Morgan BellChina – The Long March to Prosperity
January 2nd 2007 12:37
The Chinese dragon awakens and realises its potential. Should the world ignore China or join it? Find out on the two competitive advantages of China.
The news today, 2 January 2007, is that “Industrial and Commercial Bank of China overtook Bank of America late last week to become the second-biggest bank in the world by market value after a dramatic 31 per cent jump in its share price on the mainland during the last week.”
“The rapid rise in the bank’s market value underlined a remarkable turnaround in perceptions of its financial health. Only a few years ago, more than 20 per cent of its loans were non-performing.”
“Shanghai-traded shares of ICBC, which listed in October in the world’s biggest initial public offering, rose 6 per cent on Friday to 6.20 yuan, having been 4.74 yuan at the close of trading the previous Friday.”
“Only Citigroup, valued at $US274 billion, remains ahead of the Chinese bank.”
“But some analysts warned that ICBC shares could quickly fall back in the coming weeks.”
This news was published in the online version of The Australian under the title “ICBC the second biggest” and was written by Geoff Dyer.
When I was a kid I looked in a bookshop window and read in the cover of a book about China that it was a giant and one day it would awaken and become the greatest country on earth. This was 1974 and today China is close to becoming like that prophecy.
The Chinese advantage is two-fold: one, a large mass of increasingly wealthy consumers which could allow it to prosper based only on its internal market; and, two, an incredible supply of immensely cheap labour, cheap by international measures, both skilled and un-skilled.
The population of China, which according to a projection of the United Nations to 2010 is expected to be 1,380.5 million, is its biggest asset. China’s population is increasingly converging to urban areas and joining local industries. Their income is rising and so is their appetite for goods and services.
No wonder there is a construction boom going on in China and the demands for steel and energy, powering our commodity’s exports of iron ore and coal, are of great magnitude. On this respect it is said here in Australia that even if the Chinese economy slows down its pace in the near term, its massive size is still good enough to keep our mineral’s boom going.
Cheap labour is definitely an asset of the Chinese. Not just unskilled labour is cheap by international means making Chinese exports very competitive, skilled labour such as engineering-type is also un-believable cheap and a mere fraction of comparative western countries’ salaries. This way, electronics or computing and construction can compete with the rest of the world in price and beat it.
But the rest of the world does not have to sit and watch China; it can take the opportunity to develop business in China. Such is being done by most Australian banks which joined some of the most prominent Chinese banks, including the ICBC above, and grow with them. It has been a mutually beneficial participation: Australian banks provide expertise and some capital; Chinese banks provide infrastructure and customers.
Its interesting that, though officially communism is still on, in practice the political power opens-up to capitalism and even keeps Honk Kong as it is. I envisage that within some time China will be a fully capitalist society and democracy, with its populist one-man-one-vote, might have its chance.
End
The news today, 2 January 2007, is that “Industrial and Commercial Bank of China overtook Bank of America late last week to become the second-biggest bank in the world by market value after a dramatic 31 per cent jump in its share price on the mainland during the last week.”
“The rapid rise in the bank’s market value underlined a remarkable turnaround in perceptions of its financial health. Only a few years ago, more than 20 per cent of its loans were non-performing.”
“Shanghai-traded shares of ICBC, which listed in October in the world’s biggest initial public offering, rose 6 per cent on Friday to 6.20 yuan, having been 4.74 yuan at the close of trading the previous Friday.”
“Only Citigroup, valued at $US274 billion, remains ahead of the Chinese bank.”
“But some analysts warned that ICBC shares could quickly fall back in the coming weeks.”
This news was published in the online version of The Australian under the title “ICBC the second biggest” and was written by Geoff Dyer.
When I was a kid I looked in a bookshop window and read in the cover of a book about China that it was a giant and one day it would awaken and become the greatest country on earth. This was 1974 and today China is close to becoming like that prophecy.
The Chinese advantage is two-fold: one, a large mass of increasingly wealthy consumers which could allow it to prosper based only on its internal market; and, two, an incredible supply of immensely cheap labour, cheap by international measures, both skilled and un-skilled.
The population of China, which according to a projection of the United Nations to 2010 is expected to be 1,380.5 million, is its biggest asset. China’s population is increasingly converging to urban areas and joining local industries. Their income is rising and so is their appetite for goods and services.
No wonder there is a construction boom going on in China and the demands for steel and energy, powering our commodity’s exports of iron ore and coal, are of great magnitude. On this respect it is said here in Australia that even if the Chinese economy slows down its pace in the near term, its massive size is still good enough to keep our mineral’s boom going.
Cheap labour is definitely an asset of the Chinese. Not just unskilled labour is cheap by international means making Chinese exports very competitive, skilled labour such as engineering-type is also un-believable cheap and a mere fraction of comparative western countries’ salaries. This way, electronics or computing and construction can compete with the rest of the world in price and beat it.
But the rest of the world does not have to sit and watch China; it can take the opportunity to develop business in China. Such is being done by most Australian banks which joined some of the most prominent Chinese banks, including the ICBC above, and grow with them. It has been a mutually beneficial participation: Australian banks provide expertise and some capital; Chinese banks provide infrastructure and customers.
Its interesting that, though officially communism is still on, in practice the political power opens-up to capitalism and even keeps Honk Kong as it is. I envisage that within some time China will be a fully capitalist society and democracy, with its populist one-man-one-vote, might have its chance.
End
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What is interesting is that the China Model may not evolve into democracy but a one party internal democratic system with a capitalist economy system that is, ironically, workable and in parallel to the conventional democratic framework of governance and economy.