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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Bitcoin in Hong Kong

While many see Hong Kong as ideally positioned to become a global hub for digital currencies and internet finance, the road forward seems far from clear.

There’s no doubt Hong Kong is one of the world’s financial centres. But when it comes to crypto currencies, will Hong Kong still be in a leading position?

Bitcoin, which gained massive global public attention at the beginning in 2014 followed by a spike in its value, first surfaced in 2009. It is a payment system invented by Satoshi Nakamoto in 2008 and was introduced as open-source software one year later. It is a peer-to-peer (p2p) system where users can transact Bitcoins directly. Among other crypto currencies such as Litecoin (LTC) and Ripple, bastion remains the best-known and most widely used.

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Malaysian rate hike signals new trend

Looking ahead, inflation is, however, expected to remain above its long-run average. — Bank Negara Malaysia

Malaysia’s central bank welcomed Ramadan fasts and celebrations through July and August by raising the country’s interest rate for the first time in three years.

As many economists expected, Bank Negara Malaysia (BNM) announced after a routine meeting at the beginning of July that it decided to raise its overnight policy rate by 25 basis points. The new interest rate is 3.25 percent with floor and ceiling rates raised to 3 percent and 3.5 percent accordingly.

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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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