Macau economy: Thriving on sin.

Macau, the former Portuguese colony, now under Chinese jurisdiction, has a thriving economy based on gaming and gambling, that make up most of the GDP of the country, and contributing over 75% of revenues to the Government.

A tiny country of 500000 souls, Macau attracts tourists or ’sinners’ if one may call them that, numbering well over 30 million! A truly mind-boggling figure. The majority of these tourists come from mainland China, attracted by the chance to make a killing at gaming and gambling, and of course, for a soothing and caressing massage. The sex industry is also a thriving segment of Macau’s economy.

Macau does have a traditional economy comprising of some manufacturing activity in textiles, footwear, electronics, toys, etc. Especially, the textiles and apparel sector was an important activity till the year 2005, when the Multi-Fiber Agreement was terminated, leading to a decline in the activity.

Macau exports textiles, garments, electronics, toys, etc., and imports consumer goods, capital goods, fuels, etc. China, Hong Kong, U.S.A., etc., are the major trading partners. The GDP growth rate of Macau for 2008 was a high 15%, and expected to be more or less the same for fiscal 2009. The inflation rate is around 7%, and unemployment rate is about 3%. Macau enjoys tariff free movement of its goods to China under the Closer Economic Partnership Agreement (CEPA).

Macau does not appear to have serious problems on the economic front, except perhaps, those emanating on account of policy changes in China. With human nature, what it is, and sin and greed always taking the better of human judgement, Macau has little reason to fear any really serious economic challenges due to the current downturn in the global economy.

Laos economy: Struggling to grow.

One of the poorest countries of the world, the South East Asian nation of Laos is heavily dependent on external aid to sustain its economy.

Laos is a primarily agricultural economy, with the majority of its people dependent on subsistence agriculture. Among the important agricultural products from Laos are, corn, coffee, sugarcane, tobacco, tea, cotton, rice, etc. Mining is also an important activity, with copper taking the lead. Gold and tin are also mined in good quantity. And international prices of these metals have an important impact on the revenues accruing to Laos.

Among the industries of note in Laos, apart from mining are tourism, cement, garments, agro-processing, etc. The country exports coffee, electricity, tin, timber, copper, gold, etc., and imports consumer goods, machinery and equipment, fuels, etc.

The GDP of the country is expected to grow by 7.5% in 2009, though there are reservations in certain quarters about this rate in view of the current economic situation. Inflation is around 8.6%, and unemployment is around 2.4%.

Laos is slowly making the transition from a centralized economy to a market oriented one. But the present global economic situation is playing spoilsport with this process. Much depends on growth and demand in China and neighboring countries that could offer opportunities to Laos for its goods and services. Laos is also in the process of attracting foreign direct investment. The Government is also making efforts to develop the Banking industry to face up to future challenges.

One of the major challenges faced by Laos is to balance its revenues with requirements for developmental activities. With bilateral and other aid on the decline, and revenues from its metals and other exports coming down due to depressed prices in the international markets, Laos is forced to cut down on public spending, again with its own consequences. Unless there is a drastic change in the economic environment, in general, Laos may find the path towards economic development and progress, a great struggle.

Cambodian economy: Roadblocks ahead.

After a decade and more of fair growth and development, Cambodia faces an uncertain future now, on account of the global economic crisis, which is showing incipient signs of a recovery.

With a dirty past, hard to forget, Cambodia had put behind its blood-drenched legacy to register decent economic growth and development, and offered its battered citizens to rebuild their lives, and join the rest of the world as equals. Of course, the situation is not really so bad as to revive the past horrors.

Over the past decade and more, Cambodia has developed several industries to provide sustenance to its economy, and its citizens. Among the major ones are tourism, garments, cement, rubber, textiles, mining, fishing, etc. The major agricultural produce includes rubber, rice, corn, vegetables, cashew, tapioca, etc. The country exports timber, rubber, clothing, tobacco, rice, etc., and imports capital goods, machinery, petroleum products, transportation equipment, etc.

The Cambodian economy is expected to grow at a rate of 5% in this fiscal. Current inflation is nearly 20% as against 6% in 2008. Unemployment is around 3.5%. It may be noted that Cambodia, like many other countries in the vicinity, owe their decent economic growth statistics to China, that has played a major role in reducing the impact of the global recession on many of the countries, by providing a sort of lifeline in the form of import orders, and investments.

In a recent forecast of economic growth and development, the World Bank had predicted a contraction of 2% in the Cambodian economy on account of the global recession. It also feared a reversal of many of the social gains registered by the country in the past decade. However, the first signs of a global economic recovery, if true, may hold out hope for Cambodia and other countries of a better future.

Mongolian economy: Waiting for the catalyst to fire.

Mongolia, which is better known for the exploits of Changez Khan, has now a new calling card. As the owner of the world’s largest gold and copper deposits, that are waiting to be brought out into the sun. The Oyu Tolgoi deposits of copper and gold are expected to give such a boost to the Mongolian economy as to make it the world’s fastest growing economy in the near future.

Even today, mining is the major economic activity of the country, and is the major foreign exchange earner, with neighboring China lapping up a fair amount ofthe production of copper, Mongolia’s chief export. Apart from copper, the country also exports wool, hides, apparel, livestock, metals, etc. And it imports fuels, food products, vehicles, chemicals, consumer products, etc.

The global recession has hit the Mongolian economy hard with prices of copper falling quite a bit. Inflation is running at 28%, whereas unemployment is a manageable 2.8%. Inflation is the country’s major problem now, with food and fuel costs going up causing hardship to the people. On the other hand, the budget deficit is widening and the country has had to avail financial assistance from the World Bank to bridge the gap to the tune of USD 40.00 million.

Mongolia is trying to attract FDI, and has amended many of its laws relating to investment and taxation, to make itself more attractive to foreign investors.

The country is pinning its hopes on developing the Oyu Tolgoi mines to zoom into the next level of economic development, from where it would be relatively easier to take the economy forward. As such, mining is the mainstay of the country’s economy, and it is looking forward to another mining project to ensure its future economic development.

It remains to be seen how Mongolia takes advantage of its good fortune to build up a more stable and sustainable base for its economic progress.

Typhoon hit Taiwan picks itself up.

The typhoon Morakot hit Taiwan hard. Physically, as well as economically. With nearly 150 deaths, and economic loss estimated to be around USD 3.00 billion, it is said to be the worst such natural calamity in the past fifty years.

Ironically enough, the Government’s special package of development for the typhoon hit areas, in the amount of USD 3.00 billion, the same as the amount of estimated damange from the typhoon, has cushioned the fall in the country’s GDP, in these days of economic recession worldwide.

While it is France and Germany in Europe, it is China, South Korea and Taiwan in Asia, that are coming out of recession, and contributing to global economic recovery. China occupies an important place in Taiwan’s life in more ways than one. It is the most important market for Taiwanese goods and services, followed by the United States. And both these countries have an ongoing economic stimulus package that is contributing to Taiwan’s growth, by providing it opportunities in their markets.

Taiwan’s major source of revenues are exports of various consumer electronics and other goods, and services, with China being a major purchaser of them. Recent weeks have seen a pick up in imports of China from Taiwan, that may not be dictated entirely on economic considerations. Taiwan, on its part is happy to be making money in the process.

However, all this good news means that Taiwan’s economy has contracted lesser than expected, rather than register real growth. While Taiwan’s economy is expected to grow by 5.5% in the last quarter of fiscal 2009, it is expected to register only 4.00% growth in 2010.

Is the worst over for the Taiwanese economy? That’s the opinion of many major players in Taiwan’s markets, but only time will tell how close they are to truth.

China Shining.

Is China shining? If one were to go by the World Bank report of recent date of better than expected economic performance of China in 2009, it would appear to be so. According to the World Bank, the Chinese economy would grow at 7.2% fro 2009 as against it’s earlier forecast of 6.5% growth.

The major reason for this optimistic projection is the boost that the economy has got from the stimulus package of nearly USD 600.00 billion quickly put into place by the Chinese establishment. The stimulus package has boosted demand and off take of loans and resulted in more and more investment. Of the 600 billion dollars of the package, more than half of the money was invested in public works, boosting employment, and consumption.

The Chinese Government is banking upon active fiscal policies coupled with relaxed monetary policies to maintain the tempo of economic activity and recovery. But the Chinese Government is realistic enough to understand that unless there is an improvement in the global economic scenario, there is not much chance of the Chinese economy sustaining its growth and momentum, on account of its high dependence on export earnings.

Falling demand for Chinese goods and services in the world markets has led to a fall in consumption, and increase in unemployment and depressed wages. That is the reason why the Chinese leadership is rooting for stability and continuity of macro economic policies.

In a recent statement, the Chinese Premier, Mr. Wen Jiabao had pointed out three areas of concern on the economic front. One, the global economic situation that is yet to improve. Two, firms in China faced several operational difficulties affecting their growth, and excess capacity and production are a major concern. Third, it is going to take some time before the long-term policies initiated by the Government to take effect, and bear fruit.

Meanwhile, even China’s opponents are hoping that China would maintain it’s growth, so that the situation does not deteriorate further, and lead to a exit out of the current crisis.

China maintains growth amid global gloom.

Despite the global gloom prevailing on account of the recession, things appear to be going alright for China. With a strong central leadership at the helm, and very little opposition to its policies, it is in fact, not very surprising. However, China has beaten the prophets of doom that were only too ready and eager to downgrade China economically, if not write it off altogether.

The stimulus package of around USD 600.00 billion initiated by the astute Chinese Government to tackle the global downturn, without much fuss, seems to have done the trick, at least in the short term. It is expected to be smooth sailing for the Chinese economy in the next few quarters, while its American counterpart is still sweating profusely.

China is expected to clock a growth rate of anywhere between 7% to 9% in the current fiscal, and the forecast for 2010 does not look all that cloudy, though, the Chinese leadership itself is cautious about the future. Cut back to 2007, China had contributed nearly 20% to world economic growth, the highest for any country. Hence the combination of optimism and caution on part of the Chinese leadership.

However, the picture is not all that rosy from certain angles, though it is comfortable in comparison to the United States. For instance, China’s exports have been moving South for the last few months. And over-dependence on the stimulus package is not a healthy sign. The stimulus package resulted in record loans and investments that boosted the economic cycle. Sustained recovery in the economy is still not in sight and consumption is expected to go down in the near future. That would set in motion a chain reaction with wages and employment taking a hit.

One of the important questions now being asked is about a possible stimulus package in 2010, and what shape it would take. The Chinese establishment is on record cautioning against “excessive optimism”. Right now, however, many of the battered economies of the world would happily trade places with the Communist giant.

China and America SAED.

Thi is the second and concluding part of the article.

Bilateral Relations: China-U.S. bilateral relations seem to be going north with several important issues, both at the bilateral level, as well as global, willy nilly driving them in consort. On the bilateral front, some of the activities lined up are an official visit to China of the United States President, the exchange of military delegations, American participation in the Shanghai World Expo in 2010, facilitation of visa procedures on either side, and restarting the dialog on the issue of human rights.

On the economic and financial side, the two sides resolved to take necessary steps to revive their domestic economies by increasing savings in the U.S. and increasing spending and consumption in China. The second important issue is to build a powerful financial system with a proper regulatory framework in place. Thirdly, to work against protectionism and towards open markets, creating more jobs, etc. And fourthly, to reform the global financial system and to take care of future crises.
Global and regional issues also took up considerable time and effort of both the countries, with both of them resolving to hold joint discussions and exchanges as required, on the issues of low carbon economy, climate changes, energy, environment, etc. Specific projects that would be pursued for fruitiion were clean, and efficient power, clean and efficient transport, clean air and forest, and wet land protection.

It is clear that the United States and China have a lot to gain from mutual co-operation and with America’s hands full in Afghanistan, and Iraq, it may not have much of a choice than to be ‘friends’ with China, much against its natural tendencies to show off its ‘muscle’ and ‘brains’.
Concluded.

China and America SAED.

You cannot thrash them all. You cannot beat them all. The strength of your opponent defines your options in dealing with him.

In his over 25 centuries old treatise, “The Art of War”, the Chinese master, Sun Tzu, had wrote:”He who wishes to fight, must first count the cost”. And quite appropriately, perhaps, the Americans seem to be following the advice of the Chinese master diligently in avoiding a confrontation with China. China is too big, and too powerful to be trifled with. And so, the American strategy toward China is predictably different from that applied to Iraq, Iran, Libya, Saudi Arabia, and so on.

Las week, the 28th of July, to be precise, a new chapter, as it were, opened in China-U.S. relations, with the successful conclusion of the first round of China-U.S. Strategic And Economic Dialog(SAED). The dialog revolved around the theme of strategic and long term issues concerning both the countries in particluar, and the rest of the world, in general. The objective of holding the dialogwas apparently to achieve a deeper understanding of each others’ views, to bring about consensus in thought and action, to increase mutual trust that follows greater understanding, to take matters forward through mutual co-operation, and give a filip to their bilateral partnership.

A pretty long list of wishes. But one which both the sides seem to be keen on achieving, at least apparently. Of course, for their own reasons. It is difficult to imagine America giving space voluntarily to Chinese ambitions for World dominance. At the same time, the U.S. may not have many options at its disposal, in dealing with China. And the current economic crisis has only made it worse. America may be slowly, but reluctantly, coming to the realization that it cannot always call the shots. And progress in these talks may result in some benefits too, especially for its beleagured industry, and banking and financial system by attracting more Chinese imports of American goods and services.
To be concluded.

The Chinese Economy chugs along.

At one time, China was a source of mystery and awe for its ancient culture and civilization for the West.   It is, even now.   But apart from the culture and civilization part, China is now being looked upon as a stabilizer of international financial markets, badly hit by the recession.

China is one of the few large economies, that have not been much affected by the economic downturn.   It is alive and kicking, though not vigorously, as earlier.   The Chinese establishment must be commended for its swift response to the crisis, and the prompt steps taken by it, to retain public confidence in the economy, and to bring it back on track.   Of course, being a communist country and not answerable to anyone helps.

The Chinese Government initiated a stimulus package of nearly USD 600.00 billion to counter the recession, by increasing domestic spending.   This strategy seems to be working, at least for the present.   With the stimulus package doing the trick, the Chinese economy is expected to grow by about 6.50% in the current year, as figures released by the World Bank suggest.

Ironically, this is good news for the West.   Notwithstanding their aversion to the Communist regime, and its repressive policies, the West, nevertheless looks up to China to stabilize a badly bruised international financial system, and to hold the fort for some time, so that their own economies could bounce back to good health.   They look up to China to contribute to a stable world economy, that would provide them an opportunity to get their act together, and put their own house in order again.  

However, it’s not roses all the way for China.   It’s exports have certainly dipped on account of falling demand for its goods and services in the countries hit by the recession.   Unemployment is on the rise.   But domestic demand is said to be north-bound.

Overall, it’s a choppy economic scene that the Chinese have to negotiate and come out on top of.   That would require all the skill and dexterity that the Chinese possess.   But the big question is at what cost this would be achieved.

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