Author: Stephen Olson, PCG Asia, research fellow at the Hinrich Foundation
Originally published in: St. Louis Dispatch
Candidates competing for both the Republican and Democratic presidential nominations have been ratcheting up their rhetoric on trade, as the issue has moved front and center in the 2016 campaign. The American people deserve a discussion on international trade that is worthy of the office that the candidates aspire to fill. So far, it hasn't happened.
What is needed is an adult conversation — a bit of straight talk on trade — rather than one-sided talking points designed to persuade rather than illuminate. Both critics and proponents of trade have been guilty far too often of relying on oversimplified bromides that do little to advance our understanding of the real-world issues. A visit to the White House website will leave you with the impression that recently negotiated trade agreements will create Nirvana on earth, whereas a look at the materials produced by the formidable anti-free trade lobby will attribute impending Armageddon to these very same agreements. Neither one is helpful.
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Author: Stephen Olson, PCG Asia, research fellow at the Hinrich Foundation
Originally published in: East Asia Forum
The future of the EU–China trade relationship — one of the largest in the world — will be substantially impacted by a debate over whether China should be granted 'market economy status' (MES) this year. Under the terms of China's 'Protocol of Accession' to the World Trade Organization, WTO members are allowed to treat China as a 'non-market economy' until December 2016. After that time — at least in the Chinese interpretation — WTO members are to accord China MES.
Steelworkers demonstrate China's potential MES status in front of the European Commission building in Brussels during a on 15 February 2016.
Why is this so important? If China is provided with MES, it will become more difficult for the EU (and other WTO members) to successfully employ anti-dumping laws in response to alleged unfair trade practices by China. Dumping essentially means that a country exports its products to another country at artificially low prices in order to gain a share in the market. Anti-dumping laws provide for the imposition of import duties to offset this price advantage.
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Can agreements like the Trans-Pacific Partnership fortify a troubled international trade system?
Author: Stephen Olson, PCG Asia, research fellow at the Hinrich Foundation
Originally published in: The Diplomat
With the death-knell of the Doha Round seemingly signaled at the recent Nairobi Ministerial, and questions about the relevancy of the WTO intensifying, anyone reflecting on the current state of the global trade system could be forgiven for feeling less than optimistic. How did we arrive at such a dour state of affairs, and what's the path forward?
Ironically, the trade system, born in Bretton Woods with the founding of the General Agreement on Tariffs and Trade (GATT) in 1948, can be regarded as one of the great success stories of the post-WWII era. Through a series of successive "rounds" of global trade negotiations, the GATT was immensely successful in clearing out the primary underbrush stifling trade, namely tariffs. Average worldwide tariffs were reduced from 35 percent in 1948 to 6 percent in 1986, and global trade surged.
By the 1980s though, most of the "heavy lifting" in tariff cutting had been accomplished, and a new slate of more complicated issues presented themselves. Among them: barriers to trade in services, protection of intellectual property rights, and discrimination in regulatory regimes. The Uruguay Round of negotiations, concluded in 1994, subsumed the GATT into a more ambitious successor organization, the World Trade Organization, which was designed to more effectively deal with this host of new issues.
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Pacific Consulting Group has been invited to continue its work with the B20 community in 2016 – this year hosted by China, and organized by the China Council for the Promotion of International Trade (CCPIT).
“Over the next year, building on previous B20 policy recommendation reports, we will hold a series of taskforce meetings and conferences with B20 members and partners. This process will focus on global economic growth, trade and investment, infrastructure, SME development, employment and anti-corruption as their focus, and will foster communication and develop consensus between all parties. We look forward to submitting the international business community’s policy recommendations to the G20 Summit.” - Jiang Zengwei, Chair of B20 China and Chairman of China Council for the Promotion of International Trade
PCG will continue representing SME interests in the Asian region and provide input on taskforce meetings and in the upcoming conferences, culminating with the G20 and B20 Summit.
In 2016 the SME taskforce will continue to focus on the priorities identified by the previous B20 taskforces such as SME financing, access to global value chains, and innovative ways to boost the development of SMEs.
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Sitting on the sidelines is probably not the smart option.
Author: Stephen Olson, PCG Asia, research fellow at the Hinrich Foundation
Originally Published in the Diplomat
From any objective point of view, the U.S. badly botched its initial response to the establishment of the China-led Asian Infrastructure Investment Bank. Citing its concern over the potential operational practices and policies of the bank, the U.S. strongly discouraged its close partners in Europe and Asia from joining. However, the most important players, including Britain, Korea, and Australia, rejected the U.S. overtures and proceeded to join. This heavy-handed and resoundingly unsuccessful attempt to pressure allies to eschew the AIIB left the U.S. looking ineffectual and somewhat out of touch with present-day realities.
With the AIIB set to commence operations by year-end, U.S. President Barack Obama – and whoever will succeed him – will need to demonstrate a defter touch in managing the next phase. Four basic facts should help illuminate the development of U.S. policy as the bank moves from drawing board to reality:
Fact #1: There is a need for significant infrastructure funding throughout Asia, which is beyond what the World Bank or Asian Development Bank (ADB) can deliver. Viewed strictly from that perspective, the establishment of an additional source of funding through the AIIB could be positive and productive.
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Author: Stephen Olson, PCG Asia, research fellow at the Hinrich Foundation
Originally Published in the China Post
As you listen to the unfolding discussion on the Trans-Pacific Partnership, do not be surprised if you hear as much about geo-strategic competition as you do about trade or economics. In fact, U.S. President Obama himself has been surprisingly straightforward and uncharacteristically devoid of nuance in portraying the TPP as something of a victory in a strategic contest between the U.S. and mainland China to gain the upper hand in setting trade rules in the Asia-Pacific. According to Obama: "If we don't write the rules, China will write the rules out in that region. We will be shut out." He then echoed these sentiments at the conclusion of the TPP negotiations: "We can't let countries like China write the rules of the global economy. We should write those rules ... that's what the agreement reached today in Atlanta will do."
So, seen from this perspective, the TPP is part of a larger competition between the U.S. and China for clout in the Asia-Pacific region. The TPP is intended as the economic component of the broader U.S. "pivot to Asia" — a strategy intended to signal that after more than a decade of Middle East misadventures, the U.S. is "back" in Asia, and will not lightly cede influence to a rising China.
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Taking the e-plunge
Accounting & Business magazine Asia edition - November 2015
As more and more companies look to conduct at least some of their business online, you need to be ready to help your clients make the leap into the digital economy
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Many businesses still do not realise the value that could be derived from intangible assets such as customers in today’s digital world. By using mobile technology and social networks, companies can create more detailed views of their customers, their attributes and their transactions. This greater insight can in turn lead
to improved customer experience, engagement and loyalty, and even new sales channels.
Nick Jonow, partner at Pacific Consulting Group in Hong Kong, says: ‘The value of customers may be easier to calculate than the value of other intangible assets as it’s more about sales/ profitability. However, one should be careful not to reduce a customer merely to a dollar figure – the most successful companies build long-term partnerships with their clients rather than seeing them just as revenue.’
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Click here to read the full article
Author: Stephen Olson, PCG Asia, research fellow at the Hinrich Foundation
Originally published on East Asia Forum
The verdict on China’s recent currency devaluations differs depending on who you listen to. To some, the devaluations are either a positive and responsible step in the direction of a more market-determined exchange rate and a liberalised financial system. To others, they are potentially destructive, beggar-thy-neighbour competitive devaluations intended to prop up declining GDP growth by unfairly boosting exports.
In an effort to separate heat from light, let’s start by being clear on exactly what China has done. Every day the People’s Bank of China establishes a reference rate for the renminbi and allows its value to move up or down from that point within a 2 per cent band. China’s recent move has simply allowed that opening point to be determined to a greater extent by market forces based on the previous day’s trading. It is those market forces that have produced the devaluation. So it could be argued that the Chinese government didn’t devalue the currency at all. It simply opened the door slightly wider to the market, and those market forces were responsible for driving the currency down.
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Pacific Consulting group brought a delegation from Shenzhen, including the Shenzhen Stock Exchange for a business mission to meet Sweden's financial institutions.
NasdaqOMX was kind enough to host the delegation and provide an overview of the company's products and services around the world.
In addition, the Sweden-China Trade Council hosted the delegation along with representatives of the main financial institutions in the region.
Author: Stephen Olson, PCG Asia
Originally published on East Asia Forum
More so than any other developing country, China has benefited profoundly from foreign direct investment (FDI), using it as rocket fuel to launch the country’s economic development. It was FDI that provided the technology, managerial know-how and capital needed to propel China from an isolated, poor, agricultural economy in the late 1970s into the industrial export power-house and burgeoning technology player it is today.
Pedestrians walk past signboards of Chinese and foreign financial companies in the Lujiazui Financial District in Pudong, Shanghai, China. (Photo: AAP).
The double-digit growth of the past three decades that has transformed China into the second largest economy in the world was built largely on the back of exports enabled through FDI. At its peak, nearly 60 per cent of these exports were from foreign-invested enterprises, while in the higher value-added technology sector, a whopping 82 per cent of China’s exports were generated by such enterprises.
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Pacific Consulting Group has been invited to join the B20 process for 2015 in formulating recommendations for the Group of Twenty (G20) body in the area of SMEs and Entrepreneurship. The taskforce is comprised of companies, and organizations from around the globe, in a wide range of industries. Represenatives include Google, Intel, Accenture, Wahlgreens, UNCTAD, OECD, World Economic Forum, Eurochambers, and Singapore Business Federation, amongst others.
