Preparing for the Asian century @London House

Whilst BRIC countries interconnect between themselves, can London be the BRIC capital of the world?

At the first of the mayoral discussions at City Hall during the London 2012 Olympics, Jim O’Neill of BRIC fame (and fellow United supporter)  presented his paper Preparing for the Asian Century: Capitals & Markets at a discussion on Preparing for the Asian Century. He suggested in his talk at the beginning of the session that London should become the BRIC capital of the world.

I agreed with his economic analysis on the basis of productivity and labour market movements, that there will be a shift to the East from the West, as long as Asian countries still buy into globalisation. This is not just happening with China & India and the other BRICs ( Brazil & Russia ) but also another emerging group of countries called the N-11 economies which combined with economic and political changes could greatly further impact on the global economy.

Some useful points were made from the floor in response to his pearls of wisdom including the trend of increasing South-South trade & investment; the City not investing in Asia and doing it in other ways which involve the diaspora communities of London; and the importance of culture and language in Asian business.

There is increasing antidotal evidence we are seeing new patterns in trade & investment as we have enhanced levels of South to South transactions like that between two fellow BRICs. For example between Brazil and China was quoted from the floor of the discussion. There is also evidence that we have the same trend between China & India, as China supplies finance to Indian IT entrepreuers who use it to develop the sector in India.  This inter-BRIC interaction is one reflection of the South to South trading, as we also have BRICs investing in other Southern countries like China has already done in the instance of Africa particularly its infrastructure in return for supplies of  raw materials. All this of course bypasses London making it difficult for it to establish itself as the BRIC capital of the world.

As for actual investment into BRICs like China & India, the UK’s net Foreign Direct Investment (FDI) has risen over the past decade but lags behind that of its main competitors like the US, France & Germany. So it appears the City isn’t doing its job on this front, to help London becoming the BRIC capital of the world. Other ways of doing this exist like helping to get the many diaspora communities in London within the Chinese & Indians to invest their remittances or money transfers into infrastructure rather then immediate consumption. As many government in the South know this is a more reliable and regular source of finance then aid assistance and FDI and something we could assist through the relevant communities.

And finally lets not forget the importance of culture and language in Asia. South Asian communities still invest alot of their savings into gold showing their risk averse nature and something that would need to change if its to help release their saving for infrastructural investment. And there is no doubt talking the same language helps seal the deal in business in Asia. Now given we boasted that we have some 300 odd languages spoken in London when we won the Olympic bid for 2012 in 2005, its a real pity we don’t make the most of this and instead assume both here and aboard that very one speaks English in business. This mind set needs to change, if we are going to make London the BRIC capital of the world.

 So if London is to continue to be the world capital for finance, it better take on board these points that were made on the floor of this discussion at City Hall asap, as Asia becomes increasingly most importance part of the global economy.