China's Five Great Neighboring Growth Areas

[Martian2]

For 2017, China's nominal GDP is $12 trillion. The Chinese economic growth rate is 6.7%.

The big question is: Can China sustain a 6.5% economic growth rate for the next 15 years?

I believe China can comfortably grow economically at 6.5% for the next 15 years, because of "China's Five Great Neighboring Growth Areas" (see my annotated map below).

The drivers of vigorous Chinese international trade are:

1. Pan Asian Railway
2. China-Mongolia-Russia Economic Corridor
3. China-Pakistan Economic Corridor (CPEC)
4. Central Asia to China Gas Pipelines
5. China-Australia Free Trade Agreement

In future posts, I will discuss China's relationship with its international economic partners in more detail. It may surprise you, but I think China's relationship with Australia is the most crucial. My conclusion is counter-intuitive. Australia is located the furthest from China, but I think Australia is the key to China's long-term stable growth. I will explain my reasons in a future post.

 

[TaiShang]

For 2017, China's nominal GDP is $12 trillion. The Chinese economic growth rate is 6.7%.

The big question is: Can China sustain a 6.5% economic growth rate for the next 15 years?

I believe China can comfortably grow economically at 6.5% for the next 15 years, because of "China's Five Great Neighboring Growth Areas" (see my annotated map below).

The drivers of vigorous Chinese international trade are:

1. Pan Asian Railway
2. China-Mongolia-Russia Economic Corridor
3. China-Pakistan Economic Corridor (CPEC)
4. Central Asia to China Gas Pipelines
5. China-Australia Free Trade Agreement

In future posts, I will discuss China's relationship with its international economic partners in more detail. It may surprise you, but I think China's relationship with Australia is the most crucial. My conclusion is counter-intuitive. Australia is located the furthest from China, but I think Australia is the key to China's long-term stable growth. I will explain my reasons in a future post.

Eager to listen to your forthcoming analyses. I guess, as it stands, your diagram represents the Belt and Road except Australia.

By the way, the SEA link of the Belt and Road is also not included.

I would like to hear your opinion of the growth potential in SEA.

In my opinion, the most important linkage is the one across Central Asia (and Russia) not only because the energy potential, but also their geographic position in between the rich West European markets and China.

As for Southeast Asia, I believe, they are closest with respect to repeating a third East Asian miracle, hence the importance for China.

Besides, there are strong historical links between China and SEA, hence, it should be fairly comfortable for China to operate.

 

[Martian2]

China's Pan Asian Railway brings Six Great Benefits to Laos, Thailand, and Malaysia.

1. Increased Chinese outbound tourism (122 million Chinese outbound tourists in 2016) to Laos, Thailand, and Malaysia.
2. Laos, Thailand, and Malaysia can collect transhipment cargo-train fees for container shipments between Kunming China and Singapore.
3. Laos, Thailand, and Malaysia can set up Special Economic Zones (SEZs) to attract Chinese investment.
4. Beyond SEZs, Laos, Thailand, and Malaysia could liberalize their investment laws and invite broad Chinese foreign direct investment (FDI) into all sectors of their economies.

Developing countries like Laos, Thailand, and Malaysia lack capital, technology, and business know-how. It shouldn't matter whether a business investor is a domestic citizen or a Chinese national. If China is willing to assume the business risk and invest their money, a smart country would invite the Chinese investment.

Economics is win-win. The economic pie grows and everybody benefits. Taiwan's broad FDI investment into all of China, including the food sector, has helped the Chinese economy to grow. "Want Want Holdings Limited (Want Want; Chinese: 旺旺集團有限公司; pinyin: Wàngwàng Jítuán Yǒuxiàn Gōngsī) is a food manufacturer from Taiwan. It is the largest rice cake and flavored drinks maker in Taiwan. It engages in the manufacturing and trading of snack foods and beverages. It operates over 100 manufacturing plants in Mainland China."

Mainland China created a receptive investment environment for Taiwanese businesses. Look at China today. Sure, the Taiwanese companies earned nice profits. However, in the long run, the host country benefits equally economically.

5. The Pan Asian Railway gives Laos, Thailand, and Malaysia the opportunity to learn Chinese technology and modernize. This is a slow and long process, but the Southeast Asian countries will be better off if they start as soon as possible.

"...since its peak in the 1993-94 school year, when nearly 38,000 students came from [Taiwan to study in the US]. About 55 percent of Taiwan’s students in the US are at the graduate level, and almost 25 percent are undergraduate students (with the remaining percentage in 'other' categories)."

Taiwan learned the fundamentals of basic science by studying in the United States. After graduation (with a bachelors or Ph.D.), people like TSMC's Morris Chang worked at Texas Instruments for 25 years. After gaining experience at Texas Instruments, Morris Chang moved to Taiwan to set up TSMC.

Laos, Thailand, and Malaysia have the opportunity to walk in Taiwan's footsteps. The Southeast Asian nations have to learn the basics of science and gain decades of practical experience from a major industrial power. It is a lot easier and less expensive to travel on the Pan Asian Railway to study and work in China than to fly 10,000 miles to the United States.

6. The Pan Asian Railway will expose Laos, Thailand, and Malaysia to Chinese cultural values. Chinese are distinguished by their hard-work ethic. Seeing Chinese work hard firsthand should open the eyes of the Southeast Asian nationals.

Another important Chinese cultural value is MERITOCRACY.

Race, age, gender, seniority, political orientation, etc. are all irrelevant. Chinese and Taiwanese businesses are extremely successful, because the most qualified and competent person is promoted up the ranks. Malaysia has a social-engineering preferential-treatment policy for ethnic Malays in college entrances and probably government jobs. Malaysia is on the wrong path and suppressing the potential of its human resource. Malaysia's discrimination against ethnic Chinese-Malaysians will hamper Malaysia's economic and technological development.

In conclusion, the Pan Asian Railway has the potential to revolutionize and eventually modernize Laos, Thailand, and Malaysia. Whether the Southeast Asian countries will seize the opportunity and introduce many reforms is their choice.

 

[shadows888]

Average of 6.5 percent for next 15 years? I think that's too high. I think average of 5 percent over 15 Years is easily achievable. You have to take into account that by 2030 it's probability closer to 4%. But the base would be so large at like 28 trillion that even at 4% it's still Higher growth than it is now at 6.7%

 

[Jlaw]

1. Increased Chinese outbound tourism (122 million Chinese outbound tourists in 2016) to Laos, Thailand, and Malaysia.

How does outbound tourism help China's economy besides Chinese tour operators?

It shouldn't matter whether a business investor is a domestic citizen or a Chinese national. If China is willing to assume the business risk and invest their money, a smart country would invite the Chinese investment.

I don't believe it's wise for any nationality as you never know what the intention of foreign money is for. Example, NGO,

Mainland China created a receptive investment environment for Taiwanese businesses.

Coincide with the points above. Taiwanese is ethnically Chinese that is the difference. Smart Taiwanese know a strong China is beneficial to Taiwan. Japanese or Koreans would want a strong China

 

[Martian2]

How does outbound tourism help China's economy besides Chinese tour operators?

I don't believe it's wise for any nationality as you never know what the intention of foreign money is for. Example, NGO,


Coincide with the points above. Taiwanese is ethnically Chinese that is the difference. Smart Taiwanese know a strong China is beneficial to Taiwan. Japanese or Koreans would want a strong China

Outbound Chinese tourism is increasing whether the Pan Asian Railway is built or not.

Outbound tourism provides Chinese tourist-revenue to the Pan Asian Railway Southeast Asian countries.

The benefit of the Pan Asian Railway to China is a land-based modern efficient railway transport from Kunming to Singapore. This allows China to efficiently transport Chinese goods to buyers in Laos, Thailand, Malaysia, and Singapore (which is a port distribution point for the rest of Southeast Asia like Indonesia).

The Pan Asian Railway benefits both sides.