Silk Road: The view from Europe

The One Belt One Road Initiatives is not moving as fast as originally hoped by Chinese policy makers, but not a surprise for the experts. The OBOR is part of a four-pronged approach to the expansion of Chinese economic influence that seems to have an inverse relationship between the chronology of the announcement and its feasibility: 1) the Internationalization of the RMB; 2) One Belt One Road; 3) AIIB, 4) China Manufacturing 2025.

Free trade is good in the long run. Meanwhile…

In 2017, one of the biggest issues that the world will be facing is trade war, especially between China-US. President Xi and Trump have different views. Xi strongly encourages free trade between countries while Trump stresses the importance of fair trade. Michele Geraci has an even different view from both of them. He thinks that opening up trade and lowering trade barriers, in general, would benefit both countries involved, on average, but the problem is that these benefits are not always redistributed fairly within the country.

From the US with love: “Lessons on trade and reserve currency”

Trump is over blaming trade deficit for America’s current situation. But US has trade deficit to 101 countries, not especially to China. This is no longer a bilateral problem, but rather a multilateral problem which origins from America itself. One other reasons why America suffers a negative trade deficit is due to the international status of the US dollar. If there is an international crisis, the demand for dollar will increase because people consider dollar as the safest asset. Therefore dollar appreciates, whcih is bad for US’s international trade.

The European Chamber in China criticizes “Made in China 2025”

The European Chamber in China has just released a report commenting the “Made in China 2025” plan pursued by the Chinese Government. The report indicates the current challenges for CM 2025. One is the lack of skilled labors. The second challenge is overcapacity as a result of government subsidy over the past years. The third one is the challenge to international markets. I think another reason of worry is that most of the MA activity carried out by Chinese companies overseas, has actually been driven by the government encouragement. Therefore, it further represents market distortions.

Geraci hopeful about President Mattarella visit to China

The president of Italy is currently in china for an official state visit. This state visit comes at an interesting time for both China and Italy: the two countries are engaging more than before into a commercial dialogue of mutual respect and common interests, trade between the two counties shows good sign of improvement and Italian trade deficit appears to narrow slightly and capital investments made in the past couple of years have all helped improve the image that the Italian Business community has of China.