archive-au.com » AU » B » BUSINESSSPECTATOR.COM.AU

Total: 1320

Choose link from "Titles, links and description words view":

Or switch to "Titles and links view".
  • Time to end the EU's travelling circus | Business Spectator
    for Strasbourg was its position as a second seat of the European Parliament guaranteed by European treaty law to host 12 parliamentary sessions a year The results of these arrangements are bizarre Once a month 766 EU parliamentarians about 3000 staff and all their files travel 400 kilometres from Brussels to Strasbourg for a four day sitting period At the end of that period they all travel back to Brussels if they re lucky For those parliamentarians wishing to return to their constituencies it is more complicated Strasbourg s small airport only offers direct flights to six European capitals Not only is avoidable environmental pollution caused by unnecessary this travel it is also a waste of taxpayers money The total costs of running parliament in two locations are estimated to be around 200 million 294 59 million a year Funds are needed to pay for travelling expenses between Brussels and Strasbourg and not least for hotel rooms which regularly spike in price 150 per cent when parliament s in town The Strasbourg parliamentary buildings also need to be financed heated maintained and lit even though they remain empty for 317 days a year At times of public sector spending cuts such largesse is difficult to defend The public has long been sceptical of the wisdom of having parliament in two locations Well three actually because the Secretariat of the European Parliament is not situated in either Brussels or Strasbourg The parliamentary bureaucracy is in Luxembourg An online petition to change this situation has so far collected close to 1 3 million signatures Parliamentarians themselves are equally unhappy with the arrangements and in a vote 77 per cent of them have expressed their wish to consolidate all of parliament s tasks in just one city However it takes more than public pressure and parliamentary support to bring about change The reason is that Strasbourg s role in EU policy making is guaranteed by the treaties establishing the European Union To amend these treaties it requires unanimity between the countries involved and unsurprisingly France and Luxembourg have so far blocked any such attempt In fact Strasbourg s city council recently announced it would fund a PR campaign arguing its case Once upon a time Strasbourg may have had better reasons on its side Located close to the French German border it symbolised post war reconciliation This initial justification now seems a bit odd particularly as the European Union has enlarged far beyond the initial six countries that started the European Economic Community Today the EU has 28 member states For Finns Poles or the Portuguese it may be harder to understand why their taxes should be required to pay for a former symbol of French German friendship Given the number of its members not every country can realistically expect to be the seat of EU institutions anyway Seen from the distance of the South Pacific the bi location of the European Parliament does not only appear like an oddity It actually tells

    Original URL path: http://www.businessspectator.com.au/article/2013/8/22/politics/time-end-eus-travelling-circus (2014-01-12)
    Open archived version from archive


  • A green solution to make Europe sick | Business Spectator
    right mind would have claimed that such regulations made companies any more profitable they were never meant to do so In any case if the newly enforced behaviour made more economic sense then companies would have behaved in this way without regulation This attitude changed when Harvard management guru Michael Porter published a couple of articles in the early 1990s in which he claimed that indeed environmental regulations might make companies more innovative Consequently he argued whole economies would become more productive and competitive Even with an undergraduate understanding of economics Porter s thesis should have been easily refuted But the claims were far too politically alluring to be measured by normal economic standards They finally allowed politicians to claim that environmental policies did not only have no negative economic effects On the contrary imposing environmental regulations could actually promote growth and jobs It was the regulatory equivalent of a free lunch a cleaner environment at no cost and with an extra economic gain Sounds too good to be true It certainly is In his book Dr Sandström investigates the academic literature to try and verify Porter s claims And indeed there is some weak evidence that increased environmental regulation may trigger efforts by companies to spend more on research and development In a way this is unsurprising if companies are legally required to find alternatives to current production technologies of course they will need to spend time and money to devise them However when it comes to the more interesting question of whether these extra R D activities actually lead to increased productivity competitiveness and profits there is no hard evidence As Sandström summarises the research the proposals put forth for more regulations in order to create green growth are done without sufficient support from academia This is probably just his polite Swedish way of saying that vague hopes for green growth are nothing but a convenient political illusion The reality of green growth policies is however far worse than this academic conclusion suggests Not only do green growth policies fail to produce any real growth the ways such schemes are implemented in practice also show all the signs of government failure resulting from rent seeking information problems and outright corruption Sandström goes through the examples of five European countries Spain Italy Germany Denmark and the UK and the US to show how green growth initiatives were implemented and what effects they produced The results are staggering In Italy for example there have been cases in which organised crime has been drawn into new green energy projects Given high subsidies for the wind power industry that was perhaps to be expected If wind power now even beats the returns from the more established business activities of the mafia then it is only natural for godfathers to go green Or in Sandström s words these examples should be viewed as illustrations of the risk of creating opportunistic behaviour because of high risk free profits from subsidies If one were to put it positively environmental subsidies may reduce the need to do anything illegal Just building windmills will do We ll give them a subsidy they can t refuse Spain s green growth policies are perhaps an even better case study in the absurdity of environmental subsidies Under the pretence of saving the environment while creating jobs Spain has devoted considerable resources to promoting renewable energies over a long period But then a study by Professor Gabriel Calzada Alvarez of King Juan Carlos University in Madrid calculated the real costs of creating green employment According to his estimate each green job cost an average of 570 000 In wind power the figure was closer to 1 million Calzada s study attracted much attention and it certainly received much criticism However even the Spanish government subsequently accepted many of his criticisms Not least because rapidly rising electricity prices were becoming an unpopular burden on Spanish consumers and businesses In conclusion Sandström expresses his astonishment that in contrast to nearly every field of public policy no extensive cost benefit analyses are prepared for those policies claiming to promote green growth Instead it seems the debate often is based upon reports or policy documents that were developed in order to support a pre defined political opinion he says If politicians actually tried to find hard evidence for their green growth claims they might look in vain Instead we may need to revert back to the old days of common sense when nobody expected environmental regulation to cause anything else but economic costs in return for environmental benefits Dr Oliver Marc Hartwich is executive director of The New Zealand Initiative Print this page More from Oliver Marc Hartwich 09 Jan Athens 2014 is not Sarajevo 1914 21 Nov Silent assassins chase German savers 14 Nov Rates of wrath Why the EU needs real reform 07 Nov Don t put Germany on the economic axis of evil 31 Oct I spy the demise of the Old West alliance Related articles 12 Jan Obama picks Fed vice chair 11 Jan US jobs growth slows sharply 10 Jan The ECB is failing to do whatever it takes 10 Jan Inflation lifts across OECD 10 Jan NAB UK exit expected soon More from Business Spectator Technology Adapt or die Commercial The Future of Energy Family Business Alan Kohler s Family Business China China Spectator Please log in or register to post comments Comments on this article Comments Policy Peter Watson Thu 2013 08 01 10 37 Instead it seems the debate often is based upon reports or policy documents that were developed in order to support a pre defined political opinion Oliver it was always thus with socialists So the fun continues debt continues to mount several generations of southern Europeans will never work gainfully in their lifetime and the fat cats continue to live it up on the public teat Sounds a little like Russia in 1917 kieran donoghue Thu 2013 08 01 13 33 Peter I assume

    Original URL path: http://www.businessspectator.com.au/article/2013/8/1/global-news/green-solution-make-europe-sick (2014-01-12)
    Open archived version from archive

  • Europe's new 'liability' union | Business Spectator
    toxic Estimates about the amount of bad loans vary but the best estimates are somewhere between 500 billion and 1 trillion At some stage in the future these loans will have to be written off If or rather when that happens someone will have to foot the bill and the whole discussion around banking union is really about who that someone will be Over the course of the euro crisis the main concern has been with the solvency of sovereigns When yields for government bonds started to rise in the euro periphery concerted efforts by the European Union and the ECB aimed to drive them back down again Part of these efforts was the provision of large amounts of central bank credit to the banking sector in the hope that these low interest loans would be used to soak up higher yielding government debt As is now becoming clear while these operations may have had a calming effect on sovereign bonds they also increased the vulnerability of financial institutions Soaked full of bonds of their own national governments European periphery banks are arguably in a worse state than at the beginning of the euro crisis It is clear that sooner or later Europe s banking sector widely regarded as too large will shrink down to a healthier size and that this process will force some struggling banks to close or be nationalised Proponents of a European banking union particularly from the euro periphery and the European Commission are trying to make the European Stability Mechanism absorb most of the losses This solution has moral hazard written all over it and could turn out to be expensive for core euro members like Germany Under these plans national governments would not be required to save their own banks if doing so would threaten their own solvency So in practice great contributions from periphery countries to their banking sector are unlikely to be forthcoming Crucially the plans would also exempt different categories of deposits for example loans from the ECB but also private deposits of up to 100 000 As Professor Hans Werner Sinn president of Munich based Ifo research institute warns in a column for Germany s business magazine Wirtschaftswoche this week struggling banks would react to these incentives by shifting around all their liabilities until in the end they only had protected liabilities on their balance sheets This would then force the ESM to pay for all the costs of bank failures and restructuring operations The bailout of Cyprus earlier this year for the first time had bailed in bank depositors in order to protect taxpayers At the time this was presented as a model for future crises However if taxpayer protection is still the goal then the planned banking union is not the way to achieve it On the contrary it will leave mainly German taxpayers vulnerable via the ESM Unfortunately the Germans may also be required to pay for banking union in another way If plans for a joint

    Original URL path: http://www.businessspectator.com.au/article/2013/7/25/global-news/europes-new-liability-union (2014-01-12)
    Open archived version from archive

  • A euro crisis on German ice | Business Spectator
    observers might naively assume that as economic data from Europe s periphery deteriorate Germany would discuss the implications After all its exposure to Southern Europe is huge If only a part of German lending to the rest of Europe had to be written off say after a sovereign default a banking crisis or both this would inflict pain on German investors and taxpayers German savers are already paying for the crisis because the European Central Bank s policies have made decent interest income a distant memory So there are enough reasons to pay attention to the euro crisis and consider ways out of it But fight an election campaign on these crucial issues you must be kidding It is as if Germany s mainstream parties Christian Democrats Social Democrats Greens and Free Democrats are forming a cartel to prevent real political discussions None of them are willing to draw any attention to Europe as a topic Little wonder as every single parliamentary decision on the euro crisis has been supported by all these parties There is no way in which the opposition could now credibly blame the government for the very policies it has always supported There is a second reason for the cross party armistice ahead of the election A party challenging the consensus on Europe has emerged the Alternative for Germany party The Alternative is currently polling at 2 3 per cent where all the other parties would like them to remain In order not to give Alternative any extra publicity the political cartel refuses to engage on the issue of Europe effectively pretending it does not exist To round off the boredom ahead of the election polls have been stable for months if not years Chancellor Angela Merkel is virtually guaranteed to remain in office The only uncertainty remains about her coalition partner although it makes little difference in practice What is strange about this sleepwalk to the polls is not how it has paralysed proper political debates within Germany but how it has paralysed proper political debates within Europe Seasoned observers may remember that this is not the first time that the euro crisis has been held up by German domestic considerations Remember how the first Greek rescue package was agreed on May 10 2010 and not earlier when everybody knew it was coming That was because Germany s most populous federal state North Rhine Westphalia first had to go to the polls before a bailout could be agreed Will German voters cut the cord May 6 2010 Chancellor Merkel was too scared to tell voters the truth before the election making Europe wait for a decision Not that it helped Merkel s party in the end they lost the state regardless What we are currently observing follows the same pattern Around the eurozone there are issues that urgently need to be solved The Portuguese government has just avoided collapse as consensus on austerity measures is faltering Greece will need a second haircut Italy s debt dynamics are deteriorating Cyprus needs more help after its initial bailout package And these are only the most pressing problems Yet just as there is a cartel in German politics not to talk too loudly about Europe there seems to be an equal reluctance in Europe to tackle any of these issues before the German elections Every European politician knows that he will still have to deal with Angela Merkel after the election and as German chancellor she will remain the most crucial player in European politics Because any discussion on Europe might disturb her sleepwalking election campaign potential issues are closely kept under the lid for now Nobody dares to interfere with Merkel s campaign for re election not even other European leaders Bizarrely these combined domestic and international circumstances mean that within Germany the euro crisis is not allowed to become an issue And outside Germany nobody feels powerful enough to challenge Merkel This ceasefire will last until September 22 when Germany finally goes to the polls Back in January I predicted that this is how the year would play out Drab and dull Merkel will spark German mania January 17 At the time I wrote It will be the most boring election campaign with the most predictable outcome you can imagine If only I could forecast the lotto numbers with the same precision So the German elections won t change the government but they will change the dynamics of the euro crisis Until election day nothing in the euro crisis will happen In fact it will look as if the euro crisis has gone to sleep But postponed problems will still have to be solved eventually one way or another And this is why after September 22 we will learn about the next Greek haircut the next Cypriot bailout package and the future of the eurozone in general To those poor German voters going to the polls elections may have never looked more pointless Whoever they vote for won t make a difference But it s good they are finally going to the polls if only so that Europe can end its euro crisis summer holiday Dr Oliver Marc Hartwich is the executive director of The New Zealand Initiative www nzinitiative org nz Print this page More from Oliver Marc Hartwich 09 Jan Athens 2014 is not Sarajevo 1914 21 Nov Silent assassins chase German savers 14 Nov Rates of wrath Why the EU needs real reform 07 Nov Don t put Germany on the economic axis of evil 31 Oct I spy the demise of the Old West alliance Related articles 12 Jan Obama picks Fed vice chair 11 Jan US jobs growth slows sharply 10 Jan The ECB is failing to do whatever it takes 10 Jan Inflation lifts across OECD 10 Jan NAB UK exit expected soon More from Business Spectator Technology Adapt or die Commercial The Future of Energy Family Business Alan Kohler s Family Business China China Spectator Please log in or

    Original URL path: http://www.businessspectator.com.au/article/2013/7/18/global-news/euro-crisis-german-ice (2014-01-12)
    Open archived version from archive

  • Oliver Marc Hartwich | Business Spectator
    European comedy New regulations on olive oil show what a farce the noble European Union integration project has become by Oliver Marc Hartwich 7 14am May 23 12 comments Europe s slasher stalks Slovenia Its banks are full of bad loans its financial system is a mess And Europe s leaders are out in force to declare support for Slovenia a surefire sign it will within weeks be the next bailout victim by Oliver Marc Hartwich 6 42am May 16 8 comments Too easy to swallow the euro s red herring Assumptions Europe s crisis is mainly monetary are a mistake In fact the single currency has only brought to light the catastrophes of countries respective economies by Oliver Marc Hartwich 6 44am May 09 17 comments Is Germany edging towards the exit Between leaked Bundesbank documents challenging the ECB and similar comments from a German finance chief it looks like Berlin is seriously considering its position on a euro break up by Oliver Marc Hartwich 7 02am May 02 16 comments Fire and ice on Europe s debt march Europe s average debt to GDP ratio is shrinking but the closer details are devilish And hardly anyone s playing by agreed EU Stability and Growth Pact rules anymore by Oliver Marc Hartwich 7 15am April 25 8 comments What have the corporates ever done for Europe Europeans don t appreciate their own companies Seen simply as job dispensaries and tax machines the region won t know their worth until they re gone by Oliver Marc Hartwich 6 43am April 18 13 comments Double or nothing the euro solution Europe s badly designed monetary union is being defended at all costs With the EU now meddling in Portugal s separation of judicial powers maybe it s time the real alternative was broached by Oliver Marc Hartwich 7 10am April 11 15 comments Defanged by division why the anti euros can t win Down south they hate the euro for one reason in the north it s for another Within countries there are even more divisions and because of this the euro lingers by Oliver Marc Hartwich 7 13am April 04 4 comments Confusion and suspicion after Europe s new crisis The wild rise to a Cyprus solution has left European bank depositors fearful cross country resentment boiling and faith in policymaker competence completely destroyed by Oliver Marc Hartwich 6 44am March 28 17 comments The EU game has no real rules The decision to cut into Cyrpiots bank deposits is the latest broken rule in a long list since the euro was created Europe as such has become a sovereign risk by Oliver Marc Hartwich 7 27am March 19 10 comments Caught in Europe s competition dark ages The Microsoft competition case in Europe has delivered nothing to consumers a little to the EU budget and a lot to lawyers It s another failure for absurd antitrust laws by Oliver Marc Hartwich 7 23am March 14 4 comments Europe s predictable crisis revival Recent data reveals claims that Europe s monetary crisis was ebbing are false And the window of opportunity for Europe s dawdling leaders to effect real change is closing by Oliver Marc Hartwich 6 53am March 07 3 comments Brutal data on a Western debt march Morgan Stanley calculations have the debt levels of some major Western governments at 800 to 1000 per cent of GDP Central banks can only support this trajectory for so long by Oliver Marc Hartwich 8 13am February 13 14 comments Germany s ironic mini bubble Germans are all aflutter about some abrupt increases in their usually benign house prices The ironic thing is that while there are some domestic drivers the main factor is the debt crisis response by Oliver Marc Hartwich 6 42am February 07 1 comment Page 2 Young and restless Europe s lost generation Eurozone nations have pledged to spend 6 billion to fight youth unemployment totaling at least 5 6 million The continent s youth are right to want to leave by Oliver Marc Hartwich 6 43am July 04 13 comments Tools to lock away global trade As the US and EU get serious about TTIP it s clear their plans could hinder a truly global free trade order Australia would be one of the biggest losers by Oliver Marc Hartwich 8 14am June 28 3 comments Germany s grip over whatever it takes Mario Draghi s capacity to protect the euro will hinge on a ruling by Germany s constitutional court in October Early signs suggest the court is willing to make tough decisions to protect German finances by Oliver Marc Hartwich 6 25am June 20 11 comments Why the global monetary makeover is wearing off There s only so long monetary policy can pretend to solve painfully real problems of public debt demographics and inflexible economies in Europe and Japan by Oliver Marc Hartwich 6 43am June 13 28 comments Brussels can t reverse the outburst The EU s policy recommendations for each country reads like a compendium of what s wrong with Europe Add a monumental outburst of truth from one regulator and you ve got a clear list of problems with no solutions by Oliver Marc Hartwich 6 52am June 06 8 comments The currency union that d drag Australia south Like an All Black prop the push for a trans Tasman monetary union refuses to yield But too many elements for an ANZAC dollar are missing by Oliver Marc Hartwich 6 59am May 30 5 comments No olive branch for a European comedy New regulations on olive oil show what a farce the noble European Union integration project has become by Oliver Marc Hartwich 7 14am May 23 12 comments Europe s slasher stalks Slovenia Its banks are full of bad loans its financial system is a mess And Europe s leaders are out in force to declare support for Slovenia a surefire sign it will within weeks be the next bailout

    Original URL path: http://www.businessspectator.com.au/contributor/oliver-marc-hartwich?page=1 (2014-01-12)
    Open archived version from archive

  • Counting on a Chinese olive branch | Business Spectator
    an ADIZ in the East China Sea and the Chinese side will not accept it Qin urged Australia to correct its mistake immediately to prevent damaging Sino Australia relations Bishop and other senior ministers such as Treasurer Joe Hockey subsequently stood by the original comments and offered no such correction This is hardly a promising start to an important bilateral economic relationship So how could it possibly be of benefit to a speedy FTA process It comes down to the reasons why Beijing ratifies FTAs in the first place It is widely recognised that Beijing readily uses trade in general and FTAs in particular to achieve political and diplomatic goals in addition to economic gains While the most obvious example is Chinese economic policy towards Taiwan which is designed to win the hearts and minds of the latter s citizens the political motivations behind Chinese trade policy in the region are also clear Indeed Chinese proposals for FTAs and other trade agreements coincided with its era of smile diplomacy and win win rhetoric from the late 1990s onwards This followed a period in the early to mid 1990s when aggressive Chinese diplomacy in the Taiwan Straits and South China Sea caused many countries in the region to band together in expressing alarm about China s rise something which is happening again currently It is worth noting that China s offer of an FTA with the Association of Southeast Asian Nations countries must also be understood within the context of Chinese and Japanese competition for political leadership in East Asia in that period alongside the desire to assure neighbours that China s ascension to the World Trade Organisation would not cause them economic hardship Critical to the success of Chinese diplomacy was the argument that its rise would be peaceful and create opportunities for nervous neighbours In particular Beijing has long promoted the China ASEAN FTA or CAFTA as evidence of China s peaceful and cooperative commitment to prosperity and mutual gain in the region Evidence that CAFTA was heavily informed by political and strategic considerations on the Chinese side is reinforced by the fact that China voluntarily gave concessions to ASEAN on agricultural trade through the Early Harvest Program Complaints by local officials and farmers in southern China who stood to lose out from the EHP provision were explicitly overruled and dismissed by central ministries on the basis that the EHP would bring wide non economic benefits for the whole country In more recent times China is using the ASEAN Economic Community which aims to create a single market and production based amongst ASEAN 3 countries in the region the ten ASEAN member states plus China South Korea and Japan as a counter to the American led Trans Pacific Partnership As the TTP has gained momentum China s advocacy for the AEC has strengthened Back to contemporary Australia China relations On issues such as disputed claims in the East and South China Seas Beijing has pursued a familiar pattern of

    Original URL path: http://www.businessspectator.com.au/article/2013/12/4/asia/counting-chinese-olive-branch (2014-01-12)
    Open archived version from archive

  • China's salami-slicing is dicey diplomacy | Business Spectator
    Singapore s Institute of Southeast Asian Studies refer to as a talk and take approach On the one hand China seeks to reassure regional states that it is committed to a peaceful resolution of the dispute But it will insist that such discussion should only take place between itself and the other claimant at a bilateral level When it comes to the South China Sea it is refusing to discuss issues with other claimants in Vietnam the Philippines Indonesia Malaysia and Brunei as a collective China is even more emphatic that outside powers do not become involved in the negotiations even as a broker It is particularly eager to exclude the US from involvement for the reason that Beijing s powers of negotiation and even intimidation would be severely reduced if Washington is involved While China is prepared to engage in bilateral discussion of these claims it is prepared to defer the issue of sovereignty who actually owns what for a future time It figures its delaying tactics are a good strategy because time is on its side China will only grow stronger while the US will eventually accept a lesser role in the region Remember that without a fully engaged America in the Asia Pacific there is less prospect of an effective balance or hedge against Chinese power This is where the talk and take approach comes into play Beijing s strategy is to change the territorial and maritime status quo through a series of small but progressive actions designed to exercise creeping sovereignty over the disputed territories The ADIZ is a perfect example In the South China Sea measures have included announcing that China owned Hainan Island is the formal administrative capital for the disputed islands in the body of water Chinese flags have been planted on the ocean floor of disputed waters a symbolic statement of sovereignty Disputed islands are included in the tourist maps of Chinese tours There has been a massive increase in the number of Chinese military and civilian ships entering disputed areas in both the East and South China Seas in order to normalise Chinese control over these areas Central authorities administer hydro carbon mining rights and fishing licences to Chinese and foreign entities in disputed zones None of these individual moves have been dramatic enough to provoke a violent response from claimants or the US or to even amount to a crisis But collectively they add up to an assertive and even aggressive approach that is designed to ensure that Chinese control eventually becomes a fait accompli The region is well aware of this talk and take strategy but is uncertain about what countries should do about it either individually or collectively Meanwhile Beijing will alternate between conciliation and assertiveness in its diplomacy even as it continues to solidify its control over these regions These are conditions for miscalculation especially given that Beijing has next to no hotlines with other claimants such as Japan Indeed at American insistence Washington has far better

    Original URL path: http://www.businessspectator.com.au/article/2013/11/27/china/chinas-salami-slicing-dicey-diplomacy (2014-01-12)
    Open archived version from archive

  • A long march for China's national champions | Business Spectator
    in highly protected environments and are often given preferential credit rates and other tax benefits Of the over 2 000 listed firms on the country s two stock exchanges all but around 50 are effectively state controlled with the government holding majority or major stakes in those companies One problem with reducing the dominance and size of SOEs for China is that of desperation to remain competitive with international rivals Since the 1970s there has been an unprecedented degree of industrial concentration among leading firms in almost all sectors From 2006 2009 figures in large commercial aircraft two firms have an almost 100 per cent market share In automobiles 10 firms have 77 per cent global market share In heavy duty trucks four firms have 89 per cent global market share In PCs four firms have 55 per cent global market share with three firms having 75 per cent global market share in smart phones In pharmaceuticals 10 firms have 69 per cent global market share with four firms having 44 per cent market share in construction equipment The story is the same within global value chains For large commercial aircraft engines three firms have an almost 100 per cent global share Just two firms have a 75 per cent global share in braking systems Three firms have a 100 per cent share in tyres for commercial aircraft When it comes to IT two firms have a 100 per cent share in micro processors for PCs One firm has a global 90 per cent share for operating systems while two firms have a 63 per cent global share in the server markets Importantly almost all of these firms are head quartered in advanced economies in North America Europe and industrialised Asian economies such as Japan and South Korea When one looks at outward FDI in the world developed countries are behind about 84 per cent of all outward foreign direct investment in the world indicating that these same advanced firms are the ones relentlessly entrenching their dominance in existing and emerging sectors and technologies If there were ever fears that China is buying up the world economy these figures should dispel that notion What does this have to do with Chinese SOEs In 1998 then Vice Premier Wu Bangguo summarised the government s thinking in this way International economic comparisons show that if a country has several large companies or groups it will be assured of maintaining a certain market share and a position in the international order America for example relies on General Motors Boeing Du Pont and a batch of other multinational companies Japan relies on six large enterprise groups and South Korea relies on ten large commercial groups In the same way now and in the next century our nation s position in the international economic order will be to a large extent determined by the position of our nation s largest enterprises and groups The fact that China has ensured that its national champions are all SOEs with rare exceptions such as Huawei and even then credible doubts about its independence from the state remain is a function of regime politics and priorities designed to ensure that the CCP remains the dominant dispenser of business career economic and professional opportunities in the system But the desire to develop huge national champions is derived from immense vulnerability and desperation to catch up with advanced economic competitors It is the same reason why Beijing refuses to genuinely open up key sectors of its economy to outside competitors fearful that more efficient and technologically advanced foreign firms will similarly dominate key sectors like they have done in other developing economies The CCP s hope is that its SOEs can defy the laws of firm level economics that coddled protected SOEs can nevertheless emerge as world class players able to compete with the best private sector multi nationals in the own right So far only moderate progress has been made on this account and the increase in industrial espionage by the Chinese government and these firms could well be explained by lack of progress of its SOEs The bottom line is that Beijing is determined that its firms join the likes of Boeing General Motors Airbus and Exxon Mobile And doing what it takes to nurture protect and grow its SOEs is the only way it knows how Dr John Lee is the Michael Hintze Fellow and adjunct associate professor at the Centre for International Security Studies Sydney University He is also a non resident senior scholar at the Hudson Institute in Washington DC and a director of the Kokoda Foundation in Canberra Print this page More from John Lee 02 Jan The political rot in Mao s sugar coated legacy 18 Dec China s self serving moon shot 04 Dec Counting on a Chinese olive branch 27 Nov China s salami slicing is dicey diplomacy 30 Oct Ambitious China goes land roving Related articles 10 Jan Korea China jostle for Aust resources 10 Jan China trade balance contracts 10 Jan Volvo Cars sales up in 2013 10 Jan China s Fosun buys Portuguese insurer in privatisation 10 Jan Australia is not the key to China s resource prison More from Business Spectator Technology Adapt or die Commercial The Future of Energy Family Business Alan Kohler s Family Business China China Spectator Please log in or register to post comments Comments on this article Comments Policy Bruce Moon Wed 2013 11 13 08 24 John Given the current hoopla in the Oz media about the 3rd Plenum I appreciated the depth and breadth of your article I was also taken with one paragraph In 1998 then Vice Premier Wu Bangguo summarised the government s thinking in this way International economic comparisons show that if a country has several large companies or groups it will be assured of maintaining a certain market share and a position in the international order America for example relies on General Motors Boeing Du Pont and

    Original URL path: http://www.businessspectator.com.au/article/2013/11/13/china/long-march-chinas-national-champions (2014-01-12)
    Open archived version from archive