Emerging Asian economies in particular set to benefit from China’s evolution to a consumer market.
Op-Ed Commentary: Chris Devonshire-Ellis
Oct. 10 – The big players at APEC this year – Chinese President Xi Jinping, Japanese Prime Minister Shinzo Abe and Russian President Vladimir Putin – all made comments during their keynote sessions at APEC in Bali this past week. U.S. Secretary of State John Kerry also spoke, yet chose the occasion to discuss the U.S. government shut down and Syria, which were not really relevant to America’s position on engaging with Asia, and did not bring any new developments concerning Asia to anyone’s attention.
Reactions to his comments were polite, but muted, and his speech was considered largely irrelevant. His position as a replacement for U.S. President Barack Obama was well below par and missed the point of the conference, as did much of the American official delegation in the absence of the president. American corporates also seemed to find his no-show irritating, and clearly the United States has a lot of face and goodwill to make up after what can only be described as a self-inflicted and damaging debacle at this year’s APEC. Kerry also showed why he was never going to be a U.S. president, as his engagement throughout the APEC summit was lukewarm, stand-offish and not related at all to trade.
Far more prepared and at home was Japanese Prime Minister Abe, who concentrated instead on the economic issues facing the Japanese economy, and how these would be dealt with. He also discussed Japan’s willingness to share clean energy technologies with APEC, and especially with “ultra-supercritical generation technology (USGT)” – which offers 43 percent combustion efficiencies by burning coal at far higher temperatures. Abe’s speech discussed the new generation of fuel technologies; pertinent given Japan’s recent problems with its nuclear reactors. It appeared clear that Japanese technologies, innovations and efforts would be heading for environmentally-friendly power generation and less polluting technologies. Japan has already agreed on a US$4 billion joint venture for a USGT project to be built in central Java.
Russian President Putin focused on the need for APEC to engage in more long-term planning, in ensuring structural and development reform across the region, as well as new opportunities for creating financing (echoing Xi’s desire to set up both BRICS and ASEAN development banks) in addition to planning ahead for greater fiscal consolidation. His comments fit in more with the Chinese position on possibly moving away from U.S. dollar-dominated transactions, as well as away from the Asian Development Bank as the infrastructure lender of first choice (the ADB is U.S. dominated and has gained a reputation for risk adversity and red tape in financing infrastructure projects).
“The G-20 leaders have come to the consensus that growth incentives should be accompanied by fiscal consolidation,” Putin mentioned. “It’s difficult but not impossible.”
The implications of Putin’s remarks are that this will ultimately lead towards a greater role for the RMB in international trading, and possibly the ruble and other currencies as well.
Chinese President Xi Jinping said that China was concentrating on moving its economy from low-end, export-driven manufacturing to a consumer market, with an emphasis on domestic consumption. He stated that Chinese growth would be about 7 percent this year and the next, but that such a move would boost Chinese ties with the Asia-Pacific region.
“China cannot develop in isolation from the Asia-Pacific, and the Asia-Pacific cannot prosper without China,” Xi said.
Four China, Asia & Global Growth Fast Predictions
- By 2017, China will have the largest share of global GDP of any nation at 18 percent, higher than the United States.
- China’s middle class consumer base will grow from 250 million today to 600 million by 2020.
- Asia’s middle class (China, India, Japan, Korea, Australasia and ASEAN) will grow from 600 million today to 1.75 billion in the same period.
- By 2030, 50 percent of the total population of the world will have middle class incomes.
Source: Kishore Mahbubani – “The Great Convergence”
Chris Devonshire-Ellis is the Founding Partner of Dezan Shira & Associates – a specialist foreign direct investment practice providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.
For further details or to contact the firm, please email asia@dezshira.com, visit www.dezshira.com, or download the company brochure.
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