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China’s 3rd Plenum and President Xi’s New Powers

China is becoming more intriguing all the time because as it moves towards a stronger capitalistic economy, the government is apparently consolidating power in their President’s position.  This could be seen as a move for more centralized power, or alternatively an attempt at copying the US’s system and the President’s powers in the US.  It is no secret that the Chinese have modeled many of their systems, roads, infrastructure projects, etc. after the US.  The Chinese feel the US has been tremendously successful and there is no reason to copy any other (however, its only my opinion, but they may want to pass on copying our health care system and retirement system).

In simple terms, what did this Third (3rd) Plenum achieve… the top line statement given after the meeting was that China’s leadership would make more decisive movements toward a free market system, while maintaining a firm central state grip on the overall picture…not sure about you but I am confused.  However, in contrast to the past 2 Chinese President’s,  the 3rd Plenum did appear to have granted President Xi the following new powers:

1.  Control over Military, Foreign Affairs, Intelligence, and Economic Officials (not quite like the US Reserve model)

2. Creation of a National Security Council

3. Control over most of Domestic Security issues

4. Control Foreign Defense without Leadership approval

There are many similarities to the US…too many to comment on but this is probably a good thing as having a President with too little power can create more problems and frustrations so another ally that is aligned with our business interests can only be a good thing for the overall future for both countries and the world.

by Stephen Perl, MS, MBA

Author of “Dancing with the Dragon: Doing Business with China (2012)

China’s Social Stability is the World’s Problem….

Many think that the social issues and welfare of China are the sole problems of China…in fact, I would argue just the opposite.  China’s social stability is directly tied to “global growth” and stability.  How can this be?

China’s top down approach to capitalism where the state manages the countries economy in a capitalistic format has worked well for many years, but there have been disruptions.  Many only see the strong GDP numbers from the financial markets and the new projects that China is developing from the media, but underneath is still a developing country as they are part of the BRIC countries.  The BRIC states have amazing potential, but they are still developing and struggling with the many issues of growth and capitalism.

What happened to China’s economy in 1989 in Beijing when Tianemen Square revolt occurred?  The Chinese GDP plunged to 2.5% for two years…thank goodness their economy was not nearly as big then.  The consumption power that China now wields is tremendous and if there is social social unrest, it will bring this economy to its knees and hobble many others.  Even the US will feel the effect.

It is important that the US guides its partners in the right direction, but only gradually.  We cannot expect a baby to walk before it crawls so we cannot expect China to jump before it can run.

Currently, China’s economy is slowing down and maturing gradually…we should not be worried as this is normal for all maturing economies, but we must foster the right economic policies and social standards for their country.  This requires Americans to step out of their comfort zone and to practice cultural sensitivity (to the right degree…so please do not take my advice out of context).

Keeping the social stability in China is a matter that the world must be concerned with.

 

by Stephen Perl, MBA, MS

CEO of PMF Bancorp

Author: Dancing with the Dragon (2012)

US-China Trade Promotion Event at the LA Hotel on Oct 14, 2013

US-China Trade Event at the LA Hotel Oct 14th

On October 14th, 2013, PMF Bancorp participated in the U.S.-China Trade Event at the LA Hotel in Downtown Los Angeles to promote California and China trade. The Vice Minister of Commerce of China Mr. Wang, Supervisor Michael Antonovitch, and LA Mayor Eric Garcetti all spoke on the value of increasing trade and the meaningful economic stimulus that it brings to our Southern California region. Mr. Stephen Perl, CEO of 1st PMF Bancorp discussed trade finance as a tool for small business to increase trade with Supervisor Michael Antonovitch while also discussing 1st PMF Bancorp’s support for up coming trade mission.

Supervisor Michael Antonovitch & Stephen Perl, CEO 1st PMF Bancorp discuss PMF Bancorp trade financing as a way to grow trade with China & US.US-China Trade Event at the LA Hotel Oct 14th

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