The time has come to put our relations with China into a more realistic and updated perspective.
For the past few years, the holistic picture has been all too often overshadowed in public perception by one-off events (sometimes with knee-jerk reactions Chinese visas being withdrawn after a few English language students escaped; Sai Mizzi’s role and how much she was paid for it; abusive working and living conditions for employees at Leisure Clothing.
The public perception has not kept up with economic realities either. In 1985, China had a GDP of $307 billion. By 2013, it was $9.23 trillion. Adjusted for purchasing power, it was the world’s second largest economy in 2002 – the IMF believes that it is already the largest.
Not that long ago Maltese manufacturing companies moved production to China because it was much cheaper, but now China gets its low-cost manufacturing from Vietnam. China is now involved in the increasingly sophisticated production of computers, pharmaceuticals, and automobiles.
Its industries have grown 60-fold between 1985 and 2012, and its services 127-fold. It is the largest manufacturing economy in the world and the largest exporter of goods, the world’s fastest growing consumer market and the second largest importer of goods. Outbound tourists broke through the 100-million barrier for the first time in 2014, spending $164.8 billion. The number is expected to reach 200 million by 2020.
Its clout as an investor is also extraordinary. HSBC Group ranks it as the third biggest global investor behind the US and Japan, growing at an average of 35 per cent between 2005 and 2012. It is estimated that it will invest $500 billion in other countries in the next five year.
The rapid revolution has not been without missteps: the country has been accused of unfair trade practices, artificial currency levels, intellectual property theft, protectionism and local favouritism. But the issue is whether China is learning from its mistakes.
Ambassador to Malta Cai Jinbiao gave an interview to The Report last year in which he tackled many issues head on, albeit in ‘diplospeak “When China first opened up to the West in the 1970s, there was indeed a period of mutual accommodation due to the vast difference in ways of thinking cultures and traditions. But as time went by, China has become increasingly interwoven with the rest of the world. Nowadays, China has embraced many Western business ideas and vice versa.”
Another myth debunked by an HSBC Group expert, Spencer Lake, at a conference in Malta last June was that Chinese want to ‘take over “Chinese investors are not only interested in purchasing majority stakes. Instead, Chinese investors are increasingly happy with minority stakes, because they appreciate that the Western management framework is indigenous and they do not want to undermine that.”
The government signed a memorandum of understanding last summer, and recently finalised Shanghai Electric’s investment in Enemalta. It has also revived the Joint Commission on Trade and Economic Cooperation, which had not met since 2009, and which is evaluating potential areas of cooperation. These go well beyond Enemalta, looking at local opportunities, as well as using Malta as a stepping stone into North Africa. Discussions even touched on the possibility of Chinese financial institutions establishing branches here. Both sides also agreed that Malta had a role to play in the 21st Century Maritime Silk Road project being vigorously pursued by China.
A country cannot and should not ignore issues like political freedom, human rights, working conditions, corruption or transparency. But self-righteous preaching is not nearly as effective a tool as dialogue, trade and cultural exchanges.
The Azerbaijani Ambassador recently wrote in The Business Observer to highlight the progress being made in his country. The Chinese one has sent out similar positive messages. Can we afford to get stuck in the past instead of looking ahead?