Trade NOW – Summer Reading Edition

Summer is upon us and what a strange summer it is. With all the travel restrictions and social distancing it seems like a good time to sit down at a nearby lake/ocean/riverside and unplug for a bit with some fine books on trade.

In this edition I’ll lay out some books, most of them fairly recent, that I recommend you spend some time with and why I think they are worth the effort. The recommendations cover history, corporations, national economic development, infrastructure, finance and link everything into the world of trade. At the end are links to two of our Economist Events trade webinars, one just passed you can now watch and one literally happening today featuring Robert Azevedo of the WTO amongst the guests.

Empire of the Winds: The Global Role of Asia’s Great Archipelago by Philip Bowring

 Published in 2019 this is a deep history of South-East Asia (known as Nusantaria) and its trading nations. With many competing books appearing on the Silk Road and on Chinese and Indian history Philip Bowring fills in an important space for the reader interested in the history of trade. The analysis begins at 15,000 B.C and works its way up to the present-day with much time spent on the incredible sea-borne trading empires in Sumatra, Java, modern-day Vietnam and some excursions into the Philippines and Taiwan. The chapter on Madagascar, which makes the case that it is essentially Asian is a controversial eye-opener.  If most of your trade knowledge of South-East Asia starts with the colonial conquests this book will show you the rich history that preceded that era and why that lesser-known history matters to today’s trade and geopolitical tensions.

The Anarchy: The Relentless Rise of the East India Company by William Dalrymple

Another 2019 release this is classic Dalrymple and gives us incredible detail illuminating how the East India Company (EIC) evolved from an ill-starred near-disaster as a trading enterprise in 1599 to one of the most powerful corporations in human history by the mid-1800s. Relying on a larger number of authoritative Indian sources than other books on the EIC gives a fuller picture of the events that were taking place as the EIC established itself in Bengal and gradually expanded through political deals, intimidation and warfare. The detail on Bengal as the richest and most productive area of Asia is a useful counter-point to the oft-told stories that focus on Canton and the riches of the China trade. Notably, Dalrymple has made the effort to make this a micro-economic history in the sense that goods and labour costs, revenues and profits are continually laid out and calculated to (roughly) current British pounds. Offsetting this numeracy is a tremendous amount of battle detail and court intrigue – this by no means dry trade history.

 Unfortunately, the book focuses almost solely on the EIC’s fortunes and predations on the Indian sub-continent and the political maneuvering in London, leaving out quite substantial EIC history in East Asia. The three sets of colour plates make a fine visual addition the 500+ pages of text. 

How Asia Works: Success and Failure in the World’s most Dynamic Region by Joe Studwell 

If you want to understand why East Asia is highly developed, its countries’ export champions and at the cutting edge of technology development while South-East Asia lags behind then this is the book to start with. There is useful analysis concerning why agricultural policy was the crucial prelude to manufacturing exports in Japan, Korea and Taiwan and why we didn’t see the same pattern followed in the Philippines, Malaysia and Indonesia. Studwell reserves the final chapter of the book entirely for China. Published in 2013 before a number of significant shocks to the global trading system, its provides a coherent and digestible background on the manufacturing, export and financial policies that got China to where it is today, both in terms of manufacturing heft as well as the structural challenges it now faces to climb the value chain amidst geopolitical tensions. 

Connectography: Mapping the Future of Global Civilisation by Parag Khanna 

A controversial choice perhaps, particularly with coronavirus seemingly breaking many of the world’s connections, certainly anything related to air travel, politicians calling for increased re-shoring of manufacturing for critical goods and apps and hardware being blocked on an increasing basis. The Economist’s own book review is here. Published in 2016, Khanna goes into great detail showing how our world is physically connected by pipelines, power grids, highways, railroads, undersea cables, canals, and roads and virtually connected via maritime corridors, trade agreements, capital flow, supply chains, migration and challenges including global warming. The maps are a true highlight of this book and you will find yourself going back to them to reabsorb the detail they add to the narrative. Perhaps the most useful mental model to come from the book is Chapters 6 and 7 on Tug-of-War as the defining mode of interaction between China and the United States and its allies in the decades to come. While there is much talk of the seemingly simpler ‘decoupling’ at the moment, as though the world will divide into defined spheres of influence again similar to the 1950s-1980s, experts in logistics, manufacturing, finance and technology know it will never be that wholesale or cleanly divided. A continuous connection, with continuous tension on the rope, seems far more likely. 

Trade Wars are Class Wars by Mathew Klein and Michael Pettis

Published earlier this year, I must admit I have not actually finished this book yet. I’m enjoying the way it brings together the worlds of saving, investment, capital flows and trade to explain the incredible imbalances in trade between countries with a focus on China, the United States and Germany. A useful antidote to the personality-driven news cycle.

Because I haven’t finished yet, I will point you to a substantive review of the ideas in the book by Martin Wolf of the FT: https://www.ft.com/content/f3ee37e0-b086-11ea-a4b6-31f1eedf762e

It opens with: “Trade war is often presented as a war between countries. It is not: it is a conflict mainly between bankers and owners of financial assets on one side and ordinary households on the other — between the very rich and everyone else.” This encapsulates the argument of Trade Wars Are Class Wars. Its authors Matthew Klein and Michael Pettis argue that what has been happening to trade and finance can only be understood in the context of domestic pathologies in leading economies. The result has been severe global imbalances, unsustainable debt and monstrous financial crises. This story matters for everybody.” 

The Economist also has a shorter review here: https://www.economist.com/books-and-arts/2020/06/27/chronicling-donald-trumps-trade-war-with-china

Webinars:

Trade Disrupted: Rethinking Supply Chains: https://events.economist.com/events-conferences/asia/asia-trade-summit-webinars/trade-disrupted-rethinking-supply-chains/

Originally aired on July 17th and now available on-demand. A very strong Asia focus including C-suite executives of manufacturing companies and a leading shipping line plus a macroeconomist all moderated by Chris Clague of the EIU. A lot of ground reality and useful detail for business people.

Happening today! Business beyond covid-19: The future of global supply chains.Featuring Daniel Franklin moderating guests from Citi, the European Commission, Huawei and the Robert Azevedo, Director General of the WTO.

Summary: Before the onset of the coronavirus, global trade had already been stuttering; covid-19 worsened the malaise. To stop the spread of infection, governments shuttered businesses and locked down entire economies. Trade paused; small and medium businesses were thrust into turmoil; and global stockmarkets dived. As industries and economies emerge from isolation, they have a unique opportunity to re-examine their foundations and rebuild a much stronger global trade ecosystem. Their ability to diversify their supply-chain sources and take advantage of new technologies will play a critical role in their future, and that of the global economy.

• How will supply chains evolve after covid-19?
• Which emerging technologies will be incorporated into agile and adaptive manufacturing strategies?
• Will companies rethink risk-management?
• And how will they put into practice the lessons learned from the crisis?

Register here:

https://events.economist.com/events-conferences/emea/the-future-of-global-supply-chains-2020/

I hope you get some summer enjoyment from these book selections and webinars. They certainly helped give me depth and context to interpret the relentless parade of factoids and opinion we face daily trying to understand the trading world. 

About the Author

Barrett Bingley is a Director at The Economist Group which owns The Economist Newspaper and The Economist Intelligence Unit. Barrett co-Chairs the AmCham Hong Kong Trade and Investment Committee and regularly holds events and briefings on the trade topics of the day. Before moving to Asia Barrett was the senior policy advisor to Canada’s Trade and Foreign Ministers where he developed the Global Commerce Strategy, the first comprehensive trade and international investment blueprint for Canada. Barrett is also a Director of The Society of Publishers Asia.