China cannot afford to disconnect from the global economy - Arthur Kroeber

Arthur Kroeber

China is trying to find a way out of the irrational Trump policies, as the G20 convenes in Japan. Key is that China cannot afford to lose support from the international business community and the global economy, says economist Arthur Kroeber to the New York Times.

The New York Times:

In response, China’s Ministry of Commerce has threatened to make a list of “unreliable” companies and people who could be punished for disrupting Chinese supply chains. Chinese officials have echoed the threat in meetings with American tech companies. Beijing has also proposed new cybersecurity regulations that experts say could impair the operations of foreign companies in China. 

Still, Arthur Kroeber, a founding partner at the research firm Gavekal, said China would hurt itself as much as it hurt the United States if it took more steps to disconnect itself from the global economy. 

“China’s only hope of influencing U.S. policy in a more positive (from its standpoint) direction is to keep the business community as some kind of an ally,” Mr. Kroeber wrote in an email. “This limits its ability to target U.S. firms for retaliation.”

More at the New York Times.

Arthur Kroeber is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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Getting a trade deal that helps both sides might be impossible - Arthur Kroeber

Arthur Kroeber

Observers watch the proceedings at the G20 in Japan as Donald Trump and Xi Jinping will try to hammer out a kind of trade deal. But getting a deal that makes both sides happy is virtually impossible, says economist Arthur Kroeber in the South China Morning Post.

The South China Morning Post:

Arthur Kroeber, research head and co-founder of Gavekal Dragonomics, wrote in a note that “it will be very tricky to come up with a deal that satisfies the political requirements on both sides.” 

Trump, a Republican, decided to break off negotiations in early May because a deal would be a “political liability” for him if right-wing hardliners and Democratic opponents saw its terms as inadequate. 

In China, the terms negotiated by Vice-Premier Liu He, Xi’s top economic aide, were “politically unsaleable,” with powerful forces in Beijing suggesting US demands were excessive, Kroeber added.

More in the South China Morning Post.

Arthur Kroeber is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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An assertive China does not need the world that much - Arthur Kroeber

Arthur Kroeber

If the presidency of China over the G20 in Hangzhou has showed anything, it is that a more self-confident nation needs the rest of the world not as much as in the recent past, says political analyst Arthur Kroeber to LA Times. "The U.S. has less leverage to get things it wants."

LA Times:

China provoked its neighbors with confrontations in the South China Sea, an area claimed by other countries in the region, and has moved to build a military facility on an artificial island there. 

“From the Chinese side, there’s much less of a perception that they need anything out of the U.S.,” said Arthur Kroeber, managing director of the Beijing-based research firm Gavekal Dragonomics. “So that means, conversely, the U.S. has less leverage to get things it wants.” 

That has become plain in other ways, too. China refused to participate in the Trans-Pacific Partnership, the signature trade pact Obama is still trying to pass. American businesses complain of greater restrictions and murky laws that make it harder to compete in China.... 

“China is a richer, more diverse and more self-confident country than it used to be,” Kroeber said. “It can be more assertive going after what it wants. And there’s not much anyone else can do to change that.”

More in LA Times.

Arthur Kroeber is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

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Foreign investments still restricted in China - Arthur Kroeber

Arthur Kroeber

Foreign companies and their business organizations used the G20 meeting in Hangzhou as an opportunity to point at the restrictions they face when they want to invest in China, while outbound investments from China go through the roof. You only have to look at the basic figures to see they are right, says author Arthur Kroeber of China's Economy: What Everyone Needs to Know® to the South China Morning Post.

The South China Morning Post:

While global direct investments declined, China’s outbound investment surged 62 per cent to a record US$100 billion in the first seven months of 2016, according to China’s Ministry of Commerce. 

An “asymmetric investment environment” exists in China, said Gavekal Research’s economist Arthur Kroeber. 

“China in fact runs one of the most restrictive regimes in the world for foreign direct investment, according to the OECD, and is far more closed than other big emerging economies including Brazil, India and Russia,” Kroeber said. “China is especially unwelcoming to investment in the fast-growing service sectors.”

More in the South China Morning Post.

Arthur Kroeber is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

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All is well in China ahead of the G20 - Arthur Kroeber

Arthur Kroeber

China´s economy seems to have steered clear through the turbulance of the past few years, says economist Arthur Kroeber, author of China's Economy: What Everyone Needs to Know® to Bloomberg. "I’d guess that Xi Jinping is feeling pretty confident about things."

Bloomberg:

China meanwhile seems to have dodged a currency crisis and is busy bolstering its economy, growing the nation’s military muscle and securing influence abroad with hundreds of billions of dollars in infrastructure projects. With China’s markets calmed at home, the Communist Party’s message to critics is: our system works. 

It’s a long way from the turbulent period between June 2015 and March this year when the economy seemed to be lurching and market chaos raised concern that policy makers had lost their grip, according to Arthur Kroeber, the Beijing-based founding partner and managing director at Gavekal Dragonomics, a research firm. 

"Today, China’s contribution to global macro risk seems pretty close to zero, and the main issues are populist anti-globalization backlash on the political front, and the impact of negative interest rates on the economic front," said Kroeber, author of the 2016 book “China’s economy: What Everyone Needs to Know”. "I’d guess that Xi Jinping is feeling pretty confident about things." 

Even with growth at the lower end of the government’s projection and recent data signaling another soft patch, China’s economy is on track to overtake the whole of the euro zone.

More in Bloomberg.

Arthur Kroeber is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

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China will stay open for international business - Tom Doctoroff

Tom Doctoroff

Worries are mounting about China´s international stance, and increased difficulties foreign companies and organization experiences in the country. But China is unlikely to follow a course to isolationism and will act pragmatic, writes China veteran Tom Doctoroff in the Huffington Post.

Tom Doctoroff:

Despite recent belligerence, China has rejected isolationism. It has assiduously pursued leadership roles in multinational organizations such as the World Health Organization, the G20, the World Economic Forum and, most recently, the International Monetary Fund. The “One Belt, One Road” is development strategy and framework proposed by President Xi that focuses on connectivity and cooperation among countries primarily between the the PRC and Eurasia.

In return, many overseas companies, from mobile phone and auto manufacturers to airlines and hotels, have achieved sustainable profits and broad scale in the mainland market. Compared to Japan, regulatory hurdles are simpler, although still opaque and, according to the America Chamber of Commerce, becoming more onerous since 2013. Still, on the street and in the lanes, foreigners’ are surprised by the friendliness and openness of ordinary Chinese. Eyes are bright, thirsty for knowledge.

However, multinational engagement - economic, political or social - is über-practical and sharp-edged. Joint ventures are meticulously negotiated; contracts demand technology transfer to domestic partners. Affairs between foreigners and locals are rooted in material gain, not romantic satisfaction. Casual chats are English practice; American Chamber of Commerce “mixers” are for networking, not finding friends.

The pragmatism inherent in China’s broadened worldview is reflected by a new passion for travel. According to the Chinese Tourism Authority, outbound departures reached 120 million in 2015, up thirteen percent year-on-year. Despite limited incomes, figures will continue to skyrocket. But the Chinese do not travel to discover cultural riches. Expensive hotels and restaurants are unnecessary extravagances, indulgences that yield no return. The real motivation is buying luxury brands. According Global Refund, a company specializing in tax-free shopping for tourists, in 2015, the Chinese account for fifteen percent of all luxury items purchased in France but less than two percent of its visitors. Trips to Paris and London are expensive but they are not sunk costs; they are status investments. They reinforce identification with a sophisticated middle class lifestyle. Today’s Chinese “collect destinations” and post them on micro-blogs as ego puppy uppers and use social network platform to convert “experience” into social currency.

More in the Huffington Post.

Tom Doctoroff is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

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Economic systems in US and China out of steam - Arthur Kroeber

Arthur Kroeber by Fantake via Flickr

As the world's economic forces prepare to gather for the G20 in Seoul, the debate is not focusing on what real issues, says Arthur Kroeber in The Guardian. Lack of trust and failing economic systems are key for both China and the US.

"Appreciation would definitely be good for China, but the exchange rate is one tool among many in improving the structure and quality of China's economy, and in my opinion it is not the most important one," said Arthur Kroeber, managing director of Beijing-based consultancy Dragonomics.

He argued that China and the US were moving in the right direction; the problem is that they face challenges and do not trust each other.

"In the US you have a growth model that's been in place for 30 years and that emphasises consumer spending and debt. China has had a growth model emphasising heavy investment and exports. Both those models are running out of steam," he said.

Commercial
Arthur Kroeber 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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