Special Economic Zone Idaho - Andrew Leung

Andrew Leung

China is planning a Special Economic Zone in Idaho. Business professor Andrew Leung looks at his website into the concept of the SEZ's and whether the successful concept can be used also outside China. Can China save the US economy?

Andrew Leung:

China is already building five regional 'Special Economic Zones' across Africa - in Egypt, West Africa, Zambia, Tanzania,and Mauritius. (Martyn Davies, China into Africa, Trade, Aid and Influence, Robert Rotberg (Editor), Brookings Institution Press, Washington D.C., 2008, pp. 137 - 154.)

The African model consists of cooperative partnerships with the respective host governments, whose laws apply intact. There are of course special tax and other concessions for businesses inside the zone to attract the right mix of technologies, skills, and jobs. Usually, China is responsible for constructing the zones and selecting experienced Chinese enterprises to manage these zones. Businesses selected to operate inside the zones can be local, international or Chinese...

Sinomach is China's third-largest contractor, with more than $14 billion in sales last year. It has been active in more than 130 countries in Asia, Africa, Latin America, Russia and Eastern Europe as general contractor for large infrastructure and building projects.

Sinomach executives told Southeast Idaho Energy, which is planning to build a $2 billion fertilizer plant in Power County, they want the contract for engineering, procurement and construction. Their access to financing is their deal sweetener.

Southeast Idaho Energy hopes to turn coal into gas to produce nitrogen fertilizer and sulfur. The company expects to hire 700 to 1,000 people during construction with 150 permanent workers.

The company also would separate the carbon dioxide that contributes to climate change and ship it to Wyoming, where it can be pumped underground to enhance the extraction of natural gas...

This idea may be a threat or it can be turned into a truly dynamic opportunity for much needed trust -building between the United States and China. If mishandled, it could spur a much wider Cold War syndrome that will be no good for any country. If handled wisely, this could well usher in a new era of leadership in international cooperation that augurs well in grappling with some of the global challenges like sustainable development and job creation not only in developing countries but in the West as well.

We seem to be witnessing a historical inflextion point where a new world order may well emerge for the two great powers of the 21st century to cooperate closer together to create a win-win situation for both countries and the broader world.

More at Andrew Leung's website.

Andrew Leung is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch.

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Urbanization needs building spree - Andrew Leung

 Andrew Leung

China keeps on building like crazy, and there is good reason for that, Andrew Leung explains in his weblog. To deal with the rapid and unprecedented urbanization, cities need to expand at an feverish speed.

According to a recent McKinsey research report, China will be adding 350 million more urbanites by 2025, more than the existing population of the United States. The total urban population will reach 1 billion by 2030. There will be 221 cities with a population over one million, compared with 35 such cites in Europe today. In the process, 5 million square meters of roads will have been paved, 170 mass transit systems built, 40 billion square meters of floor space created in 5 million buildings, of which 50,000 will be skyscrapers, equivalent to 10 New York Cities (Preparing for China’s Urban Billion, McKinsey Global Institute, March 2009)....

As for the housing bubble, private mortgage lending in China is extremely conservative. You would be extremely lucky if you could manage to get a mortgage loan approaching 70%. Moreover, China’s banks are much better capitalized in comparison with their Western counterparts and most are supported by the state’s massive currency reserve.

China is decisively switching course with the latest 12^th Five Year Plan (2011-15), channeling the country towards higher-quality, if slower, growth, with more domestic consumption and a more balanced, equitable, innovative and sustainable economy.

More in Andrew Leung's weblog.

Andrew Leung is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch.

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The looming currency war - Andrew Leung

Image by Fantake via Flickr

A currency war is looming with the US threatening to impose punitive tariff mechanisms which may trigger a global trade war, writes Andrew Leung at his weblog. "However, China’s current resource-intensive manufactures are already trading at wafer-thin margins and any drastic RMB appreciation is likely to cause catastrophic job losses and social instability. "

For China, much more is at stake than economics. She preciously guards her independent exchange and monetary tools to grapple with the multi-faced challenges of social dynamics and geopolitics concomitant with the unchartered course of a rapidly developing, yet transitional economy, now the world’s second largest.  With rising social tensions, China is expected to change course during her coming 12 Five Year Plan (2011-15), ushering in a more moderate, higher-quality, more balanced and sustainable development model geared to much higher domestic consumption.

More at Andrew Leung's weblog.

Professor Andrew Leung is a speaker at the China Speakers Bureau. When you need him at your meeting or conference, do get in touch.

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Inflation control here to stay - Andrew Leung

Andrew Leung

China's tools to curb inflations are here to stay with us for a long time, because inflation is going to stay with us, tells Andrew Leung at CNBC. An unprecedented urbanization and the growing consumption of China's middle class will keep pressure on commodities.

Andrew Leung is a speaker at the China Speakers Bureau. When you need him at your meeting or conference, do get in touch.

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