Malaysia in 2013, stability amid a global storm

There is growing optimism among investors despite possibility of overall contraction


Multi-sector economy: Malaysia’s economic performance has been strong, and it is often recognised as among the emerging economies that will have a prominent role on the world stage in the coming years.

KUALA LUMPUR: The new year is just around the corner. In many ways, it will be a relief to say farewell to 2012, a year which has seen the advanced countries struggling amid seemingly unending economic and financial uncertainty.

Naturally, the tail-end of the year is a time to look ahead with hope and expectation. And indeed, there is growing optimism among investors about the global economy. However, is this realistic when some experts refuse to rule out the possibility of an overall contraction?

When presenting its Economic Outlook in late November, the Organisation for Economic Cooperation and Development (OECD) warned that the global economy was expected to make “a hesitant and uneven recovery” over the coming two years.

OECD secretary-general Angel Gurra pointed out that we were not yet out of the woods. “The near-term outlook is not only weak, but also downside risks predominate. The lingering euro-area crisis remains a serious threat to the world economy. At the same time, if left unresolved, the US fiscal cliff' could tip the US economy into recession and weigh on global growth,” he added.

The eurozone is expected to see a 0.4% contraction this year and a further 0.1% fall in 2013. Even if the White House and congressional leaders can hammer out a short-term agreement on the budget that will avoid the fiscal cliff, growth in the United States is forecast to grow at 2% next year, down from the 2.6% forecasted in May.

With the United States and Europe battling to revive their economies, the OECD believes the world economy will grow by 3.4% in 2013, up from 2.9% this year.

This will likely be supported by the economic expansion of the likes of China, Brazil and India, although they too will be impacted by challenges faced in the West.

< Gurria: ‘The near-term global outlook is not only weak, but also downside risks predominate

Malaysia too will contribute to this forward momentum. Its economic performance has been strong, and it is often recognised as among the emerging economies that will have a prominent role on the world stage in the coming years.

The recent Country Brand Index (CBI) 2012-13, for example, ranks Malaysia as third among the Future 15 tomorrow's leading country brands that have “great potential across a variety of areas”.

Constructed annually by global brand consultancy FutureBrand, the CBI measures and ranks global perceptions around the world's nations based on elements such as their cultures, industries, economic vitality and public policy initiatives.

Economic reforms

This year is the first time that the index report incorporate the Future 15, which reflects six future drivers: governance, investment, human capital, growth, sustainability and influence.

Published last October, the CBI 2012-13 report notes: “Malaysia's workforce, tourism and vast resources may just be the secret to its success.”

That, of course, is not the full picture. A key component of the Malaysian success story has been the sound implementation of economic reforms since the nation's independence that has transformed an exporter of raw materials into an emerging, multi-sector economy driven by exports and supported by a well-developed regulatory system.

Manokaran says the economy is still driven by domestic demand, led by private consumption
 
Forward-looking planning has enabled the Government to capitalise on the country's unique offering, including a rich heritage and scenic landscapes, to support a thriving tourism sector. Home to more than 15% of the world's species, Malaysia is one of the world's most bio-diverse areas.

The current emphasis is on climbing the the economic ladder, and this is done via Government-led initiatives such as the Government Transformation Programme (GTP) and the Economic Transformation Programme (ETP), and a conscious effort to slowly liberalise sub-sectors of our economy.

Also crucial are a focus on building on the country's vast natural resources, a commitment to economic openness, and a concerted effort to drive investments in infrastructure and research and development. These are complemented by the encouragement of innovation in business and amongst the workforce, and the development of regional alliances.

Malaysia's economy has been resilient amid the challenging global economic conditions, with real gross domestic (GDP) product growth estimated at 5.1% this year and 5% in 2013, according to the World Bank.

Its third-quarter performance surprised on the upside with GDP expansion beating economists' median expectations of 4.8%; year-on-year growth in the quarter was 5.2%, with domestic demand fuelling economic activity and compensating for the slower export demand from major trading partners affected by the ongoing economic woes.

Domestic demand in the third quarter continued to experience double-digit growth, increasing 11.4% from a year ago. The impetus for this was supplied by strong public and private sector investment.

Private investments were primarily driven by capital spending in the services sector, particularly in transportation, real estate and utilities, while public investments were mainly capital spending by public enterprises in transportation, oil and gas, education and utilities.

< Zeti warns of some uncertainties in the export sector
 
Endless possibilities

Commenting on Malaysia's third-quarter performance, Alliance Research chief economist Manokaran Mottain said the economy was still driven by domestic demand, led by private consumption and investment activities, which reflected the Government's drive to stimulate income growth, improve and develop infrastructure, and ensure a steady flow of foreign capital.

However, Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz cautioned that although GDP growth in the fourth quarter was likely to continue that of the third quarter, there were some uncertainties in the export sector. The central bank estimates that growth for the whole of 2012 will be at least 5%.

The experts are cautiously confident about Malaysia maintaining its economic performance in 2013. The recent Malaysia Economic Monitor, a report by the World Bank, said Malaysia's growth would likely weather a weak global environment and would grow robustly in 2013.

Public and private investments are expected to remain strong and lend support to economic growth in the new year. Private investment is forecasted to grow at 13.3% in 2013, up from 11.7% in 2012, driven by the rollout of the ETP. Public investment is forecasted to expand by 4.2% in 2013, as a result of higher capital outlays by non-financial public enterprises and development expenditure by the Federal Government .

The Finance Ministry has said the prospects for the services sector are expected to remain upbeat with the accelerated implementation of key initiatives under the National Key Results Area and continued investment in the seven services sub-sectors under the National Key Economic Areas.

These initiatives are geared towards driving the wholesale and retail trade, finance and insurance, and communication sub-sectors, which are forecasted to grow 6.8%, 5.2% and 8.2% in 2013.

Though the United States and Europe have some way to go before they can again enjoy pre-crisis growth rates, Malaysia looks set to stay on its stable trajectory of growth, benefiting from wise economic planning and a steady pace of growth.

A bright future lies ahead for Malaysia, a nation earmarked to become a force that will reshape the global landscape of tomorrow. As the country plays an increasingly important role, it will no doubt offer Malaysians and the world a destination for growth and endless possibilities.

By News Desk The Star/Asia News Network

Related posts
Malaysia's GDP growth dips to 5.2% in Q3, beats economists' forecast ...
Penang's economy growth declines to 1.8% in 9 months  
US Fiscal Cliff poses threat to economy worldwide!
ASEAN plans world's largest trading bloc in Asia, the RCEP vs secretive TPP...

Building an innovative society

Bad intellectual property image clouds the country’s real progress in encouraging inventors and building an innovation-based society.

CHINA has been an easy prey worldwide as it is labelled as a country with one of the worst environments for intellectual property (IP) development.

But little has been known about the nation’s steady progress in raising a greater awareness of IP rights protection and significance to build a more innovation-based society.

Chinese State Intellectual Property Office commissioner Tian Lipu admitted that China is still full of pirated goods and copycats but he also pointed out that many more individuals and companies are turning innovators instead.

“I think the Western media has painted a wrong picture of China on its efforts to protect IP rights. China’s image has been quite bad in other countries,” he said in a recent interview in Beijing.

He acknowledged that one would be able to find pirated goods in places like Beijing’s Sanlitun and Luohu district in Shenzhen but many had overseen the fact that China had developed a comprehensive system and legal structure to protect local and foreign patents and trademarks.

“Last year, we received 526,000 applications for invention patents, accounting for 25% of the world’s total. About 110,000 local applicants were granted patents. While the number of applications reflects the level of awareness of IP protection among the public, the figures of patents granted indicate how good is the quality of the inventions.

“However, the intellectual property office is more concerned about the valid patents and to see whether these patented creations are well received by the market and how well the patent is maintained by its owner. To date, there are about 350,000 valid patents owned by locals,” he said.

In China, applicants can register patents for invention, patents for utility model and patents for design. The office processed 1.63 million applications for these three types of patents last year.

As for trademarks, China received a total of 9.71 million applications as of the end of last year, with 6.65 million of them successfully registered. Besides, some 110,000 software copyrights were registered last year.

“Not many people know that China is one the countries which pay the most royalties for patents, trademarks, copyrights and franchises and one of the world’s largest genuine software buyers.

“Government departments, banks, insurance firms and many companies are using original softwares. Many firms buy books, music, movies and TV shows through copyright trade,” Tian said.

He said foreign companies had gained huge profits in overseas markets after the production of their original equipment manufacturer (OEM) goods in China.

“I think because of the conducive environment for IP protection in China, foreign investors would have a peace of mind to entrust Chinese manufacturers to produce their OEM goods.”

Last week, the office’s patents administration department announ-ced that as of June, all the departments of the 31 provincial and municipal governments had installed genuine softwares.

By the end of next year, it said, all city and county-level governments would do the same. As of the end of October, all levels of government spent some 1.48 billion yuan (RM725mil) on 2.3 million licences for operating system, office and anti-virus softwares.

It is learnt that most of the state-owned enterprises have been equipped with proper softwares while 50% of smaller companies would be given until next year to follow suit.

Tian said China might not have a society priding itself on IP like in the United States but it would not take too long for the Chinese to catch up with the rest of the world.

“China used to be a country with the highest number of inventions during the Song dynasty – and 50% of the world’s total inventions came from China. China then laid dormant for centuries until we started educating our people on the value of IP 20 years ago. I think it may take one or two more generations for us to build a society that lives by the IP culture,” he said.

He revealed that his office, the Trademark Office under the State Administration of Industry and Commerce and the National Copy-right Administration were amending the Patent Law, Trademark Law and Copyright Law to give more tooth to enforcement and judiciary agencies to carry out their duty.

Under the amended patent law, damages will be calculated based on the illegal gains of the party which infringes the owner’s right rather than the owner’s actual loss. This is because the act of infringing one’s right is relatively easy compared to the act of protecting and maintaining it, he said.

He warned that as Chinese companies reinforce their IP development, they should be on guard to face the so-called “patent trolls” which tend to buy patents at low prices and go around taking action against those infringing their rights.

“These ‘patent trolls’ did not involve in any R&D and innovation. They are a byproduct of IP development sidetracking its real spirit.

“Piracy and IP infringement exist everywhere in the world and cannot be totally wiped out. But investors should be confident about doing business in China as its government is resolute in addressing the problem.”

MADE IN CHINA
By CHOW HOW BAN

China's manufacturing growth quickens 13-month high

(Reuters) - China's vast manufacturing sector saw expansion accelerate in November for the first time in 13 months, preliminary results from a factory survey showed, a sign that the pace of economic growth has revived after seven consecutive quarters of slowdown.

The China HSBC Flash Manufacturing Purchasing Managers Index (PMI) rose to a 13-month high of 50.4 in November, the latest indicator of recovery in the real economy after data showing solid credit growth, firmer exports and rising industrial output in the previous month.

A sub-index measuring output rose to 51.3, also the highest since October 2011.

"This reflects that conditions for smaller firms, especially exporters, are looking up," said Li Wei, a Shanghai-based economist for Standard Chartered. "The consensus in the market is already for a small, gradual improvement."

An uptick in key economic activity indicators in October, following encouraging signs in September, cemented the view of many analysts and investors that a rebound in the world's second largest economy gathered momentum as it entered the fourth quarter, thanks to a raft of pro-growth policies rolled out by the government over recent months.

China is currently shuffling its senior officials after the seven top leaders of the ruling Communist Party were selected at a congress last week. The new appointments should end months of uncertainty in the highest ranks, although economic policy is not expected to change abruptly in the near-term.

Even before the congress, the central bank had moved to ease liquidity by pumping short-term cash into money markets rather than resorting to the interest rate cuts or reduction in banks' required reserve ratios that many investors had expected.

STEADY THROUGH YEAR-END

This month's PMI reading above 50 is likely to be seen as a turning point by the market, particularly if it is born out by the final reading due on December 1 and by official indicators.

Asian shares extended gains slightly after the data to stand up nearly 1 percent on the day and the Australian dollar, sensitive to demand from the biggest customer for Australia's resources, rose as far as $1.04.

"This confirms that the economic recovery continues to gain momentum towards the year-end," Qu Hongbin, chief China economist at index sponsor HSBC, said in a statement accompanying the data.

"However, it is still the early stage of recovery and global economic growth remains fragile. This calls for a continuation of policy easing to strengthen the recovery."

With a one-month exception in October 2011, the HSBC PMI -- which largely reflects the private manufacturing sector -- has remained stubbornly below the 50-point level separating accelerating from slowing growth since June 2011.

Unlike the patchy results seen in previous months, in November almost all the sub-indices in the HSBC survey concurred in showing an improving economy.

The one exception was a fall in the sub-index measuring output prices, demonstrating that manufacturers are still struggling with overcapacity and relatively weak domestic demand.

That could also reflect the weight in the survey of exporting firms, which have less ability to raise sales prices, said Standard Chartered's Li.

Indeed, China's exporters are increasingly squeezed by rising domestic costs and competition from new international suppliers, Zhou Haijiang, head of Chinese textile exporter Hodo Group, told reporters this month.

"Not only Western countries manufacture industrial goods, but also a lot of developing countries including former socialist countries who now have market economies are all exporting, thus creating a global surplus that cannot be changed," Zhou said.

"Because of this it is hard to raise sales prices, everyone is selling and it is hard for manufactured goods prices to rise. In some cases prices have even fallen."

Analysts expect no further cuts to interest rates this year or next after back-to-back cuts in June and July, and only one more 50 basis point cut to banks' required reserve ratios (RRR) in 2012 after three since late 2011 that have freed an estimated 1.2 trillion yuan for new lending.

Chinese banks are on course to make new loans worth more than 8.5 trillion yuan ($1.4 trillion) in 2012, expansionary versus the 7.5 trillion of new loans extended in 2011 and above the 8 trillion yuan that sources told Reuters back in February was the target for 2012.

Total social financing aggregate, a broad measure of liquidity in the economy, weakened to 1.29 trillion yuan in October, down from 1.65 trillion yuan in September, but still remained on track to hit a record 14 trillion yuan this year.

China also opened many previously-closed sectors to private investment with a view to funding new infrastructure projects and supporting economic growth without piling on more debt that local governments can ill-afford.

Although analysts expect fourth quarter GDP growth to outpace the 7.4 percent seen in the third quarter, full-year expansion for 2012 is expected to be the slowest in 13 years.

By Lucy Hornby, (Editing by Alex Richardson)
Newscribe : get free news in real time 

China's leadership changes

Xi will have to address a slowing of economic growth that threatens party's claim to prosperity [Reuters]

China's new Politburo standing committee, from left, Xi Jinping, Li Keqiang, Zhang Dejiang, Yu Zhengsheng, Liu Yunshan, Wang Qishan and Zhang Gaoli. Photo: Reuters

Ruling Communist Party unveils new seven-member Politburo Standing Committee that will govern nation for next decade.

State media says Xi Jinping is to take the reins of China's all-powerful Communist Party in a leadership transition that will put him in charge of the world's number-two economy for the next decade.

Xi, the current vice president and successor to President Hu Jintao, assumes power at an uncertain time with the party facing urgent calls to clean its ranks of corruption and overhaul its economic model as growth stutters.

His long-expected ascension as head of the ruling party took place at 0400 GMT along with the unveiling of a new Politburo Standing Committee, the nation's top decision-making body.

According to tradition, the members marched out before the media in a pecking order agreed after years of factional bargaining, a process which intensified in the months leading up to the five-yearly reshuffle.

In-depth coverage of China's Communist Party congress

Xi will consolidate his position at the apex of national politics by being named China's president by the rubber-stamp legislature next March, for a tenure expected to last through two five-year terms.

The standing committee, which had nine members under Hu has been slimmed to seven and includes Vice Premier Li Keqiang, which would set him on the path to be be appointed premier from next March.

Other members include Zhang Dejiang, Yu Zhengsheng, Liu Yunshan, Wang Qishan and Zhang Gaoli.

They will be tasked with addressing a rare deceleration of economic growth that threatens the party's key claim to legitimacy - continually improving the livelihoods of the country's 1.3 billion people.

China also bubbles with localised unrest often sparked by public rage at corruption, government abuses, and the myriad manifestations of anger among the millions left out of the country's economic boom.

The communists have a monopoly on political power in China and state appointments are decided within the party.

The process began with behind-the-scenes horse-trading and political deals.

It was essentially finalised on Wednesday when the party ended a week-long congress by announcing a new Central Committee of 205 people.

On Thursday, the Central Committee approved the higher leadership bodies, including the elite Politburo Standing Committee.

Factional politics

Observers believe two main factions have been jockeying for power, one centred largely on proteges of former president Jiang Zemin and another linked to allies of Hu.

Xi is considered a consensus figure who leans toward Jiang, while Li has long been seen as a Hu protege.

Analysts say that despite rivalries between the two camps which are largely divided on patronage lines, they broadly agree China must realign its economy away from a dependence on exports, while maintaining a firm hand on dissent.

The government has ramped up security in Beijing and on the nation's popular social media sites to prevent any criticism during the gathering.

The run-up to this year's congress was unsettled by events surrounding Bo Xilai, a political star seen as a candidate for a top post until a scandal in which his wife was convicted of murdering a British businessman.

The sensational affair torpedoed Bo's political career, he will face trial for charges of corruption and abuse of power, and added to the intrigue in the run-up to the transition.

Agencies
Newscribe : get free news in real time

Form over substance in higher education and university rankings

Death knell for higher education

There is a growing obsession with form over substance and nowhere is this more evident than in the unhealthy interest taken with university rankings.

THIS month marks the 22nd year I have worked as an academic.

In that time, I have seen many changes in the university. There have been, of course, some improvements since those early days.

For one thing, technology has transformed things for the better.  Let’s take a trip down memory lane.

The very first publication I wrote went through this rather painful process.

First, I had to go to the library and find the relevant cases and journal articles. Then having taken copious notes, I went back to my office where I proceeded to write out my thoughts with an ancient device known as a pen.

Having completed this task, I would send my scratching to a lovely lady in the general office downstairs whose job title was “steno”.

She would type out what I wrote, give it back to me to check and then I would return it to her with any corrections. Finally, it would be placed into a pocket made of paper known as a stamped envelope and posted to the publisher.

Now, all cases and statutes including many journals are online. I type my work myself (with the computer checking my spelling and grammar) and when I am done I e-mail the stuff to the publisher.

All in the comfort of my office where I can play Flight of the Hamsters in between constructing sentences filled with gems of wisdom.

I will be the first to admit that I am quite old-fashioned in many ways, but I can categorically say that I don’t miss the days before the Internet and Word.

Progress, unfortunately, is not always positive. And it saddens me to say that over these last two decades I have seen changes that in my opinion ring the death knell for higher education.

In my opinion, the key problem is that those who decide the direction of our universities have lost track of the values that have to underpin these institutions in order for them to play a meaningful role in society.

There is a growing obsession with form over substance and nowhere is this more evident than in the unhealthy interest taken with university rankings.

Politicians harp on about it, so the Government makes it a priority. Because the Government wants higher rankings, the vice-chancellors start ranting about it too.

Rankings have become the raison d’etre for universities.

The quick fix then becomes the holy grail, hence universities look to the ranking criteria and they focus their efforts on doing all they can to meet those criteria.

This blinkered modus operandi then leads to some seriously contorted developments which ignore the principles that are necessary for the proper foundations of truly good universities.

Academic autonomy is one of those principles.

A university is a complex organisation. It is unlike a factory where there is by and large one goal and usually one method with which to achieve the said goal with the best quality and efficiency.

Even in one faculty, there are many variations. Take, for example, the Faculty of Arts – you have departments as diverse as English and Geography; Urban Planning and Gender Studies; International Studies and Indian Studies; the list goes on.

You can’t possibly be laying down a single criterion for quality for such a diverse group. But that is what happened.

Nowadays, if you want to prove your quality, the only way you can do it, which is embraced by universities, is if you publish in the journals recognised by the ranking organisations.

It doesn’t matter if you are an English professor who publishes well-received novels, or if you are a Gender Studies lecturer who uses your knowledge for women’s activism.

What about the fine arts? Shouldn’t the creation of new ideas in dance and theatre take precedence over an article in some obscure (but acknowledged by the rankers) journal which only a handful of people will read?

Increasingly, the thinking of universities is it is our way or the highway.

Such a top down approach cannot work because each academic unit in a university has its own expertise and its own value system.

This has to be respected because they themselves should know how to advance their discipline both in an academically and socially meaningful manner.

Autonomy brings with it the necessary flexibility for each department and each academic to chart the necessary course which will improve themselves and their own disciplines.

And who should know better what that course should be than those who have trained in that discipline.

I am not against the publishing of works in reputable journals. I acknowledge that they are important to the advancement of academic thought.

What I am saying is that the diversity of academia means that there are numerous methods to determine quality. And the best way to achieve quality is by having true academic autonomy so that those who know best are the ones who determine the way to achieve the best.

BRAVE NEW WORLD By AZMI SHAROM
azmisharom@yahoo.co.uk

Related posts:
Malaysian education is too Western-centric, ignorance of Asian values, etc!...
Malaysian Universities need decolonization, relook the ratings and rankings
Top 10 universities in South East Asia, Malaysia not in!
Malaysian education heavily politicised, Quality and English not up to par!.

Hillary Clinton is the real dominator of U.S. foreign policy

 

Hillary Clinton(Photo/Xinhua)

Hillary Clinton has not been frequently mentioned during the third and final debate of the 2012 U.S. presidential election, but her influence cannot be easily ignored.

The final presidential debate focuses on foreign policy, which is closely related to Clinton's position as U.S. Secretary of State. More importantly, neither Barack Obama nor Mitt Romney proposed a new global strategy. Both of them seemed to approve Clinton's "smart power" with the minute difference lying in how to be "smart." Romney said that the U.S. Navy has owned the smallest number of warships since 1917, and Obama refuted that the United States also has fewer horses and bayonets but it has such powerful equipment such as aircraft carriers and nuclear submarines. The dialogue is one of the few highlights in the third debate, and can be considered as typical example of different yet convergent political views. 

Clinton proposed the strategy of "smart power" during the 2008 Democratic presidential nomination race and has implemented it under the Obama administration. Obama has always been absorbing Clinton's ideas on foreign affairs since he took office. For example, on the issue of Middle East, approval rate of the United States in Muslim countries was as low as 15 percent while Obama reduces vulnerability of foreign policy, with the help of Clinton, during the presidential debate this year.

Zbigniew Brzezinski, national security advisor under former U.S. President Jimmy Carter, has rated Clinton's diplomatic performance in the past four years as A- or B+. Romney has found it hard to pick on Obama's foreign policy since he is unseasoned on foreign affairs. During the first two rounds of presidential debate, he tried to play tougher but achieved less. Therefore, in the finale on Oct. 22, Romney did not indulge in issues of foreign affairs, including attack on the U.S. consulate in Libya which worries Obama most. His consultant explained that the third presidential debate matters less since the topic is far away from people's daily life. The Republic Party cares more about the 12 swing states and female voters' support. Romney just needs to act like a commander in chief.

Indeed, American voters are now more concerned about domestic affairs such as employment, personal income, medical insurance, and even abortion than about foreign affairs. No matter who wins the presidential election, the United States is most likely to continue the foreign policy formulated by Clinton.

Read the Chinese version: 美大选三辩不只是俩男人的战斗, source: Jinghua Times, author: Huang Heng

 

China is the main show

Martin Jacques shares his views on the growing clout of the world’s second largest economy.

AUTHOR and academic Dr Martin Jacques released an updated and expanded second edition of his widely acclaimed book, When China Rules The World: The End Of The Western World And The Birth Of A New Global Order, earlier this year.

During a recent visit to Kuala Lumpur when he attended an Asian Centre for Media Studies event, Jacques (pic) spoke to The Star about his book and its approach to the subject. Some excerpts:

How is the second edition different from the first?

Time. Because China is growing so quickly, China time is fast. There’s been a lot of updating throughout the second edition.

When I wrote the first edition, the 2008 (US-centred) financial crisis had just happened. The last chapter is about the crisis, which was little commented on before.

The second edition looks at the beginnings of a Chinese economic world order.

How far is the second edition a response to critics of the first?

I don’t think what I’ve done is a response to the critics. The inaccuracies in the first edition were very few, and I’ve certainly responded to those.

There was a bit of a jump in the argument between the rise of China and its relations with other countries.

Here I look at not just China-US relations, but the rise of developing countries generally, of which China is a part.

I use the phrase “rule the world” as a metaphor. I’ve learned a lot from meetings and discussions.

There was never much in the first edition I wanted to change. The structure of the book is basically the same.

Do you see China’s rise as continuing into the future?

Yes, definitely. Along the lines of the book, without any doubt whatsoever.

How might a new China-centred tributary system emerge in East Asia?

There are echoes of a tributary system. The most obvious return to that is the rise of China.

East Asian economies today are much more China-centric. There’s the fact we’re now moving to a new China-centric system.

China is probably the most important market for countries in the region, for trade and investment, with its high-speed rail links, and so on. Getting on with China will be absolutely crucial for countries in this region.

Can economic dominance translate into clout in other spheres?

If China is economically dominant, that gives it a great deal of influence over other countries.

The draw of China will be that much greater. China will be a huge cultural presence in the region.

Lots of people in this region will study in Chinese universities. Beijing will be a tremendous draw.

You can see that in the flight patterns of Malaysia Airlines, for example. Previously, Malaysians travelled to Britain, not so much to other East Asian countries; it would be interesting to see the changes.

The attraction of Shanghai will be that of a big city like New York. People are attracted to power.

We’ll be much more familiar with Chinese governance and institutions. From being a mystery, they’ll be familiar; we were used to the United States before, but much more with China (in future).

What of Greater China, the mainland, Hong Kong, Macao and Taiwan?

All the ties will get stronger.

Hong Kong will remain very much as now, I don’t expect it to change. It will become increasingly integrated (with the mainland) and Sinicised, and (still) in many senses not very Chinese.

I would expect Taiwan to move ever closer to China. Taipei feels it has nowhere to go except closer to China.

There are already a large number of Taiwanese working in China. There has been growing economic integration.

Over the next 20 years, Taiwan will probably accept Chinese sovereignty. It will come because it is absolutely the logical step.

What of the prospects of China’s collapse, as some predict?

There are gradations on the scale. China isn’t going to sail into the sunset without problems. But what I’m extremely sceptical about are predictions about the problems leading to economic meltdown and Armageddon.

Some day China may see a multi-party system, although unlikely. China may be more open, but it will still be very much Chinese.

A collapse is not impossible, but extremely unlikely.

Can China’s economic power translate into cultural influence?

It will take a long time. China is still a poor country.

Rich countries don’t aspire to be like a poor country; economic power is the basis (of cultural influence).

The Beijing Olympics is an example: China was unable to stage it 10 years before.

Since the rest of the world is not familiar with Chinese culture, the process of feeling comfortable with China culturally and politically will take a long time.

Because Chinese culture is so different from Western culture, it will take a century for the West to be familiar with it. I’m sceptical that it won’t happen.

How is China’s rise regarded by India?

India has a big problem with China, as it has a very strong view of China. India is a long, long way behind (in growth).

Indians are traumatised by China; their relationship with China is erratic, fickle and fearful. Because of the border wars, China looms very large in the Indian imagination.

The issue doesn’t disturb the Chinese, but for Indians it’s an issue. India is so far behind that the thought of overtaking China (economically) is the talk of fantasists in dreamland.

India needs to learn as much as possible from China and pursue a strong relationship with it. It needs a clear strategy in dealing with China.

India should stop this petty rivalry. At the moment there’s not much of that happening.

What of China’s relations with South-East Asia?

In historical terms for this region, 100 years (since the end of China’s dynastic rule in 1912) is not such a long time.

There is a familiarity with China in this region that is not found in other parts of the world.

This marks out relations with China as different here. Countries in this region relate with China in a multifarious process.

Laos, Cambodia, Vietnam, Myanmar are dealing (economically) with China mostly through Chinese provinces closest to them.

It’s a situation most nation states don’t allow in their regions. But Chinese provinces close to these countries will deal more with them in future.

As for relations with the United States?

It will take the US at least 10, maybe 20 years from now to treat China as an equal.

It will happen in a series of baby steps here and there, for example by treating China as a partner in the region, rather than as a problem like now.

But it won’t happen within 10 years. In certain circumstances it may happen quicker, such as a (Western) financial crisis, or it would take longer.

And Europe?

There’s been poor coverage of China in the rest of the world, mainly from ignorance. Coverage tends to be Eurocentric.

Soviet reforms under Gorbachev with glasnost (openness) and perestroika (restructuring) were well received in Western Europe. But the Soviet system could not be reformed.

China’s communist revolution had better historical roots than the Soviet’s.

What remains of the ‘Washington Consensus’ (ie, US-style economic doctrine)?

It’s dead. In the developing world, China is the main show. Why look at America?

China is actively doing (the alternative): there are general lessons in its emphasis on infrastructure, the importance of the state, of political stability, and so on.

Will there be a third edition?

I probably won’t do a third edition. It was hard work with the (second edition), being governed by the framework of the existing book.

I’d probably work on something fresh. More on the lines of “understanding China,” so that people can understand the conceptual thinking.

By BUNN NAGARA The Star/Asia News Network

 Related posts:
When China Rules The World: The End Of The Western World And The Birth Of A New Global Order   

Fearful of China's rise? Sep 28, 2012
Dawn of a new superpower Jul 08, 2012 

When China Rules The World: The End Of The Western World And The Birth Of A New Global Order

Book review: China is still ascendant

Author: Marc Jacques
Publisher: Penguin, 848 pages

SKEWED as they may be, reactionary Orientalist perspectives of East Asian realities remain the norm in Western punditry and news reports. The problem has become prevalent in both conservative and liberal circles.

The problem for the West itself is that such a persistent misperception of modern China may undermine Western interests further. Martin Jacques’ When China Rules The World: The End Of The Western World And The Birth Of A New Global Order is intended largely as a corrective, looking at the historic phenomenon of China’s grand return to the global stage in China’s own terms.

My review of the first edition of Jacques’ book appeared earlier in China awakens (Star Bizweek, Oct 3, 2009). The present consideration is of the second edition published by Penguin earlier this year.

The first edition was subtitled The Rise Of The Middle Kingdom And The End Of The Western World. The second edition, suggesting an evolution, is subtitled The End Of The Western World And The Birth Of A New World Order.

Jacques and Penguin are just as grandiose now as before. The titling remains as presumptuous and alarmist, at least to Western conservatives, and no apologies are tendered in that regard.

The title itself can be a problem for those who judge a book by its cover. Jacques does not believe that China or any other country can “rule” the world today, only that China and things Chinese would predominate globally.

The second edition contains new data and a new section in the Afterword. For Jacques, international developments in the three years between the two editions only confirm and strengthen his central themes.

His chief arguments remain intact: that China will be dominant economically and culturally, it will not essentially be Westernised, and China will be ascendant despite multiple challenges.

This rise, mainly economic but also in other spheres later, is of epochal proportions. China’s ascendancy would result from both its own efforts and the decline of the West simultaneously.

The 2008 recession in the United States, followed by economic doldrums there and the European sovereign debt crisis underline the situation impeccably. In contrast, China’s GDP growth continues, affected only minimally.

Like many others, Jacques believes that China’s current growth model based on cheap labour and global raw materials is unsustainable. For example, China would need to stimulate more domestic demand to compensate for a slackening of overseas markets.

The latest data show that more and more countries have now made China their main trading partner. And as with trade, increasingly so with investment.

Thus, China’s economic gravitational “pull” is becoming unerring and compelling. Not only has China swiftly replaced Japan as the world’s second-largest economy, its relationship with the United States has replaced Japan’s as the most important bilateral relationship across the Pacific and in the world.

Analysts impressed with China’s economic growth once expected it to surpass the US economy in a couple of decades. But that timeframe has shrunk.

In 2009 Jacques cited the Goldman Sachs prediction that China’s economy would overtake the US’ by 2027. Sceptics scoffed.

In this second edition, he cites The Economist’s projection that the Chinese economy will become the world’s biggest by 2018. Now the International Monetary Fund predicts the year will be 2016.

But even when that happens, China will still be a developing country with vast human resources yet to reach peak productivity. That means when China’s standard of living approaches that of the US, with a comparable GDP per capita, its economy will be two to four times that of the US today.

Unlike many China pundits, particularly critics, Jacques believes China will not succumb to the weight of its own promise. He does not accept that China has to Westernise or democratise before it can fully develop and prosper.

Jacques also rejects the alarmist Western notion that today’s China is re-arming aggressively. He finds Chinese defence expenditure as a proportion of GDP falling between the 1970s and 1990s, and since then only keeping pace with GDP growth.

As expected, the very people he seeks to inform are often those who spurn his information. Jacques attributes this Western stubbornness to a mixture of unfamiliarity, ignorance, prejudice, denial, stereotyping, racism and Cold War ideology against a non-Western country that is communist, at least in name.

With such unwieldy baggage, the nuances and subtleties about China are naturally lost on the bigots. For Jacques, China is a continent-sized civilisational state whose history has seen upheavals and expansion on its Asiatic land mass, but not military adventurism in a littoral and archipelagic East Asia.

In response to critics of an increasingly powerful China, Jacques does not see China as a global superpower. He finds China historically absorbed in its own internal governance as it is a very difficult country to govern, its trajectory will continue to be tempestuous, but it is still a complex and sophisticated state and the home of statecraft, so it cannot simply be dismissed with an epithet like “authoritarian”.

For example, while critics fret over the People’s Liberation Army and the PLA Navy, it is China’s Coast Guard rather than the military that is a key player in the disputed island claims. Jacques finds no less than seven uncoordinated Chinese agencies involved over these claims.

A key question in the book is whether the United States will allow China the space to be a major player in Beijing’s own regional backyard. Jacques finds that unlikely, while also convinced that US efforts, such as its “pivot” to contain China, will ultimately fail.

This book still has major gaps that need filling. A central theme is that China’s coming predominance will be different from that of Western colonialism, but how different and in what ways?

Jacques also envisages an updated revival of the tributary system in East Asia, in which all the smaller countries acknowledge their junior status with regard to China. But what form will a revised tributary system take?

Another key point is China essentially being a civilisational state rather than just a nation state like other countries. But what can this mean in practical policy terms, particularly in China’s relations with other countries?

Such answers are essential to an intelligent understanding of a rising modern China. But we may have to wait for a new book by the author for further illumination, because any answers are unlikely to be accommodated by the structure of the present work, notwithstanding its already intriguing insights.

The first edition was already a vast interdisciplinary work of far-reaching implications, and the second version even more so. Few analysts as authors have achieved what Jacques has: combining the depth and rigour of academia with the readability and vigour of journalism in a single volume on a subject of great topicality.

The result is a serious and interesting textbook which, despite its 800+ pages, has sold a quarter of a million copies (and counting) in a dozen languages in its first edition alone. His critics have yet to match that kind of appeal in whatever they have to say.

Review by BUNN NAGARA
star2@thestar.com.my

> Bunn Nagara is an associate editor at The Star.

Related posts:
Fearful of China's rise? Sep 28, 2012
Dawn of a new superpower Jul 08, 2012

'Occupy' protest, inside a revolution

Occupy! Scenes from Occupied Movement  

Books review by Andrew Ross guardian.co.uk, 

Occupy Wall Street demonstrators stage a march dressed as corporate zombies. Photograph: EMMANUEL DUNAND/AFP/Getty Images

Occupy Wall Street is wintering. That's not to say its seasoned recruits are taking time off, though there surely are equivalents of the "summer soldier and sunshine patriot" that Tom Paine invoked in his address to the Valley Forge winter encampment of the revolutionary Continental Army 236 years ago. But it's been business as usual at 60 Wall Street, in the cavernous atrium of the Deutsche Bank building, where OWS working groups have been meeting continuously since the early weeks of the occupation. In those well-attended huddles, all sorts of plans are being made for re-occupations in the months to come – an American Spring to rival the Arab one – and the air is thick with proposals for ever bolder actions.

1. Occupy!: Scenes from Occupied America
2. by Astra Taylor, Keith Gessen et al

Still, it's not a bad time to take stock of the early months of the movement. The publication of two books is an occasion either to reminisce about, or catch up with the momentous events that originated in Lower Manhattan just one week after the 10th anniversary of 9/11. The respective publishers, Verso and OR Books, are natural allies of the movement, and are to be saluted for delivering the first two book-length treatments – there will be many others in the year ahead.

Both volumes are documentaries of the heady life of the encampment at Zuccotti Park, though each book has a distinct flavour, and they deploy quite different methods of reporting. Occupy! Scenes From Occupied America reads like a series of diary entries – on-the-ground vignettes, testimonials of events, and snap analysis of where it might all be heading. Included are fragments of speeches by visiting luminaries – Angela Davis, Slavoj Žižek, Rebecca Solnit, Judith Butler – but the bulk of the entries are from writers with close ties to New York City's left-wing media organs: n+1, New Inquiry, Triple Canopy and Dissent. By contrast, Occupying Wall Street: The Inside Story of an Action that Changed America by Writers for the 99% (OR Books, £10) takes the form of a more orthodox narrative, quarried out of interviews from a field ethnography of Zuccotti Park undertaken by many hands and then polished by a team of writers.



Most of the contributors to these books are movement participants – not armchair analysts or journos on a short deadline – so the pages of each volume ring with authenticity.

On the face of it, any book about Occupy might have been superfluous. After all, the movement has been so meticulously documented by its own participants through a variety of media–official websites, blogs, tweets, livestreaming and other social media channels, in addition to alternative radio and TV, and a steady flow of pamphlets, gazettes, journals and other print outlets. Never has a protest movement documented and broadcast its doings in real time with such utter transparency and to such a far-flung audience. In some respects, the sheer volume of self-generated media has even pre-empted the need for conventional media coverage. Forging an alternative society – and many occupiers saw Zuccotti Park as a prefiguration, if not a microcosm, of such a society – requires the creation of your own autonomous institutions.

Despite this spate of agit-prop, reflection and analysis, the conventional book formats stand up quite well, and, on certain topics, are indispensable. Occupy! abounds with insights on how the occupiers have dealt with internal challenges to their experiment in direct democracy. A general assembly in full flow is a galvanic prospect; "more than one speaker," it is noted, publicly "expressed love for the general assembly".

But the GA's horizontal culture is also an open invitation to assassins of this kind of joy. Complaints about the neglect of race and gender are the most common, righteous cause of disturbance, and when the outcome reinforces the GA's reliance on the "progressive stack" – whereby speakers of (white, male-identified) privilege are encouraged to "step back" – the interference has an alchemy that is breathtaking.

Manissa Maharawal describes how she and other members of South Asians for Justice stood up to block the GA consensus on the Declaration of the Occupation of Wall Street: she "felt like something important had just happened, that we had just pushed the movement a little bit closer to the movement I would like to see".

GAs also attract their share of people "damaged by capitalism" and further frazzled by brutal policing and the roughneck life of 24/7 activism. Their fractious behaviour is at odds with the smoother, educated norms of civic speech, and they often violate the rules of GA process.

As the Zuccotti Park occupation wore on, the increasing presence of the homeless – the most vulnerable of the 99% – became the acid test of whether OWS was up to the task of heralding a new kind of society based on mutual aid. In the calendar entries of Occupy! this theme comes more and more to the fore. Indeed, Christopher Herring and Zoltán Glück's long meditation, "The Homeless Question" is worth the price of admission alone. Noting that some occupations – in Atlanta, Philadelphia and Oakland – had been more forthright in feeding and servicing the homeless, they faultlessly argue that the burgeoning unhoused population "should not be seen as a liability for the movement" (a not uncommon perception around OWS) "but a reminder of why the protest exists".

Occupying Wall Street offers a detailed rendering of how daily life was organised in the Zuccotti Park encampment. The challenge of accommodating the homeless is also part of its record of how quite different populations came to co-exist in the half-acre space. Most absorbing is the book's account of the social geography of the park, conspicuously visible in the divide between its east end, where ideological open-endedness prevailed, and the west side, or self-styled "ghetto", where the more radical groupings set up shop, along with the drum circle. As one of the westenders, a member of Class War Camp, put it, "This side of the camp isn't for reform. This side's for revolution, you know?" Unlike the east side "liberal college kids", he added, "we have nothing to lose. We don't want to fix the system, we want to fucking burn it to the ground."

Writers for the 99% (the book's collective of writers) do not shy away from pointing out that the less educated, poorer and more precarious sleepers in the "ghetto" were not only underserviced by OWS's support systems, but also lacked ready access to the resources offered by sympathetic residents of Lower Manhattan.

Such observations highlight just how difficult it is to expunge the toxic residue of race and class that poisons our existing society. For those who want Occupy to be a living, breathing alternative, every act of fellow-feeling is an opportunity to set a better norm. As many occupiers say, "the process is the product".

• Andrew Ross's Nice Work If You Can Get It is published by NYUP.

Challenging the State-Capitalism?

Clash of capitalist systems

GLOBAL TRENDS  By MARTIN KHOR

The Year of the Dragon may symbolise the struggle for prosperity for some, but others may use this year to challenge what they call state-capitalism being practised by developing countries, especially in Asia.



IT’S the first day of the Year of the Dragon. Like others around the world, Malaysians hope it will be an auspicious year.

Certainly it will be an interesting one. Perhaps that’s the only certainty about this coming year of uncertainty.

The new Dragon Year will usher in even more intense debate about the role and the rise of China and of other “emerging economies”.

As the Western countries face gloomy economic prospects, some of their political elite and intellectuals seem to be seized by fears that some developing countries, especially China, will be steaming ahead.

Used to centuries of global economic dominance, these advanced countries are fearful that their leadership will be challenged and even overturned.

This may be the reason for the obsession about China. These days, there are new books almost every month about the rise of China. Some deal with its high growth and prospects or with its complex political developments.

Quite a number, like the book Death by China: Confronting the Dragon, are of the view that China is destroying not only the American economy but the whole world and its environment.

But the fears go beyond China, and incorporate other emerging countries as well, as seen in the latest issue of The Economist, with its cover stories on “The rise of state capitalism: the emerging world’s new model.”



The magazine describes the 88-storey Petronas Towers soaring above Kuala Lumpur, as well as the China Central TV building in Beijing and the VTB bank office in Moscow, as monuments to the new hybrid corporation – backed by the state but behaving like private-sector multinationals.

The Economist’s editorial admits that for emerging countries wanting to make their mark on the world, state capitalism has an obvious appeal, giving them the clout that private-sector companies would take years to build.

But its dangers outweigh its advantages, says the magazine. For their own sake and in the interests of world trade, the huge holdings should be unwound and handed over to private investors.

The Economist however also admits that this hybrid form of “state-directed capitalism” company is not new, and cites the East India Company.

This was the huge conglomeration that took over many Asian countries’ economies, while the English government made use of its gunboats and colonial rule to back up the EIC but other British companies.

The magazine also cites the United States after its war of independence, Germany in the 1870s, and Japan and South Korea in the 1950s as examples of rising powers using the state to kick-start growth.

There is thus recognition that the rise of today’s advanced countries was based on the state’s strong support in their companies’ emergence.

These companies have dominated the global economy for decades and in some cases centuries, backed up not only by subsidies, cheap credit and other policy measures but also by their governments’ political and military force.

In the past three decades, most developing countries have been told, through IMF-World Bank structural adjustment programmes, to give up the role of the state to direct their economies and instead rely entirely on the private sector.

These policies did not succeed as the domestic private sector is weak or even non-existent in many countries. In poor countries, foreign companies were not interested in coming in except in the mining or plantation sectors.

However, several other developing countries, mostly in Asia, took on a different model. Their governments believed in playing an important or even dominant role in the development process.

At first these governments owned companies that they ran like government departments, and this was not efficient. This model was changed in some countries to one where the state can own or partly own companies that are then run on a commercial basis. The state can also assist private companies to grow.

Government investment holding institutions like Khazanah and PNB in Malaysia or Temasek in Singapore have been set up as crucial components of this framework.

The increasing criticism by Western intellectuals and politicians of “state capitalism” is not confined to academic observations.

The US administration and Congress are contemplating legislation and action to place extra tariffs on Chinese products not only on anti-dumping grounds but also that they have been subsidised and that China is not a market economy.

The Congress is also discussing whether to slap tariffs on Chinese products on the ground that China’s currency is manipulated and under-valued.

While the focus now may be on China, other developing countries may be faced with the same actions based on the same reasoning, that these countries are unfairly helping their companies through policy measures that represent state-capitalism and industrial policy.

Moreover, the US and Europe and now negotiating free trade agreements with developing countries that contain clauses or even chapters that seek to prohibit or restrict the practices of government-linked companies, or the provision of subsidies and preferences by government to local companies.

Korean economist Ha Joon-chang wrote a famous book Kicking Away the Ladder to describe how developed countries made use of policies that made them rich, and now want to prevent developing countries from doing the same and thus are seeking to prohibit these same policies.

The clash of capitalist systems and the clash between developed and developing countries over what policies are legitimate and which should be banned will intensify in this Year of the Dragon.

Related articles

• The Rise of State Capitalism. (isellerfinance.wordpress.com)