Making waves in international headlines in the last few months was the conclusion of the Trans-Pacific Partnership (TPP), whose constituents have the largest combined GDP of any other ‘multilateral’ trade agreements in the world. Let us examine what partnerships actually mean.
Note that I have placed ‘multilateral’ in quotation marks. I picked this up from Kishore Mahbubani’s book The Great Convergence, one of the best books in geopolitics written in recent history, in my opinion. Mahbubani (p.154) was on the topic of US-China relations when he noted that both countries happen to be in organizations such as APEC and G20, but bilateral engagements have focused mainly on “China’s ‘core interests’ and America’s ‘vital interests’”. How then, does multilateralism, in which world powers, especially the two largest ones, have an obligation take leadership over other countries, help in bringing them together and taking orders of dialogue higher?
Another reason why ‘multilateral’ agreements need a rethink is this – multilateral agreements are usually geopolitical. If the United States is to form a free trade zone across the Pacific, the Pacific as a geopolitical region needs a rethink. It is geographically too large and economically and politically too diverse to be modelled after relatively successful customs unions and FTZs such as the European Union, Eastern European Union (EEU, formerly the RBK CU), and ASEAN, all of which have a much lower spread in development indicators and characteristics than the TPP’s constituents. For instance, the EEU works because of Russia’s economic rise and geopolitical leadership in the region, as well as similarity of non-Russian members in historic ties. There is no way a Pacific pact will possibly transcend diversities or ensure compatibility between Chile and Vietnam or Peru and Brunei, and it may be better for individual economies to mutually evaluate the effectiveness of going into bilateral relationships instead.
Nothing is fully multilateral – a many-way agreement is essentially a host of two-way agreements and different sets of reservations, which are rules to ensure protections against liberalization of a certain economy due to domestic political or economic significance. The Gulf Cooperation Council-Singapore FTA (link), for instance, has various levels of reservations taken by GCC members against Movement of Business Persons in its Investment Chapter. This is just an example to illustrate the intricacies of negotiating a multi-way trade pact and surely, due credit must be given to current TPP members for going through such difficulties. However, if a seven-member FTA has reservations that has already set it back a great deal from full liberalization, we then pose two questions to the viability of coordinating a large agreement such as TPP:
- In net terms, how open will a 16-member partnership be?
- How will other members and leaders (i.e. US and probably Japan) deal with members which are slow to liberalize and/or fully ratify the pact? Note that ‘ratification’ may dangerously mean bureaucratically conforming to American interests.
The latter point above may be put off my some – it may be argued the UN and WTO both have accession rules despite being notoriously bureaucratic. But if we go down that line of reasoning we will then go down a slippery slope to debate whether UN/WTO will work because such systems in place is supposed to govern some 180 or 200 countries despite bureaucratic difficulties.
Before we put up a straw man, let’s divert our attention on the levels of trade pacts worldwide again. In a very simple sense, partnerships are steps lower than FTAs/FTZs – so it is worth pondering on thoughts such as when will real progress arrive or when will members who are in less of a leadership position be able to reap the benefits of free and open trade with the US, Japan and Singapore. Surely, some bilateral agreements start as partnerships with possibility of progressing to full FTAs or even CUs. But if multilateral agreements stay as partnerships due to complications of ratification process or economic progress in some countries (e.g. potential growth may be stunted due to excessive American reservation), we attack the logic, or even sincerity, of starting a partnership in the first place.
In his book, Prof. Mahbubani also highlighted the geopolitical significance of buoyancy about continuing to be number one in the United States – that it will be politically difficult for American leaders to swallow the fact that America is now in second place. Ian Bremmer posited in Every Nation for Itself that no one nation could possibly take leadership in all global issues – geopolitics, economics, and the military like the United States did in for decades. Linking this up with Mahbubani’s reasoning – there can hence be only one main reason why America has pushed forward the TPP: to continue to assert themselves as the leading world power for as long as possible.
Reservations taken by the United States were also a cause for concern. Opponents of FTAs have always cried foul on developed nations going into FTAs with emerging markets, on premises such as exploitation, introduction of competition into emerging industries in emerging markets, excessive protection, and the ability to circumvent legalities for their own strategic benefit. The TPP is no different. Joseph E. Stiglitz described in concise detail how the Investor-State Dispute Settlement (ISDS) mechanisms negotiated in the TPP are a result of exorbitant American self-protection, and how it benefits just a few companies (The Secret Corporate Takeover).
It is easy to see why the TPP was successfully concluded with a huge proportion of its members in the emerging side of East Asia. It takes two hands to clap – this applies to two sets of relationships – the bulk of TPP’s emerging economies and China and US. Surely, countries such as Vietnam or Malaysia see the TPP as a convenient and easy way to access the US market. Meanwhile, on their minds reside the episodes of China’s advances in the South China Sea, a global power which they have given little consideration about. While China has not projected criticism on the TPP,
The Eastern Equivalent
If America’s reason includes protecting its own economic interests and that of Pacific states, then China’s rise must not be ignored. The TPP has been labelled awkward in the sense that it includes Japan and a number of Southeast Asian states, but excludes China, the one mainland Asian nation with the longest Pacific coastline (of course, in some politically-bizarre definitions, this coastline borders the Yellow and South China Seas).
China’s response to the TPP, as the world sees it, would be the Regional Cooperative Economic Partnership (RCEP), which involves 16 countries, three more than the TPP (after Indonesia recently announced its membership, albeit under contentious conditions). Of course, China’s initiatives to integrate the region and take a front-seat role in Asian economics does not and will not stop at just a massive agreement – it is superfluous to state that the One Belt, One Road (OBOR) (一带一路) policy has been garnering adequate worldwide attention as well, and so it is to consider its common interests with the United States.
A few economies happen to be in both partnerships. Some are experienced – such as Singapore that has over 33 RTAs (using WTO terms) and a trade department of more than 500 staff, while some are not – Brunei has just eight. What will going into both partnerships entail? Surely, the purpose of this article is not to compare the two partnerships or major powers in question, and neither are any of the states forced to choose at gunpoint, but besides trade law causing complications, there is a strategic imperative for this ‘sandwich’ class of countries as well.
SEA remains a core area of interest for both major powers in both economics and marine politics. Its sheer dynamics – GDP(PPP) in excess of $3 trillion, a population of 600 million and growing, and the presence of Singapore, the world’s richest proper economy in PPP terms – makes the ASEAN integration and other economic policies a key area of concern. The region’s location in the heart of the South China Sea and major sea trading routes doesn’t make it any less interesting for both China and the US. Operations of the Pacific Fleet, the OBOR policy, and observer status in ASEAN are just few of the very subtle ways in which the sides are claiming stakes over the region.
Singapore’s diplomats from Chan Heng Chee to Bilahari Kausikan have a standard code of conduct of not taking sides. However, this may not apply for the rest of the region. Amidst developments in both TPP and RCEP, I’m afraid SEA will start to become the most geopolitically unstable region. Many academics have of course put off the possibility of direct, violent conflict, but the prospects of an arms war and the usage of SEA as leverage is real. Whoever garners more interest will win the region, and potentially the Pacific – China’s advances are like that of a benevolent dictator, punishing nations who undermine its sovereign claims; while the US takes the role of a servant-leader, in exchange for, of course, docks for naval vessels.
I am not purporting for reform of global institutions or leadership in free trade, as I am for liberal, unobstructed, sans-barrier, and agreement-facilitated trade. However, the very nature of treaties is that provisions for reservations, which potentially undermines the ideal no-nonsense trade, arise. I hence bring across the thought of a need for conscientious assessment of every agreement, not just in terms of economic interests, as well as a pressing need to be aware of and develop astute response mechanisms in face of multiple, seemingly daunting implications for Singapore on the diplomacy front.
Leaving this here as a reminder for all of us.
Prime Minister Lee Hsien Loong on 30 June spoke about three key challenges that Singapore would face in the next 10, 25, and 50 years. My personal stands on these:
- With our unique Singaporean grit, economic challenges can be, though not easily, readily overcome. Being status quo by programming, we may not be the most productive bunch but we are undoubtedly hardworking. Given further that a larger part of young Singaporeans are going into innovation and entrepreneurship, I see no reason we cannot succeed in this aspect.
- The trends in population growth show optimism but not guarantee. It is definitely not wise to go down the Scandinavian path. We need inspire and constantly remind our young people of one of our Shared Values – “Family as a basic unit of society”. PM was right – I might not be able to visualise myself at 70. But I definitely will not want to see my friends around me spending time with grandchildren and me, with my golf clubs.
- Shared crises, above shared experiences, pull us together. Though I find PM Lee’s worries on emigration a little exaggerating, we must work towards continuing to provide hope for young people, ensuring them that Singapore is a place for their aspirations and dreams.
Discussions about academic competitiveness, TPP, and same-sex marriage were off-tangent in my opinion.
Indonesia recently sunk a Chinese fishing vessel, among others. An illegal one of course. Are they intentionally stepping on toes of giants, like some tip them to be? Main reference: http://www.todayonline.com/world/asia/indonesia-sinks-41-illegal-fishing-boats-including-one-china?singlepage=true
In recent times, the South China Sea has increasingly become a minefield, sometimes battelfield, for many, yet it remains a backyard for some. It is the main body of water that transcends Asia’s largest economic bloc of more than 600 million people, and states are very wary of the potential impact of their actions on the stability of the region. Nonetheless, a strong message has been sent – that the significance and existence of countries who are key stakeholders in this sea are not be undermined.
Such an incident – a relatively lowly ASEAN nation disregarding cross-border political sensitivities – is probably previously unimagined. But Indonesia is no longer yet another country in a forgotten corner of the South-West Pacific. IMF’s rankings of GDP (PPP) places it as the world’s 8th largest economy, while it remains the world’s 4th most populous country and Asia’s 3rd.  This paradigm shift in the ever-elusive geopolitical power has been described as Ian Bremmer as a G-Zero World – a phenomenon in which no one country is big enough to ensure global compliance to its private agenda. 
It is apparent that this so-called “power”, of which existence I am personally skeptical about, that has phenomenally executed a pivot in geopolitics in the region and subsequently reshaping the power structure in this backyard. However, it doesn’t mean war. My fundamental belief is that such an instance will not spring into a major arms conflict. The matter, for one, is one of maritime and commercial nature, and not a regional dispute unlike Senkaku in the past. There are no grounds for China to conduct aggression against a state enforcing laws in its own waters, what more a state more recently known for negating futile pleas from the “international community” to undermine its own legal system.
Indonesia, and ASEAN at large, has had a strong history of coherent law enforcement and there have been little severe implications. Many would probably have forgot the uproar caused by our caning of Michael Fay back in 1994. Even with China out-daring many of its peers in a whole host of areas, it has yet to have done so on a full-blown military front. Kishore Mahbubani further pointed out that China’s aggressive claims has created opportunity for America to operate and intervene in its best interests, when necessary.  Besides, embargoes and sanctions will cost China really, really dearly.
The verdict? Relationships may sour, but Indonesia has done nothing wrong in principle to warrant an excessively aggressive response from China. No WW3 will happen just because of one ship. Bremmer, however, once again purported that the world is in a huge state of flux, something unseen since the previous world war.  My claim, nonetheless – it won’t start in East Asia.
: Bremmer, I. (2012). Every Nation for Itself: Winners and Losers in a G-Zero World
 Mahbubani, K. (2013). The Great Convergence: Asia, the West, and the Logic of One World. pp.131-132.
Geopolitical Journey: Indonesia’s Global Significance; URL: https://www.stratfor.com/weekly/20110801-geopolitical-journey-indonesias-global-significance (this is in 2011 though, things would have changed by a great deal by now)
The World Economic Forum releases annual reports on gender gap, available at the following URL: http://reports.weforum.org/global-gender-gap-report-2013/. The analytical work takes a four-prong approach, looking at educational attainment, economic participation, health, and political empowerment. After observing Singapore’s trends, I noticed a few key points:
Never mind health. Singapore is relatively equal on health despite ranking 85th. There are just marginal differences. But do give it some thought – among the ageing population now are males who are within the first batches of national servicemen. Is the inequality inherently due to males having went through conscription having slightly loftier CPF accounts?
It may be tempting to ask me to ignore another trivial issue – education – as well. The gap in Singapore is rather shocking. Well, it seems that girls grow discouraged in some point in time during their educational career in sexually secular Singapore. From another point of view, this may be because men generally attend more postgraduate courses compared to their counterparts. But why are career women not hitting the books again? An easy reason would be the need for the middle and working classes to stay in their jobs with the intent of providing livelihood.
But that isn’t wrong at all. Singapore ranks 12th for economic participation, signifying women contribute a considerably equal portion to economy as men. This is much higher than most Asian countries (only behind Laos and Mongolia). There is little doubt it is desirable for women to contribute to the economy as well, notwithstanding a once ideal family life with full-time mothers, very much parallel to traditional Chinese ideals. Poor nations, where people have little purchasing power on the other hand, need to have women out there to earn a living for their families. This possibly points towards the skyrocketing costs of living in Singapore, henceforth pushing women out into the workplace. If we take a step back, nonetheless, it may be due to the rising life expectations of Singaporeans (e.g. the need for travel, a car, uplifting homes, etc.)
Political empowerment is the area with the most room for improvement. This has been the talk among politicians for the past few years (after pressing and key issues of course). There is much for Singapore to do, and much more for the women of Singapore to do. Slowly but steadily, I believe, we will reach there. But the progress must not stop. There must be ongoing efforts to encourage women to step forth and give back to not just industry, but the country as well.
It seems that at times, in frantic economic resuscitation efforts, regulators and stakeholders sometimes overlook the need to focus on fuelling the right propeller. Most of the talk have surrounded bailing out large multinational corporations (MNCs) and state-owned enterprises (SOEs), and many regulators have left small and medium enterprises, which are paramount to economy and have survived the crisis pretty well, to struggle and fight the crisis on their own.
Saving, igniting and re-igniting enterprise at the SME level has a host of benefits. Doing so is, essentially:
- Relatively low-cost and low-risk: No big bucks are required for nominal grants to entrepreneurs who already have a bit of capital on hand, while campaigns are relatively cheap to finance compared to inter-government loans. Furthermore, there is no SME which is too big to fail.
- Productivity enhancing: A vibrant SME fraternity, with adequate and appropriate quality control and support framework (both monetary and non-monetary), is the ideal breeding ground for innovation and new practices. This translates into productivity gains in even the short-term.
- Diversity adding for the economy: Startups often give rise to unconventional ideas in areas such as art and design, specialized services, exotic cuisine or tourism. These form only seemingly a trivial fragment of economy, but add immense amounts of diversity, flavour and colour to their respective industries.
- Saving an increasingly pivotal segment of industry: With more SMEs and larger of such companies, they also employ an increasingly significant amount of the workforce, including self-employed contributors to the economy.
The conventional, government-based ways seldom drift away from the themes of grants and subsidies, campaigns and school penetration – most of which circle around the potential high yields one might get from being an entrepreneur.
Governments can only do that much. They can set up centres of excellence, institutes, and industry-enhancing agencies, but that’s pretty much they can do. Some things are often found by the government difficult to do.  Thankfully, there are NGOs willing to shoulder this responsibility as well, and do what the government sometimes cannot, or did not.
There currently lies, in a little secluded segment of our society, a group of individuals who are full of ideas and zest, never failing to form multiple thought institutes, with the most minor ones just a few like minded idealists getting together, and the more major ones able to conduct courses and boast a followership. Many of them deal with the creative industry, but in general advocate for people with ideas to dare to promulgate them through setting up a firm and dedicating their lives to doing what they feel for. I would consider them the champions of entrepreneurship, especially in their field, where start-ups are relatively easy to erect financially.
Shared office space, or co-working space, is also a springing trend, which paves the way for ultra-easy set-up of an operating environment. This translates to yet another incentive for entrepreneurship, where one major concern is well taken care of, at a relatively low cost. 
Developing enterprise and support for businesses
Putting a startup out on the market requires a great deal of ideas, capital, and, when all else fails, also confidence, determination and support. This is especially so for young first-timers whose SMEs are new to the market. Their companies could possibly do well with adequate networks and the right connections (“It’s not what you know, it’s who you know”), strong support frameworks, and an industry backing they know they can fall back on.
However, if they fail by their own accord i.e. lack of will or financial failure, no one else could help. But the rest of the entrepreneurship community could prevent seeing an aspiring entrepreneur waste his startup in whatever ways they could.
Ireland, by most accounts, has an adequately strong framework in Startupbootcamp. This is a (now) multinational institute which provides training, guidance, and funding for the beginners, and most importantly, at least for Ireland’s case, the networking and support they need in business development and sustainability. 
And such frameworks bring the best out of SMEs. Training is provided by “mentors”, many of which are industry leaders with a little name in their field, who, besides providing training and insights, could connect the right people to the right young entrepreneurs. In Ireland’s case, a number of startups have benefitted from IBM’s presence at the institute, for instance.
Encouraging starups – a social take
Entrepreneuship ought to start in school. To begin with, society, including parents and teachers, have to banish the dogma of staying on the ‘safe side’, and instead help to identity budding individuals with start-up potential – full of ideas, affiable, energetic, a go-getter, able to get things done. These qualities ought to be developed in school more proactively, and more importantly, get every student involved and interested. In the local context, we could make it more spontaneous and channel our resources to those who are really interested, for instance conducting an elective business study module instead of having a mass activity day. Which works better?
Outside education, people ought to look beyond being their cubicle mice. I’m not asking for mid-career switches, which tend to pack capital yet often relatively unsustainable business ideas, or say, blueprints which cannot target up to a certain critical mass (yes, we want startups around, but healthy ones too). The public ought to be more supportive of young, aspiring startups and the people behind them, so as to encourage them to generate ideas which could impact our society deeper. Entrepreneurs are humans too, they work on response. Their motivation comes from positive feedback. After all, the fraternity and its statutory boards and NGOs can only provide the framework. Economically, they are but a tiny slice of the revenue pie.
The Internet is an interesting place to watch. With the propagation of new media platforms and software technology improvement, the Internet has become a place not just for information exchange, but monetary ones too. On social media, even within personal networks, we see people selling bags, clothes, ornaments, articles, objects, and goods alike. Now, Facebook (I don’t have to hyperlink or describe it anymore) has become a primary marketing platform for many online ‘shops’ which own Facebook pages and a web domain, and provide ordering, confirmation, and delivery all off the keyboard. The carrot? Trendiness and money, I suppose.
From ground level up – what the business world needs to do
Some might argue that there is evidence that the industry is doing well. Indeed, a recent survey has stated that Singapore’s entrepreneurship is indeed robust – and ranked the city state second in the world for entrepreneurial activity among its sample group.  Through a strong culture of mutual assistance, entrepreneurs often see no trouble in tapping on their connections to smoothen business processes. At least, most corporate structures in the larger firms have no restrictions on doing business with SMEs and very young start-ups, although a minority may have reservations. It’s the human factor in play.
But there is a bit more the corporate fraternity could do to help these start-ups. Don’t worry, there won’t be any unhealthy competition as firms tend to do business laterally, i.e. with firms from other industries, to fulfill their business needs – either sales, supplies, or services.
To smoothen these things out, entrepreneurs might like to plunge into an all new concept – starting consultancy firms – be it marketing, business development, or huamn resources – from scratch. Instead of the common buy-package-sell process, consultancies take an all different model: engage-try-excel (ideally). Consultancies now tend to be viewed as a service affordable only to MNCs, but that dogma ought to change. With smaller consultancies looking at smaller margins (due to smaller overheads) and hence targetting smaller businesses which can only return smaller scale sales, the start-up scene could actually benefit by having their constituents to look at business from a different point of view and discover new information useful to business. And for these consultancies which have helped out other SMEs, please affiliate yourself to a larger firm to reap the benefits from their impeccable databases.
While MNCs could allow SMEs to branch, such relationships are not limited to just consultancies. Any industry could make use of these special relationship to facilitate SME growth. It then appears that there is no particuar reason why MNCs should do that. I’ll bring across a few:
- SMEs take a small bit of market share away from MNCs while keeping the integrity of majority of sales volume for the latter, henceforth preventing overheating and excessive competition in the industry.
- SMEs innovate, with little pressure on keeping business, the best and most effective ways, which MNCs can in turn use.
- MNCs are the industry leaders, and should there be accreditation for helping aspiring entrepreneurs set up shop, I’m sure MNCs would rush to attain it. Even without, wouldn’t it look good on their corporate profile, at least locally?
- Releasing enterprise is like releasing ladybugs into a garden. They roam on the ground, you don’t see them, but they ensure your garden blooms, and it is the larger plants and humans who benefit eventually.
Talented bosses, talented executives
A ‘talent-race’ hence ensues in today’s corporate climate, where companies look to people with the best attributes to run and lead them. One of the ways to stay ahead in this race is a focus work-life balance. With many PMETs and the top brains looking beyond cheques and ladders, SMEs ought to make use of their small size and flexibility in work and industry to allow its executives (less the Director who can decide it for himself) a better balance between time and effort spent in the office and at home.
While SMEs are obviously not as deep-pocketed as MNCs to offer (superficially) attractive remuneration and monetary benefits, or even invest in welfare infrastructure, they have proved to be more able to win the hearts of the employees themselves. Workplace cohesion and unique cultures tend to be forged more easily with institutions of strength 150 or less , and that’s what MNCs can never reach, try as they might.
Gradually, the Gen Y has started to stream into the job market. There are very particular ways to reach out to youngsters looking not just for survivability, but also finding purpose in what they do. They yearn to do things eccentrically, and require attention from their superiors in making them feel assured. Though they are resultantly constantly on the move, SMEs can afford the manpower and time-resources to keep them engaged and committed to the company, and should use that to their benefit.
Many youths also aspire to be their own bosses in future, and some SMEs have been, and most should, assist them in doing so, which can eventually spell mutual benefits, such as the young businessman sharing ideas with a company he feels comfortable with or new talents emerging start-up being picked up by the SME.  This seems to strike-out the need for institutes and networks such as Startupbootcamp, but do note that such a situation which happened in Gallup requires a really outspoken employee and a healthy work culture.
In my conscription military service, I witnessed the implementation of an organisation-wide “i-CARE” model in 2011 where ‘I’ stands for integrated, and the rest – commitment, aspiration, recognition and experience. SMEs, similarly, can adopt this framework in engaging their team, and ensuring that they remain committed, possess high aspirations, feel recognised, and have positive experiences.
One difference between SMEs and MNCs is their locality. While MNCs such as McDonalds and Citibank might have strong metropolitan presence, with some others even setting up RHQs here, they lack the national rootedness local SMEs could bring. SMEs must be first able to engage rooted and committed people, in order to understand the needs and wants of job-seekers, and reach out to them more personally and effectively.
The attraction and retention of talent is a ‘very human thing’, and requires, as well, the best people to do it. SMEs must always give a personal touch, and use their small size as a pivot not to outdo MNCs, but to ensure they have adequate high-calibre team members. And because humans never fail to be central to any organisation, society, and phenomenon, it is important that organisations must communicate right through to each individual the heart way.
At the end of the day, in encouraging and incubating entrepreneurship for a better economy, people are still at the core of it.
An international impact on entrepreneurship in the region:
 SPRING Singapore sets up and reinforces Enterprise Development Centres (EDCs) in March 2013: http://www.spring.gov.sg/NewsEvents/PR/Pages/Enterprise-Development-Centres-Help-SMEs-Stay-Competitive-and-Productive-in-Challenging-Times-20120328.aspx#.Uabzt9JkNUw
 Some co-working spaces in Singapore include: The Co, Cowork.sg, HUB Singapore, Space at 8. A quick search engine run will show a comprehensive list of providers available.
 Dyson, E., Principal of Edvantage, wrote for Project Syndicate: “How do Start-Ups Succeed”, June 20, 2012. http://www.project-syndicate.org/commentary/how-do-start-ups-succeed
 The Nanyang Business School survey ranks Singapore second in entrepreneur activity, April 30, 2013: http://www.nbs.ntu.edu.sg/News_Events/News/Pages/NBS_study_ranks_Singapore_No.%202_in_entrepreneurship.aspx
 Gladwell, M. (2000), The Tipping Point: How Little Things Can Make a Big Difference, Little Brown. ISBN: 978-0316346627
 Clifton, J. (2011), The Coming Jobs War, Gallup Press (New York). ISBN: 978-1595620552
 A faction Singapore’s defence force put in place an i-CARE framework in March 2011 in hope of engaging their people more openly. Mass engagement activities and one-to-one chats were focused on the four parts to the approach, and the campaign is seen as a more sustainable way for management to get to the ground.
The aftershocks of Lehman-2008 created multiple peripheral crises and tumbled economies around the globe. Now, as recovery is picking up worldwide (at least statistically), there are numerous organisations, countries, and groups of countries that seem to be stuck in red. Here’s who, how, why, and what can be done. Two rather separate issues with somewhat a link between them in this post.
I choose to believe that sustainable growth must always come within. In the case of a company, they must focus on their human capital, which ought to be collectively engaged and constantly look out for effective methods of doing things. For economies, just extrapolate that desired behaviour. Industry leaders must be motivated to develop the best people and firms, while regulators ought to focus on productivity. A firm should not put too much focus on marketing and revenue expansion, just as external economies will never work out in the long run.
The financial sector is an industry of interest in this case. While some economists and thought leaders have subconsciously put the blame (and shame) for this crisis on bankers on Wall Street, the US government made life a little tougher with regulation, to both they cringe. Inevitably, all these have made bankers on Wall Street feel a little disorientated and disillusioned. They start to question themselves. A few more literary ones have penned down their thoughts.
The uphill factor here is the engagement of bankers and brokers in the financial sector. If the industry is to do well, these individuals must re-find dignity in what they do – they must be engaged, motivated, and ready to make a difference, this time in a socially responsible manner. In my opinion, bankers are inherently altruistic – they want to help people and firms, and with economic backgrounds, they understand the gravity of the situation, and what is at stake for those they are meant to help – except that many a time intuitive human greed gets into them, and they end up with the wrong decisions. Now we understand how a single decision bankers make can affect our daily lives. They understood it from the start – many were just careless.
With unmotivated employees and little confidence, it is no wonder why financial institutions are recovering a tad slower than other professional services firms housing white-collared employees. Yet, it would be a little far-fetched for me urge all of us out there to put some confidence in the industry (after all, it is your money you are putting in), or to bring out some ubiquitous policy suggestion that would provide bankers with a better working ecosystem. The only way out is for the industry itself to slowly regain confidence through mutual and internal affirmation, and make both its providers and recipients understand its weight, and the impact they have on both life and the economy.
As mentioned, healthy growth ought to come from within. Countries that are struggling with their economy, more often than not, face one of such factors:
- Policy conflict – The monetary and fiscal policies cannot act in tandem, and policies are stuck in deadlock.
- Political dilemma – Certain controlled variables are not shifted to allow a healthy tilt for the selfish rationale of vote counts.
- Overreliance – Either on the external or internal economy. Necessary anti-directional policy adjustments would compromise years of sustained growth.
In order for their economies to overcome growth hurdles, governments ought to enable it from the inside, and not drive the external economy when the internal components to sustain it cannot cope. This happens to be the case for failed industrialisation attempts across half of Africa, and other regions including Asia and Latin America. Typically, investors find the workforce not productive enough, which is in fact the case. There is no point in boosting the demand function if supply cannot cope.
So what if education and infrastructure development takes a longer time? Let it be, if that means healthy, robust and sustainable growth is to occur in an additional 30 years. As easy as it sounds, it takes a lot of political will and follow through, apt leaders, and minimal corruption in order for such to happen. That’s the hurdle that humanity has the key to overcoming, but some components of it refuse the release.
The people must be empowered, be it in corporations (engaging them) or economies (educating them). And because people are the centre and the core for all things human, that is what coming from within means.
Are the governance challenges facing China’s new leadership really that different from other countries?
for Project Firefly, February 10, 2013 (not published). Submitted under the ‘Emerging Leaders’ essay competition.
Setting the stage
Just like any other newly minted administration, China’s new leadership faces a host of governance challenges. Given its population of 1.4 billion, growing worldwide interconnectedness with the information age, and a gradually rationalizing people, China no doubt has to grapple with a unique, complicated set of challenges in governance.
As compared to other countries, the impending examination on China’s government shows a few distinct characteristics:
- China faces its challenges at a time of worldwide uncertainty. And that uncertainty does not revolve only around economy, but increasingly, geopolitics and information technology as well. Other developed nations didn’t have to face such a world order in the last century.
- Almost all possible forms of challenges are coming towards China now – business competitiveness, economic growth, social media issues, information protection, eldercare, strife within the CCP, et cetera. Probably no nation had to grapple with that many hurdles simultaneously.
- With such a large population, it is inevitable that policy formulation will be more convoluted than countries with relatively small numbers. One cannot simply parallel the decision frameworks of China and, say, Japan, not just because of varying socio-political and economic landscapes, but due to the intricacies of managing the far more citizens at once.
It is indeed evident that China’s new leadership may just not be minted in the best of times. The world waits to see how they can take up this extraordinary set of policy and governance challenges.
One major facet of the myriad challenges facing Xi Jinping and his administration is the economic legacy their predecessors left behind. Hu Jintao’s leadership focused largely on manufacturing- export based industries and strong financial regulation, which brought about, since 2001 the following to the economy: 
- A rapid economic growth not dipping below 8% every year. China’s GDP expanded from $1.3 trillion in 2001 to $5.9 trillion ten years later.
- Increasingly higher inflation rates beyond 6% since 2007, except for a negative year due to the worldwide crisis. Inflation was previously relatively healthy, though.
- Across a decade, a six-fold increment in net foreign direct investment (FDI) inflows from $44 billion to $243 billion.
- Trade reliance hovers around 50% of GDP, peaking at 64% 2006. For many other economies, a huge consumer base usually doesn’t entail such trade slant.
- Not just an economic issue, but a social one as well – the widening income gap forming a rich/poor and even rural/urban divide across the country.
These results act collectively as a two-edged sword. Xi’s leadership will have the fortune of riding on their predecessor’s successes, yet must resolve the underlying issues from these outcomes. Seldom has another First World country experienced all these economic phenomena acting in tandem, nor has the previous leaderships of China faced such situations in an increasingly panicky, every-nation-for-itself world.
In a time when faced with that many tests and a pessimistic world outlook, China’s policy options must be aimed at a few key thrusts – regulating economic growth, stabilizing the pivot on FDI and trade, narrowing the income gap, and interacting effectively with the worldwide community. This would inevitably involve some of the following:
- The forced and direct monetary cooling of the overheating economy. Policies must revolve around areas like interest and exchange rates control, fiscal spending, financial in attempts to slow growth and prevent runaway inflation. 
- The engagement of the middle class, beyond tapping on their consuming power, is imperative. This dynamic class of skilled labour is essential to the professional, management, and executive (PME) workforce to create productivity, which the economy urgently needs.
- China’s explosive growth period is probably over. Productivity is central to sustaining true and longer term economic growth without feeling the backlashes such as hyperinflation and income inequality. Education reform is also a must.
These policy options and their relevant challenges seem rather generic in nature, and that any other country may use it. Indeed, this is a stage that Korea has just gone through, Mexico is going through, and India is going to go through soon. However, to face it with complex situations at home and abroad makes it special. I content that the trickiest areas would be closing the socioeconomic gap and managing peers on the diplomatic ground.
In addition, the new government needs to manage Sino-American debt, trade, and politics effectively, another impending challenge in time to come. Besides US themselves, no other country has came to worldwide political and economic power like China’s rise.
In theory, the economy works two-way. Yet we can never have a hypothetically efficient market in actuality, and it is therefore vital to note these factors of consideration, given further the intricacies of managing a really vast economy.
The Chinese Communist Party, which has been in sole dominant power since 1949, has long been known, like many other communist parties, for their tight party discipline governing its members and officials. Yet, in recent years, there has been a rise in graft, corruption, and crime within the CCP. Some recent cases include:
- The arrest and expulsion of Bo Xilai, and wife, for the murder of Briton Neil Haywood in early 2012. Bo was the mayor and party chief of Chongqing, and a member of the Politburo Standing Committee, one of the highest offices in China. 
- Liu Zhijun, former Railway Minister, who was expelled from the CCP and political office for being found with illegitimate business relationships, causing inefficiency in the system; and the intent to bribe himself into the Central Committee of the CCP. 
- The laxity in building standards of schools and buildings in the affected disaster zone of the Sichuan Earthquake in May 2008 revealed that constructors and authorities kept a blind eye to safety and cut corners, in order to pocket the balance. 
The new leadership faces an uphill task in keeping graft within the party and government at bay. China ranks 80th out of 176th on the Corruptions Perception Index, which leaves the party with a lot of work to do.  Letting the uptrend continue would inevitably stumble development and seamless governance.
Unlike many other countries in Asia and sub-Saharan Africa, China’s proliferation in corruption comes at a time when its officials are raring for more and its people are getting more well-informed, simultaneously. There can no longer be cover-ups for most scandals, and that poses an immense challenge for the new leadership of the party.
Xi’s administration also operates in a tense regional environment with numerous multilateral territorial disputes, such as over the Senkaku Islands that escalated in mid-2012. Many of these conflicts involved the military. 
China’s military pivot – including the burgeoning military spending (which hit $106 billion in 2012) and the acquisition of an aircraft carrier in late 2012, has become a cause of concern for Western powers operating in the Far East.  The new leadership must exercise sharp foreign policy and take on leading roles in regional and international military issues. That might pose some difficulty for a usually laid-back diplomatic team.
Society vs. media
The usage of the Internet is allowing the people more space, freedom, knowledge, and information, yet it is taking away the undeserved state privacy from the CCP. New media in China is gradually claiming importance, and its people are eager to embrace the information age.
China’s Internet revolution involves extensive blogging and discussions on topics such as national issues, world and regional events, international disputes, political scandals, and party officials’ personal lives. Sina Weibo, the most popular and celebrated microblogging wbsite, has 368 million registered users.  That slant shows just how articulate the Chinese have become since they are equipped with the World Wide Web. Being oppressed for sixty years or so, it is finally time for some freedom of speech, albeit virtually and not fully liberal.
We all know that China censors Facebook and Twitter, and provide their own versions in place. They also regulate and repress certain local websites and content, spotting any trace of anti-CCP sentiment. While this totalitarian method is being frowned upon, we do have to appreciate that the Internet can bring good in the form of healthy interactions, and bring bad through the possibility of organized crime (including political crime which further destabilizes its political position).
China is rather unique in this aspect – they can never compromise political stability, unlike most democratic nations around the world which are mostly running a free-Internet policy. This just explains the challenge that all CCP leaderships face in keeping themselves in power, and hence the country secure.
A strong administration and sound policies are always key to good governance, and any relevant challenges can always be overcome. Should we content that China’s aims with the new leadership are a sustainable economy, political stability, social inclusivity, and becoming a responsible world player, a competent leadership is required.
China’s governance challenges, however, comes under varying situations compared to their counterparts, and that calls for even stronger and tighter policymaking processes.
References and Notes
 Chinese economic data extracted from World Bank online database: http://databank.worldbank.org/data/views/reports/tableview.aspx?isshared=true&ispopular=country&pid=1
 China has used extensive expansionary monetary policy to create proper business conditions, largely through controlling interest and exchange rates, and money supply expansion, also known plainly as ‘money printing’.
 The first outbreak of the news of the Bo Xilai case on The Guardian (online version), “China ousts Bo Xilai as Chongqing party boss”, March 15, 2012. http://www.guardian.co.uk/world/2012/mar/15/china-ousts-bo-xilai-chongqing
 Liu was removed from office in 2011 and subsequently expelled from the CCP the following year. “China ex-rail minister expelled from party amid corruption claims”, The Guardian (online), May 28, 2012 http://www.guardian.co.uk/world/2012/may/28/china-rail-transport
 “China Angers Over ‘Shoddy Schools’”, BBC News (online), May 15, 2008. http://news.bbc.co.uk/2/hi/asia-pacific/7400524.stm
 Transparency International’s Corruptions Perceptions Index (CPI).
 “China sends patrol ships to islands at center of dispute with Japan”, CNN (online), September 11, 2012. http://edition.cnn.com/2012/09/11/world/asia/china-japan-islands-dispute
 “China Raising 2012 Defense Spending to Cope With Unfriendly ‘Neighborhood’”, Bloomberg News (online), March 5, 2012. http://www.bloomberg.com/news/2012-03-04/china-says-defense-spending-will-increase-11-2-to-106-4-billion-in-2012.html
 “China navy takes delivery of first aircraft carrier”, AFP News (hosted on Google), September 23, 2012. http://www.google.com/hostednews/afp/article/ALeqM5gSrxMrCkrSKB3TmfZLaxRtk7OMhQ?docId=CNG.120f8ada7f83c4fd3321ff305b92c6ba.331
 ‘Weibo’ literally means micro-blog. Sina is not the largest and only microblog hosting website in China, but it has gained much ground that it has come to be known as ‘China’s Twitter’. Article: “China’s forgotten third Twitter clone hits 260 million users”, Millward, S., TechInAsia, October 22, 2012. http://www.techinasia.com/netease-weibo-260-million-users-numbers/