Transcript Slide 1

Instituut Defensie Leergangen
11 April 2008
DRAGON AND ELEPHANT
Partners and Rivals in the
World Economy
7/17/2015
Willem van Kemenade
Website: www.willemvk.org
E-mail: [email protected]
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Willem van Kemenade
Senior Fellow,
Netherlands Institute of International Relations ‘Clingendael’
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Recent Publications:
China and Pakistan: New Friends can’t compare. Common Strategic
Interests make them All-Weather Friends, Yale Global, March 12, 2008.
http://yaleglobal.yale.edu:80/display.article?id=10490
Between Beijing and Paris: From abnormally good to pragmatic normalcy ,
Jamestown Foundation China Brief, July 2007. http://www.jamestown.org
Azie in de Wereld, (in Dutch), Internationale Spectator, The Hague, JuliAugustus 2007.
China and Japan: Reconciliation with Limits, In: Stanley Crossick and
Etienne Reuter, China and the European Union, A Common Future,
European Policy Centre, Brussels, March 2007.
The Elephant Economies China and India on the Global Energy Market,
Clingendael Lecture for Leergang Topmanagement Defensie, February
2007.
China and Japan, Partners or Permanent Rivals, Clingendael Diplomacy
Paper, 98 p., December 2006. www.clingendael.nl
Forthcoming: China and India, Assertive Neighbors in a Multipolar World,
May 2008.
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In 1900, Europe accounted for
20 percent of the world's
population. Today, this figure is
down to 12 percent. By 2050 it
will drop to 7, by the end of the
21st century to 4 percent.
Today, India and China together
account for 37 % of the world’s
population.
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Political
Liberalization ?
The Big Unknown
• China has evolved from a totalitarian Marxist-Leninist
dictatorship to a nationalistic, conservative, selectively
repressive, authoritarian state, a “grand alliance of a
one-party state with domestic nouveau-riches and
international capital”.
• Party moved away from “worker-peasant alliance” to
“all people’s party”, or the corporatist, Latin-American
model. Capitalists are welcome to join the party.
• Conservatives blame fm. President Jiang for abandoning
“Marxism”. Liberals criticize him for not reforming the
political system.
• Optimism that engagement, internet, globalisation, WTOaccession, prosperity, urban middle class and low-level
elections would lead to democratisation at the national
level, has not materialized as yet.
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Some Chinese are envious of
India’s Democracy
• Despite the sharp limits on free speech in their country,
Chinese intellectuals talk, often enviously, of India's
advantages in democratic governance. For all of China's
apparent strengths today, they say, future success may
depend on democratic reform.
• “If China learns its lessons from India, it can succeed in
democratizing in the future,” said Pang Zhongying, a
professor of international relations at Nankai University
in Tianjin, now at Brookings in Washington.
• “India is a far more diverse country”, he said, “a place
with the second largest Muslim population in the world,
and lots of ethnic minorities, and yet it organizes regular
elections without conflict. China is 90 % Han, so if India
can conduct elections, so can China.”
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Some Indians praise China’s
Authoritarian Regime
• Many Indians believe that a large part of the blame for
their country’s inferior economic performance must be
borne by the political system.
• China, the argument goes, is an authoritarian system
where the government and the businesses it favours can
do what they want— get funding, change laws, build
infrastructure, secure licences, fiddle their books—
without significant opposition.
• In India, however, not only does every step require
dealing with an inept, corrupt and intrusive
bureaucracy, but the democratic system itself also
imposes extra costs and delays. For every important and
helpful reform, there is a powerful lobby that will oppose
it.
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Tibet: A Burden for SinoIndian Relations
• In 1962, China defeated India in a short border war.
• The war was the result of a border dispute, inherited
from the British Empire in 1947 and the granting of
political asylum to the Dalai Lama in 1959.
• The two issues have poisoned relations between the two
powers for decades.
• In recent years there have been significant
improvements: expansion of trade and cooperation on
global issues, but no solution to the border problem.
• The current Tibet Crisis could lead to renewed hardening
of old unresolved issues.
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Historical Precedent of
China, “Globalizing” the
World in the 14th Century
• As the millennium began, Song Dynasty China was on top of
the world. In the late 13th century, Marco Polo amazed Europe
with his tales of Cathay's wealth. China's economy didn't fall
behind Europe's until around 1800.
• China’s naval expansion and exploration reached its peak during
the early Ming-dynasty – 1407-1435 – but was abruptly
aborted for domestic reasons.
• For perhaps 18 of the past 20 centuries China has boasted the
biggest economy in the world and still displays many of the
reflexes and instincts of a hegemonic power.
• The Chinese see the past two centuries of underdevelopment
and Western domination as an embarrassing aberration that
must be redressed. Home to the world's oldest and one of its
richest civilisations, the argument goes, China must now
regain its rightful place in the sun.
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India: Too Disunited to be a Great
Power during Early Modern History
• India has a history of transient Buddhist, Hindu and Muslim empires,
based more on ephemeral, mercenary conquests of a multi-ethnic,
multi-religious periphery – like the Mongol or Ottoman Empires –
than on an ancient, homogeneous, cultural core, like China.
• Foreign conquests changed Indian history: Turks and Mughals in
1206 and 1398 by land and the Portuguese by sea in 1498.
• The Mughals used mercenaries from as far as Ethiopia.
• During the 17th century Indian, British and Dutch ships traded as
equals. From the early eighteenth century, British ships displaced
the Indian ones. The ‘Mughal Empire’ (1556-1707) was so
weakened by wars of succession, agrarian crises and local revolts
that it could no longer resist British submission by 1757.
• After the end of the British Raj in 1947, India’s deep historical and
religious divisions exploded with the violent partition into two, later
three states, plus continuous wars in Kashmir. This has been the
main cause of India’s weakness, compared to China.
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European Colonialism, from the 16th
Century ~ the beginning of Globalization
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Early 1700s, 10 % of Bengal textile workers produced for British
market. By the mid-1700s, the British were importing raw cotton from
India and manufacturing it into cotton textiles in new processes that
signaled the birth of the Industrial Revolution, and would substantially
displace Indian hand-manufactures with British machine products.
First destructive impact of “globalization” on China was the “Taiping
Rebellion” (1850-1864) just after the first Opium War.
It was then that the Chinese traditional Confucian system broke down
in the face of the pressures of globalization as these were forcibly
brought to bear upon China by the Western powers.
The communist revolution and the character of the Mao-regime
(1949- 1976) was shaped by a nationalist reaction to this experience.
The greatest globalization-era before the current one ended in
1914 with the outbreak of the First World War.
The “9-11” attacks on the WTO Centre in New York were a massive
terrorist scheme to reverse the current tide of globalization
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The Current Wave of Globalization
• The first big step was China’s turn away from Mao to
the Market in 1978.
• A year later Margaret Thatcher abolished foreign
exchange controls paving the way for London’s rise as a
global financial centre.
• Then in 1981 Ronald Reagan entered the stage with a
programme of deregulation and tax cuts giving a huge
boost to market ideology around the world.
• Finally in 1991 came another huge change: Indian PM
Narasimha Rao and his Finance Minister Manmohan
Singh moving away from the regulation and
protectionism that had hobbled the Indian economy
since independence in 1947.
• Globalization may be under threat by the current tide of
protectionism in the US and elsewhere.
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Transformation
from Agricultural to
Industrial Economy
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In 1979 Deng Xiaoping concluded that the only way to lift China’s 800 million
peasants out of poverty was to move them off the land into factory jobs.
Since state industries resisted reform, new rural industries of mixed
ownership, combined with investment from the “globalized” parts of China –
Hong Kong since 1981 and Taiwan since 1989 – created the new jobs.
Big Foreign investment from Japan, the US and EU followed in the 1990s.
“In early 1980s, SE Asia attracted half the FDI into Asia outside Japan, and
China only 20 %. From mid-1990s the proportions are reversed.
China has become the world’s biggest centre for the manufacture of
everyday industrial products, taking over the role that used to be filled
by Britain (1850-1900), the US (1900-1960) and Japan (1960-1990).
Also, Overseas Chinese billionaires from SE Asia prefer to invest in China,
rather than in their adopted countries.
Many Chinese in China fear that this globalization will primarily benefit
foreign companies at the expense of local companies. Many industries are
almost completely foreign owned
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India: Late-comer in Economic Reform
• India has about 75 % of the population of China but its GDP is 40 %
• As a Soviet-ally, India has long practiced a brand of xenophobic,
soft socialism that is less conducive to foreign investment and
globalization than China’s reform-communism. Fall of the Berlin
Wall marked the beginning of the convergence of economic
ideologies.
• India’s economy is less integrated with the world-economy than
China’s. India’s exports were less than a quarter of China’s in 1999.
Now less than 1/10.
• India’s reform process, initiated in the mid-nineties is halting due to
deep misgivings over globalisation and politicians’ obsession with
“swadeshi”, self-reliance.
• The Congress party-led coalition government has shied away from
“neo-liberal reforms” since coming to power in May 2004, partly
because it depends on the backing of four allied Communist parties
for its majority in parliament.
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The Elephant
Economies of
Asia
• There have been three dramatic changes in World Economic
History over the last century and a half:
– Between 1870 and 1914, the US overtook Britain and Germany and became the
leading world economy.
– Between 1950 and 1975, Japan caught up with Europe and the US to become
the world's second largest economy.
– The third catch-up period, from 1975 to 1997, saw the narrowing of the gap
between the “tiger economies” of east Asia and the developed world.
• The next phase is to shift the centre of the world economy from the
Atlantic ocean to the Asian mainland. It will change the composition
of world output and trade and global energy consumption.
• It will create severe tensions between leading economies as they
are challenged for global dominance.
• The east Asian tiger economies moved fast but with stealth. The
“elephant economies” of Asia, by contrast, will create global
commotion as they begin to stampede.
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Seismic Shifts in World Economic
History (PPP-figures)
1. China
2. India
3. France
4. UK
5. Russia
6. Japan
7. Austria
8. Spain
9. USA
10. Prussia
Top Ten Total
1820
1992
GDP
Population
% of World Total % of World Total
28.7
35.5
16
19.6
5.4
2.9
5.2
2
4.9
4.2
3.1
2.9
1.9
1.3
1.9
1.1
1.8
0.9
1.7
1.1
GDP
Population
% of World Total % of World Total
20.3
4.7
12.9
20.9
8.6
2.3
4.9
1.5
4.2
16.2
3.7
1.1
3.4
1.1
3.3
1.1
2.9
2.7
2.7
2.9
70.5
71.7
1. USA
2. China
3. Japan
4. Germany
5. India
6. France
7. Italy
8. UK
9. Russia
10. Brazil
Top Ten Total
66.8
54.9
Source: Angus Maddison, Monitoring the World Economy, OECD, 1995
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CHINDIA
• Coined by an Indian politician/economist, Jairam
Ramesh in a book/manifesto to bring the two
together, not only in business, but also culturally.
• It was popularized by BusinessWeek and came to represent an
object of both paranoia for those in the US who fear economic
eclipse, and pride for Asian dreamers who long for the day when
the US gets its comeuppance.
• In reality China and India, far from being in strategic wedlock,
remain cool and wary neighbours.
• Five years ago, India still lived in fear of a China Threat, China
marginalizing India economically, but although Chinese products
dominate certain sectors, like electronics and toys, most Indian
companies, making quality products continue to thrive. Many
companies in the IT sectors are aggressively investing and setting
up shop in China.
• India’s spectacular succes in software and IT services has
made Chinese leaders sit up and take note.
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An Economic
NATO ?
• Gabor Steingart of Der Spiegel
published a book recently
advocating a ‘Trans-Atlantic Free
Trade Area’, an Economic NATO
to combat the challenge of China (‘a
dark superpower’) and Asia in a
‘World War for Wealth’.
• Chancellor Angela Merkel warmed
to the idea and broached it with
president Bush who was lukewarm.
• Together the Europeans and the
Americans represent about 13 %
of the world population and 60 %
of today's global economic power.
• “The military alliance forged during
the Cold War could be carried over
into the global economic war.” …..
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Rise Of China, India, Benefits
Europe - EU Study
• The average EU household's yearly income could
increase by Euro 5,000 through 2050 if the EU embraces
the rise of China and India rather than trying to stop it, a
new EC study argues.
• The EU is split over whether to impose limits on the flood
of goods coming from Asia, with euro-zone
manufacturers of textiles, shoes and other products
clamoring for protection and retailers fighting for cheap
imports.
• The report, authored by economists Cecile Denis, Kieran
McMorrow and Werner Roger, acknowledges that
globalization has caused much pain as many
industries and regions have seen their
competitiveness undercut by cheap Asian imports.
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The US-China Economic Relationship:
“A Balance of Financial Terror” (Chimerica)
• That’s how former Harvard president Larry Summers
described China’s hundreds of billions in dollar-holdings.
• The argument holds that both countries would be so
economically devastated by a trade or financial war –
“mutually assured economic destruction” -- that
neither would trigger one despite growing trade tensions.
• By that logic, China won't stop buying billions of U.S.
dollars each month because to do so could prompt a
dollar collapse that would undermine the American
consumer and the global stability upon which China's
economic miracle rests. The U.S. would not implement
tough sanctions to punish China's undervalued currency
because such action could trigger inflation, higher
interest rates and recession.
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Selected Indicators China-India
China
India
1.31 bn
1.14 bn
Population Growth Rate
0.6 %
1.4 %
Population in Poverty
4.6 %
28.6 %
$ 2.24 trillion
$ 805.7 bn
$ 6.757 (PPP) $ 1.713
$ 3.452 (PPP) $736
Average annual GDP
Growth Rate 1990-2005
8.8 %
4.2 %
Foreign Investment 2007
$ 69.4 bn
$ 12 bn
$ 2.1 trillion
$ 114 bn
0.703
81th
0.619
128th
Population
GDP 2005
GDP per capita 2005
Foreign Trade 2007/’04
Human Development
Index (UNDP)
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Human Development Report 2007/2008
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China: A Regional Power with some Global Influence
and the Ambition to become a Two-Ocean Country
Gwadar
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Transparency International
Corruption Perception Index 2007
Selected
Countries
Ranking
Score
Netherlands
7
9.0
USA
20
7.2
Taiwan
34
5.7
South Korea
43
5.1
China
72
3.5
India
72
3.5
Indonesia
Russia
143
2.3
Nigeria
147
2.2
Myanmar, Somalia
179
1.4
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The best Route to Economic Progress:
The Chinese or the Indian Way ?
• At the start of “Reform Communism” in 1978, the Chinese diaspora
and later multinationals, were eager to invest. China’s state-banking
system did not lend to private entrepreneurs and its stockmarket
strongly favors state-enterprises. As a result, China’s economy until
recently was dominated by state-enterprises and foreign investors.
Private enterprise emerged only slowly.
• Democratic India under soft Fabian socialism could not allow foreign
investors to “exploit” the Indian people and gave priority to native
entrepreneurship.
• The OECD recently warned India was not fully exploiting its
advantage as a labour-abundant economy because of high levels of
employment protection that particularly deterred larger
manufacturing companies from hiring workers.
• Work in companies with more than 10 employees accounts for only
3.75 % of employment in India, a much smaller proportion than in any
OECD country. India has stricter job protection laws than China, Brazil
and all but two OECD countries.
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FDI in India slowly catching up with China,
but Stockmarket Hot and Open
• The Indian government predicts foreign direct investment will hit $15
billion for the current fiscal year, a fraction of the $69.4 billion of
foreign investment in China last year.
• Savvy multinationals have discovered that India is a potential source
of low-cost innovation -- a sweatshop not just for labor but for
brain ware as well.
• Most FDI in India is – like in China – in form of joint ventures. Most
of them have failed so far. Danone failed in both China and India.
• India needs to attract more money from abroad if it is going to reach
its target of $350 billion of public and private infrastructure
investment.
• The Indian stockmarket is much more open than the insider market
of China but new restrictions were imposed after excess cash inflow
from the US triggered by the housing market crisis caused
disruptions.
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India’s New Government and its
Rigid, Over-protective Labour-laws
• Chinese factory workers are paid less than their Indian
counterparts and are more productive. India has rigid
labour laws that make it almost impossible to fire an
employee or hire contract labour. That is one reason
India attracts roughly one tenth of China’s FDI.
• The previous Hindu-nationalist BJP government had
indicated before its electoral defeat in May that it would
dilute or scrap two statutes that make it hard for
companies to fire workers and hamper their ability to
take on temporary labour.
• The more leftist Congress-government of Dr. Manmohan Singh depends on Communist support.
• The Communists have always opposed labourreform.
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China’s Strength: Manufacturing
India’s Strength: Global Back-Office
Services
• China as a manufacturing base and India as the back
office to the world could power global growth in future.
• China's strength is its rapidly growing domestic market -Mobile's growth in subscriptions, is more than India's total
telephone access for both fixed and mobile access.
• On the other hand, India has a clear edge in winning
service export orders, in everything from Hollywood
animation to multinational data processing. India's
software exports have the potential to be as
dominant as China's in electronics and toys.
• If deregulation continues as expected, the surge of the
two economies could be phenomenal.
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Competitive Outsourcing
The Third Industrial Revolution
• It will take 5 to 10 years before
China rises as an equal to
India in IT and outsourcing
services in English.
• Weakness: poor English; weak
protection of IPR; shortage of
managerial talent; fragmented
industrial structure.
• There are 200,000 architecture
level IT engineers in India,
against around 1,000 in China.
• There are about 8,000
software-service providers in
China, compared with fewer
than 3,000 in India
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Outsourcing moves to Higher Levels
• While medium level jobs have been moving to the East for years,
high-skilled jobs in fields like aeronautical engineering, investment
banking and drug research, those very fields, which once epitomized
the competitiveness of Western economies, are flowing to India.
• Boeing and Airbus now employ hundreds of Indians on critical tasks,
including the design of next-generation cockpits and systems to
prevent airborne collisions. For about one-fifth the cost, investment
banks like Morgan Stanley are hiring Indians to analyze U.S. stocks,
a job that can pay $200,000 a year or more on Wall Street.
• As their Indian back offices gain in sophistication, Western firms are
finding that a vast swathe of their work - even tasks requiring rarified
expertise - can be done in the country at a fraction of the cost. At the
same time, many see India as deep reservoir of potential customers.
• "India is at the epicenter of the flat world," said Michael CannonBrookes, the vice president for business development in India and
China at IBM, which has shrunk its American work force by 31,000
since 1992 as its Indian staff mushroomed to 52,000 from zero.
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The West Marginalizing Itself
• N. R. Narayana Murthy, chairman of Infosys, an Indian
outsourcing company, said Western multinationals were
entering a world in which they would conceptualize,
develop, manufacture and sell products and services,
from start to finish, outside their countries of origin.
• "The U.S. will progressively become less and less
predominant for the U.S. corporations," Murthy said.
• That may be wishful thinking by an Indian magnate. And
experts warn that a continued flow of work to India
requires drastic improvements in its physical and
educational infrastructure. Water and power shortages
are endemic, and an industry trade body has predicted
that India could find itself short of 500,000 engineers by
2010.
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India and China:
Partners here, Rivals there
• Indian oil companies engage in similar government-sponsored,
preferentially financed asset purchases in “problem countries” like
Sudan, Iran, Uzbekistan. India has not come under the same
international criticism as China.
• In Sudan India and China cooperate, in Kazakhstan they compete
and China gets the better end of the deal because the latter two
share a landborder.
• In 2005 ONGC lost a bid for Toronto-listed PetroKaz to Petrochina.
• In January 2006, India and China set aside rivalries and agreed to
cooperate in securing supplies and prevent their competition from
driving up prices. CNPC and ONGC signed an agreement for joint
bids in Central Asia/Caspian Region, Africa and Latin-America.
• India has agreed to transfer Compressed Natural Gas technology
to China.
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India plans Chinese-style
Special Economic Zones
• The Indian government has enacted legislation in May
2005 to allow the country's 29 states to bypass the
country's strict labour laws through the creation of
Chinese-style special economic zones. Eleven have
been in operation and another 35 will be set up soon.
• The creation of SEZs is a central plank of the Indian
government's plans to encourage faster inflows of
foreign direct investment and boost employment.
• Leftwing parties that support the Congress-led coalition
are likely to see the measure as a Trojan Horse to
smuggle in labour reform.
• A weak level of FDI along with low savings levels and
woeful infrastructure is seen as one of India's principal
economic challenges.
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New Pattern of
India-China Trade
• India has overtaken Brazil to become the largest supplier of iron
ore to China after Australia. Overall, China is now India's secondbiggest trading partner after the United States.
• Huawei Technologies, China's biggest telecommunications
equipment maker, spend $200 million to start making phone
equipment and expand its software development and research
center in India.
• Haier is building a factory in India to manufacture 50,000 TV sets a
month. The company, based in Qingdao, recently began selling
mobile phones in India, Asia's fastest-growing wireless market.
• India has slashed its tariff rate - from 150 % in 1992 to 15 % now.
It's still higher than China's 10 % rate, suggesting that benefits of
free trade may be slightly skewed in favor of supercompetitive
Chinese manufacturers, who already make 75 % of the world's
toys, 58 % of clothes and 29 % of mobile phones, according to
McKinsey estimates.
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Corporate Governance
• Tharun Khanna, an Indian professor at Harvard
Business School says in his new book “Billions of
Entrepreneurs: How China and India Are Reshaping
Their Future and Yours” that Indian companies
demonstrate better corporate governance than Chinese.
• “India is like a noisier version of the US” – accountability,
transparency, very vibrant credible business media
• China is the opposite: “Noise-free but biased. You get a
clean story, but it’s not always true”.
• In China it doesn’t matter that much, because financial
markets don’t work like in India or the US. “The stockprice of a bad company can go up as much as that of a
good company”
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Multicultural Management
• Khanna: Chinese are “utterly zero”. “It is hard to blame
them because there is a language barrier also. You may
remember the acquisition of a German company,
Schneider, by TCL in 2002 which was based in
Shenzhen. It was a disaster. In 2004 a bigger disaster
followed, buying assets from Thomson CSF in France
which they also destroyed.
• Many questions: Can a Frenchman report to a Chinese
and what if the French guy makes more than the
Chinese guy ?
• The Chinese have little incentive to improve their
corporate governance. They are sitting on a mountain of
hundreds of billions of capital. They don’t need anybody.
So, why bother ?
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China, India and the
Fortune Global 500 List 2007
• As a result of the different paths to development, China
has 24 companies on the 2007 Fortune Global 500 List
against India 6.
• The Chinese companies are state conglomerates - power, oil, steel,
railway, automotive, insurance, telecom, chemical, grain - and statebanks, plus two Hong Kong diversified companies.
• China accounted for a third of the world’s growth in oil demand and
it gobbled up half of the world’s cement, a third of its steel, a quarter
of its copper and a fifth of its aluminum.
• The 6 Indian companies on the list are 3 in the oil- and gas-sector,
industry-conglomerate “Reliance Industries” and a state bank
• However, last year’s, Forbes 200, an annual ranking of the world's
best small companies, included 13 Indian firms but just four from
China. It will be years before Indian high tech companies are big
enough to make the Global 500.
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The Chinese Diaspora:
Big Money / Sports
The Indian Diaspora:
High Tech Brainpower
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In contrast to the Overseas Chinese, the “Non-Resident-Indians” have
accounted for less than 10 % of foreign money flows to India. Lakshmi Mittal
bought Arcelor and Tata took over Corus, but they invest very little in India
itself. India’s current steel output of 44 million tons is one-tenth that of China.
And while the Indian diaspora may not be able to match the Chinese diaspora
in “hard” capital, Indians abroad have substantially more scientific capital,
which could prove even more valuable.
China has won the race to be the world's workshop. With the help of its
diaspora, India could become the world's technology lab.
India has received only a fraction of the FDI the world has invested in China,
but portfolio managers say India is in a number of ways the more attractive
stock-market investment.
India is about a dozen years behind China in liberalizing its economy, lowering
tariffs, and opening up industry to foreign investors.
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India’s Billionaires: The New
Maharajas
• The accumulated wealth of the 20-million-strong nonresident Indians (NRI) community has been estimated
to be more than $1 trillion, more than the Indian
economy of about $850 billion.
• According to Forbes Magazine India has 54 billionaires,
the largest number in Asia. Topping the list is Lakshmi
Mittal, the steel-magnate with $ 51 billion.
• International remittances to India are the highest in the
world - $25 billion a year - and growing 25 % annually. It
is one of the fastest-growing markets in the world, with
the Persian Gulf region one of the major contributors.
• Recently, Prime Minister Manmohan Singh said Indians
abroad are the backbone of the country's economy and
that “their welfare is in the country's interest”.
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China’s Billionaire-Tycoons
• China as a late (re-) starter with capitalism had only one
billionaire in 1999 when Forbes started the list. He was
Larry Rong, son of Rong Yiren, a pre-war Shanghai
capitalist who became vice-president of China. Larry
Rong is chairman of CITIC and good for only $ 2 bn.
• A Chinese publication claims there are more than 100
now, whereas Forbes puts it at 66.
• They could start buying companies in the US and gobble
up global assets as they have already unsuccessfully
tried.
• "A lot of people are surprised at how fast this has
happened," said Jing Ulrich, an analyst at JPMorgan.
"But this is the power of the capital markets. A lot of
people's wealth is based on newly listed companies."
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Projected Income Per Capita for the
“BRICS” (Goldman Sachs Report)
GDP per capita
(2003 US$)
60,000
50,000
India
Brazil
40,000
China
Russia
30,000
20,000
10,000
0
2000
2010
2020
2030
2040
2050
GS BRICs Model Projections.
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China effectively resisted the
“Washington Consensus”
• In 1990, the World Bank issued a list of “virtues” for emerging
economies:
• They should be open to capital flows, while moving towards
transparency, privatisation and liberalisation.
• This became a doctrine, known as “The Washington Concensus”.
• China ignored the pressure from the World Bank, the IMF and
the US and this saved it from the financial collapse that hit
Thailand, South-Korea and Indonesia during the “Asian Crisis”
of 1997.
• China now has its independent “coordinated development”
strategy, i.e. approach privatisation and free trade with caution,
open capital markets only gradually, use “assymetric” power
like huge dollar reserves to get leverage over a recklessly
spending U.S., and befriend neighbors by massive, fast
increasing imports.
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Joshua Cooper Ramo,
The Beijing Concensus,
The Foreign Policy Centre, London, May 2004
40
Pew Memorial Trust Survey on Chinese
People’s Attitudes towards Globalization
• 76% of Chinese respondents say that globalization is good for
China, as opposed to 60% of French or 62% of Americans. Chinese
respondents have significantly more favorable views of MNCs and
international organizations than Americans and most Europeans.
• Only 65% of Chinese respondents see increased access to foreign
culture in the last five years, which places them, along with
Americans, at the low end of the scale. On the other hand, Chinese
are among the world's most enthusiastic recipients of international
culture. Starbucks in the “Forbidden City”, a “barbarian invasion of
the hallowed halls of China's past” stirs controversy but is tolerated.
• At the same time, 64% of Chinese agree that 'our way of life has to
be protected from foreign influences'.
• Questions on democracy, inequality and corruption were not
allowed.
•
http://yaleglobal.yale.edu/pdfs/PewGlobal.pdf
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