CHINAwatch

Second Belt and Road Summit in Beijing addresses fears of critics

Live interview on TRT (Turkish Radio and Television Corporation) on 26 April, 2019

Belt and Road reaches an inflexion point to address a mounting backlash of concerns

My part in Radio Television Hong Kong (RTHK)'s Backchat of 26 April 2019.

Download Backchat 26.04.19  (My parts run from 12:26 to 18:26 and from 39:40 to 43:15)

How the US chooses to lose the race on 5G

An op-ed of 18 April by columnist Josh Rogin in the Washington Post explains why On 5G, the United States is building Betamax while China builds VHS. Using a different analogy, United States is betting at home on an inferior horse (spectrum standard "mmWave") while the rest of the world is running with a superior breed (spectrum standard "sub-6") dominated by China. This is elucidated in a bullet-point expose of 24 April 5G: 'The U.S. is winning a race that no one else is running' by Malcolm Riddel in China Debate, an online forum. 

The above seems to vindicate my earlier report of 12 March Why 5G is set to change the world and why China is leading.

A further piece in the South China Morning Post of 7 May, 2019 explains why US bets on different mobile airwaves from rest of the world – and that might cost it the 5G race

Dominance or development? What’s at the end of China’s New Silk Road?

A South China Morning Post exclusive of 22 April, 2019 gives an in-depth and fairly balanced view of both sides of the picture.

On the one hand, the Belt and Road Initiative meets a yearning need for infrastructural investment, particularly in the developing world and in struggling economies, leading to greater productivity, local job creation and productivity growth. It also meets China's own needs to make better use of its excess capacity, doubles down on China's advantage of global economic connectivity, and helps to realize the China Dream of greater global influence as a great power.

On the other hand, there are real and perceived risks of a "debt trap", environmental fallout, corruption and erosion of best practices. What is more, there are concerns that the Belt and Road is China's strategy to upend the Western liberal order at the expense of the United States and its allies. 

One thing for sure is that the scale of China's initiative is mind-boggling. There seems no fixed boundaries where the initiative cannot hope to venture. While oft-quoted maps for the Belt and Road usually refer to Asia, East Africa, the Middle East and Eurasia, its extension has been reported in other parts of Africa, Latin America, the Caribbean, and even the Arctic.

Initially the Belt and Road Initiative aims to cover 152 countries worldwide at an estimated cost of US$4-8 trillion, many times America's postwar Marshall Plan for Europe in comparable money terms. However, the comparison is inappropriate in terms of global reach, development deliverables, connectivity and inclusivity. 

According to the Report "The Belt and Road Initiative: Progress, Contributions and Prospects" released on 22 April, 2019 by the Office of the Leading Group for Promoting the Belt and Road Initiative, up to now, 173 deals have been signed with 125 countries and 29 international institutions, including 26 in Asia, 24 in Europe, 14 in the Middle East and 3 in Africa.

With 1,800 projects underway, click here, the initiative is nowhere near conclusion, particularly in Africa, where China's footprint is almost ubiquitous. It is thus likely to be a work in progress for many decades, if not stretching beyond mid-century.

For the initiative to be sustainable, China is beginning to learn from mistakes and deficiencies such the need for better corporate governance as well as partnership with a wider range of stakeholders, not least advanced countries including Japan and Western Europe as well as with multilateral organizations like the World Bank and the United Nations Development Program. 

What’s at the end of China’s New Silk Road? Cleary it is too early to tell.  

OECD Economic Surveys - China : Executive Summary April 2019

OECD's April 2019 economic survey on China tallies with the general picture that China's economy appears to be stabilizing, if not entirely out of the woods. Corporate debt, inefficient state-owned enterprises, lack of level-playing field for foreign enterprises, insufficient intellectual property protection, economic inequaltiies and ongoing corruption continue to weigh down productivity growth. Many of the reforms recommended by the OECD tally with what China promises to deliver in its ongoing trade negotiations with the United States, as outlined in the introduction of my May 2019 Newsletter .

 

 

GBA rivalry for human capital changes Hukou game - Ming Pao 15.04.19

An article (in Chinese) of Ming Pao Daily News dated 15.04.19 reports on the impact of a new National Development Reform Commission 國家發改委 directive "2019 Priorities for the Development of New Urbanization" 《2019年新型城鎮化建設重點任務》. The article highlights a robust transformation of the "hukou" household registration system which deprives rural migrants of essential social benefits incluidng housing, medical care and education. 

The new directive mandates the stricture's total abolition for towns and cities with up to 3 million inhabitants. Those with 3-5 million population will also need to comprehensively relax restrictions. The liberalization is dedicated to achieving the target of enabling 100 million migrants to gain urban citizenship by year end. 

Larger cities benefiting from this liberalization policy comprise 13 cities such as Xian, Tsingdao, Dalian, Xiamen, Suzhou, Ningbo and a host of 65 others such as Fuzhou, Nanchang, Zhuhai, Foshan, Haikou and Changzhou. Many city beneficiaries are situated in the Greater Bay Area.

Regardless of this policy, the GBA has become a magnet for the flow of human capital across the country. In recent years, about a million new immigrants choose to settle in the Pearl River Delta annually, resulting in 1.48 million additional urban jobs while unemployment registers on average only 2.41%. Rather than a burden, this migrant flow has been generating a demographic dividend for productivity growth. 

According to the article, this tallies with keen competition between dynamic cities for human capital. Many cities including those in the Greater Bay Area have launched incentives to attract human talent.

If the overall target of 100 million new urban citizens by year end is realized, it is set to have a transformative impact on the country's vitality, not least in the Greater Bay Area. 

Download Ming Pao 15.04.19 - GBA rivalry for human capital changes Hukou game (2 pages) (in Chinese) 

The China Compass Q2 2019 - overview of China's economy

The above report produced by The Beijing Axis of the Axis Group International, a China-focus business consultancy, features the following highlights -

• China continues to contribute 30% of global GDP growth (p.9) 
• The primary driver of China's economy is high-value services such as IT, software, leasing and other business services as the tertiary sector becomes the largest contributor. (p.76)
• During the past decade, industrial value-added output averages 20% growth annually (p.80) with machinery and equipment representing over half of China's exports. (p.98)
• China has the second highest female labour participation rate - 70.8% (after Nigeria). (p.200)
• China is projected to overtake the US economy in 2026. (p.157) 
• The economies of various provinces are comparable to mid-sized advanced countries (e.g.Guangdong v Australia; Jiangsu v Spain) (p.158)
• But China's GDP per capita registered $10,100 in 2018 (17.44 % below the ceiling ($12, 235) of the Middle Income Trap). (p.66)

Download The China Compass - Q2 2019

Huawei's 2018 outsized earnings despite US-led pushback

Live TV interview on Aljazeera English Channel on 29 March, 2019