"China's prime minister and Prime Minister Benjamin Netanyahu agreed to greatly upgrade economic relations between the two countries," said National Economic Council chairman Prof. Eugene Kandel at the "China and the BRICS: growth or a bubble about to burst?" at the "Globes" 2013 Israel Business Conference today.
"This is real commitment to ensure that Israel will play an important role in this area. There is also an understanding on China's side of the strategic importance. Why Israel? Why should China look to tiny Israel to cooperate with it in development? The answer is clear: the two economies complement each other almost perfectly," added Kandel.
"We're not competitors at all. China has a huge manufacturing base and consumption, and it has needs that require a response. In contrast, Israel is small, which limits our market and production capacity, but the challenges that the Chinese economy faces are similar to those that Israel faced in the past, and we have technologies and experience to deal with them, whether in agriculture or healthcare. Furthermore, Israel has state-of-the-art technology, but it lacks large manufacturing capacity. Therefore, there is a good fit and room for cooperation. This isn't about the sale of technology, but joint development."
IHS Global Insight EVP and chief economist Dr. Nariman Behravesh said, "The slowdown in emerging markets' growth began in 2010. Brazil's growth has fallen from 7.5% to less than 1% within three years. There are cyclical and structural reasons for this. Many emerging markets, including the BRICs, did good macroeconomic work, but not microeconomic work; they did not carry out reforms to encourage competition, for example. Therefore, the growth that was will not return. If they want to grow fast, all the countries will have to implement structural reforms."
China Investment Corporation chairman Jin Liqun said, "The last Congress of China's Communist Party ended with the adoption of far-reaching reforms. The reforms will greatly influence three areas: the market will play a much greater role in the distribution of resources; the population's income will improve, especially for low income-earners; and the private market will have more room to operate. Growth will be deliberately slowed in the short term. It's impossible to continue to grow without dealing with various issues. It's impossible to carry out anti-corruption reforms and so on when growth continues at such a rapid pace. The distribution of resources will become more efficient."
Carnegie Endowment for International Peace senior associate Dr. Yukon Huang, who previously served as China's representative at the World Bank, said that the structure of direct foreign investment in China would change in the future to become more global. He added that while salaries in China had risen by 12.6% in real terms in the past decade, salaries in other Asian countries had stagnated.
Bank Hapoalim chief economist Leo Leiderman tried to answer the question whether the worst was over in emerging markets. "2013 was not a good year, especially in Latin America, including Brazil, which underperformed compared with other emerging markets. Brazil in 2013 is a huge disappointment. Political and social uncertainty was in the background in some countries. This has to be solved for investors' appetite for emerging markets to return," he said.
Published by Globes [online], Israel business news - www.globes-online.com - on December 9, 2013
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