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BIZCHINA> Editor Choice
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Trend watcher says China well-positioned
By Andrew Moody (China Daily)
Updated: 2009-08-31 15:22 Bakas said the recovery will feel more like a "very long recession" than growth. "And a lot of companies will use it as an excuse to get rid of people. I think it will take a long time before any sort of normality returns," he said. "In China, I think 7 or 8 percent growth may still be feasible, but you must not forget that China has lost a lot of money in this crisis, as well, and was an investor in Fannie Mae and Freddie Mac (the failed US mortgage banks)," he said. The Iceland government, which might have wished it had seen the financial tsunami coming instead of being almost swept away by it, is now seeking Bakas' advice. He has told them to do what China did under Deng Xiaopeng in the late 1970s and early 1980s and encourage expatriates abroad to invest in their home country. Iceland, too, apparently has a lot of expatriates. "The Chinese government encouraged Chinese people living around the world to invest in China by offering high interest rates. China at the time was as poor as Somalia is now. This is what Iceland should do, "Bakas said. He said he also believes Iceland should have an open door policy to those from China who want to set up factories in the country. "It would be a good base for Chinese companies to serve the northern European and Scandinavian markets," he said. Combined analysis "I tend to mix know-how and experiences with that of other specialists. Tomorrow's world is a much more hybrid one, where hard science, economics and spirituality will mix more and more," he said.
Beyond the excesses of Goldman Sachs and investment bankers, Bakas has his own perspective on why the world has suddenly plunged into a downturn. His thinking is to some extent inspired by the Russian economist Nikolai Kondradtiev, who insisted that capitalism would bounce back from the 1930s depression. "The economy always goes like this, and this is the fifth major economic crisis in 200 years. It always starts with the banks and then goes out. It is exactly the same this time," Bakas said. He said that recessions also occur when the economy is on the brink of new technological developments -- in the 1930s before labor-saving consumer goods industries took off and in the 1980s before the Internet and mobile phones. The current recession is before the dawn of developments in biotechnology, nanotechnology, new energy alternatives, genetic breakthroughs and developments in recycling, Bakas said. "It is like the Chinese saying, that you have to clean up the old stuff before the new things can begin," Bakas said. "It is very psychological, because moving into a new technological period needs a crisis. Otherwise, people don't feel the need for change," he said. Bakas said he expects China to be a beneficiary of the current downturn because it will emerge as a leader in some, if not all, of the new industries, which will set it on course to becoming the world's biggest economy in the 21st century. "The winners of this crisis will be China and India, because they now have the opportunity to move into the next technological phase," he said. "The Chinese government, for example, has decided to invest massively in renewable energy. Already, there are more than 100 million electric bikes, scooters and other two-wheeled vehicles here," he said, adding that if China becomes big on renewables, it can export this new product line to the rest of the world. Bakas sees Europe being the big loser with failing industries unable to compete, higher rates of unemployment and with its people having to endure greater degrees of poverty. "It won't be an African scale of poverty, but older people will have to work a lot longer. Someone of 70 might be expected to be a stewardess on a plane, for example," he said. He predicted that much of Europe will become like a theme park or open-air museum for Chinese and other Asian tourists to marvel at the sites of what will become an outmoded civilization. "It will only be the city-states like Hamburg and London that will do well. They will stay important, but I doubt whether the rest of their countries will be successful," he said. (For more biz stories, please visit Industries)
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