BEIJING // "Can China save the world? If so, how?" Chris Patten, Britain's last governor of Hong Kong, was pushed to answer this question last week in a meeting with a group of foreign journalists in Beijing.
In the US-originated global financial crisis, the world's eyes are fixed on China, the "factory of the world". There are those, including Kevin Rudd, the Australian prime minister, who call for China to play an active role to counter the global financial meltdown.
Susan Shirk, a former US government analyst on China, was quoted as saying this week: "The global economy is now so interdependent, interwoven and we will require China's co-operation to try to put it right again."
After all, in a short period of time, the Middle Kingdom has accumulated huge global wealth, with a US$1.9 trillion (Dh7 trillion) foreign reserve. That figure is comparable to twice the GDP of South Korea, the world's 13th largest economy. It is an unprecedented achievement that even Japan and the former West Germany could not match during their impressive trade surplus performance in the 1970s and 1980s.
"Who would have thought 10 years ago that America would be in a position where it needs China's growth to pull America and the rest of the world out of American-made financial crisis?" said James McGregor, the former Beijing bureau chief for the Wall Street Journal, who now runs JL McGregor & Co, a consulting firm.
China's transformation from the "workshop of the world" now possibly to the "saviour of the world economy" is an open question. Actually, China itself is not unscathed by the global financial tsunami.
"The impact is gradually unfolding," said Yu Yongding, a monetary policy analyst, who formerly advised China's central bank. "At this stage, the most important impact is on the export side, which is slowing down," he said at his office at the Chinese Academy of Social Sciences, where he is director of the Institute of World Economy and Politics, which is China's top policy think tank.
"We are learning. We were not well prepared for this global shock. Until recently, we thought the US financial crisis was bottoming out, passing the worst stage. Actually, it is not. Now we're very vigilant."
This week, Ben Simpfendorfer, a Hong Kong-based China economist with the Royal Bank of Scotland, spoke about China's increasing capital outflows, which, he said, in the worst case scenario, can lower China's GDP growth "markedly to near five per cent", from the usual 10 per cent. China's third quarter GDP growth was nine per cent.
Mr Yu dismissed such a view, noting China has not yet liberalised its capital account and the country has the legal means to control cross-border capital flows. In fact, on Monday, China's forex regulator announced that companies must now register advanced payments of imports and delayed payments of exports, a measure seen to restrict capital flow out of the country.
Overall, China remains confident in its dealings with the impact of the global financial crisis. Mr Yu is putting his hope on China's huge $1.9 trillion accumulation of foreign reserve. That, he said, combined with the capital control on the border will be able to absorb any external shock. "There will be no problem, whatsoever. Just spending less than $1 trillion would be enough," said the Oxford-educated Mr Yu.
Mr McGregor agreed. Dissecting all complexity, he posed a much simplified view of making his point. Namely, given China's accumulation of gigantic global wealth and its sound fiscal situation, China remains the best safe refuge in the continually unfolding global financial crisis.
"After all, where would you want to be right now? America or China?" he said.
For China, the America-initiated global crisis is also a time to reconsider the West-led global financial order. "During the 1997 Asian financial crisis, the crisis occurred in East Asia. The students [Asian countries] failed to learn from their teacher [America]. The Asian countries therefore suffered. But this time, the teacher is in trouble," Mr Yu said.
Referring to the US government's $700 billion market intervention that goes against the textbook market-economy principle, Mr Yu said the students are discovering that whatever the teacher taught them is not actually followed by the teacher.
"The teacher used to tell East Asian countries during the 1997 crisis that they should increase their interest rates, they should allow banks to go bankrupt, and they should tighten their fiscal policy. Now the teacher is doing just the opposite."
In a turn of events, the United States is the one that caused the current mess. "So, we have the right to demand the US to protect the interests of East Asian countries, which are the biggest lenders to the US. This time, the US should be modest," Mr Yu said.
Mr McGregor said China is in a prime position where it can show to the world that its growth can also pump up the world. "This is an economy that has a growing consumer movement. Chinese people save 40 per cent of what they earn because they are worried about uncertainties in their lives.
"The Chinese economy can grow more when its consumers spend more money. And the way that it does is by improving its social safety net. Once there is the government assurance for that, people will begin to spend, creating a big enough market that can drive growth around the world," he said.
Economists agree China can make up for its loss in export by increasing its domestic demand. For example, just as the American government in the 1930s, the Chinese economy can hedge out the global crisis and continue to grow by spending money on building more roads, airports, environmental protection facilities and power plants. "So, growth in China can pull the world out of this situation. This isn't an unbelievable situation," McGregor said.
The warning bell in all this is to make sure China does not affect a protectionist posture. Seeing the "troubles in capitalism", if the Chinese leadership decides to retreat to its old style of state-run economy it could be a real problem for the world, observers point out.
That is essentially the same message Mr Patten had in his response to the question "Can China save the world?"
"China will help save the world economy, provided the world doesn't go protectionist," he said, adding that if China and other Asian countries can retain a reasonable urban economic growth, it will offset the economic slump in the United States and Europe.
* The National
THE LIGHT
Director: Tom Tykwer
Starring: Tala Al Deen, Nicolette Krebitz, Lars Eidinger
Rating: 3/5
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Citadel: Honey Bunny first episode
Directors: Raj & DK
Stars: Varun Dhawan, Samantha Ruth Prabhu, Kashvi Majmundar, Kay Kay Menon
Rating: 4/5
Company%C2%A0profile
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The flights: South African Airways flies from Dubai International Airport with a stop in Johannesburg, with prices starting from around Dh4,000 return. Emirates can get you there with a stop in Lusaka from around Dh4,600 return.
The details: Visas are available for 247 Zambian kwacha or US$20 (Dh73) per person on arrival at Livingstone Airport. Single entry into Victoria Falls for international visitors costs 371 kwacha or $30 (Dh110). Microlight flights are available through Batoka Sky, with 15-minute flights costing 2,265 kwacha (Dh680).
Accommodation: The Royal Livingstone Victoria Falls Hotel by Anantara is an ideal place to stay, within walking distance of the falls and right on the Zambezi River. Rooms here start from 6,635 kwacha (Dh2,398) per night, including breakfast, taxes and Wi-Fi. Water arrivals cost from 587 kwacha (Dh212) per person.
The rules on fostering in the UAE
A foster couple or family must:
- be Muslim, Emirati and be residing in the UAE
- not be younger than 25 years old
- not have been convicted of offences or crimes involving moral turpitude
- be free of infectious diseases or psychological and mental disorders
- have the ability to support its members and the foster child financially
- undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
Getting there
The flights
Emirates and Etihad fly to Johannesburg or Cape Town daily. Flights cost from about Dh3,325, with a flying time of 8hours and 15 minutes. From there, fly South African Airlines or Air Namibia to Namibia’s Windhoek Hosea Kutako International Airport, for about Dh850. Flying time is 2 hours.
The stay
Wilderness Little Kulala offers stays from £460 (Dh2,135) per person, per night. It is one of seven Wilderness Safari lodges in Namibia; www.wilderness-safaris.com.
Skeleton Coast Safaris’ four-day adventure involves joining a very small group in a private plane, flying to some of the remotest areas in the world, with each night spent at a different camp. It costs from US$8,335.30 (Dh30,611); www.skeletoncoastsafaris.com
UAE jiu-jitsu squad
Men: Hamad Nawad and Khalid Al Balushi (56kg), Omar Al Fadhli and Saeed Al Mazroui (62kg), Taleb Al Kirbi and Humaid Al Kaabi (69kg), Mohammed Al Qubaisi and Saud Al Hammadi (70kg), Khalfan Belhol and Mohammad Haitham Radhi (85kg), Faisal Al Ketbi and Zayed Al Kaabi (94kg)
Women: Wadima Al Yafei and Mahra Al Hanaei (49kg), Bashayer Al Matrooshi and Hessa Al Shamsi (62kg)
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
'Nope'
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MATCH INFO
Uefa Champioons League semi-final, first leg:
Liverpool 5
Salah (35', 45 1'), Mane (56'), Firmino (61', 68')
Roma 2
Dzeko (81'), Perotti (85' pen)
Second leg: May 2, Stadio Olimpico, Rome
Fund-raising tips for start-ups
Develop an innovative business concept
Have the ability to differentiate yourself from competitors
Put in place a business continuity plan after Covid-19
Prepare for the worst-case scenario (further lockdowns, long wait for a vaccine, etc.)
Have enough cash to stay afloat for the next 12 to 18 months
Be creative and innovative to reduce expenses
Be prepared to use Covid-19 as an opportunity for your business
* Tips from Jassim Al Marzooqi and Walid Hanna
How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Indoor cricket World Cup:
Insportz, Dubai, September 16-23
UAE fixtures:
Men
Saturday, September 16 – 1.45pm, v New Zealand
Sunday, September 17 – 10.30am, v Australia; 3.45pm, v South Africa
Monday, September 18 – 2pm, v England; 7.15pm, v India
Tuesday, September 19 – 12.15pm, v Singapore; 5.30pm, v Sri Lanka
Thursday, September 21 – 2pm v Malaysia
Friday, September 22 – 3.30pm, semi-final
Saturday, September 23 – 3pm, grand final
Women
Saturday, September 16 – 5.15pm, v Australia
Sunday, September 17 – 2pm, v South Africa; 7.15pm, v New Zealand
Monday, September 18 – 5.30pm, v England
Tuesday, September 19 – 10.30am, v New Zealand; 3.45pm, v South Africa
Thursday, September 21 – 12.15pm, v Australia
Friday, September 22 – 1.30pm, semi-final
Saturday, September 23 – 1pm, grand final
The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
Torque: 623Nm
Transmission: 10-speed automatic
Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
On sale: Now
The specs
Engine: four-litre V6 and 3.5-litre V6 twin-turbo
Transmission: six-speed and 10-speed
Power: 271 and 409 horsepower
Torque: 385 and 650Nm
Price: from Dh229,900 to Dh355,000
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
THE SPECS – Honda CR-V Touring AWD
Engine: 2.4-litre 4-cylinder
Power: 184hp at 6,400rpm
Torque: 244Nm at 3,900rpm
Transmission: Continuously Variable Transmission (CVT)
0-100kmh in 9.4 seconds
Top speed: 202kmh
Fuel consumption: 6.8L/100km
Price: From Dh122,900
Major honours
ARSENAL
BARCELONA
- La Liga - 2013
- Copa del Rey - 2012
- Fifa Club World Cup - 2011
CHELSEA
- Premier League - 2015, 2017
- FA Cup - 2018
- League Cup - 2015
SPAIN
- World Cup - 2010
- European Championship - 2008, 2012
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.