China’s huge current account surplus was once the symbol of its status as the “factory of the world.” But in recent years, that surplus has been shrinking. Last year, it sank to 1.3% of GDP. The half-year deficit announced in August was the first in more than 20 years. Some economists predict China could soon be running a current account deficit. If that happens, it will be a watershed moment with implications for all manner of issues, from the policies Beijing is able to pursue to the status of the RMB as a global currency and maybe even the way the US finances its debt.
The speed at which China has emerged as a major player in Southeast Asia is stunning. In 2000, total trade in goods between China and the 10 members of the Association of Southeast Asian Nations (ASEAN) was only $40 billion. By 2014, this had leaped to $480 billion, and is forecast to reach $1 trillion by 2020. Southeast Asia has become a strategic market for companies across the whole Chinese economy. Manufacturers are looking to offshore production in order to reduce labor costs, while tech companies are eyeing the region’s 633 million-strong consumer market as a new source of growth.
“Trade wars are easy to win,” says US President Donald Trump. US-UK trade historian Marc-William Palen disagrees. In this interview, Palen, author of The “Conspiracy” of Free Trade: The Anglo-American Struggle over Empire and Economic Globalisation, 1846-1896, and senior lecturer in history at the University of Exeter (UK), argues that US politicians’ pursuit of trade wars in the 19th and 20th centuries yielded mostly short-term political gains for themselves and high, long-term economic and strategic costs to their country.
China played a surprisingly prominent role in debates surrounding the UK’s 2016 referendum on leaving the EU. For leading “Leavers”, Brexit was a chance for Britain to free itself from a stifling Brussels bureaucracy and build stronger trade relations with upcoming powers like China. But those expecting a blossoming in China-UK relations after Brexit might be disappointed, says Leslie Young, Professor of Economics at CKGSB. Professor Young, who received a doctorate in mathematics from Oxford University in 1971, at the age of 20, and who is now a recognized authority in international economics, explains how Chinese business is likely to be affected by Brexit.
As Donald Trump signed the memorandum proposing the introduction of tariffs on $50 billion of Chinese imports on March 22, 2018, the president of the United States quipped, “This is the first of many.” He didn’t go back on his words. No one seems to be a winner, but the trade war goes on and the entire world is paying close attention. Although both sides express willingness to have talks, can the trade war be stopped? What’s the future for US-China relations?
Ioana Kraft began her career in international law, and moved to China 14 years ago. Since 2009, she has been the General Manager of the European Union Chamber of Commerce’s Shanghai chapter, working tirelessly to promote the interests of European businesses operating in eastern China. In this interview, she discusses the challenges and opportunities European businesses face in China.
Many people in India still have the impression that Chinese products are cheap and of low quality. Yet India’s smartphone market is 51% Chinese, which may surprise many Indians. And it’s not just smartphones: More Chinese companies, from new tech firms to traditional manufacturers, are heading to China’s southern neighbor, along with many of the largest multinational enterprises. Companies like Ebay, Apple and Uber, have all targeted India as their next growth market. For Chinese companies, though, India market entry might not be easy. They have to face both their old competitors as well as rising local Indian firms.
China’s One Belt, One Road initiative is the fusion of two development schemes—the land-based Silk Road Economic Belt, and the 21st Century Maritime Silk Road. Together they comprise infrastructure between 65 countries containing 63% of the world population, more than 35% of global merchandise trade, and 30% of global GDP. To date about $ 150 billion in investment has been committed.
After several decades when most Western governments inclined toward freer and more global trade, the mood seems to be changing. In the US, the presidential candidates have agreed on little but the need to keep a closer eye on trade agreements. In the United Kingdom, the new Prime minister, Theresa May, seems determined to fulfill the British public’s wish to leave the European Union, despite the fact that the pound sterling sank recently to a 168-year low. Skepticism over trade deals seems likely to remain a stubborn presence in most of the mature economies, so what should Chinese companies do to react?
For the past three decades, the general political consensus in the mature Western economies has been that trade liberalization is a good thing: most economists credit rising levels of global trade and cross-border investment with lifting nearly a billion people out of poverty in the developing world and reducing prices for consumers almost everywhere. Yet despite those successes, a growing segment of the public in the mature economies sees the impact of liberal trade policies quite differently— the revisionist view sees free trade as a major cause of the declining prosperity in the mature economies. Why has an anti-globalization consensus developed?