Commentary

[SCMP Column] Xi Jinping in Europe

March 25, 2019
The media noise about Xi’s Europe trip might be all about Belt and Road infrastructure business, but this exaggerates the importance of Belt and Road, and diverts attention from the main purpose: to work with important trade groupings around the world to reaffirm the primacy of multilateral routes to tackling global problems, and discretely to deflect the unilateralist divide-and-rule pressure being exerted by Donald Trump and his trade Rottweilers, who are due to land back in Beijing on Thursday to resume talks aimed to resolve the US-China trade war to Trump’s satisfaction. [ Read More ]

[SCMP Column] What Trade War

January 26, 2019
Guo Ping’s 2019 message is fascinating: “If we can develop the simplest possible network architecture, make our transaction models as simple as possible, ensure the highest level of cybersecurity and privacy protection, produce the best products and provide the best services, then no market can keep us away.

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[SCMP Column] Teresa May's Brexit

November 24, 2018
As historians look back on the tragic and improbable Brexit story, I sense they will see the cause of democracy disserved, and an economy harmed. They will see communities divided, and politicians hopelessly inadequate to resolve the serious challenges they faced – farce masking tragedy.

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[SCMP Column] Cleaning hte trade mirror

November 19, 2018
For the record, and obviously, China is no paragon in the world of government procurement, and is still only in the process of acceding to the WTO’s Procurement Agreement. It nowadays has developed a fairly comprehensive website flagging upcoming procurement contract opportunities but the site is only in Chinese, so is not open to most international bidders.

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[SCMP Column] Reforming the WTO

October 27, 2018
Both the EU and Canada focus on three urgent areas of reform: modernisation of the rules, to cover things like digital trade, international investment, domestic regulations, the role of state-owned enterprises, industrial subsidies and forced technology transfer; changes to the crippling “consensus” rule that blocks any reform if any one of the WTO’s 192 members object; and rescue of the dispute settlement system.

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[SCMP Column] The charisma of cars

October 08, 2018
The US may suffer a trade deficit in goods, but its fast-growing surplus in the export of services, which sat last year at US$230bn, remains politically uncounted and ignored. There will in due course be a price paid for resting trade strategy on the car-culture dreams of the 1960s.

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[SCMP Column] Preparing for a long war

September 24, 2018
I recall the revered CBS anchor, Walter Cronkite, returning from Vietnam in February 1968 to say: “It seems now more certain than ever, that the bloody experience of Vietnam is to end in a stalemate. To say that we are closer to victory today is to believe in the face of the evidence, the optimists who have been wrong in the past.” It took another seven years for the US government to recognize reality and end the war. I hope it does not take today’s US administration so long.

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[SCMP Column] Just Imagining Trade

September 17, 2018
We then have our International Import Expo in Shanghai from November 5, at which we will be able to talk to the world about how our economy is open for business. You are then scheduled to attend the ASEAN leaders’ summit a week later, and the APEC leaders’ meeting in Port Moresby on November 17.

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[SCMP Column] NAFTA revisited

September 03, 2018
In a 2015 report, the US Congressional Research Service summarized multiple studies on Nafta: "In reality, NAFTA did not cause the huge job losses feared by the critics or the large economic gains predicted by supporters. The net overall effect of NAFTA on the U.S. economy appears to have been relatively modest.”
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[SCMP Column] Tariff war

August 25, 2018
Trump’s “defence” would probably be that the structural imbalance in the US trade relationship with China is so serious that short-term pain must be a price worth paying. His administration would argue that present tactics may be regrettable, but are necessary for the long term.

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[SCMP Column] Trade war impacts on Hong Kong

July 16, 2018
While Edward Yau and Kenneth Chan may be right to duck at this stage – they don’t after all want to lend official authority to any form of alarmism, especially after Beijing has told media to avoid talk about trade war – that does not mean some serious “back of the envelope” assessments are not urgently needed.

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[SCMP Column] Redefining the trade agenda

July 14, 2018
Harvard economist Dani Rodrik, writing here in the SCMP on Thursday, was right to counsel both China and the European Union to be restrained, and resist the temptation to retaliate. If there is going to be a global row over trade, then both the EU and China would do well to resist the Pied Piper call to define the problems in profoundly flawed Trumpian terms. They should take the time to redefine the problem, and seek solutions that better suit the majority of the world’s economies.

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[SCMP Column] The bias epidemic

July 09, 2018
And with Trump’s venal politics steadily gaining ground, it is distressing that no ready responses come to hand. As Harford concludes: “We journalists and policy wonks can’t force anyone to pay attention to the facts. We have to find a way to make people want to seek them out. Curiosity is the seed from which sensible democratic decisions can grow.” Or is that his desirability bias kicking in – simple wishful thinking? [ Read More ]

[SCMP Column] How tariffs backfire

June 23, 2018
Hopefully by now it is beginning to dawn on Trump’s trade team how naïve it was to think that trade wars might be good and easy to win. What they have yet to realise as they ratchet up their tariff “punishments” is that the main victims of these actions are their own global multinationals, and of course the US’s own consumers.

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[SCMP Column] FDI crash

June 16, 2018
Even more striking: foreign investment flows into the United States slumped by 40 per cent, from US$457bn to US$275bn, and by 42 per cent into the European Union, from US$524bn to US$304bn. This investment earthquake meant that Asia was the world’s most important destination for foreign investment, with its share, steady at US$670bn, accounting for 33 per cent of global flows (compared with 25 per cent in 2016). China (attracting US$136bn) and Hong Kong (attracting inflows of US$104bn) remain the world’s second and third most important destinations for FDI, after the US.

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[SCMP Column] Trade victimhood and hyprocracy

June 11, 2018
As someone who has for more than 30 years tried to understand the practical development of international trade and investment – and the benefits these have brought to most people worldwide – I have of course found Donald Trump’s thoughts and actions on trade extremely challenging.

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[SCMP Column] Iran sanctions

June 08, 2018
A week ago, my main gloomy worries were over the dangerous escalation in the US-China trade conflict. Today, that seems positively manageable by comparison with the abyss that has opened up under the Iran Nuclear Deal. Despite optimistic comments about Trump hosting North Korea’s Kim Jung-un for denuclearisation discussions in Singapore in a month’s time, I wonder what on earth can persuade Kim to trust Trump’s sanctions-lifting promises, once Trump’s betrayal of the Iranian nuclear deal sinks in.

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[SCMP Column] Thucydides Trap

June 04, 2018
As Donald Trump’s hyperactive team hurtle from G7 belligerence in Paris, to Pacific Ocean defence talks, and a likely summit with North Korea’s Kim Jung-un in Singapore, to mercantilist trade battles in Beijing and snarling unfinished business in Nafta, it is time to pause and think afresh about Thucydides’ story.

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[SCMP Column] Trade skirmishes

May 07, 2018
The signal was clear that Trump is giving the China trade issue the highest priority. But at the same time the size and composition of the “team” powerfully illustrated the divisions across the US administration on how to manage trade relations in general, and with China in particular. Few could be as far apart on economic policy as Steve Mnuchin, a former Goldman Sachs boss, and Peter Navarro, author of “Death by China”.

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[SCMP Column] Importing and Exporting

April 16, 2018
The results were perhaps not unexpected, but were sobering nonetheless. As for the world’s 20 largest economies, China is the leading source of imports for 11. It is the second most important source of imports for a further four. In only two countries – France and Switzerland – is China not one of their top five sources of imports.

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[SCMP Column] Trade and Smiley Faces

April 09, 2018
Chinese exports worth US$46.2bn – mainly machinery, mechanical appliances and electrical equipment ($34.2bn), transport equipment ($2.7bn) and a grab bag of products like chemicals, base metals and plastics ($8.2bn). [ Read More ]

[SCMP Column] Winning trade wars or winning elections

March 26, 2018
With so much obvious likely pain at home, and such clear difficulties in achieving targeted objectives versus China, you have to come back to Trump’s preposterous claim that trade wars are good and easy to win, and ask a different question: How will Trump measure a win?

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[SCMP Column] An easy trade war to win

March 10, 2018
It is possible that the White House trade team may in due course get round to tackling issues like intellectual property abuse, but in the meanwhile to point the barrels at the very allies the US will need alongside it to wage these behind-the-border battles inside China seems counterproductive at the very least.

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[SCMP Column] New Zealand glimpse into anti-globalisation

February 05, 2018
No longer. Community anxieties that have lifted people like Donald Trump to power are only too real and well-founded. So too the eccentric forces that prompted British voters to call for Brexit. So too the shock election victory of New Zealand’s Labour Party in October last year, which brought to power Jacinda Ardern, and her left-leaning cabinet, including David Parker and Fletcher Tabuteau. 
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[SCMP Column] Trump's Tourism Slump

January 21, 2018
Already, the US tourism industry has suffered what some are calling the “Trump Slump”. From his early efforts to block travel to the US from a number of Middle Eastern economies that he deemed were sources of terrorism, to his attacks on Hispanics (remember his comments about Mexicans on the campaign trail: “They’re bringing drugs. They’re bringing crime. They’re rapists.”), his decision to engage in trade wars with Canada and Mexico, his biggest trade partners, and his recent slur on “s***hole countries”, it is hardly surprising that the flow of international tourists into the US is faltering, and may decline further. [ Read More ]

[SCMP Column] Davos Trade skirmishes

January 19, 2018
In many ways, the Trump rhetoric has made a positive result virtually unachievable. He has repeatedly and hyperbolically talked of the 1994 Nafta deal as “the worst deal ever” implying that any new deal will by definition have to be saleable as “the best deal ever” – for American workers at least. With Canada’s prime minister under political pressure to avoid embarrassing concessions, and Mexico’s president facing elections on July 1, it is difficult to see what they can offer that would enable Trump to declare such a “best ever” deal. [ Read More ]

[SCMP Column] Whistling in the wind in Buenos Aires

December 15, 2017
From the 44 countries that attended the Mount Washington meeting 70 years ago, just 23 went on to sign up to the General Agreement on Tariffs and Trade (GATT). While the US slashed its tariffs from the strangling levels of the 1930 Smoot Hawley Act, few others at first took similarly ambitious steps away from protection. [ Read More ]

[SCMP Column] Dispute Resolution

September 16, 2017

The EU data gets even more depressing: the average value of a claim is just US$52,700 - which means legal fees in even the most simple case will gobble up most of the value of the claim. US officials say the average international dispute takes 446 days to settle – about 15 months – and that US lawyers alone will cost on average US$1,200 an hour. The mind boggles at the likely costs, but we are talking millions of dollars for even straightforward cases.

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[SCMP Column] Litmus Test for Trump

August 21, 2017

Already, at least three bruising battles are in prospect. First, Canada and Mexico are bristling fiercely over US efforts to put trade rebalancing at the heart of the negotiation, not least because US complaints over what it believes are unacceptable trade deficits are implausible. In a US$1 trillion trading relationship – three times the trade in 1994 when the Nafta deal was signed – imbalances are tiny, and take no account of the complexity of trading relationships along long and complex Nafta supply chains.

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[SCMP Column] Global Trade Comes First

April 17, 2017

The report reminds that when the US in 2009 slapped punitive tariffs on allegedly-dumped Chinese tyres in defence of US trye manufacturers, the cost was US$900,000 for each US job saved – equivalent to 22 years of salary for an average tyre worker. In other words, the US could have gifted a 22-year pay-out to those tyre workers, and saved American tyre-users the punishing cost of having to buy more expensive tyres.

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[SCMP Column] Dangerous Allegations

January 23, 2017

Similar gains have arisen from Nafta – both for the US and the Mexican economy. Today, Mexico is the US’s second largest goods export market, with exports amounting to $236bn in 2015. That is equal to US exports to China, Japan, Germany and the UK combined, and it is a five-fold increase from 1993 before Nafta was signed. It is true that Mexico’s gains are even greater – up seven-fold to $295bn – leaving it with a trade surplus of $58bn – but to suggest that US negotiators did a bad job because of some misplaced “asymmetrical” charitable urge is ludicrous. And to abandon this framework in favour of old-style mercantilism can only be harmful for us all.

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[SCMP Column] Dismiss thriving desert hub Dubai at your peril

December 26, 2016

As China has extended its international reach, in particular towards the long-neglected African economies, Dubai has become an increasingly important westward hub for China, with a potentially significant role in China’s long term “One Belt, One Road” strategy. It may not yet quite match Hong Kong as a China entrepot, but it is getting there.

In 2015, China’s trade with Dubai amounted to US$48bn – and 60% of Dubai’s imports from China are re-exported, mostly to Africa. From a trickle of trade between China and Africa in 2000, it had surged by 2015 to US$160bn, with Dubai a significant conduit.

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[SCMP Column] Let’s drop ‘stuff’

December 24, 2016

These were years when 11 months of the year were empty of gifts or indulgences. That precious Christmas gift was the one indulgence for which you had craved and prayed for more than 11 hold-your-breath months. My daughters were still in primary school when we officially designated and distinguished “un-birthday” presents to try to remind them how lucky they were. Nowadays, the year is so littered with “un-Christmas” and “un-birthday” gifts that the specialness of Santa’s mystical visit has gone, just as homes have become cluttered graveyards for the  barely-used stuff of Christmases-past.

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[SCMP Column] Cost of Trade War

December 19, 2016

Remember out of the US$179 export value attributed to each iPhone exported to the US from China, the total value-added in China is just US$7. At least one US electronics company that supplies components for the iPhone earns over $40 in exports to China for each iPhone. Hit iPhone exports from China, and you inflict more harm on that US company than you do on Foxconn in China where iPhones are assembled.

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[SCMP Column] Collateral Risks

December 17, 2016

But is this likely to inflict any real harm? Unlikely. China is active and well protected in the WTO itself. It is active in ASEAN’s Regional Comprehensive Economic Partnership (RCEP). It has a large number of significant free trade agreements of its own – not least that with ASEAN. It is active in the formation of the long term vision for a Free Trade Area of the Asia Pacific (FTAAP). And a primary casualty of such a frost would be the finely-balanced US-China Bilateral Investment Treaty, which would make it easier for US companies to invest in China, and for which US companies have been clamouring for several years.

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[SCMP Column] Hard Reality of Shipping

November 28, 2016

Industry experts have inclined to call Hanjin’s collapse a “black swan” event, but given the very real likelihood of further collapses in the near future, this swan looks very much more white than black. And the crisis cascades into the massive ship-building industries of China and Korea (Hyundai Heavy Industries laid off 10% of its ship-building workforce earlier this month), and into the viability of leading ports. China, as home to seven of the world’s top 10 ports, faces a massive challenge, with an overcapacity estimated at more than 50m TEUs.

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[SCMP Column] Losing Glimmer?

October 22, 2016

In principle, Mainland Chinese demand has a long way to grow. Only 30% of Shanghai women claim to own a diamond, whereas in Hong Kong over 80% own a diamond or three. Annual growth in demand for diamond and gold jewellery from the Mainland was growing a 7% a year for most of the past decade, but has now slipped to barely more than 4%. This will arguably improve as China’s middle classes grow (almost 300m households are expected to earn over US$15,000 a year by 2030, by comparison with 153m last year) but big bets had been put on faster growth, with a result that the supply of diamonds has swollen much faster than demand.

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[SCMP Column] The Bigger Crisis Within

October 01, 2016

According to the Global Report on Internal Displacement (GRID), prepared by the Norwegian Refugees Council and its Norway-based sister, the Internal Displacement Monitoring Council, a total of 27.8m people were last year forced to flee their homes without crossing into a second country – 8.6m to escape conflicts, and a sobering 19.2m people fleeing natural disasters like earthquakes, floods or typhoons. For comparison, Europe has suffered an influx of around 1.8m, with Germany accepting perhaps a half of them thanks to Angela Merkel’s controversial compassion – a compassion that is costing her and her party dear ahead of next year’s national elections.

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[SCMP Column] Alarm over global trade

September 26, 2016

Focusing in particular on steel, where accusations against China for “dumping” surplus steel on global markets has put in jeopardy China’s recognition as a market economy, the latest Global Trade Alert reveals that at the end of last year 91% of all steel traded worldwide was affected by trade discriminatory measures – compared with 50% of world steel trade in 2009. Today Government export incentives provide sweeteners for 88% of world steel trade, compared with 77% in 2010.

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Information Technology Agreement - Ready to Sign

July 20, 2015

The US, China and the EU now are set to reach agreement on the long-delayed update on the range of the tarrif-free information and communications technology products. The breakthrough on the negotiation over the 1996 Information Technology Agreement (ITA) would make it the biggest tariff agreement under World Trade Organisation in 18 years. 

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Hong Kong and the fine art of LIN-kage

March 02, 2012


Mr Greg So, our cherished Secretary for Commerce and Economic Development, sees Hong Kong as Asia’s “point guard”: “Hong Kong can facilitate movement of goods and components in the region, and help enhance participation by small and medium enterprises in regional and global production chains.”

As Mr So’s metaphor sunk in, a light went off inside me. He is absolutely right. Hong Kong is indeed the quintessential “point guard”. By comparison with other economies, Hong Kong is, like Jeremy Lin, comparatively small. But we are quintessentially a team player: if the economies along a product’s value chain can be imagined as a team, then Hong Kong’s clear role and expertise is to manage the chain, make sure the team is pulling together effectively, and to make sure each team player is in the right place, and is doing what he does best. Hong Kong’s role is to have a clear understanding of the comparative strengths of each member of “the team”, and our value-added derives from helping them play to those strengths. Their success is our success. To baudlerise Greg So’s quote: “Hong Kong’s responsibility is getting all the players (read “economies”) playing for the name on the front of the jersey, not the one on the back.”  Nevertheless, Jeremy Lin’s No 17 shirt has been soaring in value.

 

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Russia joins the party

December 17, 2011

 

Russia is celebrating accession to the World Trade Organisation (WTO) after a marathon 18-year negotiation – longer, even, than China’s 16-year marathon.

There was a neat symmetry in Russia joining the WTO almost exactly 10 years after China joined – and the symmetry begs comparisons. Were Russia’s terms of accession tougher than China’s? How significant a liberalizing effect has WTO membership had for China 10 years on – and what might this imply for Russia’s economic development in the decade ahead?

     


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Welcoming Russia to Asia?

July 29, 2011

About this time next year the Russian tall ship Nadezhda will sail grandly into Hong Kong as part of a 300-day tour of the Asia Pacific Economic Cooperation (APEC) economies. The voyage is intended to tell the world that Russia is keenly engaged in Asia. It coincides with a year of Russian chairmanship of APEC which begins in four months time. It is perhaps not an accident that Nadezhda, in English, means “hope”.

Because for sure, Russia’s engagement with Asia remains more “hope” than substance for most of the region’s economies. Nowhere is this better illustrated than in the 68bn cubic metre Siberian gas deal that China and Russia have now been negotiating inconclusively for several years. Russia and China had been expected to sign an agreement on this in June during Hu Jintao’s visit to Moscow, but even now, haggling over the price of gas continues to hold up a deal.

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