Finance & Economy

As China’s economy slows and major U.S. corporations increasingly are moving operations to other parts of Asia, despite the geopolitical risks in other emerging economies. U.S. investment in Southeast Asia surpasses its investment in Brazil, Russia, India and China combined. Curtis China and Jose Collazo discuss the best practices for diversifying Asian investment.

The withdrawal of a few enterprises from China does not necessarily mean that China’s ability to attract foreign investment is declining. Rising labor costs, land costs, and a shrinking manufacturing sector are several structural indications of a changing economy. China will investigate and respond to foreign business concerns regarding the investment climate and safeguard the legitimate rights and interests of investors and enterprises.

AIIB

The move by China to create the AIIB doesn’t imply intention to control the bank; instead it is an attempt to enhance its “soft power,” while avoiding typical international norms of competing for hegemony. Europe’s participation has rendered the AIIB international credibility; yet China is wary that the new institution is already over-politicized even before its official launch and operation.

AIIB

The U.S. Congress’ inability to pass fair IMF reforms is partly responsible for China’s creation of the Asian Infrastructure Investment Bank (AIIB). While the U.S. is not at the center of this newly created institution. America still has time to develop the consensus in Congress to strike a balance between America’s leadership in the international system and the demand of others to have enough space, not only to survive in the system, but also to prosper.

A year-long “temporary” halt to ivory trade outside China is a hopeful, if symbolic, move to end attacks on elephants and rhinoceroses. A coalition of celebrities, politicians, and environmentalists put pressure on Xi Jinping to ban the import of ivory, but current regulations are flouted daily. The movement of ivory must be complete and permanent to fully stop the underground trade.

The Chinese central bank just announced that it will cut interest rates, but the market is more concerned about whether this means China is officially in the sweeping global game of quantitative easing. The Chinese central bank is now in a monetary policy dilemma: It is neither willing to embark on the track of excessive quantitative easing, nor ready to tighten currency policies. Instead, it is returning to neutrality, which doesn’t mean an orientation change in its monetary policies.

In October 2013, during a visit to Indonesia, Chinese President Xi Jinping announced the launching of the New 21st Century Maritime Silk Road, just one month after announcing the New Silk Road Economic Belt, while on a visit to Kazakhstan. These two initiatives, followed in 2014 by the plan to put together the BRICS New Development Bank and China’s establishment of the Asian Infrastructure Investment Bank that Fall, constitute a new paradigm for mankind.

one belt one road

The “One Belt and One Road” initiative concerns 65 countries and 4.4 billion people and is China’s most important and strategic initiative. As the Middle East and Europe faces social, political, and economic turbulence, China invites all major economies to join this endeavor to improve infrastructure and trade throughout the world. Increasingly, China’s development is inseparable from the world; and world’s stability and prosperity are inseparable from China.

As Li Keqiang wrapped up the National People’s Congress in Beijing, Fernando Menedez reviews the investment outlook between Latin America and China, noting that China is likely shift away from total volume of investments to a greater emphasis on their productivity and sustainability.

In 2015, much emphasis has been placed on a partnership between the African Union and China in order to accelerate the construction of the three major networks to help materialize the “century dream” of connecting all capital cities in Africa with high-speed railways. African economic integration calls for not only consensus and impetus from African countries, but also external investment to drive the process.

economy

Despite China’s remarkable growth, the property market still faces the challenges of consolidation, industrial overcapacity, financial risk, deflationary risk, and structural employment issues. In response the government will adjust to the economy’s “new normal” of slower growth, move toward an innovation based economy with more public goods and services, and pursue a proactive fiscal economy and a prudent monetary policy.

China’s “Foreign Investment Law” was solicited for public comment from foreign companies, lawyers, and policy makers, and though not finalized, represents a move to improve openness, promote foreign investment, and regulate investment behavior. Pan Xiaoming explains the new features that fundamentally change the structure of Chinese foreign investment.

AIIB

Britain has broken ranks with the United States to join China in the founding of the Asian Infrastructure Investment Bank (AIIB). As other nations like Australia and South Korea choose to similarly defy U.S. opposition to the AIIB, and join, it could shake Japan’s confidence in its own position and even in the reliability of its alliance with the U.S.

one belt one road

Though some view the One Belt, One Road strategy as a Chinese version of the Marshall Plan, they are vastly different. Therefore, no single country can dominate its process. There is room to dispel suspicion and build trust by further enhancing transparency of the AIIB institution through reducing China’s shareholding, offering more leadership positions to foreign nationals, and employing international business standards.

The controversial issue of “currency manipulation” has resurfaced. However, Washington and Beijing have very different perceptions about the identity of the “currency manipulator.” The net effect is currency friction that is likely to prevail until the 2020s.

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