Getting to a Quadrillion Dollar World with a closer look at GDP growth, education and demographics. Last week, Nextbigfuture described a future where China helps build out the infrastructure that the rest of the developing world needs over the next few decades. The shortfall of infrastructure is lowering the potential GDP growth by 2-3% in many countries. An extra 2% GDP growth globally would accelerate the arrival of a world with a quadrillion dollar economy measured in todays dollars. China is leveraging its $4 trillion in reserves to provide low interest financing for high speed rail, export of Chinese nuclear reactors, factories and property development.
China is offering to fill the worlds infrastructure gap. This will enable all of the developing world to follow the China economic development plan. There are various long term projections of the world GDP in 2035. GE has a vision of an industrial internet which they believe could boost world economic growth by 10-15 trillion by 2035. China is making a $250 billion-a-year investment in what economists call human capital. Asia’s Economic Miracle Has Peaked.
Historically, economics has often driven the narrative surrounding presidential visits to Asia. Consider President Obama’s 2009 trip to China in the midst of the global financial crisis. It gave wings to a narrative about China’s rise and American decline. The economic environment may be changing again. Only this time, the change is less dramatic and occurring largely out of the headlines. Over the last four decades, Asia has been home to the world’s fastest growing economies. Despite the robust growth, however, there are reasons to believe the regional economy is not as healthy as it appears on the surface. (You May Also Like: Asia’s Worst Nightmare: A China-Japan War) The Asian Credit Bubble Asia was the only region to sail relatively unscathed through the 2008 global recession. . - For Asia, total debt (household, corporate, government) reached a new high last year, running 208 percent of GDP. (You Might Also Like: China and Japan’s Real Problem: Enter the Fairness Debate) Sagging Exports.
Asiaphoria or Asiaphobia? Author: Paul Hubbard, ANU Those in the business of long-run GDP projections expect Asia, and particularly China, to keep growing above world trend rates for some years. The most optimistic — such as former Chief Economist at the World Bank, Justin Lin — have China growing at 8 per cent for at least the next decade. The semi-official China 2030 report projects 7 per cent growth later this decade, falling to between 6–5 per cent by 2030.
The Australia in the Asian Century White Paper projected Chinese economic growth of 7 per cent and Indian growth of 6.75 per cent until 2025. But ‘the view that the global economy will increasingly be shaped and lifted by the trajectory of the giants’ has recently been diagnosed by Larry Summers and Lant Pritchett as ‘Asiaphoria’. For the last 30 years around a quarter of the world’s population has lived in countries with what Summers and Pritchett call a ‘super-rapid growth rate’ above 6 per cent a year. Time series regressions miss structural breaks. Japan's quantitative easing: A bigger bazooka. THE riposte to doubts about Abenomics, the three-part plan of Shinzo Abe, Japan’s prime minister, to shake the country from its economic torpor, is more of the same, and a lot more. On October 31st the Bank of Japan (BoJ) stunned the financial markets by unexpectedly expanding its programme of quantitative easing.
The bank’s existing measures, a “different dimension” of easing from past efforts, were already daringly bold. Now it will swell Japan’s monetary base at an even faster pace, by around ¥80 trillion ($712 billion) each year, up from ¥60 trillion-70 trillion currently. To do so, it will hoover up still larger quantities of Japanese government bonds (JGBs). The bank’s action is also an admission of partial failure thus far. In recent weeks, economists had started to question Mr Kuroda’s oft-stated commitment to banishing Japan’s entrenched deflationary psychology.
Now a fresh round of no-holds-barred QE will immediately boost Mr Abe’s economic plan. China flexes its muscles at APEC with the revival of FTAAP. Author: Mireya Solís, Brookings Institution The 2014 APEC leaders’ summit witnessed a string of successes in Chinese trade diplomacy. Key among these successes was the endorsement of China’s signature trade initiative as APEC host: the realisation sooner rather than later of a Free Trade Area of the Asia Pacific (FTAAP).
China also reached a substantive agreement with South Korea on their bilateral FTA and a breakthrough on negotiations with the Americans to expand the coverage of the Information Technology Agreement — which promises to re-energise a US$1 trillion market in technology goods trade. But why did China choose FTAAP as its landmark initiative for the APEC summit? The FTAAP concept was first developed by the Americans, so why did China borrow it to stake a leadership claim in defining the future of Asia Pacific economic integration? At least three motivations seem plausible. In particular, two questions loom large regarding China’s potential to build an alternative trade regime. Asia’s Economic Miracle Has Peaked. Welcoming China’s Asian Infrastructure Investment Bank initiative. Author: Andrew Elek, ANU In October 2013, just before the APEC meeting in Bali, Chinese president Xi Jinping announced the creation of the Asian Infrastructure Investment Bank (AIIB).
The bank will be launched this year, possibly when APEC leaders meet in Beijing. This new development bank can help fill the vast unmet demand for productive economic infrastructure, especially in the emerging economies of Asia. In 2011, the OECD estimated that global infrastructure requirements over the next two decades will cost around US$50 trillion. Biswa N. Bhattacharyay, of the Asian Development Bank (ADB), estimates that developing Asian economies will need to invest US$8 trillion from 2010 to 2020, just to keep pace with expected infrastructure needs. The supply of savings, much of which is generated in Asia, is more than adequate to begin to fill some of the demand for infrastructure. Fortunately, the critical mass to launch the AIIB as an inclusive structure is already assured.
Why is Indian FDI shying away from South Asia? Author: Saman Kelegama, Institute of Policy Studies of Sri Lanka There have been promises of greater Indian investment in South Asia for a long time. A report produced by the Asian Development Bank (ADB) in 2007 argued that India would play a key role in investing in South Asia and this in turn will stimulate intra-regional trade in the region. The report made special reference to the rapidly growing Indian IT industry and identified it as a potential investor in South Asia. The ADB argued that business process outsourcing, knowledge process outsourcing, call centres and other IT related sub-contracting would shift to regional countries as a response to increased costs of doing business in India. The total FDI outflow from India to the rest of the world increased from US$20 million in the early 1990s to US$15 billion by 2011, albeit with some fluctuations.
Fourth, securing natural resources has become an important driver for Indian outward FDI. Our Mismeasured Economy. Photo TODAY’S polarized debates about the role of government often boil down to a single issue: the size of government compared with the size of the overall economy, as measured in . This is true on both sides of the debate. One recent proposal featured in The Wall Street Journal argues for a “golden fiscal rule” that the size of government as a percentage of G.D.P. should always be shrinking; liberals frequently cite the higher ratio of government spending to G.D.P. in many European countries. But such comparisons are not very meaningful: The way we measure government’s role in the economy is limited, inaccurate and unrealistic. If we want to understand how government and the overall economy interact, knowing the size of government tells us little if we are not measuring how government activities contribute to our economy over time.
The problem is that most government goods and services are provided free, so they do not have market prices like, say, mouthwash or financial planning. Rise of The Asian Cyber Armies - USNI News. States are increasingly standing up military and intelligence organizations for computer network operations. While countries everywhere perceive a need to attack and defend in cyberspace, cyber forces are of particular interest to security in Asia because they coincide with a regional investment in naval, air, and command, control and communications systems. And although American society may be vulnerable to disruption, highly technical and increasingly informatized Asian societies also face complex security challenges.
For years, most understood Asian cyber issues through the prism of China. Since the early 1990s, the Chinese have evinced an intense doctrinal and practical interest in information warfare. The Chinese simultaneously desired to “informatize “their conventional forces in imitation of the United States while developing command and control warfare tools as part of a larger asymmetric warfare strategy. What will happen if countries carve up the internet? | Media Network | Guardian Professional. Fragmenting the web: what could emerge is a patchwork of online nation states with different rules and regulations and hindered communications. Photograph: Petros Karadjias/AP Twenty years ago, there was nothing like the internet we have today, the global all-connecting network that has become an integral part of our lives. Over the last few decades, we have all witnessed how it has grown exponentially and come to change our everyday existence – keeping most of us online all the time (with accompanying frustrations as well as benefits) and making communications and information exchange unprecedentedly seamless and fast.
But I fear that we are at a turning point for the internet, and may even be going into reverse. The utopia of a borderless digital global village may be coming to an end. Edward Snowden's revelations on the scale of US online surveillance – the Guardian's massive scoop of 2013 – may be giving rise to a new era in history. Sadly, I don't think the trend can be reversed. How to prepare for Asia’s digital-banking boom. Building Silk Roads for the 21st century.
Author: Pradumna B. Rana, RSIS China’s emergence as the ‘factory of the world’, based on its focus on exporting labour-intensive manufactures, is well-known. Less well-known is the role that infrastructure played in this strategy. From 1992 to 2011 China spent 8.5 per cent of GDP on infrastructure, much more than the developing country average of 2–4 per cent, according to a 2013 McKinsey Global Institute report.
And, from 1992 to 2007, China spent US$120 billion on building 35,000 kilometres of highways. China’s push for infrastructure development within its borders picked up pace with its Western Development or ‘Go West’ policy, implemented in 2000. Last year, China devised a ‘New Silk Roads’ policy to enhance connectivity with neighbouring countries. China’s actions have led to the revival of the Northern Silk Road. It is expected that establishing new economic corridors between India and China through Nepal would be one component of the recent Chinese proposal.
Canada-asia_agenda_44.pdf. China’s digital transformation. As individual companies adopt web technologies, they gain the ability to streamline everything from product development and supply-chain management to sales, marketing, and customer interactions. For China’s small enterprises, greater digitization provides an opportunity to boost their labor productivity, collaborate in new ways, and expand their reach via e-commerce.
In fact, new applications of the Internet could account for up to 22 percent of China’s labor-productivity growth by 2025. Yet the Internet is not merely a tool for automation and efficiency; it also expands markets rapidly. Greater adoption of web technologies in China could lead to the introduction of entirely new products and services if government and industry take the right steps to maximize the potential (exhibit). Exhibit The adoption of new Internet applications may have a substantial economic impact in key sectors of China’s economy. Enlarge About the authors. Modi a shot in the arm for Indian economy.
Author: Sourabh Gupta, Samuels International By the time the results of India’s gruelling 16th general election were announced, it had become clear that the penchant of the Indian voter for confounding New Delhi’s forecasters would continue for a third straight election. Haunted by an incorrect call in 2004 which saw the previous centre-right Bharatiya Janata Party (BJP) government tossed from office, pollsters issued conservative forecasts going into the 2009 and 2014 election cycles. On both occasions the margin of victory turned out to be grossly underestimated — a testament to the desire of Indian voters to ensure politically stable governments free from obstruction and roadblocks. In part, the scale of these victories comes down to the first-past-the-post system which tends to magnify the winner among a crowded slate of candidates.
The effect was visible this time too. But there is a dark side to this election. So what to make of the result? A new crisis for Asia’s emerging economies? Author: Hiro Ito, Portland State University Countries around the globe have been nervously paying attention to the world’s advanced economies. Many have still not been able to embark on a sustainable path of recovery since the global financial crisis. The United States, the euro zone, the United Kingdom and Japan essentially exhausted conventional monetary policy measures by guiding their policy interest rates to almost zero.
These economies have now been dosed with unconventional measures, including large-scale asset purchases and quantitative easing. While the advanced countries have been struggling to jumpstart their economies, others, especially emerging market economies, have become good investment destinations for international investors. Until recently, policy makers in emerging market economies had to manage this influx of ‘hot money’ and the related danger of currency appreciation, which could harm the trade competitiveness of these export-dependent economies.
India and China, the tortoise and the hare. Why There Are No Credit Scores in China. HONG KONG — Few would dispute that Chinese society suffers from a serious trust problem. After surviving crafty scams and shoddy products for years, Chinese people have become guarded with strangers and cautious in business dealings. Given all that, it would be tempting to celebrate the fact that, according to a May 5 report in Chinese state media, the powerful National Development and Reform Commission (NDRC) has signaled that a nationwide electronic system will be established by 2017 to track each Chinese citizen's credit history. This would include performance on meeting obligations connected to taxation, government transactions, finance, judicial matters, and traffic violations. But for the system to succeed, Chinese people will eventually need to buy in -- and so far, that's not happening. China's economy, of course, still manages to function without a credit-scoring system.
The proposal invokes unpleasant memories of a Kafkaesque system that began under Chairman Mao Zedong. The Chinese Are Coming, and It's Going to Be Fine. Regional Economic Outlook: Asia and Pacific - Sustaining the Momentum: Vigilance and Reforms, April 2014 -- Table of Contents. As Obama Visits TPP Countries, New Obama Administration Report Targets Their Public Interest Policies as “Trade Barriers” to be Eliminated.