November 2017 Highlights &
Commentary

By Peng Khuan Fong 19/12/2017
    
HIGHLIGHTS

THE 9TH World Chinese Economic Summit (WCES) held on 13–14 November 2017 in Hong Kong (HK) brought together over 100 speakers from 27 countries to discuss the role of China in the One Belt One Road (OBOR) Initiative as the new driving force to counter the rising protectionist tide worldwide.
    
Image sourced from Macau Daily Times
 
OPENING ADDRESS

HK’s Chief Executive Carrie Lam said the OBOR Initiative spans across Asia, Africa and Europe and covers three-quarters of the world’s land mass and almost 60 per cent of the world’s population and can encourage closer economic, infrastructural and cultural connectivity to achieve common prosperity. She advocated a shared future of peaceful, sustainable economic growth and prosperity in the aspirations toward balanced, inclusive, innovative and secure growth.

According to her, President Xi Jinping’s keynote address at the 25th Asia-Pacific Economic Cooperation (APEC) Leader’s Meeting in Vietnam pointed out that though the OBOR Initiative is from China, it belongs to the world. “It is rooted in history, but oriented toward the future,” she added.

The keyword of the OBOR vision is ‘share’. Every nation should share its market, experience and future with other countries and regions. Hence, the plan to revive the ancient trade routes from Western Europe through the Caucasus, the Middle East and Central Asia to the Chinese mainland calls for a higher level of regional collaboration.

In that light, the free trade agreement between ASEAN and HK signed on 12 November 2017 is a significant milestone in deepening broader ties and relations including people to people bonds. In particular, focus is on the bay area development covering the HK, Guandong and Macau region. The role of HK is important as the hub of tariff exemption and trade with ASEAN.


WHAT THEY SAY

Andrew Weir, chairman of the Pacific Basin Economic Council, noted that OBOR is primarily about infrastructure, adding, “But the real story is connectivity and massive economic stimulus to countries in Asia along the route, and to open new markets.” In his view, talk about regionalization and further collaboration should be based on the common belief that the overall cake will get bigger. Therefore, OBOR can really make a difference.

Dennis Galligan (OBOR Institute at Oxford University) said the big challenge is to make the OBOR Initiative truly international by achieving coordination among the nations and regions along the route. Therefore, the smooth implementation of the OBOR Initiative depends on the need for China and associated countries to work together internally and regionally.

In China, a new blueprint has been implemented for trade and economy. Under the new era of Chinese socialism, the domestic market-oriented reform and opening-up policy have stimulated the nation’s economic miracle of sustained growth and high development. Less developed countries along OBOR should keep up with market reform and open policy to ensure their common welfare and successful growth as well.


THE NEW GEOPOLITICS

Prof. Dr. Din Syamsuddin (Indonesia) said the opposite of peace is no longer war but poverty, terrorism, climate change and so on. The East Asia world view is important for we need friendly development and peace based on moral and ethical areas of concern and values. It is best to maintain peace and security in the region.

Prof. Xiang Bin (China) said the European Union will become more socialistic and capitalism will wane as global trading is reconfigured. There is not enough collaboration efforts between the US and China and we need to work together for humanity.

Clyde Prestowitz (Economic Strategy Institute, US) said a rich and rising China is more desirable that a failing China, hence help and cooperation is best to make China a viable economy. The world needs to remodel and readdress institutions like the TPP and FTA. We have to reinvent the world economic system which is unbalanced as it can lead to war and everyone is a loser in any war.

Speaking as a businessman and not an economist, Jonathan Choi (HK Chinese General Chamber of Commerce) said China’s rise creates many opportunities and challenges. The OBOR Initiative is by China but it is for the world to become integrated, participate in globalization and break trade barriers.

Lord Jonathan Marland (Commonwealth Enterprise and Investment Council, UK) said through the world is getting smaller, governments are disconnected and want to cut off ties. Governments are not catching up with the pace of connectivity. Free trade is the way for a country to get out of poverty.

Dr Tim Summers (Chatham House, UK) said the rise of the Asian region is in a fragmented way, not integrated and coordinated. The issue at hand is to manage the period of uncertainty as changes move from West to East. The USA remains the single most that free trade brings more benefits than protectionism.

The USA, which consumes more than it produces, is grappling with structural failure and struggling to develop a new role to combat the global economic structural system as the US dollar is overvalued. The USA unilaterally guarantees the security of South Korea and Japan but wants to back away. The liberal global era led by the USA and Europe is coming to an end as Asia gets richer. The UK has the best organization in the world, the Commonwealth, which is now largely ignored.

China has never been a global power and needs time to adjust a change. Since the Renaissance, all issues have been raised and handled by the West but a two-way traffic is now developing. China needs to rethink about values and issues.

Inter-cultural dialogue among countries with a middle way orientation for a win-win situation is more important. It cannot be done by one or two countries. All have to cooperate and solve the problems of the world for the world system depends on the values of humanity. We need to believe in the power of dialogue, cocperation and collaboration between one humanity, one destiny and one world. Get to grips with the situation. Perceptions and narratives are important. For instance, which country has soft power or is the leading power.


SPECIAL ADDRESS

Linda Dessau (Governor of Victoria, Australia) urged for respect, trust and understanding between people, businesses, companies, nations and so on. No one can go it alone in a global world to ensure mutual benefits and shared economic and social future. A Chinese proverb says, “If you want to go fast, go alone. If you want to go far, go together.” Opt for openness, engagement and partnership as insularity leads to stagnation. She quoted President Xi, “Openness brings prosperity while isolation means regression.”


SPECIAL ADDRESS

Former Premier General Pervez Musharraf (Pakistan) said the confrontational stance of major powers lead to global uncertainty. The solution in having peace between super powers in the world. For universal harmony and advancement, peace is a prerequisite.


INFRASTRUCTURE

Discussions shifted to infrastructure building. The first is physical infrastructure such as roads, rails, bridges, etc. The second is institutional infrastructure like banks, organizations, universities and schools. The third is soft infrastructure meaning education, skills development, arts and crafts. Trade is not the answer to everything. Free trade has caused many conflicts. We need shared trade or equal opportunities for all to participate in trade.

On the topic of smart cities, talk centered on using technology to make life enjoyable. Cities
need to be for everyone. We must enjoy the benefits of city life with the citizens or else we will live in poverty. The livability of smart cities means it is easy and convenient to get to places. We need open standards for smart cities, a sharing economy and a knowledge economy.


GCD ENTREPRENEURSHIP

Turning to the Global Chinese Diaspora (GCD), Kriengsak Charoenwongsak (Nation Building Institute, Thailand) pointed out that 43 million Chinese live outside China. Of that total 70 per cent live in Asia, especially Southeast Asia, while the rest are in Africa, European Union, the Americans and Oceania. In Singapore, the Chinese are involved in 76 per cent of its economic activities; Thailand 40 per cent; Malaysia 23 per cent; Philippines 11 per cent; Brunei 10 percent; Myanmar 3 per cent.

The GCD has helped in many local developments of countries, even in the Silicon Valley in the USA and elsewhere. The GCD links trade and investment with China and other countries. The GCD investment in entrepreneurship is the result of connectivity with China’s outward investment. The GCD bridges China with the rest of the world and China recognizes and depends on the GCD.


GOING FORWARD

The summit noted that global political risks have risen with US President Trump’s policies in the Asia-Pacific and their impact on China-US relations. The new geopolitics is impacting Asian business planning and strategic decisions.

Everything is like a roller coaster, going up or dipping down. No one knows. So if you have a good product or service, innovate before the existing product of service dips. Use new data and artificial intelligence to help you innovate and compete.

The cycle is becoming shorter and shorter. Uncertainty reigns and no one can escape from this black swan. Learn from past lessons, look around and have proper risks management. It is imperative to adapt to uncertainty, be resilient, and handle risk and capacity building. New entrepreneurs can be compatible with big companies.

At the same time, go ahead to create links in all areas – cultural, logistic, linguistic, infrastructure, economic, business councils, international organizations. Identify the super connectors and bridge hearts and minds. Co-operate with each other and unite together. Avoid being so individualistic. Work on inter-government levels. Adopt a win-win approach.

Connectors are like building a road while entrepreneurship is like putting up a building.


OUR COMMENTARY

The WCES event enlightened attendees with the extent of China’s economic power today and the inherent business opportunities available for the GCD countries which are keen on investment there. It’s no longer a question of whether people have to deal with China. Rather it’s simply a matter of having to engage China to enjoy a win-win situation.

Asians have always looked up to China as a big brother and felt the need to collaborate with the business world there. Its massive consumer base of one billion people continues to pull and draw investments.

The USA is a major global force not to be ignored as it projects its power across the world. Thus, Asia must not destroy links with the USA while engaging with China. Although China has flaunted some trade rules and disregarded the International Court of Justice decision on the Spratly Islands in the South China Sea, Asia still has to work with China after accepting funds and investment. Many countries are indebted to China and have already jumped on the China bandwagon.

In 2017, China presented the world with the OBOR Initiative, a far-reaching, all-encompassing business vision. The main premise is that economic liaison and trade results from wide-ranging connectivity. This model for international networking is in its early days and the world waits to see what will happen and how far it can succeed.

Despite the fact that the USA and China lie at opposite ends of the pole, the GCD will have no choice but to continue working with China. Asia has to decide how to fit into the general scheme of things.

Paddy Schubert Consultants Sdn. Bhd. has a clear focus to pave the way for those keen to enter the market in the greater bay area in South China covering Hong Kong, Macau and Guangdong. Join us in this march to business exploration and advancement in 2018.