Unlike what one keeps on reading in the international press on China’s economy slowing down and heading towards a turbulent economic period, I was quite surprised to find the mood entirely different when recently traveling in that part of the world. In fact the latest report from Accenture, a leading global management consulting, technology services and outsourcing company, believes that China’s slowing economic growth should not at all be a cause of concern, because it gives the Chinese economic managers the time to readjust to changing global realities; and this in fact they are managing extremely well as compared to similar trends being handled by most developed economies of the world. Since it was a board meeting of a leading economic forum that I had to attend, it was also interesting to note that even the mood of the Chinese economic bureaucracy was very upbeat. They have big plans in mind, and I detected no nervousness in any of them. For any country to become economically strong, it needs a sincere and competent government, capital investment, good education, advanced science and technology, corporations with global footprints, and a long-term focus of the state machinery and one sees all these things coming together in China.

Every annual board meeting of the economic forum has a theme and this year’s theme was how China should be all about the long-term haul in a world where the rest of the leading global economies are suddenly switching to the short-term - especially in the Euro-zone and the USA. China on the hand desires to play a bigger global role in the corporate world and to do this it wants its companies to go the path of digitization and globalization so that they move up the ladder from manufacturing to more value added services. While surely there will be many drivers for China’s future growth, but the business captains I met clearly believed that the route to their sustainable growth lies in using more and more high end technology and in ensuring a global footprint of the leading Chinese corporations. It was quite impressive to see that even the Chinese government officials present were quite conscious of the need for Chinese businesses to move to the next generation of productivity. They sensed that the advantage their country has enjoyed with the low cost of its labor cannot last forever and to help the Chinese companies maintain their competitive edge the “Chinese government has a big role to play”.

The most interesting aspect however was the session on global trade, which immediately followed the high powered board meeting. Interesting, because in it the Chinese entrepreneurs clearly spelt their mindset on how they plan to find a solution to the growing ‘protectionism’ in the global markets. What we see today is a rising trend (post 2008 financial crisis and the recession thereafter) that points to a sort of reawakening amongst governments that their foremost responsibility is to spur growth and shore up employment at home and not to any larger romantic notion of trade for global good.

Even the world’s leading/large developed economies who are today considered as the Knowledge based economies are ironically being seen going back several ‘stages of growth’ by arguing that a certain level of manufacturing base should always be maintained in an economy to hedge against unemployment, inflation and restricting undesirable imports. The United States of America (USA) as we know after a long time has renewed its focus on shoring up American manufacturing in order to replace some its imports and boost its exports. Just a few weeks back, the Democrat Congressmen in the USA shot down the bid of their own President (Obama) for signing the proposed TPP (Trans Pacific Partnership) on a fast track, as they see it to be treaty that is likely to cost Americans their jobs and erode their wages. Today’s Japan under Abe is also being seen to facilitate national manufacturing in order to cut cost of doing business at home and to move back its off-shore production. The Chinese government and businesses are not worried and they instead look at things very differently. According to them the US endeavor like the TPP or China’s initiative like the AIIB (Asian Infrastructure Investment Bank) are merely drives to “Rebalance Relations” between China, Japan and the USA. They contend that in the long run the TPP cannot be successful without China just as the AIIB cannot achieve its potential without the backing of America. The USA cannot afford to keep shutting China out from the TPP and likewise China also needs to make USA a stakeholder in the AIIB, and in its development cum promotion of the modern day silk belt and road. The Chinese further believe that it is imperative that rules of TPP will change in the future with China’s accession into it, because, after all, when safeguarding the sanctity of global trade it will be difficult to set aside differences in certain areas (e.g. intellectual property); which as everyone knows can only be resolved by jointly striking a balance between a Western wish-list and Chinese concerns. And when it comes to IP rights the Chinese like to quote George Orwell, “Believing things which we know to be untrue, and then, when we are finally proved wrong, impudently twisting the facts so as to show that we were right.”

Latest: On my way back and in less than 14 days after the conclusion of the conference, one could not help but feel envious - about the speed at which the Chinese economic managers move - when reading that China and South Korea (a key TPP member) have now officially signed a free trade agreement (FTA). The signing of the China-South Korea FTA is a landmark case in global trade, not only because it signals China’s confidence to open up its markets to Asian competition, but also because it points to an inevitable integration of Northeast Asia where Renminbi will be the principal trading currency. China of late has been deeply concerned about the prevailing international monetary system, which it calls unreasonable and to counter this it has been promoting enhanced global convertibility of its own international currency, the Renminbi. And it is also in this context that the China-South Korea FTA may turn out to be a real game changer in the world of global finance.

In Pakistan’s case also we are likely to see (in not too distant a future) a similar demand from China, vis-à-vis the CPEC (China Pakistan Economic Corridor), to increasingly move towards adopting Renminbi in our economic dealings (or at least the ones with China), and personally I feel that it will not be a bad move to become a supportive partner in the Renminbi convertibility drive, as and when the time comes!

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