Summary:
> EU has approved the Comprehensive Investment Agreement
> Foreign direct investments in China grew to a record $163 billion in 2020 despite the pandemic
> Germany, Brazil, Colombia, Mexico, Japan and South Korea have decided to allow Huawei to build parts of their 5G networks under security processes.
> United Arab Emirates, China and the US sent missions to Mars this month
Hegemony vs fragmentation: New powers, elites, alliances
George Siy
February 15, 2021
The hegemony of the United States on political views is past already although its ability to enforce its policies in finance, military and media on other countries continues. This decline is partly a result of the world fragmenting politically even as it is consolidating its capacity to monitor and deliver goods and information.
Germany, Japan, the European Union and even US corporations won’t anymore follow the US decoupling uncritically, but some countries such as the United Kingdom or Australia or some of our politicians still will.
Investments. The EU has approved the Comprehensive Investment Agreement, which will allow it more investments, and with more control, in China, as well as Chinese investments in Europe. The success of Volkswagen, Mercedes, General Motors and European luxury-goods, consumer and industrial companies in dealing with China has been the basis for probably considering further advancement of relations with the Asian economic superpower.
Foreign direct investments in China, including those of US companies such as Intel Capital and Tesla, grew to a record $163 billion in 2020 despite the pandemic. Among financial institutions that are now allowed to own 100 percent of their operations there are Goldman Sachs, BlackRock and Fidelity International. This leeway came after removal of Chinese companies from US stock markets and restrictions on their businesses and even with risks of US shifts in regulations and a trade and technology war amid domestic political uncertainties in both countries.
Investments continued to pour into China even from Japanese companies, even from some 7.6 percent of them planning to move out. Matsushita, Panasonic and other big players with profitable markets in China said they would not be major global players for long if they did not have a major presence in China. These developments show that economics today increasingly trumps politics.
Technology race. Germany, Brazil, Colombia, Mexico, Japan and South Korea have decided to allow Huawei to build parts of their 5G networks under security processes, although the core will still be installed by Nokia. Mexico’s experience showed speedy fast build-up within a few years and dropping of broadband service prices. The UK, India and Taiwan, however, continue to plan to block Huawei 5G equipment. New industries are developing incredibly fast and changing the economic and power structures in the world. Low-cost satellites launches will expand international enterprise services and create new governors of the world. Low-orbit satellites of Musk already being deployed will cover the world and make broadband available everywhere and will continue to enable surveillance by the United States. Neuralink is a leap into the cyborg world, with Musk claiming that it has also enabled monkeys to play video games through chip implants. Supposedly aimed at developing improved living for paralyzed people, such implants could also be embraced by sports and the military.
Space is being mapped out for mining and occupation, but who will determine rules or limits for these endeavors? The United Arab Emirates, China and the US sent missions to Mars this month (The UAE is the fifth to successfully put a spacecraft into orbit around Mars, after the US, Russia, India and the European Space Agency). The US, with over 50 years head start, is the most advanced in studying military applications of space explorations.
High speed logistic links will reduce air and sea travel. The high- speed links, with automated cargo handling being built rapidly all across China, as well as other countries, removing the need for planes in many routes, will make it a logistic, interaction and travel powerhouse and an even more efficient manufacturer and distributor. The US needs to redevelop its mass transit or no amount of tariffs or sanctions will lift its physical efficiencies and cost-competitiveness enough to justify its leadership. The $750-billion annual budget of the US military also needs to be substantively reallocated to domestic development of people and infrastructure.
New markets, powers rising. India and Vietnam and the rest of the Asean are coming in powered by massive investments and enterprising populations. What are the Philippines and Filipinos and their government doing to benefit from this?
Analysts and noisy politicians who had no experience implementing significant operations successfully in the past can better help the Philippines move forward by studying proven management models, not just spouting political theories, and insistence to focus on political differences that actually distract the people and impoverish them. Some of their points are legitimate, but are these keys to progress or mere distractions?
Progress in management requires that we spend time on where we can achieve much, and set aside first what cannot be productively engaged in. Will the Philippines rise or fall farther behind?
To be concluded next week!
George Siy is a Wharton-educated industrialist, international trade practitioner and negotiator. He has advised the Philippines and various organizations in trade negotiations with the Association of Southeast Asian Nations, Japan and the United States.
New Worlds by IDSI (Integrated Development Studies Institute) aims to present frameworks based on a balance of economic theory, historical realities, ground success in real business and communities and attempt for common good, culture and spirituality. We welcome logical feedback and possibly working together with a compatible frame.
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Hegemony vs fragmentation: New powers, elites, alliances