Sunday, 30 January 2011

Happy (Chinese) New Year!

While my better half is away in Singapore to celebrate Chinese New Year with her mother's family, it seems an appropriate time to post analysis on China.

Dr Martin Jacques, co-founder of think-tank Demos, gives an interesting talk over at TED. Although entertaining, it promotes a very populist claim that... well, Jacque's book entitled "When China Rules the World" pretty much says it all.

After being told in the 1980s that the world business language would become that of booming Japan, I'm not a huge fan of extrapolation. So, what's the contrarian view?

Hedge fund manager and serial short seller Jim Chanos is skeptical of China's astounding growth. reports:

"In a TV appearance this past Friday, Chanos pointed out that construction is 60% of Chinese GDP compared to only 5% for exports. That’s huge. “We’ve seen this movie before,” he says. “Whether it was Dubai a couple of years ago, Thailand and Indonesia during the Asian crisis of the late ’90s, or Tokyo circa 1989, this always ends badly.”"

So much for economics. What's the technology angle? Jacques' presentation mentions the much praised Shanghai magnetic levitation train that can reach 350 km/h. However, he neglects to mention that it was built by two German engineering companies, Siemens and ThyssenKrupp.

What Jacques does mention that is truly contrarian is that the Chinese love their government. The world's largest private PR company, Edelman, says that 88% of Chinese trust their leaders compared to about 20% of Americans.

The Edelman Trust Barometer as it's called is taken seriously. Owen Pringle, online marketing executive at Amnesty International, told me it has been instrumental in their change of direction. He said this strong Chinese respect for their government makes it hard for a Western NGO like Amnesty to ask them to reject the authoritarian ways of their leaders and embrace Western institutions.

Aside from this one surprise, the presentation is the usual playing to the public gallery. It's interesting to note that Jacques is the former editor of the now defunct Marxism Today. So, perhaps his prognostications should be taken with a modicum of salt.

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