Risks and global economic realities are ever so exaggerated and/or twisted by the Western dominated press.
The present international system is/was designed primarily to represent and promote American and so Western interests. Yet as is more and more evident, the US position -as the global financial center and the dollar as the dominant reserve currency- are now on a “Chinese life support system”*.
Most know how gigantic the Chinese holdings are of international US $ reserves. These rank by far as the largest of any country and in fact at nearly 3 trillion $, these are some 10 times more then the IMF has in its total reserves. (Japan stands a distant second to China with less then half and Russia a third, with less then half of Japan.) Fact is, sovereign wealth funds have injected more capital into emerging markets in recent years than the IMF and the World Bank combined.*
The fundamental problem of China for the US, is not its military strength but its economic prowess -and it is this which is slowly and irresistibly eroding American global pre-eminence.
Fact is, American unipolarity is overwhelmingly a military phenomenon and its been hugely distracted by its entanglement in the Middle East -and as a consequence has neglected its position in East Asia. China and India are rising to the task faster then we think -and Thailand is right in between of those rising economic giants.
American soft power is its promotion of democracy by the people, China by way of contrast, emphasizes democracy between nation states, most notably in term of respect for sovereignty and democracy in the world system. China can offer its own experience of growth as an example, success and model to other developing countries to consider, something the US as the doyen of developed countries cannot.
If the relations between China and the US for some reasons seriously deteriorate, any attempt to exclude China from the present international economic system would simply not be an option.
Through globalization, China has transformed itself into a formidable competitor to the US, with is consequent power over the value of the dollar and the fact that it has undermined key sectors of the US manufacturing industry…,in the meantime China’s impressive knowledge of the US is not reciprocated in the US (and Washington), beyond a small coterie of experts. And American’s attitude towards China, so far at least, stands in striking contrast compared to the China’s huge investment in its relationship and understanding with the US.
Even while China’s economy is now 3 times larger then India’s, the latter is another economic giant on the rise. India is the largest democracy in the world. In 1950 the per capita income of India was around 40% greater than that of China, by 1978 they were roughly equal. By 1999 however, China’s was not far short to being twice that of India’s. And despite India’s steady /fast growth in the just past years, China continues to extend its lead over India. The latest figures show China’s economy is now three times as large as that of India. Yet, together these command close to 40% of global GDP.
China is now doing a huge amount of business in Africa, which has overall more natural resources then Australia. For example, Africa is by far the largest global producer in key metals like platinum and cobalt. China’s trade with Africa has soared nearly 50 times, over the past 10 years. As example consider that, over 31% of China’s oil imports and 20% of its timber exports, come from Africa.
While commercial planes from China to Africa are filled with business people, arrivals from the US (or EU) are mostly tourists and relief workers. Africa aspires to China, versus resents the long -mostly abusive- history it endured from the West.
Unlike the Middle East which for over 30 years has received an enormous amount of US attention, despite the rhetoric Africa has in recent years been relatively neglected, having remained of marginal concern to the US.
If you took a map of Asia and then inverted it, comparing it with Europe, Thailand would so look like France -in its centric almost dominant position. Thailand as the second largest country in SE Asia -and being one of the world’s largest food producer- in a region where over half the world population lives, hardly plays a marginal role, despite its continued political malaise and relative stock market lethargy.
As a metaphor, we have seen how a less then well run public company (LVT) can still be a good stock investment. That is if it just becomes a touch better and starts from a low base, or/and if more invest there on the merits of likely high dividend income in a low inflationary environment -yet high economic growth region.
As I have stated before, and similar with my view earlier this year on the stock mentioned above, Thai stock market valuations remain among the lowest in Asia, as such they already discount many of the concerns investors have! Despite the present uncertainties about politics (nothing new there) and the coming succession of the monarchy, Thailand remains economically a not insignificant player in this ever faster rising economic power region (being between the two economic giants), which almost by definition will economically rule the world already in the foreseeable future -and then for some time.
In the developed West, many people prey upon fear. They mention the shortcoming or more likely the risks, but are unable/unwilling to balance these with their own failings. For example the evils of corruption in developed countries is not balanced vs. the dominant and hugely financed western lobby groups, which is a form of Western corruption. Or the sky-high executive compensation with all the abuses in recent years, or the huge liability exposure/risk in many developed countries (notably US), which have often devastated free enterprise and innovation, just to name a few.
What is risky I suggest is remaining globally-financially uneducated and then turning money over to a western salesman whose job it is to keep you fearful and believing they know more than you -and that investments in all developing countries are far “riskier”. This dogmatic expression continues, despite and post the Western induced financial crisis, which by a long shot showed that the risks of late were far greater investing in the Western developed countries.
As of late I have mentioned HANA (19.7) as my new top choice in the electronics sector and ROJNA (10.70) as an equally relatively new, top choice, in the industrial property developer sector. Rojna has a highly profitable project in China, yes one of the largest and fastest growing in the world.
Best Regards,
Paul A. Renaud.
www.thaistocks.com
* From the excellent but "heavy reading" book "When China Rules the World". The rise of the middle kingdom and the end of the Western World. (2009).
