ACBC Chairman Frank Tudor elaborates on the economic, social and political forces working towards – and against – global convergence.
As I contemplate the journey of global convergence that 7 billion (at last count) of us are all on, I feel compelled to comment on “things that draw us together” and “things that force us apart”.
Capitalism, coupled with free trade, is without doubt one of the greatest triumphs of human kind drawing individuals and countries together in an intricate and complex web of mutual trade and dependency. I believe it will adapt and continue through the process of convergence as a common denominator across countries.
Technology will play its part in our journey and there is perhaps no more powerful an example of what draws humans together than the Internet. It facilitates global trade, reveals pricing information in real-time and enables arbitrage. As a platform for social media it breaks down cultural barriers and facilitates freedom of speech. In science it pools information and connects distributed intelligence around the globe. And whilst the prospect of the Internet waking up and becoming self-aware may seem far-fetched, cyber chatter already admits to the emergence of a global brain which speaks both Mandarin and English. There is little doubt that the Internet will expedite the process of global convergence emerging economies.
Finally, there is the plain fact that we are all human with all that entails. We are all self-aware, seek explanations for our existence/mortality and irrespective of creed, wish the best for our children.
Inequality is a divisive force and global issue that the fortunate amongst us cannot afford to ignore if not for humanitarian reasons then for selfish reasons related to personal security and civil unrest. In one sense the forces unleashed through global convergence will reduce inequality across countries but in so doing increase inequality within countries.
For example, inequality in the developed world has been increasing as manufacturing jobs are outsourced to emerging economies, and in emerging economies as the more capable become rich ahead of others.
In China the recently announced plans to liberalise interest rates, reform migrant worker registration and crimp state owned enterprises to reduce income equality between eastern and western China, urban and rural China are welcome. Undoubtedly they are ambitious given the central government target of lifting a further 80 million from poverty.
A further factor which has the potential to be divisive is related to the pursuit of economic growth, and the consumption of all of the “low-hanging fruit”. One cannot overstate the importance of economic growth to our journey of convergence which will mean that we are either growing the world economy to accommodate emerging economies where everybody wins, or, without significant growth, sharing a zero-sum world where there are winners and losers.
There is a line of argument that suggests the developed world has already taken advantage of all of the “low-hanging fruit” such as free land, immigrant labour and powerful new technologies. If we assume that the advancement of science, engineering and innovation precedes and enables economic growth then we are looking at a slowdown in growth.
There is also a sense the developing world is fast consuming its quota of “low-hanging fruit”. History shows that for developing countries to sustain growth over a long period of time, of the type China has enjoyed since the 1970s, is rare and easier to achieve during the early stages of economic growth when they are small in relation to the world economy. As “catch up” is achieved, and as in developed economies, continued growth then depends on the rate of scientific progress which by its nature is uneven and unpredictable.
Hence, the absence of sufficient growth could become divisive at a global level. China’s leadership has long recognised the importance of sustaining growth through jobs and prosperity for all.
A final but important driver is the issue of sustainability and finite resources. As billions of people catch up to high-income resources, creation of waste, emission of pollution and destruction of biodiversity increases pressure enormously. The clear and present danger of climate change juxtaposed against the needs of the developing world to grow, has stalled the Doha negotiations that portend greater divisions between developed and emerging economies in the future.
In view of these factors we may well then ask: “What then is our future outlook?”
And: “What of our journey of convergence?”
Success depends on effective political leadership – the danger of western democracies is not death but sclerosis brought about by vested interests competing for favours in an increasingly fragmented political system that struggles to achieve clear mandates. In the US and Australia alike, money is too often allocated to infrastructure projects based on politics rather than on need or bank for buck.
On the other hand, China’s political system has served it well over the last few decades and is now incorporating the needs of a growing middle-income class as it evolves.
Successful navigation of our convergence also involves authentic personal leadership – leaders such as ourselves through our “knowledge” and “opportunity” are “accountable” and must consider it an “obligation” to increase the net worth of our “personal/professional” balance sheet before we depart the planet. And our contributions should properly account for tangible assets (ports, roads and factories) and intangible assets (state of our bilateral business relationships, regional security, and human capability).
And why should we do this – because we want our offspring to be better off and not worse off than we were. It’s our commitment to the next generation. ■
*This is an extract from a speech delivered by Frank Tudor as part of the ACBC China Networking Day on March 12, 2013. For more information about the Australia China Business Council, visit: www.acbc.com.au