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Siah Hwee Ang:Global trade and economic recovery face multiple headwinds

Updated: Jan 7, 2023

Siah Hwee Ang, Professor at Victoria University of Wellington

Siah Hwee Ang is a professor at Victoria University of Wellington. His research interests focus on venture capital, management research methods and international corporate strategy. He not only teaches strategy to undergraduates, graduate students and corporate executives, but also works with senior executives from Fletcher Construction LTD., Fairfax Media, Singapore Television and Fonterra.

Global trade and economic recovery face multiple headwinds

1. The China-Pakistan Economic Corridor is one of the most important components of Beijing’s ambitious Belt and Road Initiative. But so far, just one-third of planned development has been completed.Please talk about your views on this.

The China-Pakistan Economic Corridor has been one of the earliest projects in the BRI Initiative. But given Pakistan’s development and its constant challenges at the borders, it is not surprising that the progress is slow. There is also the political challenge with India where China is trying its best to maintain a working relationship with, but given the background history between Pakistan and India, there are bound to be delays on the development work along this Corridor.

2. TPP, NAFTA, GAAT, WTO -- the concepts that govern our global economy and international trade are confusing to say the least, but affect us all. Why is there so much conflict around trade deals?

Trade deals are what economies strive for. They are there to facilitate trade deals but not necessarily saying that trade will happen. Yet, economies also find that opening up to trade deals can make its local businesses and sometimes society come under pressure as external forces start to dictate the need to act, without being ready. Say for example, local SMEs are bound to be affected by a large foreign MNC coming into its industry domestically. This MNC, while serves many interests, will not be helpful to allow the development of national champions. Hence, issues with trade deals. For the large trade deals are centred around tariffs, and over time this becomes a sin qua non as opposed to an advantage for firms when their country is involved in trade deals. Therefore, trade deals, while being signed all the time, do not really result in harmony among firms as they find ways to create advantage.

3. 10 years ago the outlook on the automotive industry was completely different. Tesla was a tiny company that was seen as a boutique venture. By applying a brilliant business strategy, Tesla managed to become one of the household names in the automotive industry around the world. Today, all of the large auto producers have turned their attention towards the electric vehicles niche, and there is little doubt that this is the future. What enabled Tesla to become a larger autoproducer than the Ford Motor Company in just 10 years?

Technology is the word. Technology disrupts industries and allows cross-fertilization. In this case, advanced technology has been brought into an industry that is pretty much stuck into standards. A new standard is being created – one to which will resonate well with the future, will definitely wipe out competition quickly, especially if competitors do not react fast.

4. After the Biden administration came to power, the trade tensions between China and the United States, or the trade tensions between the major economies of the entire world, eased. At the same time, the world economy is gradually recovering from the impact of the epidemic. However, the world economy is still depressed. Do you think the future Is the overall recovery of the world economy optimistic?

Trade tensions between US and China is more about supremacy in the global economy as opposed to just trade. For the large part, the competition there is about technological advancement, connectivity and data. The pandemic will accelerate competition between the China and the US. But hopefully the competition is a healthy one – so far trade between China and the US is still growing by and large. The world economy does need both of these economies to be on the front foot, which I’m seeing at the moment. So I’m optimistic the world economy will recover soon, perhaps starting with China and a few other Asian economies, then the US.

Editor Assistant Research Fellow: Xianglin Gu



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