by Graham Thompson, Website Editor, 8 June 2012
Jim O'Neill of Goldman Sachs Asset Management is the man who invented the acronym BRICs - Brazil, Russia, India and China - to describe the four most significant growing economies in the modern world. So he was an excellent choice to address the opening ceremony of the 4th European Confucius Institutes/Classrooms Working Symposium on 6 June.
The audience that packed the Signet Library in Edinburgh included 150 directors and delegates from 70 Confucius Institutes in Europe, as well as senior representatives of Chinese embassies and consulates across the continent ; a large delegation from Hanban, presidents and chancellors from Chinese universities such as Shanghai Fudan, Peking, Xiamen and Tianjin Nankai ; and Scottish business people.
O'Neill stressed four key points :
China is "the single most important national economic consideration for the current generation"
the 2008 crisis may turn out not to have been a bad thing for China, as it accelerated some helpful changes in policy
China's own economic future is becoming more dependent on itself, rather than being dependent on the rest of the world as has been the case for much of the last 30 years
China is trying hard to solve its own economic problems, unlike some other countries at the moment !
He focused much of his subsequent commentary on "the Growth 8", eight countries which collectively make up around a quarter of world GDP and which, he explained, "can no longer be regarded as traditional emerging markets". These are China (10% of world GDP), Brazil (4%), Russia (3%), India (3%), South Korea (2%), Mexico (2%), Indonesia (1%) and Turkey (1%).
Like any good economics talk, O'Neill's presentation had some fascinating statistics and forecasts. For example :
the contribution of the "Growth 8" to the increase in world GDP from 2001-2010 was greater than that by the G-7 major developed countries, and around half of that came from China
the increase in Chinese GDP from 2010-2011 - just one year - was equivalent to creating "one Greece every eleven weeks"
the increase in BRICs GDP from 2010-2011 - just one year - equivalent to creating the Italian economy, the eighth largest in the world
by 2020, China's share of world GDP is expected to reach 15%, around the same as the Eurozone - as he said, what implications might this have for the leadership of global financial institutions such as the IMF or the World Bank ?
the combined GDP of the BRICs countries is expected to exceed that of the US by 2020, perhaps even by 2015
In terms of the global economy, O'Neill was fairly bullish. He said Goldman Sachs expects the world to grow at an average annual rate of 4.2% in the decade to 2020, compared to an average of around 3.4% in the last 30 years. He noted that China and the other growth markets are already dominating world consumer spending, and that western countries with high-quality products and services the Chinese and others want can continue to do well.
Finally, he noted that economic growth is fundamentally based on population ("having over one billion is a bit of an advantage...") and productivity. Given that the BRICs countries and another 11 key emerging market countries have some 70% of the world's population, if they can move towards higher levels of productivity, the world will, he concluded hopefully, be "a better place for many than it has been in the past".
For Jim O'Neill's biography, see here, and for more on BRICs and Goldman Sachs research, see their site here.
SCA note - although Mr O'Neill's talk was a fascinating tour of the global economic scene, please do not take it as gospel for your own investment decisions ! The usual caveats to investment commentary apply.
The Confucius Institutes Symposium
The Confucius Institutes Symposium ran from 6-8 June, and was organised by The Confucius Institute for Scotland in the University of Edinburgh. The delegates spent two days discussing such topics as 'The development of the Confucius Institute', 'Confucius Institute Assessment and Evaluation', and 'Hanban 2012 Key Projects', as well meeting educators from Scottish schools and universities and enjoying some traditional Scottish hospitality and sightseeing (despite the persistent rain).