than US$1.90 a day. By 2013, it was just 10.7%. In actual numbers, that is 1.85 billion in 1990 compared to 767 million in 2013. A second glance puts in perspective the anger of many people in the world, and not in a good way.
In 1990, the bulk of global extreme poverty was in Asia, the most populous region in the world. Now it is in Africa, the most troubled region in the world.

We wrote about this with my colleagues in a series of stories in China Daily Asia Weekly last month to mark International Day for the Eradication of Poverty, which falls on 17 October. The World Bank says the number of people living in extreme poverty is falling by 88 million per year.

Before we start celebrating, though, let’s go back to that US$1.90 a day, which adds up to US$57 for a 30 day month or a whopping US$693.50 a year. To meet the threshold, a family of four would have to earn US$2,774 per year or US$231 per month. It is hard to imagine any place in the world where that is anywhere near enough.

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2016 BOAO Forum for Asia

Looking to the future

This year’s BOAO Forum for Asia (BFA) has a theme of Asia’s New Future: New Dynamics, New Vision.

This time, the 17th annual gathering of leaders and industry professionals in Asia covers areas such as inclusive finance, disruptions of traditional business and economic models, new banking practices, regional cooperation and growing links through reforms and initiatives.

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R&D spend driving China pharma co’s

Companies are narrowing the gap

China is not a powerhouse of innovation, yet, but it is certainly trying to pay its way into that particular status. This willingness to spend in R&D – to pay to talent, buy innovative companies and seek out new technologies – is particularly visible in the pharmaceutical and biotechnology space. And it is working.

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China Issues Biosimilar Guidelines Draft

A long-awaited set of guidelines for a billion-dollar market.

After years of waiting, Chinese biosimilar makers will soon have a set of guidelines to follow.

This post on Thomson Reuters Life Sciences Connect news blog (HERE) outlines the  industry’s reaction to the draft biosimilar guidelines.

The global biologics market is experiencing a golden age over the current decade. As drug development progresses, it’s time for biopharmaceutical companies to start reaping its rewards. The market is expected to grow more than 80 percent from $138 billion in 2010 to $253 billion by 2020, according to Sandoz international GmbH. And $2 billion of this will be coming from biosimilar products.

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HK protests impressive but status confusing

HONG KONG, China. Eight days into the protests that have shut down entire neighbourhoods of the city, things are looking… ah… complicated.

The government has been adamant that it wants work and school to resume on Monday. The protesters have said that they are ready to talk, or ready to keep protesting, or not ready to talk unless new demands are met, or keen to get back to the streets en masse. It is really hard to tell.

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Asia set to cash in on blockbuster movie business

No other place on earth can  compete China for enthusiasm for Hollywood movies. Proof is in how much audiences will pay out of pocket to go to the theatre to see blockbusters like Transformers or in how much super-rich investors are willing to shell out to get into the game of producing them. 

In just 11 days, Transformers: Age of Extinction earned US$212 million in Mainland China, 10 times more than the US$21 million the movie earned in South Korea and far, far higher than the US$6 million earned in Malaysia or the US$4 million it earned in Hong Kong, Singapore or Thailand.

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Chinese Investment Is Far From Scary

A “mix of policy liberalization and changing commercial realities in the Chinese marketplace” have led to a boom in Chinese foreign direct investment (FDI) in the US, but these investments are complicated by mistrust, national security concerns and widespread fears that Chinese firms have unfair advantages.

A new report suggests Chinese FDI in U.S. high tech may not be as scary as popular opinion there would have us believe.

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