AS year-end approaches, it’s time to look at our crystal ball on “predictions” on what lies ahead in the years to come, which are apparently bright and promising, yet plagued with bumps, threats and hazards, making prospects also bleak.
As there will be aplenty of yearend reports on the Philippines, let me focus instead on externalities, trends and developments in Asia and the world over. After all, we are increasingly linked with the world in an ever-decreasing little global village, making us vulnerable to all these developments, thus, the importance of not becoming parochial.
Global growth softening. Growth in developed countries or even China, which enjoyed double-digit growth for two decades, are now facing historic slower growth and productivity, despite interest rates down to almost zero, when these are supposed to perk up investments.
Asian Development Bank (ADB) President Takehiko Nakao noted that America and European countries are just inching with growth rates of only 1.0 percent to 1.5 percent with Japan at 0.6 percent.
Subsequently, slumping economies of the Western world, more so since the 2008 global financial crisis, have affected global trade and exports of many developing countries, including the Philippines.
“Flying geese” model now passe. For many decades, many believed in Japanese scholar Kaname Akamatsu’s 1930s “Flying Geese” model of growth, whereby to succeed one just “followed the leader.”
When England started the industrial revolution, Germany and the United States followed the industrialization path. Europe and socialist countries, led by the Soviet Union, also industrialized, followed by Japan, and later the newly industrializing countries of South Korea, Taiwan, Hongkong and Singapore. By 2000s South Africa, Mexico, Brazil, China, India, Malaysia, Thailand and Turkey became the emerging economies, with Indonesia and the Philippines tagging far behind.
But American economist Prof. Jeffrey Sachs claims in an ADB forum that “the leader can no longer lead,” making allusions to America, which is no longer a good model to follow with its high growth rates decades back now stagnating dismally at about 1 percent.
For Sachs, America now sucks as it is no longer a good model for “ecological reasons.” Having a car for every American and big houses for every family is no longer right as they result in traffic, wasteful energy, high carbon footprint, massive mining, poor urban-space management and resulting unhealthy diets and lifestyles that produce obesity, cancer and cardiovascular problems.
Thus, if we still blindly follow America, we may end up like lemmings massively racing to the edge of a cliff only to plunge in mass suicides.
Sleeping giant now stands tall. Meanwhile, as America’s appeal declines, it is worth watching China’s phenomenal transformation. In 2000 Japan was larger than the combined economies of China, South Korea, India, Southeast Asia, Australia and New Zealand. By 2015 China is now as large as all these economies combined, Takashi Shiraishi of Japan External Trade Organization’s institute for Developing Economies says. A power shift has, indeed, taken place.
Although the slumping global markets affected China’s exports and growth rates now down to about 6 percent, from double digits for two decades with economic zones like Guangdong and Xiamen even growing by 25 percent, Xi Jin Ping’s paradigm shift for a “win-win development” strategy under his “Belt and Road” initiative is seen not only to bail out China, but provide development for all.
Internally, China suffers from excess productive capacity like cement and steel. But, instead of exporting more finished goods like trucks and buses, it is building bus assembly plants all over like Nigeria, Africa and elsewhere, which enable developing countries to also industrialize.
Ride on China’s explosion. China is exploding in projects with over 130 bilateral and regional transport agreements; 356 international road routes; over 4,200 direct flights connecting China with 43 countries; and 39 China-Europe freight train routes as of last summer alone.
It is building six industrial development corridors radiating from China, namely: 1) China to Central-Western Asia, which is extending through Iraq, Syria, Turkey, into Europe and Africa; 2) China to Western Europe to Hamburg, Rotterdam and Madrid; 3) Mongolia-China-Russia corridor involving 32 large projects; 4) China-Pakistan Economic Corridor, with China investing $46 billion and creating 700,000 new jobs in Pakistan alone; 5) Bangladesh-China-India-Myanmar corridor; 6) China-Indochina Peninsular corridor.
Moreover, it is building railways and water systems in eastern and central Africa, reversing centuries of colonialism, poverty and ignorance. At the Beijing summit, 20 more agreements with 20 countries were signed.
Also significant is the Kra Canal south of Thailand, connecting the Gulf of Thailand to the Indian Ocean, shortening travel by 1,200 kilometers, but affecting ships passing Singapore. It will create 3 million jobs.
Another project is the 173-mile Grand Nicaragua Canal, involving $40 billion mostly in China investments. It’s wider, deeper and 3.5 times Panama Canal’s length. It is also tying up with Russia linking Siberia and Alaska at the Bering Straits, followed by projects all the way down to Canada, America’s National Water Alliance Project and South America.
“Trump card” needed. Apparently, China cannot do all of this alone without the United States’s involvement and the signs are encouraging with US President Donald J. Trump’s warm ties with China.
This win-win development thrust and cooperation with China and Russia do not augur well for the neoconservative hawks representing the industrial-military complex, which wants perpetual Cold War geopolitics, with China and Russia and fueling little wars and revolutions all over.
With America holding a “Trump card,” who is a hothead and accused for his Islamophobic, racial and misogynist remarks and threats on North Korea, the world is still teetering on bleak uncertainty, but because of Trump’s nature as a businessman, known for his book Art of the Deal, prospects are bright as he will make friends and do business with traditional enemies, regardless of adverse propaganda like Russia-gate and unfounded Russian mingling in elections, believed machinations of hawkish conservatives out to destroy his friendly overtures with China and Russia.
For the Philippines, let’s just play our cards well by focusing more on economics than politics.