Global China Practice

I attended a panel discussion yesterday on China. The event was held under Chatham House rules, meaning I can’t reveal the organization or the participants. But I can describe the issues discussed.

The event was clearly scheduled to coincide with Secretaries Clinton and Geithner’s visits to China for the annual Strategic & Economic Dialogue (S&ED), but there was very little discussion of that, given the dramatic events of the last few weeks. The two experts were well known in the China think tank community, having spent their professional lives studying China.
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Marketplace, a program of American Public Media, has a fascinating and balanced video of workers assembling IPads at Foxconn’s Shenzhen manufacturing plant.  The assembly line is clean and modern and there’s a clip of workers playing soccer and the company-built soccer field.  A much more benign picture than we’ve seen from other media outlets.

Click here to see the video.

Intelligence Squared is a radio program on National Public Radio that takes a controversial issue and subjects it to an Oxford-style debate with an audience that votes at the end on who won the debate.

Its most recent debate tackled the issue of China versus the U.S. and which country is more capitalist.  It was a fascinating discussion with brilliant individuals on both sides.  I was particularly interested to listen to the two experts positing that China is more capitalist.  One, Peter Shiff, came at it from a very conservative perspective by noting that, relative to the size of the economy, the Chinese government represents a smaller proportion than does the U.S.  The other expert, Orville Schell, focused more on the inadequacies of the U.S. society, noting that we still have debates about evolution and climate change while China accepts the science and moves on to practical solutions.  He seemed to have a more liberal bent.

On the pro-U.S. side, Ian Bremmer was his usual passionate self describing our “creative destruction” as the engine that will allow the U.S. to ultimately prevail.

In the final vote, which measures how much the audience has changed its opinion after being exposed to the debate, the pro-U.S. side won definitively.

The debate is very much worth listening to, but the web also provides a wealth of background material on the issue.

Fleishman Hillards corporate communications team in China, led by Dana Xu has issued a report that examines trends in China in 2012 across a variety of categories.  It is an excellent overview of what promises to be an extraordinarily consequential year in the modern history of China.  It is worth a very thorough read.

Click here to see the full report, which was excerpted below.

World Bank Predicts Moderating Growth in ChinaThe World Bank has issued a report entitled China 2030 that predicts moderating growth in the near to mid term.  The report indicates that the current rate of growth is “unsustainable” under current policies.  World Bank President Robert Zoellick was sanguine about the short term forecast, according to a Wall Street Journal report:

Mr. Zoellick said he thought China would engineer a “soft landing” in the next year or so, so growth would remain strong for now. He didn’t make any specific short-term forecast.

The report was co-authored by the Development Research Center, an influential government think tank, which suggests the findings will be taken seriously by the PRC.

My colleague, Dana Xu is our Senior Vice President and Head of Corporate Communications, Fleishman Hillard China.  She has some valuable insights on Chinese outbound investment.  Worth a thorough read:

Dana Xu, SVP & Head of Corporate and Public Affairs, Fleishman HIllard, China

For years, economic headlines about China centered on foreign direct investment (FDI) – the capital flowing into the country from abroad. Now, the story is about Chinese outbound investment. In January, China’s Ministry of Commerce announced plans to increase outbound direct investment between now and 2015, maintaining current annual growth rates of about 17% and achieving a cumulative outflow during the period of US$560 billion. That will, for the first time, bring China’s outbound investment into line with the investment it attracts from abroad.  China’s FDI In 2011 fell to US $115 billion from $185 billion the previous year on global economic weakness, particularly the European financial crisis. Even so, The Rhodium Group, a consultancy, predicts that by 2020, China’s total outbound investment worldwide could reach anywhere from US$1 trillion to US$2 trillion a year. 
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Doug Guthrie is Dean of the George Washington University School of Business. In addition to his academic business credentials, he is also a China scholar and a huge advocate for better economic relations between the U.S. and China.

In today’s China Daily, he tasks President Obama to task for not speaking out in favor of more Chinese foreign direct investment in the U.S. Guthrie saw Vice President Xi’s visit as a perfect opportunity to push back against irrational resistance in Congress to more Chinese investment. He sees this as a critical issue that has enormous implications for American economic growth. Here’s Guthrie’s own words:

“If we are going to be successful in getting the US economy back on track, foreign direct investment in the United States will be a necessary part of this. And our most important partner in this endeavor will be China,” said Guthrie. “At this point, we need China more than it needs us. Yet, instead of focusing on how to rebuild skilled labor, how to foster competitive business environments, and how to attract capital back to the United States, we obsess over issues like China’s currency manipulation as the source of our problems.”

The Wall Street Journal has a fascinating interview with the Dean of the China Europe International Business School, John A. Quelch.  Dean Quelch talks about his plans for expansion and is clearly bullish on the growth of Chinese brands.  But he predicts that the business to business sector will lead the way.  His key quote:
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This week’s Economist launches a new weekly special section on China.  It is a testament to the undeniable importance of China in the world economy.  According to the magazine:
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Today’s Financial Times has a story describing the growth of Chinese investment in Europe, particularly in Great Britain, described as “the most popular destination in Europe for Chinese inward investment.”  Chinese investors see opportunities in Europe and Europe certainly needs the money.

According to the story, Europe offers a vast range of investment opportunities that are relatively secure and, due to the current state of the economy, under-priced.  Utilities and infrastructure seem most attractive to the Chinese.  A short video captures the essence of the story.

Click here for video.
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