Balance of power shifts as sun rises in the East

Dennis Morrison, Contributor

If we are to go by China's burgeoning list of billionaires, then Chairman Mao Zedong would have been correct when in 1965, he accused "capitalist roaders" as being bent on eventually restoring capitalism in China. Deng Xiaoping, his successor, was among the capitalist roaders whom he saw as reactionary forces in the Communist Party of China.

But even though Mao still enjoys the approval of 70 per cent of Chinese, the reforms of Deng Xiaoping, begun in 1978, would be credited by most Chinese for the miraculous success of what he designated as China's "socialist market economy".

Forbes' rich list, announced last week, ranks 115 Chinese billionaires from the mainland among the 1,210 billionaires from around the world, almost double last year's 64. Their businesses cover manufacturing, information technology, food, and other sectors, where China has grown spectacularly since Deng Xiaoping launched his reforms.

For the first time, a Chinese mainland billionaire, Robin Li, is in the top 100, and like Carlos Slim and Bill Gates, he heads China's leading information technology company, Baidu, Google's main competitor in the Chinese market of more than 420 million Internet users.

36 billionaires

Hong Kong, once more a province of China, has 36 billionaires on the list and its richest man has moved up to the 11th spot. Taiwan, too, features prominently on the world's rich list with 25 billionaires, as Asia has become the fastest-growing region in the number of billionaires in line with its rapid economic transformation. Indeed, the number of Asian billionaires is more than Europeans, for the first time, in the 25 years since Forbes has been listing the world's richest.

Not to be outdone, Indian billionaires have moved up the list of the world's super rich, as have Brazilians and Russians, reflecting the dynamism of the so-called BRIC countries and the wider emerging market economies. Prominent among the Indian billionaires are members of the Mittal family, who now sit at the top of the global steel industry, and also India's leading players in the information communication technology sector. The rapid evolution of the information and communication technology sector globally is confirmed by the pre-eminence of its leading players in that sector on the rich list.

Evidence that the centre of gravity of the world economy is shifting to Asia is showing up not only with respect to the number of billionaires, but in the aviation market, one of the cornerstones of the global economy. At last week's Asian Aerospace 2011 event in Hong Kong, news came that the Asia-Pacific region has emerged as the largest in the world in terms of passenger seat capacity. In 2010, air traffic in the region grew at double-digit rates and led the recovery of the global aviation industry. This growth was based primarily on the robustness of Asia's economic recovery as more than 80 per cent of the traffic was generated within the region.

The Beijing Capital Airport moved up to second spot in the world in terms of scheduled seat capacity next to Atlanta's Hartsfield. Tokyo's Haneda Airport also moved up to occupy third spot, pushing London Heathrow into fourth position.

Judging by announcements from the world's largest planemakers, Boeing and Airbus, they expect this momentum in the Asia-Pacific region to be sustained. Boeing is forecasting that air traffic in the region will grow at an annual average rate of nearly seven per cent over the next 20 years, compared with a world average of five per cent.

Tapping in to travel growth

On this basis, Boeing expects that Asia-Pacific will account for 44 per cent of world travel in 20 years' time, from 34 per cent today. And its competitor, Airbus, is predicting that the region will receive 40 per cent of new airplane deliveries worldwide over the period. As could be expected, Chinese airlines - Air China, China Eastern Airlines, and China Southern Airlines - are at the forefront of aircraft purchasers, with big contracts going to Boeing and Airbus.

But China is pushing aggressively to establish itself as a leading commercial aircraft manufacturer. At the Hong Kong show, it announced completion of the preliminary design of its C919 medium-range commercial airliner that is meant to be a direct competitor with the very popular Boeing 737 and Airbus 320 models. The C919 is slated to undertake the first flight in 2014, with certification and delivery to its first customers by 2016.

The Asia-Pacific region seems set to be the dynamo of the global travel industry for the foreseeable future, but it is likely that the rapidly growing middle classes of China and India are going to be drawn to destinations in the West as well. This will be facilitated by the significant expansion in aircraft deliveries anticipated by Boeing and Airbus and the greater fuel efficiency of the new generations of these aircraft. While Jamaica has secured Approved Destination Status from China and is doing some groundwork with Chinese tour operators, by virtue of our location, that market appears to be more a medium-term prospect.

Dennis Morrison is an economist. Email feedback to columns@gleanerjm.com.