Re-Orientation – part 2

Everyone lives by selling something

Chapter 2 of 'Investing in the West in a China-led world' - Understanding what China wants from the West – and how its international shopping list is likely to change over time – can help investors identify which Western companies are more likely to benefit from the tailwind of Chinese growth, and which may find their exports dwindling as China pursues its policy of self-sufficiency.

Sep 15, 2021

15 minutes

Michael Power
Chapter 2 of 'Investing in the West in a China-led world' - Understanding what China wants from the West – and how its international shopping list is likely to change over time – can help investors identify which Western companies are more likely to benefit from the tailwind of Chinese growth, and which may find their exports dwindling as China pursues its policy of self-sufficiency.

Contents

01
Everyone lives by selling something
02
Time is running out for the geometry of today’s global trading system.
03
What does China want that the West has to sell?
04
Conclusion
01

Everyone lives by selling something

Sun breaking through clouds over Shanghai
The key to understanding the West’s future is being able to predict what each Western nation can produce that the rest of the world will want to buy.

The future of national livelihoods

Novelist Robert Louis Stevenson’s maxim that “everyone lives by selling something” applies to nations as much as individuals. The key to understanding the West’s future is therefore predicting what each Western nation can produce that the rest of the world – especially China, but Asia at large – will want to buy. This includes services, which is a critical sector as Western dependence on it is rising. Services include all varieties of tourism: traditional leisure, educational, sporting, conference, medical and cultural. The provision of cross-border digital services, from entertainment to finance, is expected to continue expanding fast for the next few decades; the West will have a key role to play here too.

Western nations will have their work cut out. The East began to take control of the centre of economic gravity by producing goods more cheaply than the West. More recently, it has advanced this shift in trade by achieving a higher quality standard in some areas, too. Part of the success of Eastern companies has been due to using a ‘fifth column’ to break into Western markets where direct access was difficult – that is, US and European multinationals, through which Chinese-manufactured goods bearing Western brands have come to dominate global markets for many goods. Against this backdrop, Western nations will not find it easy to increase their share of the global trade pie.

Authored by

Michael Power
Global Strategist

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