WE all know that there is an endless list of people, at least based on what is being reported in the Western mass media, forecasting that China’s economy will crash soon.
Based on the latest April data on China’s property price, bank lending and inflation rate, it would appear that all the dire forecasts for China are unfolding right in front of our eyes.
As i Capital has advised repeatedly, it does not see China crash landing this or next year. In fact, it continues to see a soft landing in the coming months.
By focusing on China, what the China bashers have not shown is that between the two emerging Asian giants of India and China, India should be the economy that is heading for a crash.
The three charts above show key economic statistics for these emerging giants.
India’s situation is somewhat similar to Greece. She has persistent and high levels of budget deficit, external trade deficit and also a high inflation rate.
In contrast, China’s economy is better managed. Despite such contrasting economic performance, why is it that China is forecast to crash and not India?
Is it because China has some problems with some minorities? The China bashers love to highlight Tibet and Xinjiang as China’s major trouble spots. This cannot be because the social problems that India faces are even more serious than China’s.
In 2006, Prime Minister Manmohan Singh called the Naxalites “the single biggest internal security challenge ever faced by our country.”
In 2009 he said that India was “losing the battle against Maoist rebels.” The Naxalites are very popular and growing in popularity in India. So why zoom in only on China?
The answer is simple.
To the China bashers, India is seen as a rare Asian democracy which they will go all out to portray as the model nation.
In contrast, China is still portrayed as a communist country and they would go all out to discredit her as a successful nation, and if possible to cause the country to break up.
Unfortunately, the facts of the matter do not support such a conclusion.
No matter how one looks at it, China’s economy is not ready to crash.
Based on anecdotal evidence, the property bubblet is already being busted. Property prices are already peaking.
The numerous measures need time to take effect.
The economic and housing data in the coming months will be more reflective of the underlying trend and thus more accurate.
How entrepreneurs can turn what they love doing into successful businesses.
Eileen Gittins
About 10 years ago when I was fundraising for my second startup, I came across a former entrepreneur-turned-VC who had decided to return to the trenches. It was clear she was more than happy running her new company--she was unabashedly delighted. I remember thinking, "Really?," because her company was developing back-end technology that, honestly, was lost on me.
It didn't matter that I couldn't appreciate her company's business--the point was that she loved it. And I realized that I loved that she loved it. It was a bit of an epiphany, actually. It sounds obvious, but that level of passion is not only about commitment, it's about meaning and, just as important, it's about fun.
Most people think about their jobs as the thing they do, instead of the thing they get to do. When you can build a culture where people feel privileged instead of entitled, that's magic. And that's what the best Silicon Valley companies do: They tap into the power of personal passion.
Entrepreneur Lesson One: Do Something You Love
This is the first lesson in my own entrepreneurial playbook: Do something you love. Life will throw a lot of pies in your face, and there will be days when you can't get out of your own way--so there better be something big that sustains you. Big as in "you just can't not do this" big. Like when artists say they paint because they have to, or writers say they write because they can't not. It has to be way more than a paycheck.
Entrepreneur Lesson Two: Don't Be Afraid To Show It
Being a female CEO in a male-dominated business, the natural tendency is to be "more like Mike." That typically implies a non-emotional, fact-driven communication style. For the women out there reading this, please fight that feeling. Wear your passion on your sleeve. Men too. It's infectious. Everybody--whether a prospective investor, customer, employee or partner--wants to team up with people who love what they are doing and aren't afraid to say so.
When I was raising money for Blurb, a book publishing company, in late 2004 it was a very contrarian play. Everything was going online. Yet here I was pitching a business that would take the digital back to analog. Crazy, I know.
While there were many reasons Blurb ultimately got funded, I believe that principal among them was not only how passionate we were about the business, but how willing we were to communicate that passion. In addition to being a great business, it would be so much fun to enable everyone with a broadband connection and 10 bucks to be globally published. How could we not do this?
Entrepreneur Lesson Three: Hire For Passion And Curiosity Skill is actually not the most important thing we look for as we build our team. We look for people who are passionate about something, anything. It's actually a great interview conversation; I learn more about candidates in the interstices, in the "not business" moments, than when we are talking about SEM conversion or agile software development. As a result of asking the passion question, we (a) don't hire the people who can't answer the question and (b) have hired people who are competitive boxers, BMW driving school instructors, part-time DJs, theater stage managers, 5 a.m. San Francisco Bay rowers and aspiring screenplay writers.
No matter how our employees' creative juices manifest, these are people who will "get" our customers. They understand how intense the creative process is, how much it means and how special it is when the outcome is even better than imagined. At our core, that's the promise of Blurb. Employees who understand this will create great experiences for our customers--whether in software, on our site, in the quality of book they receive or the service they get along the way.
Our folks' natural curiosity will cause them to discover new opportunities, not because it's their job, but because it's their DNA.
Entrepreneur Lesson Four: The Power of Story
We recently hosted a meeting with our worldwide market development folks. When asked how they talked about Blurb, to my astonishment, each of them told the same story--how the company was founded by a CEO who was a photographer (and serial entrepreneur), who had been photographing folks she had built companies with and wanted to share the images and stories as a gift back to them. Since you couldn't "gift" a website, she decided to make a book. And she found out how impossibly difficult and expensive a proposition that was. The result: Blurb was founded out of a real need by someone who had something to say, who had a design sensibility, who cared deeply about image quality and who wanted to share with her community.
BEIJING - MAY 25: U.S. Secretary of State Hillary Clinton (C), U.S. Treasury Secretary Timothy Geithner (L) and China's Vice Premier Wang Qishan (R) attend a press conference during the China-U.S. Strategic and Economic Dialogue (S&ED) at the Great Hall of People on May 25, 2010 in Beijing, China. Hillary Clinton called upon Beijing to back international pressure against North Korea following the sinking of a South Korean warship, and to seek greater stability in the region.
May 24 (Bloomberg) -- The Chinese official who is facing Timothy Geithner in Beijing today jokingly calls himself the Treasury secretary’s “uncle” because of a family connection. Geithner may one day call him “Premier.”
Vice Premier Wang Qishan leads the delegation meeting with Geithner and Secretary of State Hillary Clinton at the Strategic and Economic Dialogue, which is discussing yuan revaluation, Europe’s debt crisis and North Korea’s nuclear program. Wang, who oversees China’s financial sector, is mentioned for membership in the ruling Politburo Standing Committee and as a successor to Premier Wen Jiabao, two China experts say.
Geithner says Wang is China’s “definitive preeminent troubleshooter, firefighter, problem solver.” He is also a high-level emissary to business leaders: During a three- month stretch this year, Wang met with Citigroup Inc. Chief Executive Officer Vikram Pandit, JPMorgan Chase & Co. CEO Jamie Dimon and UBS Investment Bank Vice Chairman Leon Brittan.
“Wang has done everything and he’s very good at it,” said Robert Hormats, the U.S. undersecretary of state for economics, energy and agriculture and a former Goldman Sachs Group Inc. banker who first met Wang in the 1980s. “He knows the American relationship inside and out. He has had great relations with a number of American officials for decades.”
China’s Firefighter
China’s top leaders regularly tap him to extract the country from crises, including the 1998 collapse of a provincial investment company and the 2003 outbreak of a deadly virus in Beijing. As mayor, Wang also headed the Chinese capital’s preparations for the 2008 Olympic Games.
Dimon said in an e-mail that Wang was “extremely smart, engaged and deeply knowledgeable about issues, finance and history.”
Yesterday Wang met Federal Reserve Chairman Ben S. Bernanke, where they talked about the global economy, the official Xinhua News Agency reported. Wang also dined with Geithner last night. Today, in opening remarks for the talks, Wang said the European debt crisis has caused a “chain reaction,” affecting market confidence.
Next Premier?
Li Cheng, director of research at the Brookings Institution’s John L. Thornton China Center in Washington, says Wang’s experience means he’ll likely be named to the standing committee in 2012, giving foreign bankers a familiar face at the top of China’s power structure.
Wang, 61, is also being mentioned within the party as a possible candidate to succeed Wen in 2013, when the country will be looking for a seasoned hand to guide China to full yuan convertibility, said Li and Victor Shih, a professor at Northwestern University in Evanston, Illinois, who studies Chinese politics and finance.
“He would help push for the convertibility of the yuan in a very positive way,” Shih said.
Geithner nudged Wang on the yuan from the outset of the meeting today in opening remarks at the Diaoyutai State Guest House in western Beijing.
“Allowing the exchange rate to reflect market forces is important” for China to maintain low inflation and to help shift resources to “more productive higher value- added activities,” Geithner said.
The yuan’s value has been fixed to about 6.83 to one U.S. dollar for almost two years.
Resisting Pressure
Wang won’t have the final say. He is one member of the 25-person Politburo, which sets policy for the government and the ruling Communist Party. And up to now, the government has resisted U.S. pressure to end or loosen the peg.
“Only the authorities of a sovereign country have the right to decide how to form the exchange rate,” Assistant Finance Minister Zhu Guangyao said in Beijing on May 20.
Li Keqiang, the executive vice premier, is one of nine current members on the standing committee, and is the front-runner to succeed Wen, Brookings’ Li said.
Yet Wang’s experience, which includes stints as head of China Construction Bank Corp. and China International Capital Corp., the country’s first investment bank, as well as deputy governor of the central bank, outshines Li’s resume, said Brookings’s Li.
‘Can-Do’ Leadership
Hormats said Wang had the “can-do” leadership style of former Premier Zhu Rongji, who led a drive to sell shares of the country’s biggest state-run companies to foreign investors and shepherded China’s 2001 entry into the World Trade Organization.
Wang, as vice governor of southern China’s Guangdong province, was tapped by Zhu to oversee the bankruptcy of Guangdong International Trust & Investment Corp. after its 1998 collapse due in part to soured real-estate investments.
A native of northern China’s Shanxi province, Wang often speaks without notes when giving speeches, peppering his remarks with anecdotes. He didn’t respond to a request for an interview.
In a Washington speech last July, Wang called himself Geithner’s “uncle,” referring to ties he had with the Treasury secretary’s father, Peter, who headed the Ford Foundation’s office in Beijing in the 1980s. Geithner, 48, who pronounces Wang’s name with the correct Chinese tones, was a Dartmouth College student in Beijing in the early 1980s.
Autographed Basketball
On the same trip, Wang met with President Barack Obama at the White House. The vice premier received an autographed basketball.
A year earlier, speaking at Washington’s Wardman Park Marriott, Wang’s sense of humor came out as he explained that while China’s economy was large -- it is now No. 3 in the world -- its per capita gross domestic product was a fraction of that of the U.S. He told Finance Minister Xie Xuren to check out then-Treasury Secretary Henry Paulson.
“Look at his wallet,” Wang said. “He has a really fat wallet.”
--Michael Forsythe in Beijing. With assistance from Rebecca Christie in Washington and Dawn Kopecki in New York. Editors: Anne Swardson, Bill Austin. To contact the editor responsible for this story: Bill Austin at billaustin@bloomberg.net
