World Islamic Economic Forum (WIEF) Foundation, organised a one-hour webinar, WIEF STRAIGHT UP on US and China: Navigating Market Uncertainties. The event was held on 22 April 2021 at 10:00am (+8 GMT).
The ongoing trade tension that began mid 2018 between America and China have hurt the global economy and thus, increased uncertainty worldwide. A turning point was when the Phase One trade deal was signed in early 2020. Followed by the US-China Alaska talk in early 2021 which ended with both sides agreeing to maintain open channels for continued dialogue while moving towards Phase Two negotiation to improve trade certainty.
Undoubtedly, a sound international trade ecosystem is heavily influenced by the world’s two super powers and how the two countries plan to continue their relations.
Dr Shirley Yu, the director of Shirley Yu & Co in China, as well as an expert on the country, explained about China’s long term vision between 2020 and 2035. In 2020, China has surpassed the EU’s 27 economies combined, with an 18 per cent growth year-on-year in the Q1 of 2021. It has planned for its economy to double in the 15 years. By the end of 2020, China’s nominal GDP hit around 80 per cent of America’s nominal GDP, making it the first rising economy that has come this close to America’s economic might, since the second world war.
China announced the Made in China (MIC) 2025 strategy in 2018, aimed at driving the Chinese manufacturing towards the very top end of the global supply chain by focusing on prominent economic driven sectors.
The country is currently producing over 50 per cent of the global smartphone market shares, a huge contrast from its condition just a few years ago. This dominance is a result of a deliberate policy to drive towards a high end in smart manufacturing, automatically making them the price determiner for global smartphones market.
Another sector that has achieved a phenomenal result is the New Electric Vehicle (NEV) sector. The development of NEV in China were not done by traditional vehicle manufacturing companies, instead, giant tech companies, like Alibaba and Tencent. They come into the market and eventually became an implausible competitor to Tesla.
Ali Baba and Tencent have recently moved their headquarters to Singapore, opening job opportunities to the locals. Being in Singapore, an Asian headquarter, China’s technological expansion will radiate across ASEAN region.
China plans to invest USD5 trillion on infrastructure post-pandemic in the next five years. Their government is addressing the post pandemic recovery differently from America. Shirley explained that China uses the stimulus to invest in digital infrastructure instead of sending a fiscal stimulus check to every citizen in the country, as done by the US. She added, ‘perhaps, America should put more focus on digital infrastructure expansion.’
‘Every indicator, points toward China being a dominant economic player of the 21st century. In short, China will become very important. Shocks like the pandemic, reinforce long term structural trends and at the same time, create major changes in the trajectory of those trends.’ Richard Javad Heydarian, a professorial chairholder in geopolitics at Polytechnic University in the Philippines explained. ‘China strides in cutting edge technology and not only in terms of low-end manufacturing. This has created a lot of anxiety in the west.’ He added.
US-China economic integration is more than in the trade space. Supply chains are moving out of China and in 2020, it became the largest foreign direct investment (FDI) destination in the world, surpassing America. 2021 sees its FDI continues to rise. In terms of the growth rate of FDI into China, the Belt and Road region has become the highest growth of foreign investors in China in 2021.
While China is becoming more economically dominant, it is geopolitically isolated than in the past. China’s growing economic dominance can also bring about growing tensions and potential conflict with the west. ‘Some data shows that China alone is responsible for more than 30 per cent of the new global GDP contribution and in fact that has been the case since 2008.’ Richard said.
The next frontier, it seems, will be in the AI as well as blockchain technologies, digital economy and even in carbon trading. Again, China is leading in innovation and has a long game plan. This is very apparent. China will continue to be an important player, and a threat to America.
The session speakers were Richard Heydarian, Asia-based academic and policy adviser from Philippines and Dr. Shirley Z. Yu, Director of Shirley Yu & Co China, as well as an expert on the country.
About World Islamic Economic Forum (WIEF) Foundation
World Islamic Economic Forum (WIEF) Foundation was established in 2006. It is the organising body of the annual World Islamic Economic Forum. The Forum serves as a focal point where country leaders, captains of industry, emerging entrepreneurs, academics and other stakeholders from the Muslim World and beyond, meet to build bridges through business. The Foundation also undertakes various capacity building programmes under the WIEF initiatives of the Businesswomen Network (WBN), Young Leaders Network (WYN), Education Trust (WET) and Roundtable Series (WRT).
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ROLE-PLAYERS
- Shirley Z. Yu, Director, Shirley Yu & Co, China
She is a senior visiting fellow with the Institute of Global Affairs and Firoz Lalji Centre for Africa at LSE, an Asia fellow with Ash Centre of Harvard Kennedy School and a professor with IE Business School. She is the creator of a daily intelligence newsletter on China – ‘China BIG Idea’ and New York-based business talk show Hey China!
She is a frequent commentator and contributor on BBC News, Bloomberg, CNN and Channel News Asia on China. She is an Op-Ed contributor to the Financial Times, South China Morning Post expert and also a keynote speaker at leading think tanks including the Chatham House, Asia Society and the LSE.
A Davos expert on China, 5G as well as geo-economics, Dr Shirley is author of Huawei Goes Global: Made in China for the World, On China, by Ambassadors and The Rise of the RMB and the Fall of the Yen. She has a PhD in political economy from China’s Peking University and a master’s degree in government from Harvard University. - Richard Heydarian
He is an Asia-based academic and policy adviser. He is currently a professorial chairholder in geopolitics at the Polytechnic University of the Philippines. He was a visiting fellow at Taiwan’s National Chengchi University and an Assistant Professor in Political Science at De La Salle University, Philippines. He has delivered lectures at the world’s leading universities, including Harvard, Stanford, and Columbia universities, and is the author of, among other books, The Rise of Duterte: A Populist Revolt against Elite Democracy (Palgrave Macmillan, 2017) and The Indo-Pacific: Trump, China, and the New Struggle for Global Mastery (Palgrave Macmillan, 2019).
As a columnist, Richard has written for the world’s leading publications, including The New York Times, Washington Post, The Guardian, Foreign Affairs, and is a regular contributor to Aljazeera English, Nikkei Asian Review, South China Morning Post, and the Straits Times. - Dr Juita Mohamad, Fellow, ISIS Malaysia (moderator)
She is a Fellow in the Economics, Trade and Regional Integration (ETRI) Division of ISIS Malaysia. She has worked at the Asia Desk, OECD in Paris, the Asian Development Bank Institute and Waseda University in Tokyo, Japan. She holds a PhD in international studies from Waseda University, Japan. Her research focused on the impact of trade liberalisation on wage inequality between skilled and unskilled workers in Malaysia. She obtained her master’s degree in economics from Shiga University, Japan and her bachelor’s degree in business administration from UKM. Her research interests include trade, digital trade regional integration, protectionism, wage inequality, the informal