Over the last 9 years I had been following #AFF Hong Kong thoughtfully for the 8th time, giving me a 6-8 month head start on Asian economies’ realities over anyone relying on Western media reports on Asia. Their tendencies to turn any good news from this part of the world economy into bad ones resulted in asset managers to not give adequate weight in their portfolios for titles from China and ASEAN, already the 2nd and 7th largest global economies of today! 10th #AFF in 2017 stood out for Asia driving Change, Innovation and Connectivity for a better future of people on our planet! Because China’s Belt and Road kind of Marshall Plan is a proposal to its neighboring and Free-Trade-Agreement partners offering a canvas to roll out new economic drive by innovations and improving connectivity for a shared productive GDP growth promising Regional Economic Stability. Of course, China’s economic strength will determine the role it can take in accompanying the Belt and Road initiative by the facilitation of financing partnering countries’ synergistic and complementary infrastructure development roadmaps.
China’s economy is however still considered most attractive for Foreign Direct Investments. Over the past three years China’s economic reform has eliminated excess capacities and reduced over stoking effectively and new areas on digital economy topics are emerging. A return of a stable RMB will become vital to all of ASEAN, having switched clearing on commodity trades already largely from formerly U$ to the Chinese currency. China takes its pressure to accommodate 7mln post-graduates and 6mln graduates every year in its economy very serious putting Innovation and entrepreneurship facilitation for a rapid technological growth on top of its 13th Congress agenda. The 8 core Technologies are Artificial Intelligence, Artificial Reality, Blockchain, autonomous Driving, Robotics, Virtual Reality and 3D-Printing. However, just domestic consumption shows substantial upside potential from currently still half the civilian versus public ratio of the US. Inter ASEAN Trade is now at 18% only and expected to have significant potential to further improve towards the 85%+ benchmark levels of the EU. Therefore Chinas FTAs with the ASEAN were recently enhanced aiming at bringing the %age of ASEAN people participating in consumption from currently only 34% higher up. ASEAN countries target to advance from seventh to fourth rank in global economy by 2020. Therefore they commit to a sharing and caring collaboration towards benefits for their bonus demography population and most recently even speak about a potential Asian Economic Community (AEC).
Chinas banking sector often ambiguously doubted by western newsmakers has successfully driven down its Non-Performing Loans ratio to lower levels than outside China but considers for the remainder still a ten years work-out period. Corporates reaching leverage of 80% gearing are advised to perform debt to equity swaps. The experienced rates of impairment for such assets over the last few years were in an order of 5%. In internet financing by FinTech 2.0 China stands for almost two thirds of the global volume, representing 85% of total Asia, so that parts of that current volume might turn out as a bubble eventually. Commonly perceived fears from US protectionism were actually disavowed rationalizing that even if tax codes would affect global trade (Trump wants to finance national stimuli by import taxes), a most likely higher U$ would neutralize the external effects in the near term. Medium term would result US internally in a huge deception of its people expecting to become more engaged in future prosperity. Because not participating in what may be the biggest economic development plan since post World War 2 Marshall Plan, will shift economic gravities even faster towards Asia already talking about New World Order. So real threat would only occur once US Liquidity will have evaporated from the rebounds of protectionism.