1 CHINA, MONGOLIA SIGN A MILITARY AGREEMENT WWW.POLITICALLORE.COM PUBLISHED:2019/10/22      2 330 KV ULAANBAATAR-MANDALGOBI TRANSMISSION LINE COMMISSIONED WWW.MONTSAME.MN PUBLISHED:2019/10/22      3 TETRA TECH AWARDED $30 MILLION MONGOLIA WATER SUPPLY PROGRAM MANAGEMENT CONTRACT WWW.BUSINESS.FINANCIALPOST.COM PUBLISHED:2019/10/22      4 DEFENSE MINISTER OF MONGOLIA VISITING CHINA WWW.MONTSAME.MN PUBLISHED:2019/10/22      5 MONGOLIAN PM TO ATTEND ENTHRONEMENT OF JAPANESE EMPEROR WWW.NEWS.MN PUBLISHED:2019/10/22      6 PRESIDENT KH.BATTULGA: PARTICIPATION OF SCHOLARS IS CRUCIAL FOR POLICY ON MINERALS WWW.MONTSAME.MN PUBLISHED:2019/10/22      7 NORWAY’S $1 TRILLION FUND BUILDS RIO STAKE AFTER DIRTY MINE SOLD WWW.MINING.COM PUBLISHED:2019/10/22      8 RICH CHINESE OUTNUMBER WEALTHY AMERICANS FOR FIRST TIME – CREDIT SUISSE WWW.RT.COM PUBLISHED:2019/10/22      9 B.UYANGA: DBM NOT ONLY PROVIDES LOANS, BUT ALSO SUPPORTS DEVELOPMENT PROJECTS IT FINANCED WWW.MONTSAME.MN PUBLISHED:2019/10/21      10 CHINA, INDIA WILL REGAIN ECONOMIC GLORY WWW.CHINADAILY.COM.CN PUBLISHED:2019/10/21      I-VIII САРД ГШХО ӨМНӨХ ОНЫ МӨН ҮЕЭС 4 ХУВИАР БУУРЧ, 1.3 ОРЧИМ ТЭРБУМ АМ.ДОЛЛАР ХҮРЧЭЭ WWW.BLOOMBERGTV.MN НИЙТЭЛСЭН:2019/10/22     ОФФШОРТОЙ ХАТУУ ТЭМЦЭХИЙГ FATF ЗӨВЛӨЛӨӨ WWW.ZGM.MN  НИЙТЭЛСЭН:2019/10/22     АМ.ДОЛЛАРЫН ХАНШИЙН ӨСӨЛТ ТҮР ЗУУРЫНХ WWW.ZGM.MN НИЙТЭЛСЭН:2019/10/22     АБЭ ШИНЗО: МОНГОЛ УЛСЫГ МӨНГӨНИЙ БОДЛОГО, БАНК, САНХҮҮГИЙН ХҮНДРЭЛЭЭ ШИЙДСЭНИЙ ДАРАА ОУВС-ИЙН II ШАТНЫ ДЭМЖЛЭГИЙГ ОЛГОХОД БЭЛЭН WWW.IKON.MN НИЙТЭЛСЭН:2019/10/22     МОНГОЛ УЛСЫН ЭДИЙН ЗАСГИЙН ТӨЛӨВ БАЙДЛЫГ ОЛОН УЛСЫН САНХҮҮГИЙН БАЙГУУЛЛАГУУД ХЭРХЭН ДҮГНЭВ WWW.IKON.MN  НИЙТЭЛСЭН:2019/10/22     "МОНГОЛ УЛС-ЕВРАЗИЙН ЭДИЙН ЗАСГИЙН ХОЛБООНЫ ХООРОНД ЧӨЛӨӨТ ХУДАЛДААНЫ ХЭЛЭЛЦЭЭР БАЙГУУЛАХ БОЛОМЖ НЭЭГДСЭН" WWW.IKON.MN  НИЙТЭЛСЭН:2019/10/22     ЦАХИЛГААНЫ ХӨНГӨЛӨЛТ ҮРГЭЛЖИЛНЭ. ГЭХДЭЭ... WWW.EAGLE.MN  НИЙТЭЛСЭН:2019/10/22     СААРАЛ ЖАГСААЛТ БА МОНГОЛ УЛС WWW.EAGLE.MN  НИЙТЭЛСЭН:2019/10/22     ИПОТЕКИЙН ЗЭЭЛ: ХҮРТЭЭМЖ БАГАСАЖ, БУХИМДАЛ ИХЭСНЭ WWW.EAGLE.MN  НИЙТЭЛСЭН:2019/10/21     2019 ОНД ХАЙГУУЛЫН 58 ЛИЦЕНЗ СОНГОН ШАЛГАРУУЛАЛТААР ОЛГОЖЭЭ WWW.BLOOMBERGTV.MN  НИЙТЭЛСЭН:2019/10/21    

Events

Name organizer Where
"Doing Business with Mongolia" seminar at House of Commons, London UK MBD House of Commons Dec 16 2019

NEWS

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China, Mongolia sign a military agreement www.politicallore.com

Chinese and Mongolian defence ministers signed a protocol and agreement to provide assistance to Mongolia, Akipress news agency reported. Both countries have already cooperated in the military and technical fields.

The defence minister of Mongolia Nyamaagiin Enkhbold and chief of the armed forces visited Beijing to take part in the CISM Military World Games were received by Chinese President Xi Jinping.

The Mongolian Minister Enkhbold is paying a working visit to China upon the invitation of his Chinese counterpart Minister Wei Fenghe and held official talks with the official. The central topic of their discussion was global defence and security issues.

Also during the visit, the Mongolian defence minister attended the 7th International Military Sports Council (CISM) Military World Games. For Mongolia, that was one of the massive military games after the Selenga-2019, annual Russian-Mongolian drills, which took place in August and involved 1,400 troops from both countries.

In the course of his visit, Minister Enkhbold will take part in the 9th Beijing Xiangshan Forum for dialogue and cooperation on global defence and security issues. Following the meeting, both Chinese and Mongolian ministers signed an agreement to provide assistance to Mongolia.

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330 kV Ulaanbaatar-Mandalgobi transmission line commissioned www.montsame.mn

Dundgobi /MONTSAME/ The 330 kV power transmission line stretching for 250 km between Ulaanbaatar and Mandalgobi soum of Dundgobi aimag and two electric substations which have been built with a soft loan of USD 113.04 million from the Exim Bank of China and an investment of USD 5.95 million from the Government of Mongolia were commissioned and handed over on October 18.

The handing over ceremony was attended by Minister of Energy Ts.Davaasuren, Ambassador of China to Mongolia Xing Haiming, Governor of Dundgobi aimag O.Bat-Erdene, and other relevant officials.

In his remarks at the ceremony, Governor O.Bat-Erdene said, “Dundgobi aimag now has a reliable energy source which is greatly significant for the aimag’s development and for developing manufacturing and providing services. In addition, the construction which will contribute to Mongolia’s economy offers a starting point for energy exports to Russia and China as well as the creation of longitudinal power transmission lines”

The new substations secure energy supply to the southern region and enables domestic supply of energy for the Oyutolgoi, Tsagaansuvarga, Tavantolgoi and other deposits of strategic importance as well as energy export to China.

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Tetra Tech Awarded $30 Million Mongolia Water Supply Program Management Contract www.business.financialpost.com

PASADENA, Calif. — Tetra Tech, Inc. (NASDAQ: TTEK) announced today that the government of Mongolia, through a Compact formed under the Millennium Challenge Corporation (MCC), awarded Tetra Tech a $30 million, seven year, single-award contract. Tetra Tech will provide program management services for a comprehensive water supply project in Mongolia to increase bulk water supply and meet future demand in Mongolia’s capital city, Ulaanbaatar.

MCC is assisting the government of Mongolia in addressing Ulaanbaatar’s water supply constraints with a project that includes installing new groundwater wells, an advanced water purification plant and a new wastewater recycling plant. As the Program Management Consultant, Tetra Tech will oversee and review detailed designs and environmental and social impact assessments, and provide planning, financial oversight, and program management services.

Under a previous MCC contract, Tetra Tech provided technical support services to the government of Mongolia to support innovative wastewater recycling and groundwater conservation projects. Tetra Tech evaluated the use of recycled wastewater at large combined heat and power plants (CHPs) in Ulaanbaatar and prepared impact assessments and feasibility studies. Tetra Tech also developed the process and design of a tertiary treatment wastewater recycling plant and connecting infrastructure to use recycled water at the CHPs.

“Tetra Tech is pleased to continue supporting MCC and the government of Mongolia in securing a safe and clean water supply for the people of Ulaanbaatar and supporting economic growth in Mongolia,” said Dan Batrack, Tetra Tech Chairman and CEO. “We look forward to using our expertise as a premier, high-end consulting, engineering, data analytics, and program management firm to support MCC’s innovative, evidenced-based work promoting stability and reducing poverty.”

About Tetra Tech

Tetra Tech is a leading provider of high-end consulting and engineering services for projects worldwide. With 20,000 associates working together, Tetra Tech provides clear solutions to complex problems in water, environment, infrastructure, resource management, energy, and international development. We are Leading with Science® to provide sustainable and resilient solutions for our clients. For more information about Tetra Tech, please visit tetratech.com, follow us on Twitter (@TetraTech), or like us on Facebook.

Any statements made in this release that are not based on historical fact are forward-looking statements. Any forward-looking statements made in this release represent management’s best judgment as to what may occur in the future. However, Tetra Tech’s actual outcome and results are not guaranteed and are subject to certain risks, uncertainties and assumptions (“Future Factors”), and may differ materially from what is expressed. For a description of Future Factors that could cause actual results to differ materially from such forward-looking statements, see the discussion under the section “Risk Factors” included in the Company’s Form 10-K and Form 10-Q filings with the Securities and Exchange Commission.

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Defense Minister of Mongolia visiting China www.montsame.mn

Ulaanbaatar /MONTSAME/. Minister of Defense N.Enkhbold is paying a working visit to the People’s Republic of China upon the invitation of Chinese Defense Minister Wei Fenghe and held official talks with the Chinese minister.

Following the meeting, both defense ministers signed a protocol and agreement to provide assistance to Mongolia within the framework of the military and technical cooperation between Mongolia and China. Also during the visit, the Mongolian defense minister attended the 7th International Military Sports Council (CISM) Military World Games. The defense ministers and chief of the armed forces of world countries that participating in the CISM Military World Games were received by Chinese President Xi Jinping.

In the course of his visit, Minister N.Enkhbold will take part in the 9th Beijing Xiangshan Forum for dialogue and cooperation on global defense and security issues.

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Mongolian PM to attend enthronement of Japanese Emperor www.news.mn

Mongolian Prime Minister U.Khurelsukh flew to Tokyo earlier today in order to represent Mongolia at the enthronement of Naruhito, Emperor of Japan. The ceremony will take place on 22-23 October.

Representatives of 195 countries that have diplomatic relations with Japan and international organizations including the United Nations and European Union will be attending the ceremony. By attending the enthronement ceremony, the Prime Minister will confirm that Mongolia attaches great importance to the strategic partnership with its important third neighbour, Japan.

Japanese Emperor Akihito stepped down from his throne on April 30 to let his son the Crown Prince Naruhito to take over. According to NHK, it is the first time in 200 years that a Japanese Emperor has abdicated.

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President Kh.Battulga: Participation of scholars is crucial for policy on minerals www.montsame.mn

Ulaanbaatar /MONTSAME/. The celebratory conference on the occasion of the 80th anniversary of the establishment of the geology sector in Mongolia took place at the State House on October 18.

President of Mongolia Kh.Battulga attended the conference and gave remarks, expressing his stance on the sector. In his remarks, President Kh.Battulga said, “The development of the geology sector has a large impact on the economy as well as the national security of Mongolia. Our lands and the resources inside it are the best guarantees for independence. It is the roots of our independence, freedom, development, and security.

It is geologists that discover and multiply the resources that are in our lands that are “...subject to national sovereignty and state protection” as stated in Article 6.1 in the Constitution of Mongolia. I consider that each of the newly discovered mining deposits must increase the amount of national wealth, and improve the economy. However, it has now become necessary to have the mineral resources, that were discovered and its amount estimated, to be approved by the globe that it is under the ownership of that nation--especially as public property.

In the condition that a joint agreement is established on conducting mining at a location where mineral resources, of which amount was scientifically estimated, it is a property that must be considered as an investment from the side of Mongolia. For this reason, discussions should never be held on giving someone ownership of the resources, which are available in the land that is owned by all the people of Mongolia. The interests of our country must always be put first, and the benefits of the economy must be evenly distributed. And this is why we are facing our current situation, where we have to review the cases in which agreements on mining and usage of land violated Article 6.1 of the Constitution, and have it comply with the law.”

The President then called for geologists to be the ones to foresee the future necessities of the world even when selecting their research topic and be the leaders in reducing poverty, evenly allocating the benefits of resources, and creating the conditions for a peaceful life.

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Norway’s $1 trillion fund builds Rio stake after dirty mine sold www.mining.com

After freezing out Rio Tinto Group for more than a decade for owning a highly polluting copper mine, one of the world’s biggest sovereign wealth funds has brought the company back into the fold.

Norway’s $1 trillion wealth fund built a 1.4% stake in the world’s No. 2 miner by the end of September, according to Bloomberg data. That puts the fund among the top 10 holders of Rio Tinto shares, the data show.

The investment demonstrates the value of meeting the increasingly aggressive environmental goals set by some of the largest money managers. Norway’s wealth fund is at the forefront of those efforts, and said earlier this year it would stop investing in companies that mine more than 20 million tons a year of thermal coal, the most polluting fuel. Miners including Glencore Plc and Anglo American Plc are set to fall foul of this rule.

Norway refused to buy Rio Tinto stock for more than a decade because of the environmental damage caused by its Grasberg mine in Indonesia, one of the world’s biggest copper and gold projects. In June, the fund said it had revoked that exclusion, after a recommendation from its Council on Ethics.

Rio agreed to sell its stake in Grasberg last year for $3.5 billion. The mine, operated by U.S. company Freeport-McMoRan Inc., is highly contentious. Every year it dumps tens of millions of tons of mining waste into an Indonesian river system and will continue to do so for years to come.

Rio has sought to burnish its environmental credentials, becoming increasingly vocal on the subject. After offloading its last coal mine in 2018, the company has sought to distinguish itself from rivals that still have fossil-fuel exposure.

(By Thomas Biesheuvel)

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Rich Chinese outnumber wealthy Americans for first time – Credit Suisse www.rt.com

A new report by Credit Suisse shows that the number of rich Chinese people has surpassed the number of wealthy Americans for the first time as both countries continue to produce millionaires at fast rates.
“This year, for the first time, China recorded more members of the global top 10 percent (100 million) than the United States (99 million),” the Swiss bank reported in its annual wealth survey released on Monday.

“Despite the trade tension between the United States and China over the past 12 months, both countries have fared strongly in wealth creation, contributing $3.8 trillion and $1.9 trillion respectively,” said Nannette Hechler-Fayd’herbe, global head of economics and research at Credit Suisse CSGN.S.

According to the study, the ranks of the world’s millionaires have risen by 1.1 million to an estimated 46.8 million, collectively owning $158.3 trillion in net assets (or 44 percent of the global total). The US added more than half of this increase, creating 675,000 new millionaires.

A decline in average wealth in Australia resulted in 124,000 fewer millionaires, while Britain lost 27,000 and Turkey 24,000.

The report estimates that 55,920 adults are worth at least $100 million and 4,830 have net assets above $500 million.

Credit Suisse projects that global wealth will rise by 27 percent over the next five years to $459 trillion. The number of millionaires is expected to grow over this period to almost 63 million. According to the bank, global wealth increased by 2.6 percent over the past year.

The bank noted that wealth inequality declined in most countries during the early years of this century. The share of the world’s bottom 90 percent accounts for 18 percent of global wealth, compared to 11 percent in 2000, it said.

“While it is too early to say wealth inequality is now in a downward phase, the prevailing evidence suggests that 2016 may have been the peak for the near future.”

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B.Uyanga: DBM not only provides loans, but also supports development projects it financed www.montsame.mn

We interviewed B.Uyanga, Director of Credit Financing Department of the Development Bank of Mongolia.

- To start with, please introduce us the activities and goals of the Development Bank of Mongolia (DBM)?

The Development Bank of Mongolia (DBM) was officially inaugurated and began its operations in 2011. DBM works to provide financing of large-scale projects and programs for Mongolia’s development as well as to support and track the results of the development projects. The Law on Development Bank of Mongolia was revised in 2017 with primary amendments made to ensure that not less than 60 percent of the DBM’s funding to be provided for export-oriented projects and programs. In this respect, the DBM has been mainly financing projects, enterprises and factories that are working to export their outputs abroad. In addition, we provide funding to major projects of imports, infrastructure and power plant. According to the aforementioned law, all of these shall adhere to government’s midterm and long-term development policies.

- Could you tell us about the goals you have set for this year?

First of all, we are working on non-performing and problem loans by announcing this year as the year to deal with problem debts. Furthermore, DBM’s improvement of domestic regulation, loan issuing activities as well as internal restructuring, reorganization and enhancement of corporate governance are being carried out. Not to mention the main operations toward the country’s economic growth, to fund export projects and programs. Goals for this year focus by and large on these three directions.

Most importantly, apart from loan issuing activities, we are working together with government and non-government organizations to bolster the loan investments provided to entities and tackle challenges of exporting faced by them. For instance, DBM has been maintaining cooperation with ‘Export International Trade Center’ NGO since 2015, giving support to exporting entities to sell their products to the USA, Canada and Japan and European markets.

DBM’s efforts to assist the lending entities and projects include organizing meetings with government departments in charge of trade, chambers of commerce and other relevant organization of foreign countries, delivering information on documents required for exports and document preparation and studying what products made in Mongolia attract the most attention of overseas customers. This implies that when providing services and loans, DBM works together with the companies and development projects it funded until they are fully completed to show tangible results and profits with eventual intention toward the nation’s future growth.

Could you introduce loan and financing indicators of your bank?

As of today, our bank has loan portfolio of MNT 2.7 trillion. Besides giving direct loans to major projects and programs, we provide funding to commercial banks. In other words we finance small and medium sized enterprises through commercial banks. Currently, we have funded 15 programs through 11 commercial banks. Number of entrepreneurs and entities that received financing reached 1700 now. Whereas direct loans granted by our bank, has been given to 74 loan holders or such number of projects and programs.

1700 entities are not a small number. How effective are the loans being granted through commercial banks?

These loans are effective. Commercial banks take their risks at 100 percent, studying the loan requests themselves. Finally, they submit their request to our bank with suggested factories and entities to provide loans. After running selections, relevant ministries also send a list of the factories and entities that are considered proper to support. The commercial banks study these entities and our bank provides loans to the selected entities. There is not any risk on loans being given through commercial banks and repayment of loans is running at 100 percent without any problem.

What about loan disbursement by sectors or purpose?

40 percent of loan portfolio is allocated to processing industry, 24.2 percent to construction sector, 16.3 percent to indirect loans or commercial banks, 10.6 percent to mining, 8.3 percent to energy and 2.6 percent to other sectors.

I heard that the Development Bank would support ‘Export Mongolia-2019’ international business forum to be held in Mongolia on October 28-29. Could you elaborate it?

As we finance projects and programs targeted to export, our bank will involve the exporting entities that have got loans from our bank in the forum and provide information. ‘Export Mongolia’ forum will be held for the 5th time. Previously, only domestic companies and entities used to attend the forum, but this year many international organizations will take part and bilateral and trilateral meetings will be held in a wider range. Financial institutes, which promote businesses, will participate as well. We will introduce our projects and programs at the forum.

The Development Bank of Mongolia has right to draw its funds and financing from foreign sources. The bank issues various types of bonds and collaborates with international banks and financial institutes.


B.Bold

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China, India will regain economic glory www.chinadaily.com.cn

That China is a leading country in the world should not surprise anyone because since 1680, it had been the No 1 economy, till imperialism attacked it.

Before that, India was in the lead. India, too, suffered very severely from foreign invasions and imperialism. Such factors affected both China and India.

By the year 2010, China had achieved a record double-digit growth in GDP. Several structural changes, particularly the decline in the share of agriculture, the rise in the share of manufacturing, and the rise in the share of services, with respect to the years before, were remarkable. So was the lower level of unemployment.

In the first few years after 1980, when modernization, reform and opening-up were introduced, the Gini Coefficient had gone up because higher incomes rose much faster than the middle incomes. (Gini Coefficient is defined as a measure of statistical dispersion intended to represent the income or wealth distribution of a nation's residents, and is the most commonly used measurement of inequality.) But by 2010, even it had come to decline.

China had accumulated huge foreign exchange reserves in US dollars, achieved a massive level of exports and a magnificent infrastructure. When Indians visit China, they say after their return: "Why can't India be like China?"

China's economic growth since the 1980s, which is visible in every corner of the country, is an amazing achievement indeed, and deserves an 'A+' for development, at least up to 2010. After 2010, the story changed a bit.

According to data from the International Monetary Fund, of which China is a member, GDP growth rate in 2010 was 10.63 percent. Then, it started declining. In 2018, it was 6.6 percent. In the first half of this year, it was at 6.3 percent.

The latest IMF forecast suggests China's GDP growth rate in 2024 will be 5.5 percent. Now, is this projection a cause for alarm? The answer is, it depends, because the old strategy of increasing growth has now outlived its purpose. China needs a new strategy now.

The rate of investment, however, had been going up till 2010. In 2010, it was at 47.71 percent of GDP. Now, it has declined to 44.38 percent, but is still very high, and probably higher than any other country's.

The net flows of foreign direct investment as a percentage of GDP had also declined over the years, from 3.47 in 2004 to about 1.36 in 2018. The household savings rate, however, has surprisingly gone up, from 28.24 in 2000 to 38.46 in 2013, and then moderated a bit to 36.14 in 2018, according to IMF data.

What is interesting is the incremental factor of the ratio. It was 4.62 in 2010, which climbed to 6.5 this year, suggesting the new policy lays emphasis on high efficiency in the use of capital.

A Renmin University of China study shows that the total factor productivity in growth of China's GDP was 4.3 in 2010, and then it declined to 3.6, which squares with the past inefficiency in the use of capital. Unemployment has also been declining - the rate was 4.5 in 2010, now it is 4.4. The Gini Coefficient was down to less than 38 in 2015.

The Chinese growth from 1980 onwards, especially after 1996, has been largely a story of more capital, more labor, suggesting longer-term focus, which is bound to bring diminishing returns. That's why, the GDP growth rate has been going down.

It is a correct strategy that China should now focus on innovation, which will take China from one curve to another, upward. That means, China can have higher growth rates for a longer time.

My new book Reset: Regaining India's Economic Legacy charts India's annual economic growth, which was 3.5 percent to 4 percent between 1950 and 1980, more or less the same as China's. But, after China introduced reform and opening-up, India's economic growth started accelerating.

But, in the past, adoption of a certain economic model did not yield the expected results. Comparisons clearly show a command economy, or a government-directed economy, does not run successfully to deliver high growth.

India suffered till 1991 when the Congress party-led coalition government headed by Narasimha Rao initiated major economic reforms, which increased growth from 3.5 percent to around 7 to 8 percent over the next five years.

Such high growth rates were sustained over the next several years. But after 2016, growth has decelerated. Now, it's down to around 5.5 percent. This had nothing to do with economic strategy but bad economic policies and questionable experiments that backfired badly. But India recovered, and high growth rate has returned.

Until recent decades, China's strategy has been what economists refer to as "switch trade". China imported semi-processed goods from East Asia, added value to them, and then exported them to Europe and the United States.

Data shows China had a negative balance of trade, or deficit, with East Asia. But it almost reached a surplus in trade with Europe and the US. That's how China made its progress and accumulated foreign exchange reserves.

The labor in East Asia had become quite expensive. So, it became cheaper for East Asia to send semi-processed goods to China. Now, countries like India and Bangladesh are competitors for China. So, China needs to rebalance its trade and change its foreign trade strategy.

China's labor is becoming expensive too, and more skilled. So, China needs to move away from setting up industries that basically service imports from East Asia. Instead, China should set up industries that are indigenous and can use innovation to produce new products. The country is already doing this quite well. China has beaten the US in 5G, and leads in artificial intelligence.

In the past, China went in for liberal financing. Infrastructure received money from banks that were supported by the government. But the private sector was not a big beneficiary. This needs to change now, and more financing should flow toward the private sector as well, to give impetus to innovation.

Lessons need to be learned from countries like Brazil and Argentina that were seen in the 1960s as economies that could become developed like the US and Europe, but were plagued by one crisis or another, and have not been able to realize their potential till now.

The experience of East Asia, which includes Japan, is also relevant. In 1995-96, the World Bank published a report called The Economic Miracle of East Asia, advising countries like India that were seeking growth to follow the basic principles of economic growth as pursued by East Asia.

But, in 1997, there was the Asian financial crisis. It was found later that the East Asian economic tigers were going to the market and giving short-term loans and investing in, or building up, long-term assets. The World Bank produced a sequel that reconsidered the "miracle". That should not happen to China.

The significance of the financial system cannot be overemphasized. One key aspect to note is that unlike the US and Europe, East Asian economies' financial system was not ready for the kind of high economic growth they witnessed.

Besides rising labor costs and outdated switch trade, China has to contend with high tariff walls that are being built around it, particularly by the US. China's infrastructure is nearing saturation point, and it's no more going to be the way to generate employment and higher skills. Even housing seems to be a bit saturated.

So, rebalancing of trade, combined with the Belt and Road Initiative, is going to be the key to future growth. China may want to consider giving higher rates of interest on savings and continue underlining innovation.

It is possible for China and India to learn lessons from their past that witnessed colonialism, imperialism, reparations for combat, monarchy. It is possible for the two nations to discover mutual areas of cooperation, particularly in research and development that can produce great value in the form of more innovation. One more area of cooperation could be mutual exchange of intellectuals.

This process has accelerated over the last four to five years. History is in cyclical mode. Two nations that were the world's economic leaders will regain lost glory. It's just a matter of time.

By:Subramanian Swamy

The writer is India's former commerce, industry and law minister; member of the ruling Bharatiya Janata Party; and member of the upper house of parliament. The article is adapted from his address to the international conference on China's 70 years as a republic, organized by Tsinghua University on Sept 22 in Beijing.

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