What's New

GBP post-Brexit

My 30-sec video clip for Wikistrat (a global cloud-sourced strategic consultancy of which I am a Senior Analyst). 

Download IMG_2493 2

For background, visit Why Brexit may not happen after all

THE 2016 PRESIDENTIAL CAMPAIGN AND THE CRISIS OF US FOREIGN POLICY

A 10th October Lowy Institute Analysis by Thomas Wright explores "how US foreign policy would change should Donald Trump or Hillary Clinton win the US presidential election. Wright argues that a Trump presidency could see the United States undermine the liberal international order that it helped to establish. Clinton, by contrast, would be a more traditional internationalist president".

Click here

The analysis' key findings are as follows -

• "Trump’s foreign policy will very likely be informed by his core beliefs: opposition to America’s alliance relationships; opposition to free trade; and support for authoritarianism, particularly in Russia".

• "Clinton’s foreign policy is likely to reflect a more traditional internationalism, but may also distinguish itself from the Obama administration by a greater effort to deal with regional challenges to order in the Middle East, Europe, and Asia".

• "If Clinton wins, she will need to respond to growing populist and nationalist sentiment in America in favour of limiting US engagement in the world".

Never before is an American presidential election been watched and debated so closely by so many nations, most of all the world's rising powers. All, not least Russia and China, are geared up in anticipation of a potential paradigm shift in the dynamics of the world order.

A Brookings Institution analysis by Jeffrey Bader dated 10 October "A framework for U.S. policy toward China" offers some possible pointers on how a new US President, particularly if Clinton wins, may re-calibrate policies in relation to a rising China. 

How to win the resource revolution

A McKinsey Quarterly article of October 2016 shows that although resource strains have lessened, new technology will disrupt the commodities market in myriad ways.

In particular, the article points out that -

"Technologies, many having little on the surface to do with resources, are combining in new ways to transform the supply-and-demand equation for commodities. Autonomous vehicles, new-generation batteries, drones and sensors that can carry out predictive maintenance, Internet of Things (IoT) connectivity, increased automation, and the growing use of data analytics throughout the corporate world all have significant implications for the future of commodities. At the same time, developed economies, in particular, are becoming ever more oriented toward services that have less need for resources; and in general, the global economy is using resources less intensively.

There are five takeaways - 

1. Resource prices will be less correlated to one another, and to macroeconomic growth, than they were in the past.
2. You will have more influence over your resource cost structure. Resource productivity remains a major opportunity.
3. You may find resource-related business opportunities in unexpected places.
4. The resource revolution will be a digital one, and vice versa.
5. Water may be the new oil.

US face-off with Russia over Syria and military threats against Russia and China

My exclusive live interview with RT International on 7 October 2016

How Oman can leverage China’s One Belt, One Road

My PowerPoint presentation at the 20th International Conference on ISO and TQM at the University of Buraimi, Oman, on 26th September,2016.

Download Oman 20-ICIT - How Oman can leverage China’s OBOR (PowerPoint presentation) 

Download Paper - How Oman can leverage China (Research Paper) 

Download 20-ICIT-Programme-v.1

View this photo (1)  View this photo (2)  View this photo (3)  View this photo (4)

The evolving role of China in Africa and Latin America

An Economist Intelligence Unit 2016 assesses how a re-balancing China’s relationship with Africa and Latin America will evolve in the years ahead. 

The report contains the following highlights -

• "China continues to play a pivotal role in both Africa and Latin America as a trade partner, investment facilitator and financial backer, but there are big questions over how this relationship will evolve in the years ahead in view of instability and uncertainty caused by China’s economic rebalancing act."

• "In Africa, China is adopting a more interventionist stance in its dealings to protect its commercial interests, strengthening its trade ties across a wider range of product markets, investing further in strategic supply bases, and pushing ahead with trade- and investment-facilitating finance initiatives".

•  "Chinese firms remain engaged in Africa and are positioning to snap up extractive sector investments at lower prices, with a view to securing longer-term strategic supplies. This is already taking place in Copper-belt countries such as Zambia, the Democratic Republic of Congo (DRC) and Congo (Brazzaville)". 

• "Chinese firms are well-placed financially, and strategically connected to tap into growing demand from Africa’s low-income masses, as well as exploit growing demand from parts of the urbanised upper low to lower-middle income segments of Africa."

• "Trade and investment by China into Africa will seek to consolidate its presence on the continent, tap into its fast-growing consumer markets, establish production bases closer to its end clients, exploit Africa’s free-trade deals (among regional economic communities and with major international partners), and set up production bases to feed value chains and consumer markets back in China".

• "In Latin America and the Caribbean, the direct impact of weaker demand from China, and its indirect effect in the form of lower commodity prices, has forced difficult policy adjustments, particularly for South America’s commodity exporters, which are still ongoing. The Economist Intelligence Unit projects a contraction in regional GDP of 0.3% in 2016".

• "Partly in response to concerns of policymakers there to the problem of a growing trade deficit, China has attempted to reboot its relations with Latin America, focusing on investment and technical co-operation, in an increasingly diverse number of sectors that have the potential to improve infrastructure, boost research and development (R&D), and raise the region’s long-term growth rate".

• "The expected convergence of Chinese incomes with Latin American per head incomes should also help the region to make some competitiveness gains going forwards, particularly in areas in which it has comparative advantages, such as agribusiness, with the potential to rebalance trade relationships".  

• "For Latin America to take full advantage of these opportunities, productivity-enhancing reforms and improved intra-regional trade will be necessary in the coming years."

The report points out that "China is Africa’s single biggest trade partner following years of stellar growth since the early 2000s, which reflected China’s insatiable appetite for Africa’s energy products and raw materials, as well as its ability to place a wide range of goods on the African continent.". 

China has been effective in tapping into Africa's fast-growing and massive low-priced consumer market populated by its rising lower-middle-class. At the same time, China is replicating her successful model of special economic zones in partnership with a host of African countries, with 15 such zones already established in coastal regions (except Mauritius) and five more planned for coming decades. These are set to accommodate manufacturing and other businesses diversifying or re-locating from China or other places owing to rising costs and other competitive pressures and Africa's attractive development dynamics. They are also poised to support creation of African jobs and development of local skill sets which have become no longer competitive in China and other localities. 

As for Latin America, the Report flags up the so called 1+3+6 Plan outlined by President Xi during his state visit in 2014. This entails one plan (the 2015-19 China–Community of Latin American States Co-operation Plan) with three engines (trade, investment and finance), and six priority sectors for co-operation (energy and resources, infrastructure construction, agriculture, manufacturing, scientific and technological innovation, and IT).

A year later, during his visit to Africa, Premier Li Keqiang outlined the so called 3x3 Plan which sets out three priority development initiatives (IT, electric power and logistics), with emphasis on three key actors -  government, society and the private sector. 

Africa's has huge development potential thanks to its massive young demographic dividend and rich agricultural resources as "food basket" for the world. However, as the Report shows, many African and Latin American countries remain over-dependent on extractive industries. This is becoming increasingly unsustainable as the world is shifting from energy and resource-intensive industries, driven by China's re-balancing and the collapse of energy prices.

How resource-dependent African and Latin American countries will cope is likely to depend on their ability to capture their respective long-term competitive advantage by diversifying into carefully-targeted "linkage industries", supported by vigorous, sustainable policies and measures. On this front, my power-point presentation at a 2015 conference in Zambia - African sustainable development through "quality" extractive industries - may offer some useful food for thought. 

Download EIU Report - The Evolving Role of China in Africa and Latin America