CHINA AND OUR FUTURE?

China - How should we approach it?

Just finished reading an excellent book by Martin Jacques entitled;"When China Rules the World." It was very enlightening because the traditional view has always been that China will become more like the West but in fact his thesis revolves around the premise that the West will need to become more like China. In 2007 Goldman Sachs estimated that China would overtake the US in economic terms in 2027. The Economist predicted in 2011 that this would take place in 2018. Chinese exports overtook those of the US in 2007,its fixed capital investment overtook that of the US in 2009 and its manufacturing output overtook the US in 2010. It enjoys net foreign assets of $2 trillion while the US has net foreign debts of $2.5 trillion. In effect China is the banker to the US for all intents and purposes. The Western financial crisis moved the balance of economic power further in China's favour with the EU and Barclay's bank amongst others knocking on China's door for economic assistance to keep both the Euro and a significant British bank afloat. How times do change. The West has been slow to officially recognise this new reality.

 

The 2008 world financial crisis has made the economic decline of the US and indeed of other Western countries much more dramatic in comparison to China's economic advance. The situation needs to be seen in the light of Western warning signs of impending trouble that were largely ignored i.e huge levels of public\private borrowing and indebtedness, current account trading deficits and government budgetary deficits. The US now depends on China's willingness to keep purchasing US debt and total US debt itself is now estimated to be in the order of around $9 trillion - How long will foreign governments hold their belief that the US will remain financially viable? The future for the West as a whole looks bleak for the next decade, comprising low economic growth, cuts to public spending and aggressive deficit and debt reduction - No real cheer there.

Jacques argues that there are two Western views of China's future, the first view marvels at China's huge economic progress but rests in the comfort that China will become more like the West in terms of a liberal democracy. This view is given short shrift for a number of reasons we will return to below. The second view is that China's economic progress although impressive will end in disaster because it will not change itself politically to cope with the pressures it will become more susceptible to. These pressures are significant and include the following; pressures on its environment and pollution, the slowdown of its GDP growth from 10% per annum to more like 7%-8% due to the Western economic slowdown, locally based corruption and internal pressures from its own people on land reform and local planning issues. The aforementioned pressures are real but not insurmountable. Indeed there is still a huge level of confidence in the central government of China based in Beijing however there is less confidence in local and regional government in China where corruption of local party officials and other public officials is a huge problem.

China's huge foreign reserves are both a blessing and a curse. A large proportion of them are held in dollars or dollar denominated securities. If the Chinese were to move part of these out of dollars and into something else -- i.e. its own currency ( the remnibi) then the remainder of its dollar based currency reserves would fall in value. China would be shooting itself in the foot and so she must proceed very carefully here. Its currency, the remnibi (sometimes called the yuan) is not yet traded internationally and is not yet being fully used as a reserve currency like the dollar or to a lesser extent the Euro. China benefits from a huge level of internal saving from its populace even though they are poorer than Western countries on average. If the remnibi were traded internationally then in theory the savings of the Chinese populace could be invested abroad which would act against the current wishes of the Chinese Government. There has also been much pressure from the US in arguing that the non market determined exchange rate for the remnibi against other currencies means that the remnibi is undervalued internationally and Chinese exports are cheaper than they otherwise would be. There is some truth in this view,however before any trade war is undertaken between China and the West, some deep breaths need to be taken.

Why is China different to the West, according to Jacques there are 8 major differences which we should be aware of;

1. China is not a nation state in the Western sense of the word it is a civilisation state which promotes its civilisation values much more than its state values.

2. In South East Asia - there will be a tendency for local states to return to the tributary position of seeing China as the local power they will need to have regard to in a tributary sense - not paying dues but having regard to in terms of the actions they take. Historically these states viewed Chinese culture as superior to their own and borrowed from it extensively

3. The Chinese regard themselves as a unique unified race with characteristics which are not replicated in other races. Someone will always be Chinese wherever they live and whatever other nationality they acquire.

4. China operates on a continental sized basis -- it is so huge that single Chinese provinces are equivalent to the size of European countries.

5. Chinese Polity-- The Chinese political system has historically not shared its power with many significant competing political interests either under the imperial system or under Chinese communism.

6. Chinese modernity -- China will modernise but in its own unique way - its modernity will not be of a Western nature - it will have a uniquely Chinese face.

7. The Communist state -- is different to what happened under imperial system however there are also some real similarities as well -- Not discounting the post 1911 nationalist period up until the 1949 Communist revolution.

8. For many years to come, China will be simultaneously a developing and a developed country. It will have 20% of the world's working population - real progress will be tempered by the rural Chinese population having to catch up with modernity.

An old Confucian proverb states, "May we live in interesting times." We are certainly living through them now !!!



 

SOCIAL VALUES AT CHRISTMAS AND INTO THE NEW YEAR

Kindness allied to social value- An unbeatable combination?

The great Peter Drucker stated that spiritual values are crucial - they do not need to fully offset materialistic values but they do still need to be present. There does need to be a return to compassion. In an age of murder, terrorism and persecution, compassion still needs to be present. Moral indifference besets cruelty and persecution and in these very difficult economic times man is not just physical but also spiritual as well. We need to try and maintain a meaning and responsibility in our lives and spirituality is key to this. The temptation to make money without responsibility should be resisted This is where the concept of social value comes in.

 

Under the Social Value Act 2012, if a potential service provider offers community benefit beyond the contract specification (e.g. by employing people with disabilities), then this should be taken into consideration by the authority in deciding where to award a contract. The Act  requires certain public authorities – such as a local authority or an NHS trust – to consider how the procurement of a service may improve the economic, social and environmental well-being of an area.According to the NCVO in most cases, social value must be considered at the point when an authority proposes to enter into a public service contract i.e. the “pre-procurement” stage. Service commissioners will need to know how to incorporate social value into their commissioning approaches.

 

The Government’s definition of social value is: “a concept which seeks to maximise the additional benefit that can be created by procuring or commissioning goods and services, above and beyond the benefit of merely the goods and services themselves”.

 

This new legislation will move public service commissioners into considering wider elements than just pecuniary gains. As we move into 2013, how might this new legislation play out?

 

One thing is certain - we will all need to be much better at assessing the social value  of the things we do and the services we provide. We will need to have a look at the tools and approaches to do this and we will need to demonstrate how we have improved social value.

 

So it will not just be about making savings but also about improving the social value that people get from services. We should all be in favour of that.

 

THE BAMBISANANI PARTNERSHIP -- OBTAINING THE DIANA AWARD

Working together even in the most difficult circumstances can make a difference



Instead of talking about the cuts and doom and gloom which we are always likely to do in these straitened times, I wish to mention more of an inspirational story which will hopefully make us all think. Fourteen students from St Mary's Catholic high school in Menston (including my son) and ten students from Mnyakanya High school in rural Kwa Zuku Natal,South Africa  are the first young people in diferent continents to receive the Diana Award for their collaboaration on the Bambisanani Partnership. The Diana award was established in in the UK in 1999 in memory of Diana,Princess of Wales, as a legacy to her belief in the power of young people to change the world.

 

For the past 6 years the two schools have worked together in the Bambisanani partnership using sport as a catalyst to promote education, health,leadership and global citizenship,Bambisanani is the Zulu word for hand in hand and encapsulates the collaboration between the two schools. The St Mary's students visited South Africa in Juky 2012  and worked at the Mnyakanya school,Ntolwane primary school and the Zulufadder Aids Orphanage. Young leaders from Mnyakanya and St Mary's jointly organised Sports and Reading festivals for local primary schools.

 

The area where the students worked has one of the highest raes of HIV\Aids in the world,unenployment is high and adult illiteracy is close to 60%.Education is the key to breaking this cycle of poverty and ignorance. David Geldhart,Assistant Headteacher and founder of the partnership stated," I am so proud of the young volunteers from Mnyakanya and St Mary's.These young people are doing things for others that really do matter. Their positive actions and commitment are making a difference in the world. They are all role models who I know have already inspired others. They are all honoured to receive the Diana Award."

 

Mrs PK Zondi who co-ordinated volunteering at Mnyakanya High school stated," We are delighted that the Young Leaders are the first South Africans  to receive the International Diana award. The Bambisnani Partnership has inspired both our schools in so many ways. My learners have established an Aids awareness proramme which has helped so many. They show love for others and their work is changing lives."

 

Teachers in South Africa have paid tribute to the work of the Bambisanani partnership.Moses Xulu who teaches at the Ntolwane Primary said: “It was wonderful to see the St. Mary’s and Mnyakanya students working together; they are a powerful team, so mature, confident and effective.”

William Vilakazi from Mnyakanya School added: “The Bambisanani Partnership is fantastic. “The joint learning projects that we are developing in art, creative writing and using sport are wonderful in raising aspirations of young people from both communities.”

 

As we approach Christmas let us all draw some inspiration from this and realise that working together in a spirit of constructive collaboration can make a difference. We should all do much more of it.

 

 

 

 

 

LEADERSHIP CHANGE -OUTSIDER OR INSIDER?



George Entwistle - A good example of an unsuccessful insider -
Could an outsider have done better?

There are now many books published about successful historical figures which try to turn their leadership styles into generalised management approaches. These do not always work well but there can be lessons we can learn from what has happened in the past. An interesting article in this week's Economist turns the spotlight on Abraham Lincoln,perhaps the greatest US president ever. He made a series of very courageous moves by provoking the South into Civil War to break the deadlock over the struggle between North and South. He was a great orator who inspired his supporters and he did things that the normal politicians of the time would not have attempted. In regards being the presidential candidate of the Republicans he defeated two of the most experienced politicians in the US to become his party's candidate. A successful leadership outsider. But do outsiders make good leadership candidates for an organisation or are internal candidates the best?

 

If you bring in an insider he\she usually knows how the organisation works and can best keep it on a steady path. However a steady path may not be what is required and often an internal candidate can be promoted beyond his ability. Internal candidates will need to demonstrate they can either steady the ship or deliver radical change. They can be a blessing and a curse as everyone knows what they are capable and incapable of at the same time. An external candidate can offer a fresh outlook on problems but a lack of knowledge of the organisation's culture can cause much resentment as well and create barriers.

 

Guatam Mukunda of Harvard Business school describes leaders as "filtered" - known quantities, insiders who have been subjected to tests and challenges and "unfiltered" leaders who are unknown enigmas. Filtered leaders tend not to make a radical difference -- unfiltered leaders are more risky - they can make a real difference both positive and negative. People who spring to mind are Winston Churchill and Barrack Obama.

 

Unfiltered leaders bring fresh perspectives but for every successful outsider there are also failures. People who try to bring in new ideas to an organisation which desperately needs them but the organisation is not yet ready. Think of Chelsea and AVB or Brian Clough and Leeds. Hunting for stars from other organisations does not always work as their leadership is not always transferable into a new environment.

 

For an outsider to work, the organisation he is entering must be ready,willing and able to embrace a new direction and must be supportive of that new leader. Similarly the new leader must be ready to move the organisation in a new direction and not upset people but take them with him on the change journey to a happier place. There must be a fit between both these elements for the unfiltered leader to work in this new environment because otherwise the unfiltered leader will fall at the first hurdle. Filtered leaders can rarely deliver such new perspectives because people know"what they look like in their underpants."

 

Would you take a punt on an unfiltered leader or would you stay with the filtered alternative? It just depends on what level of radical change you wish to entertain within your organisation. There is a newer emerging trend which is that of the insider-outsider - a leader who has worked within an organisation then leaves it and then later comes back stronger and wiser after having gained new experiences. Steve Jobs did this with Apple and Tony Hall is going to do it with the BBC.

 

A good example of a filtered leader not really stepping up to the plate was George Entwistle of the BBC. Someone who was well known and steeped in BBC tradition but unaware that he had to radically move the BBC away from its complacency on public service broadcasting, employee relations and journalistic standards. He just didn't have a clue as to where the BBC should be going he was more interested in keeping it where it was, in what he perceived was a good place to be.

 

Filtered or unfiltered -- What might your leadership choice be? Does it depend on the degree of change your organisation needs to embark upon? I believe it probably does - but a new leader and an existing organisation need to embrace each other - or else they will both fail.