China’s new membership of the European Bank for Reconstruction and Development is “a win all round”, says EBRD President Sir Suma Chakrabarti, rejecting criticism that allowing the People’s Republic to join contradicts the multilateral’s Articles of Association.
“It’s definitely a win for the EBRD to have the world’s second-largest economy as a shareholder, allowing us to do proper business development in China and encouraging Chinese companies to work with us,” Sir Suma tells bne IntelliNews, during an exclusive interview in London.
“Our financial sector is built on sand,” Michael Lewis, the American author, told me last week. “After all, we’re in the middle of a huge monetary experiment, with central banks playing a bigger role in stimulating growth than we’ve ever seen”.
Back in 2010, Lewis wrote The Big Short – an expose of the banking shenanigans that sparked the 2008 financial crisis. It has since been made into a glitzy Hollywood movie, which enjoyed its UK premier last week.
Even the state-run media called it “Black Monday”. The Shanghai Composite, China’s main share index, plunged an eye-popping 8.5pc in a single day at the start of last week. Tuesday saw another 7.6pc drop.
These dramatic falls, which followed a more gradual but still stomach-churning 11.5pc decline in Chinese stocks the week before, ripped through global markets. America’s Dow Jones Industrial Average share index plummeted an unprecedented 1,000 points, before closing 588 down – its biggest decline for four years. The FTSE-100 endured a 4.7pc nosedive, its worst one-day loss since 2009. Germany’s Dax index, also, went into “bear market” territory, falling to more than 20pc below its peak. Commodity prices similarly plunged, with oil hurtling down towards $40 a barrel, testing six-year lows.
Suggest investing in Africa and you could well face furrowed brows and questions about your sanity. Western impressions of “the dark continent” are often unfavorable – driven by intermittent TV coverage dominated by disease, famine and war.
Many recoil in horror at the idea of engaging in African business, citing lawlessness, poor infrastructure or Nigerian e-mail scams. Beyond the stereotypes, though, Africa is actually among the world’s hottest investment trends.
What are we to make of Beijing’s shock devaluation? With the UK media classes fixated on Jeremy Corbyn, a potential Labour leader even his supporters acknowledge won’t ever be Prime Minister, you may not have clocked recent events in the People’s Republic. The actions of the Central Bank of China, though, and the near-term path of the yuan, could have a big impact on UK living standards.
Having grown 9.8pc a year since the late-1970s, the Chinese economy now outstrips America on a purchasing power parity basis (adjusted for living standards). With the big Western economies still shaky, if this Eastern giant stalls, the UK’s nascent recovery could easily reverse. And if Chinese stocks and bonds crash, with “contagion” spreading to financial markets elsewhere, that would upend British politics.
I’m as interested in the Queen’s Speech as the next political obsessive. All that proposed legislation, and the window it provides on the soul of the new government, should be pondered by anyone interested in the trajectory of British policy-making over the next five years.
Last week’s Queen’s Speech committed the first majority Conservative administration in almost two decades to a referendum by the end of 2017 on European Union membership. Measures to freeze income tax and extend childcare are also on the agenda. We’ll almost certainly see more devolution for Scotland, Wales and Northern Ireland, along with “English votes for English laws” at Westminster.
Iran remains a pariah state. In the eyes of many Westerners, not least those sitting in the mighty US Congress, there are few more dangerous, untrustworthy states on Earth. It’s incredible, then, that in the wake of an historic framework agreement, which emerged earlier this month after fraught negotiations in Lausanne, long-standing international sanctions against Iran could soon be dropped.
Even in the midst of a general election campaign, to say nothing of the slow-motion-car-crash negotiations that may or may not keep Greece (for now) in the eurozone, this Iran deal deserved more headlines. A country that should rank as one of the truly significant global economies, bigger than South Africa and home to 81m people, could soon return to the world stage.