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Donald Trump: whether you love him or hate him, you are almost certainly paying him an inordinate amount of attention. Through his unusual, off-the-cuff Tweets, his idiosyncratic management style, and his refusal to pander to the mainstream press, this United States president has managed to not only polarize the US voters but to be the subject of dinner table conversations from Downing Street to the Kremlin.
As tempting as it is to join the fray with a discussion of the fate of the Trump trade, NAFTA and the border wall, Syria, or North Korea, let’s take a look behind the curtain and see what is going on with China. We are all aware that when it comes to economic, political and social planning, China takes the long view. That said, President Xi Jinping and Premier Li Keqiang are now demonstrating just how nimble the leadership can be.
Rightly or wrongly, China has been heavily monitored and criticised by the press during the past few years for adventurism in the South China Sea, human rights controversies, trade practises, and etcetera. But a rare opportunity has presented itself: as the world’s attention is focused on Trump and the other drama in the West, China has been quietly making huge strides with One Belt, One Road (OBOR) with little press attention or diplomatic pressures to hinder their progress.
In case you have not been following it, OBOR is a development plan that leverages China’s unparalleled infrastructure building expertise to establish (or re-establish) land and maritime trading routes connecting the country with the rest of Eurasia and Africa and Messrs Xi and Li have made it clear that the policy will be the driving force behind the nation’s long-term economic and political development strategy.
As China’s domestic economy has grown and matured over the past two decades, it has begun to rely on its new middle-class to replace the central government and export markets as the key consumers in the economy. The result of this shift is a near critical overcapacity in heavy industry which President Xi identified last year in his Five Year Plan as a key area to be curbed.
With One Belt, One Road, China plans to utilise the expansion of the trade routes to absorb the existing domestic overcapacity. While offsetting the surplus at home is a great benefit, even more critical is the overall expansion of the Chinese economy as the new trade routes come online and increase both demand for Chinese-made goods and the availability of strategically critical raw materials and food sources.
The brilliance here is that the materials, heavy equipment and manpower needed for the project are already available so they can be quickly deployed (and with little risk) while the international community is focused elsewhere. This allows China to remove key impediments to its economic transition, improve its strategic preparedness, increase GDP, and massively expand its influence throughout the hemisphere. Perhaps the rest of the world should put Twitter away for a moment and pay attention?
Charlie O’Flaherty is partner — head of digital strategy & distribution at Crossbridge Capital. Crossbridge Capital is a global wealth manager who recently launched CONNECT by Crossbridge, Singapore’s first fully functioning robo-advisory platform for Accredited Investors.
The views expressed in this article are those of the author and not the author’s company. This material is provided for educational purposes and should not be construed as investment advice or an offer or solicitation to buy or sell certain securities.