Friday's best web looks at Sino-Indian relations, India's power
woes indicative of poor governance, the difficulty state-owned
enterprises face when investing in North American resources,
tourism in South Africa, and an assessment of the Colombian
economy.
[caption id="attachment_69457" align="alignright" width="300"
caption="Tourists from BRIC nations are increasingly coming to
South Africa for its majestic scenery, among other things"]
[/caption]
Jing Huang, Kanti Bajpai and Kishore Mahbubani of
Foreign Policy explore the China - India rivalry in depth
Best web: This lengthy piece examines the similarities between
China (
FXI
,
quote
) and India (
INDY
,
quote
) as they emerge as world powers. There are fears they will
become rivals leading to severe tension or worse. The authors
persuasively argue both nations have much more in common and that
mutual interests will ultimately outweigh any determination to
start conflict. There are three major sticking points that could
exacerbate tensions. First, the border dispute which has been
ongoing for several decades in the Himalayas to which there's no
end in sight. Second, Pakistan has been a contentious issue.
However, Islamic extremism and terrorists harboring there
seems to be muting China's enthusiasm for the alliance. Lastly,
shared rivers between the nations may foment discord over water
rights. For now, there appears to be open dialogue as the shared
goals and interests of both countries are
practically indistinguishable.
Arvind Subramanian of the Peterson Institute for
International Economics discusses what India's inability to
provide power suggests about the country's governance
Best web: Subramanian takes a very critical view of the Indian
power situation after this week's massive blackouts. He notes many
individuals residing in rural India are frequently without power.
The high costs incurred by the country's inefficient grid means
companies are forced to pay higher rates and are less competitive.
Subramanian argues the efficiency of power distribution within
a state, as measured by transmission and distribution losses, is a
good proxy for determining its quality of governance. When assessed
by this metric, India scores very poorly. The author wonders why
Indian voters are willing to tolerate such incompetence. Like the
salt shortages during the time of Gandhi, power shortages today
could prove to be a revolutionary force if the government does not
act quickly to improve its grid.
Hugh L. Stephens of the China Power blog covers the
difficulty state-owned enterprises face when investing in
resources in North America
Best web: Many of the largest companies in emerging markets are
state-owned enterprises, which are increasingly running into
difficulties when trying to expand into North America. China
National Offshore Oil Corp (
CEO
,
quote
) is one such company, with its bid to acquire Nexen Inc. (
NXY
,
quote
), a global oil company based in Canada. There is mixed sentiment
within Canada as to whether the government should approve the
merger. Nexen has holdings in the Gulf of Mexico, so the merger
must also receive U.S. regulators' seal of approval. The
sentiment against China is much more palpable in the U.S. so
ultimately, Nexen may be forced to divest itself from its Gulf of
Mexico holdings to ensure the merger goes through. Should it
eventually receive approval, other SOEs may be emboldened to make
forays into North America, potentially giving Beijing, Moscow, etc,
increased influence over resources in America's backyard.
Audrey D'Angelo of the Independent Online of South Africa
reports on the growth of winter tourism in South Africa
Best web: Being an official member of the BRICS has really
boosted tourism in South Africa (
EZA
,
quote
). More people are visiting from China, Brazil (
EWZ
,
quote
), and India on business and staying for prolonged periods. This
has been a boon to the economy, creating service sector jobs that
would not have otherwise been available. Visitors from India are
the most likely to be traveling on business, while those from
Brazil and China were more likely to be visiting on holiday. There
was no mention of tourists from Russia.
Joseph Hogue of Emerging Money examines the reason behind the
recent Colombian central bank rate cut
Best web: For the first time since 2010, the Colombian central
bank cut interest rates. Even though economic growth is strong and
foreign investment continues to pour in, the bank cut rates in
order slow the peso's appreciation. A strong peso has been
inhibiting the competitiveness of Colombian exports, leading to a
recent decline in manufacturing. The Global X FTSE Colombia
20 (
GXG
,
quote
) has appreciated over 14% year to date.