TrendLines

WASHINGTON - The second round of negotiations in Washington between the U.S. and China to resolve a long standing trade dispute has yielded mixed results. With US Commerce Secretary, Wilbur Ross, expected to visit China next to continue the talks, investors will seek credible action from both sides to diffuse trade tensions further.

“ON A positive note, the two sides acknowledged the need to avert a trade war and that continued formal talks were the best way to address bilateral trade issues,” says BBVA in a research note.

“Post-meeting statements to this effect from China’s top economic advisor, Liu He, and U.S. Treasury Secretary, Steven Mnuchin, should help soothe unnerved investors’ fears of a lose-lose trade war.

“The former noted that ‘both sides agree not to go ahead with imposing tariffs’, while the latter stated: ‘We’re putting the trade war on hold’.

CHRIS PATTEN is ardently pro-EU. He sees Brexit as a betrayal of the UK - and a bar to Britain remaining a major player on the world stage. And he is clearly no fan of how world politics is panning out . . .

CHRIS PATTEN can be best described as an over-achiever.

Across the 300 pages of his First Confession [Allen Lane, 2017], he wears a bewildering number of hats: Chairman of the Conservative Party; British Cabinet Minister; the EU’s European Commissioner for External Affairs; confidante of Lee Kuan Yew; crony of Margaret Thatcher; chastiser of China; English patriot; Chairman of the BBC; Co-Chairman of the International Crisis Group; advisor to Pope Francis; Chancellor of Oxford University; and — most famously — the last Governor of British Hong Kong. 

THE HKSAR Government is committed to the development of innovation and technology and has pledged more than US$3.6 billion to various programmes since 2015, the Financial Secretary, Paul Chan, told delegates to this year’s Hong Kong Startmeup Festival. 

“To sustain our competitiveness in the 21st century, we need a new engine for our economy in the form of innovation and technology (I&T),” Chan said. 

Hong Kong is focussing on four areas – AI and big data analytics, biomedicine, smart city and fin-tech. “We are also working relentlessly with industry stakeholders to enhance Hong Kong’s ecosystem for start-ups,” he said. 

IN THE near term, Thailand’s economic prospects at the close of 2017 are significantly brighter than at any time during the past several years . . .

BANGKOK ­— In terms of its economy, Thailand clearly turned a corner in 2017. What remains murkier, however, is whether Thailand as a society has succeeded in turning the page.
With the year coming to a close, the Thai economy was nearing 4.0 per cent growth as exports, the main pillar, came roaring back to life, approaching a record US$236 billion in value.
While that gross domestic product (GDP) rate does not compare to the soaring figures Thailand posted in earlier decades, it is also a far cry from the gloomy forecasts of critics who claimed the unelected Government was not capable of managing the economy.
With fourth quarter GDP coming in at 4.3 per cent – the highest quarterly rate since the first quarter of 2013 – the National Social and Economic Development Board (NESDB), Thailand’s chief planning agency, raised its growth forecast for the year to 3.9 per cent.
Exports and tourism have been driving most of the gains. But investment has also been key.

HANOI — Vietnam, buoyed by a revived Trans Pacific Partnership (TPP) trade pact and a regional trade agreement dominated by China, is in the box seat in an  outlook driven by investment and growth .  . . .

THE Trans-Pacific Partnership (TPP) — feared to have floundered after President Donald Trump withdrew U.S. support earlier — gained a second wind at November’s Asian Pacific Economic Co-operation (APEC) meeting in Da Nang. The remaining 11 nations agreed to press on with expanded trade and investment programmes.
“Vietnam is in the box seat right here. It desperately wanted the TPP,” Carl Thayer, a defence analyst with Australia’s University of New South Wales, told ATI.
The revived TPP, now termed the Comprehensive and Progressive TPP after intervention by Canada, is undergoing fresh talks towards a final agreement. The TTP’s 11 nation members would include Australia, Chile, Japan, Malaysia, Mexico, New Zealand, Peru and Singapore.
Vietnam was considered a winner under the earlier TPP pact, with World Bank forecasts that, by 2030, economic benefits would add about 8.0 per cent to its GDP.
The key industries to gain from TPP were textiles and garments and global supply chain operators, as in telecommunications, taking advantage of Vietnam’s close proximity to regional economic giant China.
Vietnam is also a member of the China-dominated Regional Comprehensive Economic Partnership (RCEP), which is centred on the 10 ASEAN nations and  countries with free trade pacts with ASEAN — Australia, China, India, Japan, South Korea and New Zealand.
“Vietnam can follow (the TPP) path and it can follow RCEP, which China is espousing, at the same time — it is not mutually exclusive,” Thayer said.
But Pavida Pananond, a Professor of International Business Studies at Thailand’s Thammasat University, says that, without the U.S. role in TPP, China influence over Vietnam’s trade profile has risen.
Pavida, told ATI said while the “size of potential gains from trade and investment may be reduced for Vietnam, [in the absence of the U.S.] it remains attractive as the only member in Asia with relatively low costs and a large growing market”.
She said that, despite the revised TPP agreement, Vietnam would remain “significant” in its overall standing in intra-regional trade and investment in Asia.
Vietnam’s economic outlook has risen in recent years. “The near-term outlook is positive,” the United Nations reported in its annual economic and social survey for Asia and the Pacific (UNESCAP). The UN has projected Vietnam’s growth at 6.5-6.7 per cent over 2017 and 2018.

Xi Jinping wants China to be a global leader in 10 chosen industries, including the Internet, big data, electric vehicles, semiconductors, robotics, pharmaceuticals
and artificial intelligence, by 2025 . . .

THE Pearl River Delta is morphing into what some now dub Silicon Delta, China’s answer to Silicon Valley in California.
China is home to some of the world’s most valuable ‘unicorns’ — private companies valued at US$1 billion or more — while its top tech companies now rank among the world’s tech leaders.
Such is the optimism surrounding China’s growing innovation potential that some believe the “next big thing” could well come out of Silicon Delta.
Addressing the HSBC Australia China Conference in Sydney in November, Frederic Neumann, HSBC‘s Co-Head Asian Economics, said China is making great advances in high-tech industries.
“One thing I really want to stress is that China is no longer a copycat market. Some of the most exciting innovations are happening in China,” he said.
Helen Wong, HSBC’s Chief Executive, Greater China, concurs: There was a time — not so long ago, actually — when Chinese tech companies were dismissed as mere copycats,” she says. “But not any more. China is now punching above its weight on innovation.

FOLLOWING up a  GST with its new Insolvency and Bankruptcy Code, an amended Arbitration Act requiring faster settlement of commercial disputes, and recapitalisation of the banks  has allowed the Modi Government to present a more enticing offering to international investors. The rules of the game have changed . . .

INDIA’S Modi Government has introduced game-changing corporate and taxation reform that could trigger far-reaching implications for its economy.It now has a goods and services tax (GST), an up-to-date Insolvency and Bankruptcy Code (IBC) and an amended Arbitration Act which requires the hearing and settlement of commercial disputes to be completed within a maximum of 18 months.According to key executives of one of India’s top legal firms, compared with three years ago, the investment climate is “100 per cent” better.
Pallavi Shroff, a Managing Partner of the Delhi-based Shardul Amarchand Mangaldas & Co (SAM), says the States are actually competing with each other for investment.
“They are trying to facilitate investment,” she says. “Approvals still take a bit of time, but the whole process is much simpler today.”
The impact of the changes is freeing up distressed assets, including manufacturing plants, for ownership transfer to new investors.
Until now, banks have been hamstrung by archaic legislation which protected the sponsors of companies. As a result, banks, particularly public sector entities, were weighed down by non-performing loans.
The changes have rekindled investor interest in India, a destination that was once difficult and unpredictable ­— in large part because of unhelpful Government policies.
The Modi Government, it seems, has done what its predecessors were unable to deliver — a single simplified taxation system — and has taken over the powers of the States to collect taxes. It has also reduced bureaucratic red tape.
It is early days yet with these reforms, but the first signs are promising. Investors are reassessing India. In just one sector alone – real estate – an estimated US$10 billion in new investment has flowed in.
Shardul Shroff, Executive Chairman of SAM, regards the GST legislation as India’s most far-reaching change yet.
“The Government has made Constitutional amendments giving it power to take over taxation from the States,” he told ATI. “In doing so it has reduced State authority and vested the Centre with the right to collect and distribute taxes between manufacturing States and consuming States.”