[SCMP Column] Jobs and bankruptcies

March 21, 2020
In an economy with no unemployment safety net, and pension provisions that provide negligible security in old age, these are numbers that should concentrate the government’s mind. An early recovery in Hong Kong is going to depend on substantial government support. For cash-strapped companies, low-interest loans miss the point, and US Treasury Secretary Steve Mnuchin may be right in predicting US unemployment up to 20 per cent, and calling for $1tr economic support package, perhaps including cash handouts to families in need. [ Read More ]

[SCMP Column] Coronavirus infects the global economy

February 08, 2020
Assuming disruption for a minimum of four months, that means losses for airlines and the tourism sector internationally of over $18bn. Not just Cathay Pacific has slashed flights to China destinations: American Airlines, Delta, United, Lufthansa and British Airways are among leading airlines that have slashed services to curb their losses.

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[SCMP Column] Recession danger

November 11, 2019
The World Trade Organisation recently revised down to 1.2 per cent its forecast for global trade growth this year. Its forecast in April was 2.6 per cent. In Korea, exports fell in October by a shocking 14.7 per cent, the 11th consecutive month of trade contraction, with exports of electronics down 18 per cent and semiconductors down 32 per cent. In an economy where exports account for 44 per cent of GDP, it is hard to imagine the impact of such a downturn.
Singapore has reported non-oil exports down 8.1 per cent in September – the seventh consecutive monthly fall – with electronics exports down 25 per cent. [ Read More ]

[SCMP Column] Time to reset capitalism

September 23, 2019
Much of the mysterious alchemy of company and market behaviour over the past decade has without doubt been due to the perverse influence of quantitative easing and near-to-zero interest rates, which has so enriched anyone holding property or equity assets, and punished those with savings or pension plans.
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[SCMP Column] Global Syndemic

February 04, 2019
The once-fusty British medical journal The Lancet, joining forces in a “Lancet Commission” with the University of Auckland, the World Obesity organisation, and the Milken Institute School of Public Health, has just released an awesome but virtually unreadable expose on the Great Global Syndemic – the grave combination of the epidemics of obesity, undernutrition and climate change that now looms over us. [ Read More ]

[SCMP Column] Pacific Islands and APEC

October 06, 2018
Between 2013 and today, one suspects that the views of defence establishments in Washington or Canberra have become much less sanguine. China’s activity in the not-so-distant South China Sea, and its growing overall military muscle-flexing, have without doubt soured sentiments, but the Lowy Institute’s more measured perspective surely still holds true.

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[SCMP Column] Life after Lehman

September 10, 2018
A fascinating examination in the Financial Times last week of “the story of a house” following the crash illustrates that many of the houses sold in foreclosure auctions across the US were snapped up at firesale prices by private equity firms. Stephen Schwarzman, head of Blackstone, now has a portfolio of 80,000 homes, making his firm “one of America’s biggest private landlords”. Inequality would not have become the inflamed issue it is today if the victims of the crash had been supported as assiduously as our banking institutions.

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[SCMP Column] May madness

April 30, 2018
After three days last week feting French President Emmanuel Macron and his wife, and three hours frostily lunching Germany’s Chancellor Angela Merkel, he has less than two weeks to decide on whether to put a bomb under the three-year-old Iran Nuclear disarmament deal, or whether to kick the can down the road.

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[SCMP Column] Debt and systemic stress

March 29, 2018
The US Fed is predicting that the 1 percentage point increase in interest rates since early last year will add $15bn to US corporate interest rates this year, and $39bn in 2019. The Congressional Budget Office says interest costs in the US will triple over the coming decade, from US$269bn last year to $818bn in 2027.

[ Read More ]

[SCMP Column] Cryptocurrency concern

January 05, 2018
The tech-savvy idealists and libertarians will at this point dismiss me as a dinosaur that is myopically unable to recognise our inevitable future. But I take comfort that I remain in good company. A recent YouGov survey in the US said that 62 per cent of respondents either had never heard of bitcoin or believed they were used for criminal purposes. A customer survey by HSBC found that 59 per cent of respondents had never heard of blockchain technology. Of the 41 per cent who knew about it, around four fifths did not understand it. [ Read More ]

[SCMP Column] Free Trade is Tough Sell

November 27, 2017

It does not help that in big economies like the US only 1 per cent of companies are actually involved in international trade. While the impact of this 1 per cent is huge in terms of lowering costs for local companies and Walmart shoppers, these impacts are indirect and unappreciated by most businesses, and most consumers. While economies like Hong Kong and Singapore have a much higher awareness of benefits, with 70 per cent or more of companies involved in trade one way or another, we are exceptions that prove the rule.

[ Read More ]

[SCMP Column] Bad Things Do Get Better

November 20, 2017

From joining APEC 1998, Vietnam’s GDP has grown from US$27bn to US$202bn – averaging growth of more than 6 per cent a year. And yes, exports have surged almost 14-fold to US$177bn last year, but imports have surged in similar measure, to US$174bn, leaving merchandise trade in almost perfect balance. If there were ever an example of the xenophobic economic illiteracy of Trump’s zero-sum view of the world as a bundle of bilateral trade balances, Vietnam surely provides it. Vietnam is a poster child for the net benefits of globalization and commitment to free and open trade and investment. It would in normal times be applauded by the US for its willingness to open up and engage. But these are not normal times, and my newly acquired Florida Gator fans are not the only ones thrown into deep stress.

[ Read More ]

[SCMP Column] From Trade to Theatre

November 13, 2017

Trump’s decision to air his new strategic concept at the APEC leaders’ meeting was interesting, and probably contentious. APEC is conspicuously not a military or strategic forum, with its eyes firmly focuses on economic cooperation. And given China’s liberalizing embrace at the meeting, there were many of APEC’s 21 member economies anxious not to beat an “Indo-Pacific” drum. That perhaps explains the muted response to Trump’s speech, with comments only from those with no reasons to curry favour with Trump. Evan Medeiros, a former top Asia adviser to Mr ?Obama, noted that the prospects for the Indo-Pacific strategy were uncertain: “It has no serious economic component, relies conceptually on an ambivalent India, and looks like China containment to many Asian leaders,” he said.

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[SCMP Column] Nuclear Deal Goes Nuts

November 04, 2017

For thousands of years – back to 6,500BC at least – Iran has been the world’s crucible for pistachio nuts. Not only do Iranians devour them with a passion, at almost every festive opportunity, but anyone anywhere in the world that had heard about, and developed a taste for pistachios, had to turn to Iran. Even through the past century, after crude oil, Iran’s main export has always been pistachios, coming mainly from the south-eastern province of Kerman, famous also for caraway seeds and Iran’s not so awesome auto industry.

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[SCMP Column] An Assault on Free Trade

October 21, 2017

The irony here is that the US is by far the biggest user of the WTO dispute settlement process, accounting for almost 20 per cent of the 520 cases brought since 1995. The EU’s trade commissioner Cecilia Malmstrom, said last week that the impasse could lead to a breakdown of a system that is central to managing disagreements among the world’s trading nations.

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[SCMP Column] Brace for the Next Crisis

September 25, 2017

Deutsche Bank has just published its annual long-term assets survey, titled: “The Next Financial Crisis”. It lays out numerous possible triggers – a recession; a clumsy central bank unwind; deflation; an asset market crash; a collapse in market liquidity. Triggers could come from Italy, China, Japan or from Brexit-blighted Britain. The list is long. As one commentator noted: “The range of disaster scenarios shows that the experts simply do not know what will happen next.” And if the experts don’t know, what hope for us mere mortals with measly savings needing to be parked somewhere?

[ Read More ]

[SCMP Column] Finding the Right Path

July 24, 2017

The unifying theme here is that the US runs trade deficits with nine of its ten top trading partners. Last year this ran to a whopping overall trade deficit of US$728bn on total trade amounting to US$3.8 trillion. These deficits ranged from US$347bn with China and US$146bn with the European Union down to US$69bn with Japan, US$64bn with Germany, and US$63bn with Mexico. To Trump, this is all the fault of exploitative foreign trading partners, ill-placed generosity on the part of the liberal and open US economy, and currency manipulation – and it must stop.

[ Read More ]

[SCMP Column] Frustration in Hamburg

July 10, 2017

While many were predictably protesting against globalization and US withdrawal from the Paris Climate Accord, the militancy was perhaps more forcefully fuelled by anger at widening inequality across the world’s economies over the past decade. That should carry a powerful message to China, which is today one of the world’s most unequal economies, and to Hong Kong which among the world’s cities is second only to New York in terms of the extremity of the divide between rich and poor.


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[SCMP Coumn] World Still Integrating

June 24, 2017

Empirically, there is little evidence to underpin King’s claim that globalisation faces a life-threatening crisis. Global foreign investment outflows that rose to US$1.9tr in 2006 tumbled hard to US$1.2tr during the global financial crisis years of 2008 and 2009, but have since recovered to US$1.75tr last year. Imports and exports worldwide took a tumble in 2009, but have otherwise continued to grow – not at the flamboyant pace of the 1980s and 1990s, but still around 3 per cent a year. Between 2007 and 2015, for example, imports have grown from US$16.9tr to US$20.75, while exports have risen from US$17.3tr to US$21.3tr.

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[SCMP Column] Lessons from Tech Age

May 29, 2017

There will be job carnage in some unexpected areas – among surgeons, actuaries, insurance agents, and para-legals, for example. As the cost of sequencing a genome has fallen from US$100 million in 2001 to US$100 today, and approximately 3 cents by 2020, so the health insurers’ task of anticipating health risks will fall dramatically, according to Steve Monaghan at Gen.Life. The result: insurance premiums will tumble; the actuaries and insurance agents selling us health insurance products will be laid waste; and early warning of possibly serious illnesses will preempt the need for many operations, and spill our surgeons’ gravy train.

[ Read More ]

[SCMP Column] Instagram’s Big Appetite

May 08, 2017

When once the written word was the message, with pictures to provide visual validation, today it is often the picture itself that is the message, propagated with a viral force and speed that is almost impossible to get your head around. In less than seven years since Instagram launched it has gathered 700m active users – over 100m of those added in the four months since the beginning of this year. These are at the heart of a snaphappy global community that this year is expected to take 1.2 trillion photos, with around 100 billion being added every year. About 85 per cent of these will be taken on smart phones, with just 10.3 per cent taken with what I used to know as a camera.

[ Read More ]

[SCMP Column] Resurgence of Optimism

May 01, 2017

Here in Seoul, at the year’s second meeting of APEC’s Business Advisory Council, the voices have been unanimous that Trump’s flamboyant January withdrawal from the Trans-Pacific Partnership (TPP) should not be allowed to exterminate one of the world’s biggest and most ambitious trade agreements. At least, not without a fierce fight – likely to be staged during the meeting of APEC Trade Ministers in Hanoi in just under a month’s time.

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[SCMP Column] Hypocrisy of Fair Trade

April 08, 2017

All too often local companies – and industry associations funded to lobby on their behalves – do use such regulations, standards and a myriad arcane tripwires to keep pesky foreign products out of their home market. The hypocracy of “fair trade” is its failure to recognize that our upright local companies are in truth identical to their perfidious foreign counterparts. Wilbur Ross will without question discover numerous examples of unfair practice by foreign companies. What he will discretely fail to notice or acknowledge is those same unfair practices thriving around him in the US, nourished by powerful local manufacturing lobbies, and equally effective in keeping pesky non-American companies at bay in their efforts to sell goods and services to US consumers.

[ Read More ]

[SCMP Column] Playground Rule Explains Trump’s Disdain for Global Trade

March 20, 2017

So our trade negotiators need to be clear: they are doing us in business no favours by spending thousands of hours, and millions of dollars of taxpayer money, negotiating bilateral trade deals. If they want to make a difference – take note Mrs May – they must instead spend their time working on multi-country (plurilateral) deals, and making sure they embrace the tough behind-the-border reforms, rather than on border tariffs.

[ Read More ]

[SCMP Column] Saudis Tilt Towards Asia

March 11, 2017

The choice of destinations speaks volumes about Saudi Arabia’s aims and priorities – including a weakening of confidence in a Trump-led US as its primary international ally. Malaysia, Indonesia and Brunei – as Asia’s most important majority-Moslim countries – are important Sunni allies in the ongoing battle with Iranian-led Shiites, as well as long-standing trade and investment partners. China and Japan are not only among Saudi’s most important oil and natural gas export markets, but critically important sources of future investment as the country arm-wrestles itself away from its extreme reliance on oil and gas.

[ Read More ]

[SCMP Column] At the heart of migration

February 27, 2017

One of our biggest headaches has been that the minute we start talking about international workers, immigration officials come into the room, and begin talking about national security and illegal immigration. In the wake of the “9-11” terrorist attack on New York’s World Trade Centre, the problem perhaps inevitably became even more fraught. These immigration officials had no interest in talking about the increasingly severe problems businesses are facing with labour shortages. That was not their job. Their job is to protect their countries’ borders against attack.

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[SCMP Column] A world without trust

February 20, 2017

In the US, the contrast is even more breathtaking. An S&P Top 500 CEO earns 335 times more than the average US employee. For the average citizen three questions arise: what miraculous talent can possibly justify such disproportionate reward? Is a company’s success truly mainly due to the talent of a CEO – what about the contribution of a conscientious and highly skilled workforce? And what extraordinary personal spending needs justify an executive demanding such huge rewards.

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[SCMP Column] Calm before the storm

February 04, 2017

I am thinking in particular about the Philippines’ two main foreign exchange earners, and major contributors to the economy – Overseas Filipino Workers (OFW), and Business Process Outsourcing (BPO). Surely both of these pillars of the Philippine economy have to be vulnerable while the Pinocchio Apprentice is railing against migration, and the imperative to bring America’s jobs back home. Given the importance of OFW and BPO to the Philippine economy, the cause for concern must be high.

[ Read More ]

[SCMP Column] The Art of Trade War

January 28, 2017

But in terms of direction, the signals make uncomfortable reading for the US. In Prof Simon Evenett’s Global Trade Alert, widely regarded as the leading tracker of emergent protectionism since the 2008 global crash, the US has launched a breathtaking 3705 discriminatory trade measures against trading partners, making it by far the worst initiator of new discrimination in the entire G20. Even India and Russia rank far behind, while China is a comparative innocent, responsible for just over 1268 discriminatory measures.

[ Read More ]

[SCMP Column] Diminishing Act

December 10, 2016

But many shrinkflationary ploys must on balance be regarded as helpful. It strikes me that efforts to reduce overpackaging, even if motivated by a desire to reduce costs and bolster profit margins, are a good thing. So too efforts to reduce the use of plastic bags, and to trim food waste, and to make us print on the clean side of printed sheets of paper. So are the efforts to miniaturize mobile phones or cameras, which greatly reduce the pace at we exhaust so many raw materials. Those little devices in public toilets that ration the use of soap and speedily turn off the water tap surely also have beneficial shrinkflationary effects.

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[SCMP Column] Renewing the Air We Breathe

November 21, 2016

With just 6,200 electric vehicles in Hong Kong out of a total of more than 530,000 cars on the road, it is unclear how quickly policies can be changed. Since vehicle emissions account for 14% of Hong Kong’s greenhouse gases, 14% of harmful respirable suspended particulates, and 20% of volatile organics, it is clear that government leadership is required. There is potential here for Hong Kong and the Mainland to lead the world. Lift electric car ownership to Norwegian levels, and the air that we breathe will be transformed. But maybe I am letting my enthusiasm get ahead of me.

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[SCMP Column] Essential Growth Catalyst

October 08, 2016

The now almost inevitable failure of the TPP means that the China-ASEAN-led Regional Comprehensive Economic Partnership (RCEP), which includes Australia, New Zealand, Korea, India and Japan, excludes the US, and is due to be completed by the end of the year, will provide the primary architecture for driving trade liberalization in the Asia-Pacific. As a Financial Times journalist wrote last week: “Not only would (RCEP) exclude the US, but it would also include worse safeguards for intellectual property, internet freedom, workers’ rights, wildlife and the environment.” Most important, China is at the heart of the rule-making process, while the US is not even at the table. Grimly, it seems that neither Trump nor Clinton greatly care.

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[SCMP Column] High Price of Big Scientific Research

October 03, 2016

These last two scientific endeavours must surely be candidates for an Ig-Nobel Prize, with this ignominious list released only last week in Harvard. As with the Ig Nobels, they surely amuse, but make us think. Like this year’s Ig Nobel Reproduction prize – to Egyptian Ahmed Shafik for studying the effects of wearing polyester, cotton or wool trousers on the sex life of rats - or the Economics Prize to a New Zealand team which assessed the perceived personalities of rocks – or my personal favourite, the Peace Prize to a Canadian team that studied “The Reception and Detection of Pseudo-Profound Bullshit”.

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[SCMP Column] The high cost of bad air

September 17, 2016

Both the World Bank and UNEP are emphasizing that these pollution-driven ailments inflict not only social harm and personal tragedy, but carry a very high economic cost too. I recall a World Economic Forum study released almost exactly two years ago that said the six main contributors to premature death and poor health worldwide – cardiovascular disease, strokes, diabetes, respiratory illness, cancer and mental ill-health – would cost the global economy US$47 trillion in the 20 years from 2010 to 2030 – with impacts heavy enough to bankrupt many of Asia’s health care systems.

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[SCMP Column] Economic conundrum

September 05, 2016

The demographic challenge among today’s poorer economies is rather different, but they account for only a small proportion of world consumption, and are likely to remain weak drivers of global economic growth. India – by 2050 expected to become the world’s most populous country – is predicted to have a working population of more than 1bn by mid-century – up almost 300m from today. Its workforce is set to overtake that of China somewhere between 2025 and 2030. At the same time, Nigeria is predicted to become the world’s third most populous country, and Indonesia the world’s fifth, by 2050. Indonesia’s workforce is set to almost double over the half century to 190m.

[ Read More ]

[SCMP Column] Big is not Good

September 03, 2016

AB InBev’s publicity materials betray how oblivious they are to the poverty of their offering. Under the ridiculous broad strap-line of “Dream People Culture”, they say their dream is “to be the Best Beer Company Bringing Together People for a Better World”. Pardon? As Financial Times reports more soberly noted, the deal has more to do with strengthening presence in Latin America and Africa, “whose markets have not been disrupted by a shift in tastes towards craft beers”.


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[SCMP Column]A pension crisis unfolds

August 27, 2016

For Hong Kong’s MPF savers, the message is similarly grim. If you earn HK$35,000 a month (which puts you firmly among Hong Kong’s upper middle class), then your MPF savings would amount to HK$36,000 a year, or HK$1.4m over a 40 year working career. Real investment returns of 3% a year would give you around HK$4.6m – enough to last for about 17 years if you can live on 75% of your final salary. But since 2000, MPF investment returns have been negative for five of the 15 years. HK$500,000 of contributions since 2000 would have earned just HK$100,000.

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[SCMP Column] Unwelcome Intruders

August 15, 2016

Procter & Gamble, the world’s biggest advertiser, spends 11% of its total annual revenues – approximately US$7.24bn – on advertising its washing powder, dypers and so on. If everyone else were like me, studiously avoiding adverts wherever and whenever they appear, then this would be money that is wholly wasted It could almost certainly be put to much better use.

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[SCMP Column] Economics of Olympics

August 06, 2016

By these many measures, the Rio Olympics look set to be a disaster of reasonably epic proportions. Venues and the metro system are incomplete. The ocean is polluted. Zika haunts every nook and cranny. The country is buried in its worst recession for almost a century. And Dilma Roussef’s impeachment shows a country in political chaos. The doping scandals that are keeping so many Russian athletes away are not of Brazil’s making, but coming in the wake of corruption scandals in Fifa and doping scandals in other sports like cycling they have tainted the games. So many today question how many of the medals have been won on the back of chemical enhancement. From the shaming of sprinter Ben Johnson in the 1988 Seoul Olympics, doping scandals have become graver and graver. A widely-quoted study in Sports Medicine estimates that between 14 and 39% of athletes dope. Whatever the true number, the suspicion of winners tarnishes even the most awesome of performances. Whether it is the dominant teams coming from the US, Germany, Brazil, Germany or China (all with more than 400 competitors), or little teams like that from Hong Kong, which is just 37-strong, and has only ever won one medal, potential drug scandals hover not far away.

[ Read More ]

[SCMP Column] Welcome measures

July 30, 2016

China is not among the most grievous sinners. The IEA says China’s fossil fuel subsidies – mainly focused on oil and coal – have almost halved since 2008, from US$42 billion to around US$22 billion. This is far behind Saudi Arabia and Iran, which provide fossil fuel subsidies of US$69 billion or more, and even behind India and Russia, which in 2014 provided subsidies of more than US$40 billion.

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[SCMP Column] Grand football ambitions

July 25, 2016

To build local expertise, a clutch of Chinese billionaire business barons have gone aggressively overseas to acquire control of top clubs which will build knowledge of the the way the global football business works, and at the same time earn them a handsome profit. Suning Holdings has paid €270m for 18-time Italian champion Inter Milan, while Wanda Sports Holdings, controlled by Wang Jianlin, reputed to be China’s richest man, has bought a 20% stake in AC Milan. Which means the next “local-derby” between the two top Milan sides will be as much a Chinese contest as an Italian one.

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[SCMP Column] Rebuild Case for Liberal Trade

July 11, 2016

Making things worse, in the recession since 2008 trade has stagnated and actually fallen since 2014. From trade growth averaging 16% a year between 2003 and 2008, it has slowed to annual growth of just 1.5% since 2010. Confidence in the benefits of free trade has been rocked. As manufacturing demand has fallen inside China, so raw material exporters worldwide have suffered sharp declines. At the same time China has begun to “domesticate” more high-value-added parts of global supply chains, so shortening the chains and reducing export opportunities for component makers along these supply chains.

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[SCMP Column] Soaring to New Heights

June 25, 2016

Supercell so far has just four products – or “titles” – Clash of Clans, Hay Day, Boom Beach and Clash Royale. But on the foundations of these four games it has in the world of mobile gaming, become a global leader. These are the elite of games, attracting millions of fans and gamers worldwide. They earned profits last year for Supercell’s 190 staff of Euros 848m on sales of Euros 2.1bn. Mobile apps like Clash of Clans may not yet rank alongside League of Legends in the universe of professional video gaming, but now as part of the Tencent stable of companies who knows where we will be within the next decade.

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[SCMP Column] Banking in Fear

June 18, 2016

Given the pressing importance of this problem, surely more parties need to get involved. In APEC, Finance Ministers last autumn called on the 21 APEC economies “to build capacity to address financial crimes, which threaten everyone’s economic and social well?being”. They called for a report “exploring ways to strengthen capacity in tackling tax crimes and other related crimes”. But beyond these fine words, our region’s officials have sat on their thumbs. Surely cooperation to share suspicious information is not too much to ask.

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[SCMP Column] Costs of Migrantion

May 21, 2016

In APEC, we have begun to discuss the creation of an “international worker card” that would not only facilitate the movement of such workers to and from their overseas jobs, but would also embody standardized access to health insurance and maintenance of retirement benefits. Jokowi would serve us well by lending Indonesia’s support to this initiative. 

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[SCMP Column] Your digital afterlife

May 16, 2016

By 1995, the digital revolution was pretty much limited to music, videos and photos. By 2010 it had swallowed the print media, retailing, TV programming, travel and tourism services and the human resources profession. By last year, it was engulfing financial services, healthcare, education, the auto industry, and agriculture. It is now lapping at the door of two even more fundamental activities in our economies – accounting and legal services.

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[SCMP Column] Spreading Pain

May 02, 2016

Steel is a sore subject in many parts of the world as recent recession, in particular a sharp cut back in steel consumption in China, has left most of the world’s steel manufacturers haemhorraging horribly. And as China was in the boom years the main driver for plump profits for the world’s steelmakers, so it is fair to acknowledge that in the downturn, China has played a large part in spreading pain.

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[SCMP Column] Smelling the Air

April 05, 2016

Get out on the street, and the reality most people are feeling is much more dispiriting than Ms Yellen’s statisticians are telling her. So instead of relying on data modeling, she and her counterparts around the world ought to be sending more people out onto the streets to “smell the air”.  As one anthropologist put it: “What we need is not just economic analysis but on-the-ground ethnographic analysis of how consumer perceptions of prices actually operate.”

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[SCMP Column]Aerial Torture

March 07, 2016

This might just make these long-haul journeys commercially viable: up to now, such long flights have been commercially disastrous. In 2004, Singapore airlines launched direct flights from Singapore to New York and Los Angeles. A year later, Thai Airways tried direct flights from Bangkok to Los Angeles, and American Airlines began flying from Chicago to Delhi. But by 2013 all of these services had been cancelled. Of course, soaring fuel prices did not help, but the economics proved impossible. In order to carry enough fuel for the journey, Singapore Airlines had to cut its passenger load from the normal 300 down to 170. Even making the flights business-class only could not make them pay.

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[SCMP Column]Signs of Life

March 05, 2016

In short, the reasons why companies and consumers are still unwilling to begin relaxing and spending seem very clear. Quite why so many economic policymakers don’t recognize or acknowledge these forces perplexes me. Whatever the reason, it seems much more adversity lies ahead before the patient on the emergency room table begins to show signs of sustainable life. 

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[SCMP Column] Life Goes On

February 15, 2016

Reflexivity may seem a big deal to George Soros and colleagues on the world’s equity markets, but in the bigger scheme of things, this is barely a bump in the night. Perspective is a wonderful thing.

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[SCMP Column] Time to count the winners in global commodity crash

January 18, 2016

So what do I make of all this? On balance, I think the panic about oil prices is overdone and that low prices will actually do us some good as we try to breathe life back into the global economy. But I think the gloom emanating from the commodity economy tells a darker story, suggesting a long haul ahead before we get any spring back in our step. The scale demands inside China driven by new cities, new airports, new mass transit systems, and 400 million or more emergent “middle class” consumers will in due course come to our rescue, but it will take time. Our year of the fire monkey might not quite be an outright disaster. But for most of us, it is unlikely to be fun either.

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[SCMP Column] Off Life Support

December 21, 2015

So as we edge into the Year of the Monkey, and drink toasts to the future, the main message is that several years of austerity and belt-tightening still lay ahead, even though we can more credibly today talk about “green shoots”. Patience and risk aversion may still be well advised. We are more than half way through our “lost decade”. And while China’s domestic restructuring is at present causing us all heartburn, on balance we remain lucky to live on China’s doorstep. As the global economy begins to rally back towards boisterous good health, there will be nowhere more exciting to be than in China, where a seismic digital revolution is taking place – but I think that is a story for another day.

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[SCMP Column] Denise of Dymocks may not signal end of books after all

January 27, 2015

So what a shock to learn that Mark Zuckerberg, Facebook founder and ultimate e-geek, has set up a book club, confesses a love of reading books, and promises to post two books a month for his Facebook followers to digest and debate. Sales of his first chosen book – Moises Naim’s The End of Power – have surged, with hard copies of his book sold out in days, and 180,000 Zuckerberg fans signing up to debate the book within a week.

And a further shock to learn that book sales have not collapsed as consultants were predicting until very recently. Consultancy PwC told us just two years ago that e-books would overtake physical books by 2015. Today, Deloitte says printed books still account for 80 per cent of sales by value. The leading UK bookstore Waterstones says sales of real books were up 5 per cent in December. In the US, sales of physical books rose 2.4 per cent last year to 635 million.

I’m confused. Am I really a dinosaur, or is the world really moving with me on this?

Data from Hong Kong would suggest I am not so extinct after all. Sales of new book titles in 2013 in the city were down 50 per cent from two years earlier to 4,000, but Hong Kong’s 77 libraries remain as busy as ever. Some 11.4 million books were on offer in our libraries at the end of 2014 – up 3 per cent from two years earlier, and book borrowers rose over the same period by 5 per cent to 4.2 million.

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[SCMP Column] Ignoring mental illness creates an economic burden for us all

October 23, 2014

The WHO measures the mental illness problem in terms of Disability-adjusted Life years, or “DALYs” – years lost due to suicides, other premature death, inability to work, or impaired productivity - and says that worldwide we lose 199 million DALYs every year. It is hard to get your head around such an awesome number, but the message is clear: it is big. They say an estimated 154 million people suffer mental illness worldwide, 100 million of these suffering from alcohol or drug abuse, and almost 900,000 commit suicide every year – almost double the number that are murdered, and three times the number that die in wars.

Here in Hong Kong, based on limited data, we know there are 190,000 patients currently being treated for varying degrees of mental illness, and an estimated one in seven suffer various levels of neurotic symptoms. Hong Kong’s suicide rate is twice that of New York or Singapore. There is a wide gap between demand for treatment and the supply, because of shortages of mental health professionals. We have an average 4.6 psychiatric specialists for every 100,000 people, compared with an average in high income countries of 8.6.

Dr Layard’s conclusions for the UK are highly relevant to us here in Hong Kong: depression and anxiety cause more misery in our society than all physical illness put together; this is unacceptable because effective remedies exist but are not used; these remedies are not expensive and would pay for themselves in terms of enhance workplace productivity; failure to give mental illness the attention it deserves is both grossly inefficient, and grossly unjust. More of us should have been running in last Sunday’s Rat Race.


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[SCMP Column] Economies at risk if root causes of sick workers are not tackled

July 17, 2014

A recent World Economic Forum study estimated that the six key contributors to premature death and poor health – cardiovascular disease, strokes, diabetes, respiratory illness, cancer and mental ill health – would cost the global economy $47 trillion in the two decades from 2010 to 2030. About one third of this would be due to mental ill-health, which is unmeasured in many economies.

Losses on this scale are not just a heavy burden on the sick, on companies, and on governments around the region – they are also large enough to bankrupt many of our region’s health care systems.

As our societies become steadily older, with the population over 65 expected to double by 2050, so this arithmetic will get steadily worse, with a dwindling workforce carrying the cost of funding care for the elderly in their societies. Japan faces the severest of these challenges, with about one third of its population expected to be over 65 by 2035. But none of the rest of us can be complacent because all of us are close behind.


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[SCMP Column] Unfinished Business

June 05, 2014

As we move into year six of the “great recession”, with the economies of the US, Europe and Japan still spluttering unprettily along, two issues worry me most of all: the emergence of protectionist, anti-foreign political forces in many communities around the world; and the largely-invisible curse of youth unemployment.

Gone is the boisterous, flamboyant optimism and excess of the 1980s and 90s. In its place, we have either xenophobia and protectionism at worst, or at best a gloomy resignation to hard times stretching far over the horizon. The  Japanese have a fitting word for it: “Gambarimasu” - “We must struggle on”.

These trends can be seen most alarmingly across Europe, with unemployment rates among under-25 males stuck above 30% for most of the past six years, and with fascist, right wing parties rising to political significance in recent European parliamentary elections.
In theory, here in Hong Kong, things are not so bad. Unemployment rates are at historic lows, and the worst effects of the great recession are not evident – thanks largely to the lucky nearness of China’s fast-emerging economy.

But I fear problems in Hong Kong are much more troubling than bare data suggests. 

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[SCMP Column] Politics is the deal

April 24, 2014

Two months ago I flew down to Singapore to give a presentation titled: “Are FTAs history?” There was a particular mischievous pleasure in taking this to a Singapore audience, where the government, more than any in Asia, has invested massively in securing Free Trade Agreements (a total of 38 at present counting).

The message was simple, and persuasive: today in Asia, around 80% of all trade is in intermediate goods that are progressing along long and complex supply chains that embrace a dozen or more economies. Negotiating bilateral trade agreements that secure preferential tariffs for the export of finished goods from one economy to a second economy is, without much exaggeration, a total waste of time. It gave me great pleasure telling off Singapore officials for wasting so many thousands of hours, and so many millions of taxpayer dollars, negotiating deals that were useless and would never be used.

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[SCMP Column] Food of Gods

February 13, 2014

In short, therefore, our love affair with chocolate is under threat. Just as China’s 1.3 billion population come into enough money to become basic consumers, and begin to develop the west’s sweet tooth and learn our romantic customs, so the world’s crop looks like it is under threat. Prices have whipped and sawed - from a 32-year peak of US$3,520 per tonne in 2010 down to US$2,200 in 2011, and back up close to record highs again today

Add to this volatility in cocoa prices a similar volatility in sugar prices – sugar and cocoa being the most important ingredients in chocolate and many naughty Valentine desserts – and the scene looks set for an expensive Valentine’s Day. Worldwide, there are many good and worthy arguments that can be made for improving food security. Here is a romantic one.

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Five stages of grief

October 08, 2011

I have consistently been in the “Dr Doom” camp over the past six years or more. It’s just that I find it hard to accept that it has taken until now for so many who should know better to recognise the seismic upheavals that occurred in 2008 – the consequences of which have been clear to see for the past three years. The paradoxical result of all this is that for the first time in several years, I find myself more optimistic than the market, and convinced that stocks are now stupidly oversold – in the Asian region at least. Yes, the US economy is teetering on the brink of an aggressive and painful recession in spite of trillions of dollars of QE stimulus. Yes, Europe’s economies are staring into an abyss, with Greece now almost certain to default on its debts within weeks, possibly having to be manoevered out of the Eurozone, and several more significant European nations facing significant and painful structural adjustments – job losses, welfare service cuts, and so on. But what’s new?? This has been glaringly clear for a year or more. How can it be that stock market investors and analysts have only now stumbled on the discovery, and dived in panic for the exits? 

I suspect it all comes down to Kubler Ross’s “Five stages of Grief” – devised for understanding how individuals cope with bereavement after the loss of someone dearly loved. Stage 1 is Numbness and Denial – an incapacity to acknowledge the dreadful event that has just occurred. 

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The search for jobs

September 23, 2011

Whether or not the doom-mongers are right that economic growth has stalled, and we are slipping relentlessly down into the New Great Depression, for most of the world’s politicians – and Obama in particular – the nightmares are about jobs.

President Obama acknowledged this formally two weeks ago with his US$450 billion “American Jobs Act”, which aims to cut unemployment to 8% by creating 1.9 million jobs. In Spain, where youngsters calling themselves “los indignados” – the “indignants” – have mounted street protests in face of youth unemployment stretching past 40%, and in the UK, where violence, riots and looting recently shocked the nation, the nightmare is the same. In crisis-striken Greece, where unemployment has passed 20% and must undoubtedly rise as government cuts ever further into spending, riots and street demonstrations have become almost routine. This is not a setting in which politicians get reelected. And if the “Arab Spring” is any guide, it is setting where even well engtrenched governments can be overturned – witness Egypt and Tunisia, and perhaps more to come.

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Peru, poverty and some lessons for Hong Kong

September 09, 2011

Yes, I could write about the crisis rolling on in Europe, or the traumatic reliving of “9-11”, but these all seem a very long way away in Peru, where I have spent the past two weeks attending meetings of the APEC Business Advisory Council (ABAC).

Yes, Peru, like Hong Kong, is a member of APEC, the group of 21 Asia-Pacific economies – a sharp reminder of the reach of this forum, which has seen its importance explode since the crash in the global markets in 2008, and the floundering of the Doha Round of trade liberalization talks.

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Typhoon Season for World Markets

August 12, 2011

Whether or not we are finally at the bottom of what is now formally being acknowledged as “the Great Recession” is hard to tell. After the shocking losses of the past week, I know many in the markets who are praying so. But perhaps most important, the events of the past week may finally mark the end of “policy fudge”.

If that is so, then this is a time to celebrate – not that the globe’s problems have been solved, because of course they have not, but that Governments are at last poised to deal with the core problems – cleaning up banks’ balance sheets, dealing with millions of underwater mortgages, reining in on unsustainable public services, and – yes – raising taxes, no matter what the Tea Party says.

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Days of Reckoning in the Global Economy

July 01, 2011

You remember all of that rubbish back in 2009 about “green shoots” appearing to mark the beginning of the end of the global market crash? I recall dismissing this premature optimism, and saying instead that we had perhaps reached the end of the beginning. But I now realize I was wrong – only now are we reaching the end of the beginning. In fact, when our grandchildren look back at this horrid period, it may be this very week that is recalled as the watershed point from which the crisis was at last honestly faced, enabling the start of decisive remedial action.

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Big Sky Dreaming

May 20, 2011

For the past two weeks, I have been buried in the snow-clad mountains of Big Sky Montana, huddled with a thousand or so government officials from the 21-member APEC region discussing trade liberalization. For light relief, I decided to take a peak at the state of the residential property market in this affluent community of 1,400 homes at the heart of one the US’s largest and most exclusive ski resorts.

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When Growth is Not Growth

July 30, 2010

After wrestling through four conferences on “Knowledge-based growth” in the past three months, I am at the end of my tether. Not only have I come to the conclusion that most people who use the phrase “knowledge-based” don’t in fact know what they are talking about (or are simply lobbying for more government funding for company or university R&D budgets), but that most are clueless too about “growth”.

I will come to the “knowledge-based” stiff in a minute, but first “growth”. Surely you have to be brain-dead not to notice that the large proportion of the “growth” that the world’s rich western economies boasted over the 15 years to September 2008 disappeared in a puff of smoke in the wake of Lehman Brothers’ collapse. We had been counting the illusory gains of property and stock market bubbles and debt-funded leverage. All of a sudden, most European economies – and most of the complacent citizens living in them – found the growth had gone, and they were no longer as wealthy or economically prepared for retirement as they thought they were. The same happened in Hong Kong of course, as property prices crashed in the Asian Financial Crisis in 1998.

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Decoupling – Just in Time

May 21, 2010

Is it only me that is puzzled? Asia’s economies are supposed to be heavily dependent on the export markets of Europe and the United States – that’s what the old argument about decoupling is all about. So how is it that as debts mount in Europe and the US, with government spending being cut, taxes raised, consumers cutting back, and unemployment still moving in the wrong direction that Asia’s economies continue to bound forward?

I suppose the simplest – and most plausible – answer is that the impact of contraction in Europe and the US has yet to hit us. After all, the US Government’s various stimulus initiatives have yet to expire, and so may still be buoying the consumer market. A group of US department store chains including Macy’s and JC Penny, accounting for about 3,000 stores and annual sales of about US$70 billion, said last week that sales in the early part of this year were tentatively up from the gloom of spring 2009. 

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Greece and Boiling Frogs

May 07, 2010

In recent weeks, I have thought a lot about the old Chinese story about boiling frogs. You will recall the story says that if you throw a frog into boiling water, it will leap out in shock. But if you drop the frog into cold water, then slowly boil the water, the frog dies without ever recognizing the danger.

For me, Europe’s economies have for many years been frogs originally dropped in cold water. European friends have smiled smugly and dismissively as outsiders like me have talked about the impossible unsustainability of Europe’s complacent, comfortable lifestyles. As the water has crept closer and closer to boiling point, so Europeans have continued to lounge, oblivious to the imminent threat of death.

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America’s Obsession with Exchange Rates – Seeing the Trees, Ignoring the Wood

April 09, 2010

A good friend, weary of my persistent pessimism about the state of the global economy, insisted last week that we should all now be at least “cautiously optimistic” about the prospects for recovery. No, I said – everyone is “prematurely cautiously optimistic”.

This is all very perplexing. I see myself as a happy, positive, optimistic person. Even some of my friends accept this to be so. Why am I so weighed down by the forebodings ahead, when so many others are full of talk of “green shoots”, a consumer rebound, and resurgent exports?

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