It would not be too far from the truth to say that China is not all that it says it is. Many of its military and diplomatic actions have gone against norms and messages propagated by its own government. Retracting its own statements and even concealing the truth comes naturally to a government that maintains a monopoly over all information in circulation within the country as well as that which leaves it. Recent statements from the Chinese government have painted a colorful picture for the coming months, with it soon to “regain the economic growth it lost” and maintain its internal strength. How much truth can actually be accorded to such a statement though? Is China’s economy truly in a good shape or is such a statement to be seen as a mere façade, shadowing a highly unstable country?
If recent trends emanating from the country were to be analyzed, one could indeed point to the latter. At the beginning of the year, China’s economic growth had already begun a steady decline, falling to its lowest in 27 years, a mere 6 percent in the 3rd quarter of 2019. Predictions during the time, from both within and outside, projected the growth rate to fall further, with an economist at the Chinese Academy of Social Sciences predicting a drop below the annualized 5 percent. Additionally, reports questioning the accuracy of the data released by China have also emerged. China’s national accounts are based on data collected by local governments who are rewarded for meeting growth and investment targets. In this regard, it has become apparent through outside observation as well as internal admittance that many of China’s provinces have had an incentive to skew local statistics, some by nearly 20% a few years ago.
Such manipulation of data can have serious ramifications on the calculation of national data, especially since China’s GDP is based on input data rather than real performance. It is also to be noted that in addition to local governments manipulating data, there is a discrepancy between underlying economic activity and GDP figures, which has allowed the government to ignore bad investments and project only the figures it approves off. Based on such an understanding of the Chinese economy, reports from 2019 show that both GDP as well as GDP growth in China are far below official predictions and statements. It must also be understood that the Chinese government itself has always had an incentive to project greater growth during its developing years. Claiming higher growth rates and lying about recessions has allowed China to retain or even increase investment. With that being said, it has become increasingly evident that the statistics and figures released by China cannot be wholly relied upon.
While the above highlights the concealing factor behind China’s economy, it also points to the possibility that China’s economy is currently in a bad state. With the shuttering of businesses across the country, it is evident that the Covid-19 crisis dealt a devastating blow to China’s already floundering economy. Reports published by China’s National Bureau of Statistics in April showed that the country’s GDP had fallen by 6.8 percent, a contraction the likes of which, China has not seen since at least 1992. However, with lockdown measures now ending and policymakers stepping up stimulus to combat the massive economic shock, the country is now set to return to a modest growth rate according to its government. This may be true as China has begun on a path of recovery, however, its economy may have to face another looming crisis soon.
Over the past few months, it has become increasingly evident that not only is foreign investment fleeing the country but there is increasing unrest among local investors as well. China’s economic downturn which began with the trade war and culminated in the COVID-19 economic crisis has frightened investors across China. Since the beginning of the trade war with the US, many international companies have begun shuttering business and departing from the country. The pandemic has seen that number only increase over the past few months with potentially disastrous economic outcomes. Additionally, fears within China have surfaced as well, with many attempting to send their capital abroad. The recent political turmoil now plaguing Hong Kong is also reviving fears over massive capital outflows from the country. China’s new national security bill and the retaliation promised by the US and others has stoked significant concerns. The first instance of this is seen in the immediate aftermath of China’s announcement of the Bill on May 22 when Hong Kong’s benchmark for local stocks plunged by 6.9%. Essentially, with tensions rising, further turmoil and capital flight may soon be in the cards.
Only time will tell whether the government will be able to reduce the possibly disastrous consequences of such capital flight or even reverse the same. In 2015, when similar fears of capital flight occurred, it spurred the country to spend nearly US$1 trillion of its reserves. However, with the current economic downturn in China, it would be highly unlikely that the Chinese government will be able to muster the funds needed in countering such consequences. The Chinese government has seemingly taken cognizance of this fact though and has therefore introduced measures aimed at ensuring Chinese investment and capital remains within China. Not only has China already put a cap on the amount of money allowed to leave the country but also cracked down severely on its underground banking system. Additionally, the government has been attempting to woo the fleeing investors back with promises of economic stability and recovery. China’s current projection of post-pandemic recovery and growth must therefore be viewed through a critical lens, and seen as merely a tool through which it attempts to influence and reassure investors.
On the government’s attempts at ensuring investment though, it has not merely acted in the field of rhetoric and promises though. Since the beginning of last year, the Chinese government has put a cap on the maximum amount allowed for withdrawal from its economy. According to new rules, individuals will only be allowed to withdraw a maximum of the equivalent of around $15,000 and carry transactions up to only $50,000 abroad in a year. Any Chinese citizen found to be withdrawing in excess of that amount will be barred from making any withdrawals for two consecutive years. Additionally, any Chinese citizen leaving China with an excess of RMB 20,000 in cash require a permit issued by the bank that provided the same. In enforcement, the State Administration of Foreign Exchange (SAFE) has already begun its crack down on capital flight. In November of last year, the agency fined Chinabank Payments $4.2 million for moving money overseas. In the following month, SAFE fined the Bank of China $6,000 for breaking a government rule and allowing a customer to withdraw over $50,000 in cash according to reports. One can be sure that the situation in China is indeed serious, when its government has become overly concerned over a mere $15,000 being withdrawn from the economy.
This concern has also been extended to the new surge in China’s underground banking system. China, in its efforts to counter threats to its economy, has begun a serious crack down on all capital outflows, whether legal or illegal. The Supreme People’s Court recently introduced stiff penalties for any and all illegal currency exchanges. According to new rulings, the government will introduce jail terms of five years or more for those operating ‘underground banks’, which currently facilitate illegal foreign exchange and cross border trading. Through this process, the Chinese government has effectively sought to stop tens of thousands of Chinese from funneling millions out of the country through these services. Since the government has put a cap on the amount of money being withdrawn from the country, people have sought other mechanisms through which they can transfer funds overseas, either for the purpose of investing in property or making other significant foreign exchanges.
The requirement for such mechanisms has motivated the creation of an Informal Value Transfer System (IVTS) known as ‘Underground Banking’. The IVTS involves the transfer of funds to a bank account controlled by a Chinese IVTS provider who then transfers the same into an account of the remitter’s choice. This allows for the transfer of large amounts of funds out of the country without the knowledge of the Chinese government. The stiff penalties now being imposed on such transfers are once again indicative of the governments need to retain capital within its own economy. Any large capital outflow can result in a fall in exchange rates, negative spiral of declining confidence and finally, no buffer for government debt. For a country currently facing a debt to GDP ratio of nearly 300%, capital outflows could result in serious consequences for its economy, especially during a time when mechanisms like the IVTS has seemingly gone into overdrive.
The government is currently doing everything within its power to paint a picture of recovery, provide opportunities for investment and crack down on individuals attempting to evade its rules and directives. While the crackdown on capital outflows and underground banking is evident, there has also been significant actions taken on the digital currency front. Within China, there has been a surge in both the transaction as well as mining of Bitcoins over the past few years. Many experts have stated the need for three factors in ensuring effective cryptocurrency mining, i.e. low-cost electricity, colder weather and reliable internet. The availability of all these factors in China has facilitated massive incursions into the usage of cryptocurrencies, with reports showing between 35-37 variants of the same currently available in the country.
With the property market currently being viewed as inflated and the stock market as a scam, cryptocurrencies provide an alternative to Chinese citizens who wish to make investments that are not riddled with problems or subject to government scrutiny. Many middle- and upper-class Chinese have thus begun making investments and transactions through Bitcoins and other cryptocurrencies. With the government being unable to shutdown Bitcoin accounts or monitor transactions made through the same, this mechanism effectively allows individuals to subvert it. It is estimated that this medium alone has accounted for transactions ranging in billions of dollars over the past few years. With the Renminbi (RMB) essentially losing its transactional value, the number of people now adopting these mechanisms has seen a significant increase, putting the government on alert. However, the only action the government can undertake in this regard, is accelerate the launch of its own sovereign digital currency and hope its citizens will give up on Bitcoins and other cryptocurrencies (a highly unlikely prospect).
It is evident that the government in China may soon have an economic crisis on its hands, one which it may be unable to counter. Extremely high debt to GDP rates and possibly massive capital outflows has put the government in a precarious position. It has therefore sought to curb high debt and also put out reports that its digital currency would be a game changer for Asia, allowing for more RMB demand in the region. Undoubtedly these reports are another one of its propaganda activities, aimed at retaining investment. According to reports, China’s economy will face two major shocks, a pandemic stimulus and a post-pandemic economic fallout.
It must also be noted that China depends on the global economy for its own recovery and if this does not occur soon enough, its economy will have to face serious consequences. The reasons for this are manifold. Most importantly, China, the world’s largest exporter, relies on the United States, Japan, South Korea and others for its economic activity. Exports to the US, are currently facing a shortage of demand as well as disruptions across global supply chains. Additionally, China needs to ensure continued implementation of its Belt and Road Initiative in order to continue a majority of its overseas economic activity. Currently, from Europe to Asia, trade as well as infrastructural projects across the BRI, which accounts for around 17 percent of China’s exports, have been put on hold.
It has therefore become apparent that China’s economic growth is not all that it would seem. While it is the second largest economy in the world and has shown spectacular growth in the past, it would seem like China’s glory days are behind it. Forces that once drove China’s economic growth are now withering. China’s economy can no longer rely on a trade surplus or foreign investment to boost growth and will probably see increased capital outflows in the coming months. Additionally, China is now on the verge of a debt crisis and the massive foreign reserves it has repeatedly used as stimulus in the past have been slowly declining. In this context, it is imperative to question the narratives propagated by the Chinese government. If the Chinese economy is truly on the path of economic recovery, then why has there been an increase in the lack of confidence shared by its own civilians? And if such are the woes facing the country, is the future of its’s economy truly as promising as it’s government would have the world believe? One would think not.
Leaders of BRICS Emphasize Strengthening Economic and Security Cooperation
Leaders of the BRICS group (Brazil, Russia, India, China and South Africa), the end of their 14th summit hosted by China, have emphasized their commitment to strengthening economic and security cooperation among members, within the context of a new era in global development. With high hopes and the current world developments, the BRICS is still debating its expansion to include new members following strong suggestion from China.
The leaders underscored their adherence to sovereignty and territorial integrity of all countries, advocated a world without nuclear weapons and called on developed countries to exercise “responsible economic policies, while managing policy spillovers.”
The group continues advocating for a “comprehensive reform of the UN, including its Security Council,” in order to increase the representation of the developing countries so that it can adequately respond to global challenges. It also calls for preserving and reinforcing the arms control system.
“Unbalanced recovery” after the pandemic is ” aggravating inequality across the world,” the global growth momentum has weakened, and the economic prospects have declined, the declaration says.
“We urge major developed countries to adopt responsible economic policies, while managing policy spillovers, to avoid severe impacts on developing countries,” BRICS leaders said, urging “multilateral financial institutions and international organizations to play a constructive role in building global consensus on economic policies and preventing systemic risks of economic disruption and financial fragmentation.”
The five leaders underscored that the G20 “shall remain intact and respond to current global challenges.” The leaders outlined basic areas of further cooperation with international organizations.
The June summit via a video link, offered an impetus to cooperation in three summarized main areas – politics, security, economy and finance, cultural and humanitarian ties. There are various issues incorporated into the Beijing Declaration adopted by the participants. The text of the declaration is published on the Kremlin website, and official websites of the group members.
BRICS countries have maintained contacts at international organizations, including the United Nations and the World Trade Organization, coordinating their views on key international issues, and “the situation in the world has remained tense, while the group of five countries has been the true keeper of a multilateral system.”
BRICS expansion has been the most debatable question during the past few years, and got heated up after Russia and China called for a new global order to end unipolarism. Monitoring mainstream news and information reports indicated that Russia has been teaming up with China and India (and that could be interpreted as BRICS platform initiative) and a few other external countries in the process of establishing a new global economic system. It aims at breaking the unipolar system, and defeat American hegemony around the world.
Ahead of the summit, China’s State Councillor and Foreign Minister Wang Yi chaired a videoconference dialogue between foreign ministers of BRICS countries and their counterparts from emerging economies and developing countries. This was the first BRICS Plus dialogue at the level of foreign ministers. Participants in the dialogue came from BRICS countries as well as invited countries such as Kazakhstan, Saudi Arabia, Argentina, Egypt, Indonesia, Nigeria, Senegal, United Arab Emirates and Thailand.
According to Chinese Foreign Minister Wang Yi, the dialogue is of importance to further expand cooperation between the BRICS countries and other emerging economies and developing countries. As a BRICS Plus participant country, Argentina has on several occasions expressed its interest in joining this mechanism. The Argentine president, Alberto Fernández, considered that BRICS represents for Argentina “an excellent alternative for cooperation in the face of a world order that has been working for the benefit of a few.”
Early June, Russian State Duma (the lower house of parliament) Speaker Vyacheslav Volodin wrote on Telegram that the United States and its allies are destroying economic ties by their sanctions policy, but at the same time creating new points of growth in other countries. “The move by Washington and its allies to cut the existing economic ties has created new points of growth in the world,” he pointed out. According to the parliament speaker, Western sanctions are leading to the establishment of another group of eight nations – China, India, Russia, Indonesia, Brazil, Mexico, Iran and Turkey – that is 24.4% ahead of the old group of developed countries in terms of Gross Domestic Product (GDP) and purchasing power parity.
“The United States, with its own hands, has created conditions for countries willing to build an equal dialogue and mutually beneficial relations to actually establish a new G-8 group with Russia,” Volodin noted. If the establishment of another new Group of Eight nations – China, India, Russia, Indonesia, Brazil, Mexico, Iran and Turkey – and compared to BRICS – Brazil, Russia, India, China and South Africa, it follows that BRICS will have to be absorbed by the new Group of Eight organization, and thus pushing out South Africa.
In an interview discussion, Ms. Valeriia Gorbacheva, GR-Director at Russia’s National Committee on BRICS Research, explained that Russia does not need to create new unions or new G-8, there are already established structures such as SCO, BRICS, ASEAN, EAEU and CIS. “In the face of growing geopolitical instability, BRICS and those countries mentioned above that sympathize with the group may play a decisive role in changing the course of world history. Considering the geopolitical situation, BRICS takes on special importance for Russia. No BRICS country has supported the West’s illegal unilateral restrictive measures against Russia,” she told Modern Diplomacy.
According to her explanation, on the contrary, sanctions from the collective West are pushing the BRICS countries to deepen cooperation. Thus, Russia’s foreign trade turnover with BRICS partners shows tangible growth. At the end of 2021, trade increased by 40% and reached a record US$164 billion. In the first quarter of 2022, there is also a significant increase – 38% compared to the first quarter of 2021.
Gorbacheva pointed to the mechanisms created within the BRICS that can help overcome the economic isolation declared by Western countries against Russia the backdrop of the Ukrainian crisis. First of all, these are the BRICS Contingent Reserve Arrangement and the New Development Bank. The NBD is independent of Western-centric international institutions and operates with significant financial resources. The portfolio of investment projects approved by the NBD reached US$30 billion in 2022. It already approved 80 projects and loans worth more than US$9 billion to all BRICS countries to mitigate the economic consequences caused by the COVID-19 pandemic.
In order to reduce dependence on the American banking system and regulators, the BRICS countries are increasing the volume of mutual settlements in national currencies, she said, and added that Russia is interested in the development of an alternative SWIFT system for BRICS and BRICS+ countries. “There is the danger that the inclusion of new players could undermine the positions of the BRICS countries themselves within the group. First of all, we are talking about South Africa, which has the least economic weight within BRICS. If expansion does occur, it would rather be about the quasi-membership of major second-tier countries on each continent pursuing, if not openly “anti-Western” policies, but an alternative, Gorbacheva further told Modern Diplomacy.
She, however, concluded that “the most likely scenario is the consolidation of the BRICS+ format as a platform for “integration of integrations” in compliance with the principle of equitable geographical representation and invitation of member countries of large regional integration associations.”
Lucio Blanco Pitlo III, a Research Fellow at the Asia-Pacific Pathways to Progress Foundation, argued that the already established BRICS may have better chances of enticing new members. The new members could be Argentina, Egypt, Indonesia, Kazakhstan, Nigeria, United Arab Emirates, Saudi Arabia, Senegal, and Thailand that participated in recent consultations.
Dr. Pankaj Kumar Jha, Professor at O. P. Jindal Global University in Sonipat, Haryana, explains in an emailed discussion that China and India border conflict will continue influencing BRICS. However, India and China are cooperating to develop alternate financial structures, cohesive guidelines within Asia and the global south on many issues such as trade, investment and developing an understanding so that dominance of the of west could be reduced to a minimum in global financial architecture, he argued and added, “the foundation of cooperation in BRICS brings potential resources and critical development requirements under one umbrella.”
Questions about the future of BRICS are bound to be there especially when a new world order is being discussed. Drawing inspiration from Quad plus, BRICS countries are also discussing BRICS plus format. The formation of new grouping G-8 is primarily a fusion of BRICS and VISTA (Vietnam, Indonesia, South Africa, Turkey, Argentina). The formation is primarily to connect BRICS to middle income and middle power countries, according his explanation.
Dr. Pankaj Kumar Jha concluded his argument: “This geopolitical configuration is in exploratory phases, undoubtedly meant to bring a new axis of Russia-China but inclusion of Mexico , Indonesia and Turkey has its own strategic baggage. How much successful this grouping would be is still a matter a conjecture. From geopolitical point of view, much would depend on how sanctions on Russia shapes up and the post-coronavirus recovery of China.”
As the world is facing massive challenges, it also requires international collaboration and cooperative solutions, importantly not to grossly endanger the economic prospects of poor and underdeveloped countries.
Quite recently, Alexander Shchetinin, Director of the Russian Foreign Ministry’s Latin American department, also said some Latin American nations are seeking closer ties with BRICS. He expressed confidence that Russia’s cooperation with countries that show interest in BRICS will continue. “In what format, we will coordinate first of all with our partners in this group, and with those countries that want to be closer to BRICS, including with regard to Latin America,” he told TASS on the sidelines of the St. Petersburg International Economic Forum.
According to the diplomat, the issue of any additional BRICS formats is the subject for a discussion, primarily within the group. BRICS is an informal group of countries, which includes Brazil, Russia, India, China and South Africa. The purpose of the association is the development of comprehensive cooperation between the member countries. It is non-bloc in nature and is not directed against third parties. It has no permanent headquarters.
“More broadly, this week’s summit aims to usher in a new era for global development that is more inclusive, sustainable and fair,” South African President Cyril Ramaphosa said in his weekly address to the South African people, the text of which was published on the presidential administration’s website, “Through the reform of the multilateral system, including the United Nations, and by refocusing the attention and resources of the global community on the sustainable development agenda, the BRICS group can support a sustained and equitable global recovery from the coronavirus pandemic.”
For South Africa, Ramaphosa said, the BRICS summit is a valuable platform to strengthen ties with partner countries in support of South Africa’s economic growth and job creation. “More than that, the summit is our opportunity to contribute to a better world, in which all countries have a better chance to recover from this pandemic and to flourish,” he stressed.
The South African president pointed out that the BRICS countries initially identified strengthening economic and financial ties as one of the key areas of their cooperation. “The countries have adopted the Strategy for BRICS Economic Partnership to increase access to each other’s markets, promote mutual trade and investment and create a business-friendly environment for investors in all BRICS countries,” Ramaphosa pointed out, “An important part of this strategy, particularly for South Africa, is to diversify trade.”
Historically, the first meeting of the group began in St Petersburg in 2005. It was called RIC, which stood for Russia, India and China. Then, Brazil and subsequently South Africa joined later in February 2011, which is why now it is referred to as BRICS. The BRICS member countries (Brazil, Russia, India, China and South Africa) collectively represent about 26% of the world’s geographic area and are home to 2.88 billion people, about 42% of the world’s population.
Decoding Sri-Lankan economic crisis at the midst of the Russia-Ukraine War
Sri Lanka requires an immediate “bailout” plan from the IMF after Prime Minister Ranil Wickremesinghe declared the island nation officially bankrupt on June 22, 2022, saying, “Our economy is fully collapsed.” These collapses are caused by a number of circumstances. This economic downturn didn’t happen overnight; rather, it was the result of years of failed policies. A hastily implemented program of development and rehabilitation celebrated the conclusion of the civil war in 2009.
Economic statistics of Sri Lankan economy
The Russia-Ukraine conflict has far-reaching global ramifications. Sri Lanka is no different. The economic crisis in Sri Lanka was exacerbated by the COVID-19 outbreak and the ongoing Russia-Ukraine war. The start of the COVID-19 pandemic, which triggered a global recession, exacerbated the situation, and by 2021, the country’s foreign debt had increased to 101 percent of its GDP, threatening an economic disaster. According to government data, China accounted for about 10% of Sri Lanka’s $35 billion foreign debt as of April 2021. Due to the Sri Lankan government’s failure to repay the financial capital loan to China, the strategically located Hambantota International Port (HIP) was given over to China Merchants Port Holdings (CM Port) on a 99-year lease with a payment of US$1.12 billion in 2019. Repayments to China are estimated to be in the range of $400-$500 million, according to the Sri Lankan Finance Ministry. Due to a severe paper shortage, Sri Lanka is experiencing its worst financial crisis since independence in 1948. Colombo owes $6.9 billion in debt service this year, and the country’s foreign currency reserves were around $2.3 billion at the end of February 2022.
India & China: The geopolitics
Following India’s offer of a $1 billion line of credit to purchase basic commodities such as food and medicine, China is nearing a deal with Lanka to provide a $1 billion line of credit to purchase basics. Sri Lanka has $4.5 billion in debt to repay this year, starting with a $500 million foreign sovereign bond that was due to maturity on January 18, 2022. Hambantota Port made an operational profit of $1.81 million in 2016, after generating $11.81 million in revenue and expending $10 million in direct and administrative expenses. CM Port committed roughly $1.12 billion on the port’s revitalization as part of a Public-Private Partnership.
According to the Financial Times, Sri Lanka is experiencing a rising financial difficulty as a result of Russia’s invasion of Ukraine, which has wreaked havoc on two of the country’s most significant tourist attractions, with analysts predicting a default. This year, almost 30% of tourists came from Russia, Ukraine, Poland, and Belarus, and the conflict threatens to stifle that flow. Official records reveal that Sri Lanka generated $3.6 billion in tourism in 2019 before the epidemic dropped it to less than a fifth two years later. Sri Lanka’s government spent 83 percent of its income on debt servicing in 2017, with a quarter of it going to overseas borrowings. From 2019 to 22, external debt repayments are estimated to more than triple, from $2.1 billion in 2017 to $3.3-$4.2 billion every year.
Think Tanks take on Lankan crisis
However, Verite Research, renowned economic think tank based in Colombo on its Feb 2022 reports had said, “The interest that must be paid on past debt has been the key driver of Sri Lanka’s debt rise from 2015 to 2019”. This pile up debt primarily due to irregularities in loan repayment. As explained by Prashant K. Chaudhary & Madhubrota Chatterji, “ Inflation has surged to 14 percent, according to the National Consumer Price Index, in December 2021, for the second month in a row after reaching a double-digit high in November 2021. This has resulted in exorbitantly high prices for everyday consumer products (national consumer price index of 11.2 percent), which many Sri Lankans cannot afford. In December, food costs increased by 6.3 percent, while non-food prices increased by 1.3 percent”.
There are two potential responses to the economic crisis in Sri Lanka: short-term fixes and long-term solutions.
The short-term solution for the Sri Lankan economy would be a bailout, as President Gotabaya Rajapaksa stated that his administration was in talks with the IMF over a rescue package. Experts have emphasized the importance of a bold fiscal consolidation based on high-quality revenue strategies. They recognized room for boosting income tax and VAT rates and reducing exemptions, as well as revenue management reform, given Sri Lanka’s low tax-to-GDP ratio.
Long term measures
Long-term solutions to Sri Lanka’s economic issue will include reorganizing the country’s broader economic, trade, and industrial policy, i.e. diversifying away from tourism and tea exports.
“For Sri Lanka to be competitive, it requires a tax and regulatory environment that positions it as a business-friendly nation.” Explained by Dr. Ganeshan Wignaraja, Senior Fellow of ISAS and Research Associate, ODI. He further explained that Sri Lanka’s ranking of 99th on the World Bank’s Doing Business Index is low by the standards of other upper-middle income economies in Asia, and that the country should ideally target being in the top 35 or 40 in the world by 2025, which requires a major effort in cutting red tape affecting business and digitizing all government services. Expressed worries regarding the future employability of local graduates in the Port City,” he had said. Despite the possibility of reversing the brain drain, there are critical challenges in the university system that must be addressed, including a talent mismatch. The President has acknowledged the issue and emphasized the need of moving toward a curriculum that is appropriate for the Port City (that includes STEM subjects, IT skills and foreign languages). The act of rage has been made illegal, but stronger enforcement is required.”
Similar to how our bodies require ongoing evaluation and care to improve, the economy is a living and dynamic system. The Sri Lankan economy must thus take both short-term and long-term action.
G7 & National Mobilization of SME Entrepreneurialism
While G7 shares their wisdom, some 100 additional national leaders are also desperately trying to get their economics in order. Visible damages are the lack of productivity, performances and profitability across the national SME sectors, reducing exports, growth and job creation sharply. With little or no specific economic solutions on hand, the economic development teams are open to new ideas. Critically needed, to catch up the lost decade, a generational transformation urgently required; such new challenges demand hyper speed, global-age style execution so what’s stopping all this?
The four transformational stages: National economic development teams must first come to the big realization, that today, a wide-open world is always open for high value goods and services produced. Study the global patterns of high value consumptions. Therefore, hardcore upskilling exporters and reskilling of manufacturers must become top priority over popularized abstract crypto-sci-fi-economies.
The absence of constant learning and constant disruptions must stand up to the global age demands of global age competitiveness. Fact: The world can easily absorb unlimited exportable ideas in unlimited vertical markets. Fact: The well-designed innovative ideas are worthy of such quadrupled volumes. Fact: The entrepreneurial and dormant talents of a nation are capable of such tasks. Fact: The new global age skills, knowledge and execution are now the missing links.
On the other hand, the majority of nations with existing postures of comfort are already flooded with massive innovations, but still ignoring lack of massive commercialization, due to lack of entrepreneurialism. Over certification and degrees but seriously lacking entrepreneurial directions or surrounded with empty incubators and exhausted accelerators as real estate projects. Sometimes, too many economic development programs but often without a mega punch of pragmatism.
Round-table discussions are good starting points; without debates, the silence only sinks economies.
What can nations do? During recent decades, Western economies of the free world on the midsize business economies were too slow to understand ‘soft-power-asset-management’ , the art of imagining things over ‘hard-asset-centricity’ where staying deeply stuck to old routines on old factory floors was rewarded. This is like when bicycle makers, restricted to dream about ‘drones’ or flying cars. Some 100 millions small and large plants around the world are badly stuck in old groves of decades old mentality, unable to transform to the meaning of global-age, unable to rapidly optimize to grow to new heights with new global age thinking and execution.
Bad globalization planning did the rest of the harm. Imagine all that wasted potential, talent and machinery, infrastructure under the dead weight of old mentality still logged into hard-assets… deeper studies are critical. If facing the truth is not a problem, study China and their SME optimization as an excellent strategy.
The error of mind: The term “SME” is a grave error, a misnomer created by job seeker mindset, as there is nothing small about a baby elephant. It will become an elephant in time. It is all about creating a big new company, active within a big economy of million small medium large businesses within a nation.
National mobilization of entrepreneurialism is a systematic entrepreneurial driven methodology to uplift 1K to 100K SME entrepreneurs with in a region, sector or a nation, into advancing and up scaling their enterprises by upskilling for better exports, reskilling for smarter manufacturing and understanding innovative excellence to enable standing up to global-age competitiveness of today.
A simple fact, like turning an ‘on’ and ‘off’ light switch; economies without digitization are as if without electricity, without upskilled frontline teams on tasks as if without a bulb. Just like all other professional requirements, this expertise calls for advanced and regimented training and skills to deliver and manage such major national tasks. Evaluate frontline economic development teams as a prime objective to create new thinking.
First, the philosophy: National mobilization of entrepreneurialism on digital platforms of upskilling for innovative excellence are not new funding dependent, they are deployment hungry and execution starved, so what’s stopping ? Hidden in the differentiation, deeper understanding of “extreme-value-creation for creating local grassroots prosperity economies” and the “extreme-value-manipulations for creating hologramic-debt-based economies” and this is where the future challenges are hidden.
Second, the new mastery: As the cycle of laborious-work are getting replaced by smart-work while smart-work getting replaced by smarter machines, the ‘Masters of Robots’ will be the new smart unlearners, the ‘Slaves of Robots’ will be the deniers of change.
Thirdly, the critical observations: Why has the immediate replacement of the old education system around the world with new global-age transformation has become so necessary? It is a liability on national productivity, it is a burden of debt on the emerging youth of any nation and it is rotten from the inside damaging business innovation and economic philosophies in the silence of the day.
Meritocracy is only painful when refusing change. Therefore, national mobilization of entrepreneurialism is only possible when job creator mindsets deliver bold narratives. Nothing happens when silence dominates. Discover advanced level thinking, create bold open debates, and explore Expothon and such ideas on Google
The unmasked SME economy: Nations with deeper upstanding of creating, developing and managing systematic growth to Micro Enterprises, Micro-Manufacturing, Micro-Trades & Micro-Exports, have a distinct advantage to quadruple exportability. Uplifting entrepreneurialism is not an academic exercise but revolutionary cycles led by entrepreneurial mindset capable of harmonizing various types and layers of mindsets. Acquire your own mastery
Old-order is no-order: Emergence of new thinking, everything almost broken, and everything procedure or policy for sale, therefore, everything ready for change; new vision, new mobilizations, new deployments and new talents openly challenged. The visible damage points to chasms and voids need of urgent fixing, bold narratives a must. Expect a change, create a change and become change. Discover new pillars of economics.
The five new dimensions; The political science is now transforming into becoming the real economic science. The power of a nation is neither the hard nor the soft power but the real value of economic power? The economic power now measured by national skills of citizenry to become productive, or slide towards fake-crypto-tyrannies. The national leaderships expected to create economic development as their prime mandates and save their own sovereignty on the global stage. The rest is easy.
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Sri Lanka requires an immediate “bailout” plan from the IMF after Prime Minister Ranil Wickremesinghe declared the island nation officially...
Healthy planet needs ‘ocean action’ from Asian and Pacific countries
As the Second Global Ocean Conference opens today in Lisbon, governments in Asia and the Pacific must seize the opportunity...
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While G7 shares their wisdom, some 100 additional national leaders are also desperately trying to get their economics in order. Visible...
70% of 10-Year-Olds now in Learning Poverty, Unable to Read and Understand a Simple Text
As a result of the worst shock to education and learning in recorded history, learning poverty has increased by a...
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