SatNav
BeiDou navigation system, has taken nearly 30 years to develop and build. It joins a list of other systems — America’s GPS, Russia’s GLONASS and Europe’s Galileo and marks the end of the China’s dependence on America for location data (a critical service) which is controlled and operated by America’s Air Force.
This is symbolic of the widening rift between China and West. Work on BeiDou began in 1993. In 2013, Chinese navy tested it during an exercise in South China Sea. With the constellation now complete it offers global coverage with more accuracy. It claims to offer better accuracy (10 cm viz 30 cm offered by GPS) and are technologically more advanced than GPS satellites.
China is not short to publicise Beidou’s commercial offerings with applications like — freight tracking, autonomous taxis and shipping navigation. In future we may see many smartphones manufactured in China equipped to receive signals from Beidou’s satellites. It is exploring exporting Beidou enabled product to other countries but it may yet struggle to find its place in the world.
End of an oil age
Budgets of oil producing countries don’t add up anymore. Algeria needs the price to be $157 per bbl. Oman needs it at $87. Kuwait, Oman and Iraq have all decided to cut their budgets and adopt austerity measures. Have we already reached peak oil?
The world seems to have permanently entered a new era of low oil prices. Cleaner sources of energy are slowly becoming more affordable. This creates a downward spiral for Middle East countries who may loose close to 10 percent of GDP this year due to the pandemic. Countries like UAE, Qatar and Saudi Arabia may do better with their cash reserves and diversified Sovereign Wealth Funds. But that party will not last forever?
Saudi Arabia has already made adjustments by increasing taxes and cutting some subsidies. That may depress economic activity in the short run. But without a diverse economy this short term pain is a necessary evil to alleviate long term concerns. There is already growing resentment around such taxes which may lead to larger social unrest affecting business and emigration adversely.
However, on the bright side low oil may help these countries expand their market share which in the past couple of years have been taken over by US shale producers. With poorer gulf states on the horizon we may see a new geopolitical landscape shaping up in the years to come.
Vietnam
One country which is for sure to fare well in the current pandemic is Vietnam. Being quick to implement strict measure early in January, it now gets the benefit of having controlled the pandemic and a chance to bounce back quickly.
It is a go to place for the sort of production that has become too costly to do in China. It is an established place for cloth-makers and slowly becoming a key link in the technology supply chain. Its stable polity with low inflation, is attracting FDI from global giants. It is also turning out as a refuge for company who are falling prey to Sino-American rivalry.
Vietnam’s economic strategy looks much as China’s once did. A lot of FDI, export-led growth, a steady climb up the value chain from textiles to tech. It is also prone to some of China’s vices, including a nexus of corruption, real-estate deals and bad debts.
Still, Vietnam has attributes that once made investing in emerging markets so enticing and globalisation — a fast-growing economy, rapid urbanisation, improving infrastructure and an expanding middle class.
Though the trade-oriented nature of Vietnam’s model means it is at the mercy of events elsewhere.