Oh no, don't worry...I'm not talking about that article by Morgan Kelly. I already know Ireland is basically fecked (thanks Bertie!), and I know that you all know about the basic truth of Ireland's coming economic apocalypse. Admittedly, I am a little ashamed as to how my smartarse, joke predictions of what life in Ireland will be like under German or IMF rule may actually come true.
No, in writing on storm clouds I am actually casting my glance further afield, to Asia, where China seems to have now decided that it should flex some muscles. You will of course be aware of the existing stand-off between China and Japan over the Diaoyu/Senkaku islands, the arrest of a Chinese fishing crew by the Japanese Coast Guard for (allegedly) colliding with a Japanese vessel while (allegedly) drunk. Allegedly? Look at the video below!
China's growing confidence is further underlined by their response to Hilary Clinton's offer to mediate between China and Japan over the island chain, and the case of the drunken sailors. Does anyone know what the Mandarin for "Piss off Hilary" is?
But China's not alone in displaying a ballsy attitude while dealing with its neighbours. In a suitably ironic response to China's own "String of Pearls" strategy, Vietnam is now offering Cam Ranh Bay Naval Base, the much beloved former shore leave destination for generations of Soviet sailors, to foreign navies. Apparently, all foreign navies.
I'm sure such a move could not possibly backfire. After all, it's not like the Vietnamese need to be seriously concerned about being the stage for a clash between the great powers. I'm sure deploying a strategy of containment and encirclement against China will be greeted with a totally cool-headed and reasonable response in Beijing.
See, suddenly Morgan's article doesn't look that bad, does it?
Showing posts with label China. Show all posts
Showing posts with label China. Show all posts
Monday, November 8, 2010
Thursday, November 4, 2010
Insert Dragon Cliche Here - China's New Colonies
The Dragon's talons extend into Europe! The East is Red - Eastern Europe that is! Chairman Mao's Magic Wok Hits Sofia! Pun-laden stereotypes aside, China's presence in Eastern Europe is steadily growing. Also, I could have had a glorious career as tabloid headlines writer. Sigh...
China has now (as I have been predicting for ages. Well, two months anyway!) seriously begun to take advantage of the economic chaos still gripping the economics of the Western world, by using the hunger among European and North American economies for hard cash to snap up some cut-price investments. The Asia Times reports on China's growing business interests in Eastern Europe, with Great Wall Motors establishing a factory in Bulgaria, while Huawei and ZTE are heavily involved in the strategicly sensitive upgrade of the country's telecommunications network. Interestingly, Bulgaria has a corporate tax rate of 10%. So if the EU does push our tax rate up from 12.5%, Ireland is really in trouble.
True, like any tabloid hack I may have overstated the case by claiming that Bulgaria and its ilk east of the Carpathians are now colonies of China. After all, this is only economic engagement; yellow stars on a red background do not yet fly over Sofia, no Xia class subs patrol the Black Sea, and no J-11's roar of runways near Bucharest. But is such a thing possible?
Judging from China's engagement in the "Developing World" (to use what I believe is now the PC term) military engagement can follow economic investment. ComingAnarchy.com has a great post on the so-called "String of Pearls", China's system of naval bases throughout the Indian Ocean (not to be confused with a "Chinese pearl necklace", which is very different, and only allowed in some "nightclubs" in Hong Kong). It is important to remember that these facilities have tended to go hand-in-hand with infrastructure developments in the countries concerned, for example Hambantota, which represents both a commercial investment by China in Sri Lanka, and the development of a PRC military presence in the country.
But, and let's not be politically correct here, these are all poor countries that China is investing in, right? No rich, Western country would be so desperate for cash as to open its gates to that kind of investment! Oh by the way, did I tell you that Ireland's bond yields today are at 7.68%?
It's certainly something to bear in mind as Ireland slowly goes broke; just what will we be desperate enough to do if and when the ECB cuts off our funding? Could we see considerable Chinese investment in Ireland's economy, and what military strings would come attached to the commercial goodies concerned? What would a cash-strapped, hard-pressed US be able to do about a Chinese military presence in Europe (alright, maybe not Ireland, but possibly in Eastern Europe)? After all, Chinese bases in Europe (especially Western Europe) would be an awesome comeback for that whole Opium War thing.
Have I gone mad? Probably. Or do I really see a Xia class out there in the Irish Sea?
China has now (as I have been predicting for ages. Well, two months anyway!) seriously begun to take advantage of the economic chaos still gripping the economics of the Western world, by using the hunger among European and North American economies for hard cash to snap up some cut-price investments. The Asia Times reports on China's growing business interests in Eastern Europe, with Great Wall Motors establishing a factory in Bulgaria, while Huawei and ZTE are heavily involved in the strategicly sensitive upgrade of the country's telecommunications network. Interestingly, Bulgaria has a corporate tax rate of 10%. So if the EU does push our tax rate up from 12.5%, Ireland is really in trouble.
True, like any tabloid hack I may have overstated the case by claiming that Bulgaria and its ilk east of the Carpathians are now colonies of China. After all, this is only economic engagement; yellow stars on a red background do not yet fly over Sofia, no Xia class subs patrol the Black Sea, and no J-11's roar of runways near Bucharest. But is such a thing possible?
Judging from China's engagement in the "Developing World" (to use what I believe is now the PC term) military engagement can follow economic investment. ComingAnarchy.com has a great post on the so-called "String of Pearls", China's system of naval bases throughout the Indian Ocean (not to be confused with a "Chinese pearl necklace", which is very different, and only allowed in some "nightclubs" in Hong Kong). It is important to remember that these facilities have tended to go hand-in-hand with infrastructure developments in the countries concerned, for example Hambantota, which represents both a commercial investment by China in Sri Lanka, and the development of a PRC military presence in the country.
But, and let's not be politically correct here, these are all poor countries that China is investing in, right? No rich, Western country would be so desperate for cash as to open its gates to that kind of investment! Oh by the way, did I tell you that Ireland's bond yields today are at 7.68%?
It's certainly something to bear in mind as Ireland slowly goes broke; just what will we be desperate enough to do if and when the ECB cuts off our funding? Could we see considerable Chinese investment in Ireland's economy, and what military strings would come attached to the commercial goodies concerned? What would a cash-strapped, hard-pressed US be able to do about a Chinese military presence in Europe (alright, maybe not Ireland, but possibly in Eastern Europe)? After all, Chinese bases in Europe (especially Western Europe) would be an awesome comeback for that whole Opium War thing.
| Suprisingly, China failed to see the funny side. |
| Oh my God! The sea view from Dalkey is, like, totally ruined! |
Wednesday, October 27, 2010
China-Bashing: All the Cool Kids Are Doing It!
How freaky is this video:
This message makes me less afraid of China then of the confrontational mindset that is clearly growing in US political circles. "America has problems, and they are China's fault!"
However, frightening though the above video is, the below parody by liberal group Campus Progress is actually more terrifying:
Chinese Professor from Campus Progress Action on Vimeo.
For while the "Yellow Horde" fears betrayed in the first video are what one would expect from the Right in America, that a liberal, and I would presume left-wing, group would also bang the China-fear drum shows how entrenched such a negative view of the PRC has become in American society.
Ironically, such an opinion is probably more dangerous now, while China's military strength is considerably below that of the US, then I suspect it will be in coming decades when many expect the two nations to reach parity in terms of military might. After all, economic fears can quickly give rise to military action, and a more belligerent US might be tempted to put China in its place before its too late, leading to significant loss of human life.
If you are American, and wish to combat China hatred in the US, might I suggest you do the following:
1. Buy a Mao suit
2. Acquire a copy of the "Little Red Book".
3. Wear said suit to work/college/church, while waving the LRB, loudly proclaiming that "Chairman Mao is the red sun in our hearts".
I feel certain the above steps will calm fears of China in the US, and lead to more harmonious relations.
Snicker.
This message makes me less afraid of China then of the confrontational mindset that is clearly growing in US political circles. "America has problems, and they are China's fault!"
However, frightening though the above video is, the below parody by liberal group Campus Progress is actually more terrifying:
Chinese Professor from Campus Progress Action on Vimeo.
For while the "Yellow Horde" fears betrayed in the first video are what one would expect from the Right in America, that a liberal, and I would presume left-wing, group would also bang the China-fear drum shows how entrenched such a negative view of the PRC has become in American society.
Ironically, such an opinion is probably more dangerous now, while China's military strength is considerably below that of the US, then I suspect it will be in coming decades when many expect the two nations to reach parity in terms of military might. After all, economic fears can quickly give rise to military action, and a more belligerent US might be tempted to put China in its place before its too late, leading to significant loss of human life.
If you are American, and wish to combat China hatred in the US, might I suggest you do the following:
1. Buy a Mao suit
2. Acquire a copy of the "Little Red Book".
3. Wear said suit to work/college/church, while waving the LRB, loudly proclaiming that "Chairman Mao is the red sun in our hearts".
I feel certain the above steps will calm fears of China in the US, and lead to more harmonious relations.
Snicker.
Thursday, October 7, 2010
African Immigrants in China
Interesting little article in The Guardian dealing with the plight of African immigrants in China, focussing on their experience in the city of Guangzhou. As a former resident of Guangdong's capital city, the article brought back memories of my own period wandering around Shamian Island and Tianhe, and in particular it reminded me of just how large the African and Middle Eastern communities in the city are.
When I first moved to Guangzhou, I had expected the locals to react to foreigners in a similar vein to the citizens of other Chinese cities I had lived in or visited. As any foreigner who has been to China, from two-week tourists to long-time residents, will tell you, being stared at in the street is not uncommon, even in places as cosmopolitan as Beijing. Similarly, even in Shanghai I did, on occasion, hear mutters of "laowai" (literally "old foreigner") as I walked down the street. But in Guangzhou, the local populace is basically indifferent to foreigners - at least to those from the West.
So close to Hong Kong, and with so many foreign owned factories and enterprises in Guangdong, the presence of "da bizi" ("big noses") is now very common. But what is quite unique to Guangzhou is the large number of immigrants from Africa and the Middle East- sadly, they are not greeted with the same acceptance shown to, well, white people.
Even the best educated and worldly of my Chinese colleagues could be quite spectacular in their casual racism, towards Africans in particular, and I was solemnly informed that while Europeans and Americans who visited China tended to be decent and hard-working, most Africans were not to be trusted. Inevitably, such distrust leads to reinforcing patterns of behaviour, with the locals reluctant to lease apartments to Africans, consequently resulting in these immigrants concentrating in less salubrious areas with landlords who are not too picky, effectively creating ghettoes. Similarly, the fact that immigrants from Africa find it so hard to get visas to work in China means that some, by necessity, have to turn to less legitimate forms of work - around the Garden Hotel, for example, the drug dealers catering for Western visitors were predominantly African.
True, the immigrants themselves sometimes engage in behaviour that does not endear them to the locals. As someone who, with typical Irish Catholic guilt, cannot miss mass even when living in a state with atheism as its official faith, I regulalry attended mass in the Sacred Heart Cathedral near the banks of the Pearl River. The English language service was organised and mainly attended by African immigrants, with the ushers being entirely drawn from the immigrant community. These ushers could take quite a dictatorial line when ordering people to their seats, or when kicking people out for being improperly clad (i.e. wearing shorts) or committing similarly abominable acts. But they seemed to take a particular delight in ordering Chinese massgoers about (some of whom were merely curious locals, eager to see what actually took place in the cavernous building, but many were genuine Chinese Catholics, trying to practice their faith). At times, the racial tension between African and Chinese Catholics was palbable.
What is clear, though, is that China cannot afford to treat African immigrants as a problem - the influx of migrants from the continent is a by-product of China's investment there, and a beneficial one to boot. Almost all of the immigrants are of a commercial bent, and offer economic bonuses not only to friends and family at home, but also to the local Chinese with whom they trade. As China grows to play a more dominant role in Africa, such migration, and the bonuses associated, will only increase. China needs to learn to smooth out any problems or tensions that result. Furthermore, in days to come when China's interest in Africa extends beyond the merely commercial, and develops further along diplomatic lines, the PRC's own African community will be able to serve as an invaluable intermediary.
When I first moved to Guangzhou, I had expected the locals to react to foreigners in a similar vein to the citizens of other Chinese cities I had lived in or visited. As any foreigner who has been to China, from two-week tourists to long-time residents, will tell you, being stared at in the street is not uncommon, even in places as cosmopolitan as Beijing. Similarly, even in Shanghai I did, on occasion, hear mutters of "laowai" (literally "old foreigner") as I walked down the street. But in Guangzhou, the local populace is basically indifferent to foreigners - at least to those from the West.
So close to Hong Kong, and with so many foreign owned factories and enterprises in Guangdong, the presence of "da bizi" ("big noses") is now very common. But what is quite unique to Guangzhou is the large number of immigrants from Africa and the Middle East- sadly, they are not greeted with the same acceptance shown to, well, white people.
Even the best educated and worldly of my Chinese colleagues could be quite spectacular in their casual racism, towards Africans in particular, and I was solemnly informed that while Europeans and Americans who visited China tended to be decent and hard-working, most Africans were not to be trusted. Inevitably, such distrust leads to reinforcing patterns of behaviour, with the locals reluctant to lease apartments to Africans, consequently resulting in these immigrants concentrating in less salubrious areas with landlords who are not too picky, effectively creating ghettoes. Similarly, the fact that immigrants from Africa find it so hard to get visas to work in China means that some, by necessity, have to turn to less legitimate forms of work - around the Garden Hotel, for example, the drug dealers catering for Western visitors were predominantly African.
True, the immigrants themselves sometimes engage in behaviour that does not endear them to the locals. As someone who, with typical Irish Catholic guilt, cannot miss mass even when living in a state with atheism as its official faith, I regulalry attended mass in the Sacred Heart Cathedral near the banks of the Pearl River. The English language service was organised and mainly attended by African immigrants, with the ushers being entirely drawn from the immigrant community. These ushers could take quite a dictatorial line when ordering people to their seats, or when kicking people out for being improperly clad (i.e. wearing shorts) or committing similarly abominable acts. But they seemed to take a particular delight in ordering Chinese massgoers about (some of whom were merely curious locals, eager to see what actually took place in the cavernous building, but many were genuine Chinese Catholics, trying to practice their faith). At times, the racial tension between African and Chinese Catholics was palbable.
What is clear, though, is that China cannot afford to treat African immigrants as a problem - the influx of migrants from the continent is a by-product of China's investment there, and a beneficial one to boot. Almost all of the immigrants are of a commercial bent, and offer economic bonuses not only to friends and family at home, but also to the local Chinese with whom they trade. As China grows to play a more dominant role in Africa, such migration, and the bonuses associated, will only increase. China needs to learn to smooth out any problems or tensions that result. Furthermore, in days to come when China's interest in Africa extends beyond the merely commercial, and develops further along diplomatic lines, the PRC's own African community will be able to serve as an invaluable intermediary.
Sunday, October 3, 2010
And for the Main Course, China Will Have - Ireland
China is now making its move to gain a foothold (both politically and commercially) in Europe by offering to buy Greek bonds. As Al Jazeera notes, the real benefit for China is not so much the acquisition of debt (although this will help shore up the Eurozone, an obvious market for Chinese exports), but rather the foothold it will give China in key European industries and facilities, such as ports and infrastructure. Not only will this potentially provide yet more markets for Chinese firms that specialise in infrastructure development, it will also ensure China receives considerable political capital for its investment.
After Greece, I feel it is inevitable that China will look to Ireland - if not for economic opportunities (which are, as we sadly know, thin on the ground) then the immense political capital investment in Ireland offers. As with Greece, China has the opportunity to get into European infrastructure at low, low prices - but Ireland offers ports and airports much nearer the key European economies of France, Germany and the UK than Greece does.
More to the point, however, is what China stepping-in to save Ireland would say about China and its place in the world. Investing in a country like Greece, a non-English speaking economy with considerable socialist characteristics, is not a serious departure from China's existing investment efforts in Africa and Asia. All that is new is that the target of investment is in Europe. But investing in Ireland, an English-speaking nation smack bang in the Anglo-American axis, which for the last 10 years has been a poster-child for laissez-faire capitalism - that says China has arrived, and is now a force for the whole world (developed nations included) to reckon with. In effect, China will go from winning economically with a home team advantage (i.e. its spectacular domestic performance), to winning the away leg in front of hostile fans (gaining a global commercial presence).
It is, as I have said, inevitable - so how does Ireland handle it? Do we simply pretend like its not possible, or do we seize the Chinese opportunity with both hands. Are cash-rich shareholders with strategic vision such a bad thing?
After Greece, I feel it is inevitable that China will look to Ireland - if not for economic opportunities (which are, as we sadly know, thin on the ground) then the immense political capital investment in Ireland offers. As with Greece, China has the opportunity to get into European infrastructure at low, low prices - but Ireland offers ports and airports much nearer the key European economies of France, Germany and the UK than Greece does.
More to the point, however, is what China stepping-in to save Ireland would say about China and its place in the world. Investing in a country like Greece, a non-English speaking economy with considerable socialist characteristics, is not a serious departure from China's existing investment efforts in Africa and Asia. All that is new is that the target of investment is in Europe. But investing in Ireland, an English-speaking nation smack bang in the Anglo-American axis, which for the last 10 years has been a poster-child for laissez-faire capitalism - that says China has arrived, and is now a force for the whole world (developed nations included) to reckon with. In effect, China will go from winning economically with a home team advantage (i.e. its spectacular domestic performance), to winning the away leg in front of hostile fans (gaining a global commercial presence).
It is, as I have said, inevitable - so how does Ireland handle it? Do we simply pretend like its not possible, or do we seize the Chinese opportunity with both hands. Are cash-rich shareholders with strategic vision such a bad thing?
Wednesday, September 29, 2010
Then Mr. Li Asked His Translator "Who Is This Cowen Guy, Anyway?"
I wrote recently about Brian Cowen's meeting with Li Changchun, the 5th ranking member of the Standing Committee of the Chinese Politburo. Sadly, we probably won't be getting obligatory "Lakes of Ponchatrain" mobile ringtones; however, according to His Biffoness, we will be able to avail of major opportunities to increase trade and investment between Ireland and China.
Apparently, Ireland's reputation is "very strong" in what the Press Association insists on terming the "communist state" (remind me again, was it in Ireland or China where the government recently heavily manipulated the financial sector for the "national interest"?). If Ireland is so well known in China, then this represents a major turn around from a short few years ago. I seem to remember numerous people in both Beijing and Guangzhou asking me "Ireland - isn't that in England?".
However, let's give the Government the benefit of the doubt, and assume that "Ireland Inc." truly is impanted firmly in the mind of the Chinese consumer. What do we plan to sell to them?
As for China being at the "heart of (our) new strategy for trade, tourism and investment"; would anyone in Government mind articulating what, exactly, that strategy is? And how we are going to carry it out when Enterprise Ireland has only got offices in Beijing, Shanghai and Guangzhou, and the IDA have only got an office in Beijing?
And Brian, for God's sake, the Chinese are sitting on US$3 trillion in foreign currency reserves - ever think of asking Mr. Li are there any Chinese companies that would like to use Ireland as their EU hub? As I've written before, Ireland needs to be positioning itself as China's gateway to Europe, helping Beijing navigate through the complex regulatory and economic environment within the EU, and carving out a niche as China's friend within the Community.
But, no Brian - you just ask them if they want any Mullingar heifers.
Apparently, Ireland's reputation is "very strong" in what the Press Association insists on terming the "communist state" (remind me again, was it in Ireland or China where the government recently heavily manipulated the financial sector for the "national interest"?). If Ireland is so well known in China, then this represents a major turn around from a short few years ago. I seem to remember numerous people in both Beijing and Guangzhou asking me "Ireland - isn't that in England?".
However, let's give the Government the benefit of the doubt, and assume that "Ireland Inc." truly is impanted firmly in the mind of the Chinese consumer. What do we plan to sell to them?
"(Cowen) told visiting officials that Ireland's relationship with China is at the heart of the country's new strategy for trade, tourism and investment.
And he used the meeting to raise the issue of the export of beef to China."I'm torn on the latter point - we are, after all, still a nation famed for our agriculture, and it is no accident that some of the largest Irish multinationals are in the food sector. However, it is worrying that Cowen seems to think Sino-Irish trade should hinge on beef - by which I fear he means the raw primary product, as opposed to any processed goods. From the little I know of agricultural economics, it seems that when a rich country buys raw materials/food stuffs off a poor country, in the long run the poor country loses, becoming increasingly dependent on the whims of the rich nation's consumers and the political demands of the rich nation's own food producers (witness realtionship between farmers in developing nations and the EU, for example). The simple fact is that China is the rich country and Ireland is the poor country. And not simply in gross terms - there is 875,000 multimillionaires in China. In effect, the PRC represents a First World nation with a population of around 300 million (albeit they are living cheek-by-jowl with a developing nation of a billion). Beijing holds a lot of the economic cards in its relationship with us (and, to be fair, with everyone else) so we are going to have to box clever.
As for China being at the "heart of (our) new strategy for trade, tourism and investment"; would anyone in Government mind articulating what, exactly, that strategy is? And how we are going to carry it out when Enterprise Ireland has only got offices in Beijing, Shanghai and Guangzhou, and the IDA have only got an office in Beijing?
And Brian, for God's sake, the Chinese are sitting on US$3 trillion in foreign currency reserves - ever think of asking Mr. Li are there any Chinese companies that would like to use Ireland as their EU hub? As I've written before, Ireland needs to be positioning itself as China's gateway to Europe, helping Beijing navigate through the complex regulatory and economic environment within the EU, and carving out a niche as China's friend within the Community.
But, no Brian - you just ask them if they want any Mullingar heifers.
Monday, September 27, 2010
Biffo Asks for Some Tips from the Chinese
His Tremendousness Brian Cowen will be meeting with a senior Chinese politician today, Li Changchun, the 5th ranked member of the Politburo Standing Committee of the Communist Party of China. Mr Li is, according to Forbes, China's propaganda chief. Now, given what I have said before about Ireland's need to court Chinese investment, I am pleased that Mr. Cowen at least recognises that the fifth most powerful man in China is about a billion times more powerful than the mightiest man in Ireland, and that we should, in effect, kiss-up to the PRC.
However, is it possible that Mr. Cowen recognises that Mr. Li offers more than mere investment opportunities? This was the man, after all, who in 2009 organised (along with China Mobile) for every mobile phone in China to have patriotic songs as ring tones in honour of the 60th birthday of the PRC. If your phone starts playing "Lakes of Ponchatrain", you know why.
However, is it possible that Mr. Cowen recognises that Mr. Li offers more than mere investment opportunities? This was the man, after all, who in 2009 organised (along with China Mobile) for every mobile phone in China to have patriotic songs as ring tones in honour of the 60th birthday of the PRC. If your phone starts playing "Lakes of Ponchatrain", you know why.
Wednesday, September 22, 2010
Best Foreign Relations Video Ever
Taiwan's Next Media explains the current tensions between China and Japan using a cartoon Ninja and a Panda. This is how they teach international relations at Harvard, you know:
Thursday, September 16, 2010
What's the Mandarin for Property Crash?
I grow bored of Portergate, and so my internet browsing has led me further afield, to examine China and the continuing economic miracle that rolls on there in apparent defiance of the global recession. Obviously, given the swamp of debt in which much of the rest of the world is mired, there is much speculation that surely the Chinese economy will soon come crashing down, with many doom laden predictions being aimed at China's sky-rocketing property market.
I was unsure of my own view on this topic, until I read this post on the Wall Street Journal China Real Time Report. True, it is scant in terms of details or figures, and the article does not even suggest that the Chinese property market might crash. However, the following two lines regarding leading developer Ren Zhiqiang have convinced me that China will soon experience a tumble in property prices:
"(Ren) once famously said anyone who couldn’t afford a house in the city should go back to the countryside"
And, after a protestor threw a shoe (I mean really, who throws a shoe?) at Ren during a speech he was giving to a real estate conference, "Ren seemed to embrace the attack. Cracking a smile after the first salvo missed its mark, he went on to insult the shoe-thrower as someone probably frustrated at being too poor to buy a house."
Now, supposedly professional economists (you know, those ones with "degrees", and who have carried out "research") will tell you that you measure the likelihood of property bubbles by looking at multiples of average income, price rises year on year, and over-active lending on the part of banks. You know, numbery sort of things.
Not me. I measure the likelihood of a bubble bursting using the patented "Aitor McDonagh Mean Hubris Quotient". And let me tell you, with Ren's comments, we are going off the scale.
Basically, measuring Ren's comments against our standard measures taken from Ireland, we have long passed the 100 MicroBerties on the smugness scale (equivalent to when Bertie Ahern professed that anyone who doubted Ireland's miracle property market was "Sitting on the sidelines, cribbing and moaning is a lost opportunity. I don't know how people who engage in that don't commit suicide")
With Ren's remarks, China's property market is clearly reaching the GigaSheehy mark, where the level of empty, air-headed hubris is equivalent to when the former head of Allied Irish Bank, Eugene Sheehy said "We'd rather die than raise equity (from the State)". You know, shortly before AIB needed €3.5 billion of taxpayer's money?
Judging by my highly scientific (and don't forget, patented) scale, China is due a bit of a property crash. So surely, the Middle Kingdom will end up as depressed and sullen as Ireland is today? Not quite - let's not forget that many countries have property bubbles, but as in most cases, China did not focus almost exclusively on property to the detriment of all else. That was an Irish speciality. China will continue to tick away, exporting huge quantities to the West, importing luxury goods, and developing their own high-end, quality brands. Some of the Chinese middle classes, and some of the super-rich (like Mr. Ren), will however become too familiar with the words "negative equity".
I was unsure of my own view on this topic, until I read this post on the Wall Street Journal China Real Time Report. True, it is scant in terms of details or figures, and the article does not even suggest that the Chinese property market might crash. However, the following two lines regarding leading developer Ren Zhiqiang have convinced me that China will soon experience a tumble in property prices:
"(Ren) once famously said anyone who couldn’t afford a house in the city should go back to the countryside"
And, after a protestor threw a shoe (I mean really, who throws a shoe?) at Ren during a speech he was giving to a real estate conference, "Ren seemed to embrace the attack. Cracking a smile after the first salvo missed its mark, he went on to insult the shoe-thrower as someone probably frustrated at being too poor to buy a house."
Now, supposedly professional economists (you know, those ones with "degrees", and who have carried out "research") will tell you that you measure the likelihood of property bubbles by looking at multiples of average income, price rises year on year, and over-active lending on the part of banks. You know, numbery sort of things.
Not me. I measure the likelihood of a bubble bursting using the patented "Aitor McDonagh Mean Hubris Quotient". And let me tell you, with Ren's comments, we are going off the scale.
Basically, measuring Ren's comments against our standard measures taken from Ireland, we have long passed the 100 MicroBerties on the smugness scale (equivalent to when Bertie Ahern professed that anyone who doubted Ireland's miracle property market was "Sitting on the sidelines, cribbing and moaning is a lost opportunity. I don't know how people who engage in that don't commit suicide")
With Ren's remarks, China's property market is clearly reaching the GigaSheehy mark, where the level of empty, air-headed hubris is equivalent to when the former head of Allied Irish Bank, Eugene Sheehy said "We'd rather die than raise equity (from the State)". You know, shortly before AIB needed €3.5 billion of taxpayer's money?
Judging by my highly scientific (and don't forget, patented) scale, China is due a bit of a property crash. So surely, the Middle Kingdom will end up as depressed and sullen as Ireland is today? Not quite - let's not forget that many countries have property bubbles, but as in most cases, China did not focus almost exclusively on property to the detriment of all else. That was an Irish speciality. China will continue to tick away, exporting huge quantities to the West, importing luxury goods, and developing their own high-end, quality brands. Some of the Chinese middle classes, and some of the super-rich (like Mr. Ren), will however become too familiar with the words "negative equity".
Wednesday, September 8, 2010
Meet the New Owners - Part 2: The Chinese
The dragon awakens. All under heaven - tian xia. A Communist state with a capitalist economy. To get rich is glorious. Whether a cat is black or white doesn't matter, so long as it catches mice it's a good cat. The future superpower. The Middle Kingdom. The mountains are high and the emperor is far away.
The above are just some of the many tired clichés about China that I will diligently avoid in this post. The simple fact is this: the United States, the richest nation on earth, has given its wallet to China in exchange for the fleeting pleasure of cheaper consumer goods. China now has America's cash - bags of it (estimated between US$1.75 -1.87 trillion in June 2010). And while Rome's will was enforced by the legions, and Britannia's through the might of the Royal Navy, China will buy your compliance.
As a strategy, it is superb in its subtlety and simplicity. Despite the massive expansion in its military budget, China has almost exclusively focussed on the defensive, militarily speaking. Even the much feared DF-21 is, in essence, a defensive weapon - China does not want to take on the US Navy globally with massive carrier battle groups of its own, it simply wants to keep the US out of what Beijing perceives as its maritime patch, using a (admittedly game-changing) land-launched anti-ship missile. It is with economic force, rather than its military, that Beijing will go on the offensive - and economic offensives tend to be more profitable than military ones.
China's involvement in Africa is well-documented (interesting documentary on the topic by Al Jazeera's Witness programme here) and while some would argue this push into the continent is commercially driven rather than politically or diplomatically led, the latter will inevitably follow the former. China is in Africa, in a nutshell, to buy up resources in exchange for hard cash and investment in local infrastructure. I'm fairly certain that, if you were the leader of Zambia, you would listen to the country that was building your roads.
Having already developed a sphere of influence in Africa, both commercial interests and growing diplomatic stature are ensuring that China now looks for new horizons. Its involvement in South America is well underway - a growing presence in Europe is surely inevitable. Only this time, China will be the cash rich senior member in an investment partnership, rather than merely the hawker of cheap OEM goods to European customers. How can money-savvy China pass up the opportunities that flagging economies in Europe like Spain, Portugal and Greece offer in terms of depreciated assets and the ability to acquire political capital and prestige at bargain basement prices? And if a flagging economy is a big draw for Chinese investors, well, no one flags better than Ireland!
What's more, the usual Irish gombeen approach to business won't work with the People's Republic of China - they know how to play us. Witness the recent promise by Chinese investors to create 1000 jobs in Athlone in a Euro-China business hub. Only catch- those 1000 jobs would be for Chinese immigrants, not the local Irish. The Chinese recognise that Ireland, for the last few years, has focussed almost exclusively on property to the detriment of all other sectors of the economy. And until we can offer them greater incentives than our over-stocked landbanks, the Chinese will only invest in one thing here - land.
That's why, in a rare note of seriousness, this blog is advocating that Ireland proctively grab China's future economic expansion into the EU as the opportunity we need to kick-start our economy, by offering China unique skills that set Ireland apart from our fellow EU members. We have one massive advantage over the rest of the EU for attracting Chinese investment - a little-known fact is that China is an English speaking country, or at least, it is fast on the road to becoming one. As the only English-speaking member of the Eurozone, and as a small, non-threatening nation with no history of imperialism, Ireland is ideally positioned to act as China's partner in Europe. Rather than seeking masses of manufacturing jobs, we need to offer China our knowledge of the EU regulatory environment, our experience of dealing with Brussels, and our ability to network throughout the community, to grow Ireland as the ideal destination for Chinese companies to locate logistics, sales and compliance hubs for their European operations.
As a solution to our economic woes, its not perfect, and much work needs to be done - such as beefing up Ireland's paltry representation in China, and introducing Chinese as at least an optional foreign language in schools would be a good start. But as a plan for the future, aiming to be China's gateway to Europe beats waiting for Ireland's property market to rebound.
The above are just some of the many tired clichés about China that I will diligently avoid in this post. The simple fact is this: the United States, the richest nation on earth, has given its wallet to China in exchange for the fleeting pleasure of cheaper consumer goods. China now has America's cash - bags of it (estimated between US$1.75 -1.87 trillion in June 2010). And while Rome's will was enforced by the legions, and Britannia's through the might of the Royal Navy, China will buy your compliance.
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| Both images property of Bank of China |
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| Seriously, America, it's defensive! |
Having already developed a sphere of influence in Africa, both commercial interests and growing diplomatic stature are ensuring that China now looks for new horizons. Its involvement in South America is well underway - a growing presence in Europe is surely inevitable. Only this time, China will be the cash rich senior member in an investment partnership, rather than merely the hawker of cheap OEM goods to European customers. How can money-savvy China pass up the opportunities that flagging economies in Europe like Spain, Portugal and Greece offer in terms of depreciated assets and the ability to acquire political capital and prestige at bargain basement prices? And if a flagging economy is a big draw for Chinese investors, well, no one flags better than Ireland!
What's more, the usual Irish gombeen approach to business won't work with the People's Republic of China - they know how to play us. Witness the recent promise by Chinese investors to create 1000 jobs in Athlone in a Euro-China business hub. Only catch- those 1000 jobs would be for Chinese immigrants, not the local Irish. The Chinese recognise that Ireland, for the last few years, has focussed almost exclusively on property to the detriment of all other sectors of the economy. And until we can offer them greater incentives than our over-stocked landbanks, the Chinese will only invest in one thing here - land.
| Check your wallet, Wen. |
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| Let's see you invade the pitch at Croker now. |
Monday, August 9, 2010
The Tides Shift...
As many of you may (or may not) know, I began my career after college in China, as a lightbulb man. Yes indeed, lightbulb men, those carefree, heroic individuals who spend their lives wrangling lightbulbs on the open grasslands of Inner Mongolia, herding great flocks of 40 watts into pens, where they are sheared and shipped out to provide light for the Western world. Yaagh! Lightbulbs, ho! ... Yes indeed, noble work.
Before I get carried away by my own nonsensical ramblings, I think I should point out that I actually worked in Guangzhou, in Guangdong province (the original Canton, and sadly at the opposite end of China to the plains of Inner Mongolia). My working life in the Big GZ consisted not of cowboy inspired antics, but of managing a dull and dingy office on the 18th floor of a rickety sky rise. All computer controlled and very simple: lightbulbs get ordered, lightbulbs get packed, lightbulbs get shipped to Ireland, lightbulbs breakdown, customers get angry. There was a set process.
Only rarely did I get to actually see lightbulbs, on supplier visits where we would venture over the Pearl River and out to the factories, located in small hamlets of only a few million people. There, regimented, dehumanised, regulated row after row of young women performed with robotic precision the same movement for 12 hours a day. At the end of their shift, they collapsed into their bunks in the hastily thrown up dormitories around the factory, while their nocturnal bretheren shuffled down, pale and with bloodshot eyes, to take on the night shift.
It was Dickensian, and simultaneously a perfect example of all that is wrong and all that is right with capitalism. These girls were exhausted, with scant opportunities for human contact or emotion. They were, for the few years they were in Foshan or Dongguan or Cixi, mere components in an industrial machine.
And yet, they were immeasurably better off than their grandparents. They would never know hunger, and tough though their lives were, they had far better access to medical care in Guangdong than back in home in Hunan or wherever they happened to be from.
Arrogantly, perhaps, I thought that these sorts of jobs offered fantastic opportunities - if you were from the developing world. After all, had not Europe and the US gone through the exact same process during the Industrial Revolution? Would the hard work and sacrifice of these young women not simply lead to a better, fairer China in the future?
Well, recent news from Ballymote in Sligo suggest that the worm has turned, and I may come to regret that condescending hubris. G-LED, a Taiwanese LED lighting manufacturer (you can't keep a light-bulb man down!) have just announced plans to develop a factory in the town. What does this mean for the locals? What kind of jobs can they expect this development to produce? And are we in Ireland (and the West generally) prepared to accept the argument that this isn't exploitation, merely progress, when we are the ones on the wrong end of the value chain?
If the 21st Century belongs to Asia, then Ballymote or Limerick may soon take the place of Guangzhou or Shenzhen - will we be prepared to accept the rule that economic might makes right then?
Before I get carried away by my own nonsensical ramblings, I think I should point out that I actually worked in Guangzhou, in Guangdong province (the original Canton, and sadly at the opposite end of China to the plains of Inner Mongolia). My working life in the Big GZ consisted not of cowboy inspired antics, but of managing a dull and dingy office on the 18th floor of a rickety sky rise. All computer controlled and very simple: lightbulbs get ordered, lightbulbs get packed, lightbulbs get shipped to Ireland, lightbulbs breakdown, customers get angry. There was a set process.
Only rarely did I get to actually see lightbulbs, on supplier visits where we would venture over the Pearl River and out to the factories, located in small hamlets of only a few million people. There, regimented, dehumanised, regulated row after row of young women performed with robotic precision the same movement for 12 hours a day. At the end of their shift, they collapsed into their bunks in the hastily thrown up dormitories around the factory, while their nocturnal bretheren shuffled down, pale and with bloodshot eyes, to take on the night shift.
It was Dickensian, and simultaneously a perfect example of all that is wrong and all that is right with capitalism. These girls were exhausted, with scant opportunities for human contact or emotion. They were, for the few years they were in Foshan or Dongguan or Cixi, mere components in an industrial machine.
And yet, they were immeasurably better off than their grandparents. They would never know hunger, and tough though their lives were, they had far better access to medical care in Guangdong than back in home in Hunan or wherever they happened to be from.
Arrogantly, perhaps, I thought that these sorts of jobs offered fantastic opportunities - if you were from the developing world. After all, had not Europe and the US gone through the exact same process during the Industrial Revolution? Would the hard work and sacrifice of these young women not simply lead to a better, fairer China in the future?
Well, recent news from Ballymote in Sligo suggest that the worm has turned, and I may come to regret that condescending hubris. G-LED, a Taiwanese LED lighting manufacturer (you can't keep a light-bulb man down!) have just announced plans to develop a factory in the town. What does this mean for the locals? What kind of jobs can they expect this development to produce? And are we in Ireland (and the West generally) prepared to accept the argument that this isn't exploitation, merely progress, when we are the ones on the wrong end of the value chain?
If the 21st Century belongs to Asia, then Ballymote or Limerick may soon take the place of Guangzhou or Shenzhen - will we be prepared to accept the rule that economic might makes right then?
Thursday, May 27, 2010
Micheal Martin Wan Sui!
Driving to work this morning, I was treated to the syrupy tones of Micheal Martin (the Irish Foreign Minister for anyone living abroad) on the radio, live from Shanghai, where he is, eh, "leading" a trade mission .
Apart from pulling the usual government stunt of contradicting the Financial Regulator, Matthew Elderfield, by saying that (yes of course!) the state would bail-out struggling mortgage holders, despite the moral hazard this would cause; the man from Cork also noted that we in Ireland will have to introduce Chinese (Mandarin, I presume) into our schools, if we hope to compete in the 21st century.
As one of the growing number of Irishmen and women who have made a somewhat half-assed attempt at learning Mandarin, I can (and this is rare for me) agree whole-heartedly with the Fianna Fail Minister. No, of course China will not take the place of the US as the main focus of our efforts to attract investment, but given the amount of ready foreign currency China has floating around in its coffers, we would be foolish not to at least try to give some of this money a home in Ireland.
A poster on Politics.ie (Seenitallb4, I believe) has hit the nail on the head, by noting that introducing Chinese in Irish schools would immediately put us on the radar of the Chinese government, who would, no doubt, view this as evidence of their growing soft-power.
Apart from the language benefits, learning a language which is so different to English should also broaden the horizons of our future students, who will realise that there is more to "abroad" than the usual choice of Boston or Berlin (or indeed, Birmingham).
Of course, the joke will be on the Chinese when, in 20 years time, their industrial facilities here in Ireland are hiring Irish school leavers whose Mandarin is just as poor as the French and German that their parents and grandparents allegedly spent 6 years learning in school during the eighties and nineties. Because after all, it is one thing to offer a language on the school syllabus, it is another for the students to actually study it effectively.
Politics.ie discussion here.
Apart from pulling the usual government stunt of contradicting the Financial Regulator, Matthew Elderfield, by saying that (yes of course!) the state would bail-out struggling mortgage holders, despite the moral hazard this would cause; the man from Cork also noted that we in Ireland will have to introduce Chinese (Mandarin, I presume) into our schools, if we hope to compete in the 21st century.
As one of the growing number of Irishmen and women who have made a somewhat half-assed attempt at learning Mandarin, I can (and this is rare for me) agree whole-heartedly with the Fianna Fail Minister. No, of course China will not take the place of the US as the main focus of our efforts to attract investment, but given the amount of ready foreign currency China has floating around in its coffers, we would be foolish not to at least try to give some of this money a home in Ireland.
A poster on Politics.ie (Seenitallb4, I believe) has hit the nail on the head, by noting that introducing Chinese in Irish schools would immediately put us on the radar of the Chinese government, who would, no doubt, view this as evidence of their growing soft-power.
Apart from the language benefits, learning a language which is so different to English should also broaden the horizons of our future students, who will realise that there is more to "abroad" than the usual choice of Boston or Berlin (or indeed, Birmingham).
Of course, the joke will be on the Chinese when, in 20 years time, their industrial facilities here in Ireland are hiring Irish school leavers whose Mandarin is just as poor as the French and German that their parents and grandparents allegedly spent 6 years learning in school during the eighties and nineties. Because after all, it is one thing to offer a language on the school syllabus, it is another for the students to actually study it effectively.
Politics.ie discussion here.
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