One of the key factors in why the West has lost its global economic competitiveness in the 21st century is because it can no longer produce goods and services at prices consumers at all levels are ready to pay for. Thus, over the past two and a half decades China has carved out its competitive advantage by producing goods and offering services at unbeatable prices in every economic sector and industry we can think of and in doing so has penetrated world markets with a brand identity that Chinese goods are good, reliable and inexpensive.
From electronics to consumer goods, to home decor to cosmetics, to healthcare, and now to sending satellites into orbit, China has become the world’s industrial leader which simply put means that it is no longer economical to produce anything anywhere else but China.
Can the world play ball with this new reality and if so will this mean an end to the social safety net that has protected the Western workforce since world war 2 or will this new level of competition become so unbearable that it will start a trade war thus moving the West into an isolationist stance and away from principles of free market competition, the very principles it so fiercely defended when it was in the West’s best interest. Time will tell.
Today I had lunch with a German friend in Dubai who is head of M&A at HSBC in Frankfurt, Germany and on the condition of anonymity he told me that, “we are just waiting for the financial system to implode across the EU and in Germany (whose economy is relatively better).
From the Foreign Policy – According to the International Institute for Strategic Studies report Military Balance 2010, Saudi Arabia’s defense budget grew from $24.9 billion in 2001 to $41.2 billion in 2009, a 65 percent increase. The budget of the United Arab Emirates (UAE) grew a whopping 700 percent, from $1.9 billion to $15.47 billion, in the same time period. Kuwait and Bahrain also dramatically expanded the dollars devoted to security over the last decade; their defense budgets increased 35 percent and 80 percent, respectively.
