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China has overtaken the US – says IMF

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It was expected but not so swiftly, possibly the Covid-19 has expedited what was inevitable. A report published in “The Our Asian Times” on 1st December 2020, titled ” IMF Admits China Has Overtaken The US As The World’s Largest Economy; But Why Is The Media Silent?” says the world has to wake up to the new reality – China is the undisputed new economic super power.

In the past, economists have traditionally been using the index called MER, which means Market Exchange Rate, to calculate the GDP when comparing the economic performance of different countries. This method has been viewed with extreme suspicion as it doesn’t reflect the real figures because it underestimates the buying power of currencies of many countries. More reliable and now widely accepted yardstick called the Purchasing Power Parity (PPP) which is used by IMF, enables you to compare how much you can buy for your money in different countries.

To explain this further, according to the traditional exchange rate, one US Dollar is equivalent to 6.9 Chinese Yuan, but 6.9 Yuan can buy in China more than one US Dollar in America. On this basis 99 trillion Yuan the Chinese produced in 2019, is equal to USD 26 trillion which is much greater than the USD 21.4 trillion America actually produced in 2019. This is the PPP method which is said to be better than the MER method to compare economies.

The IMF is clear in its report, it says “PPP eliminates differences in price levels between economies and thus compares national economies in terms of how much each nation can buy with its own currency at the prices items sell locally. Using the PPP method, the Chinese economy is determined to be USD 24.2 trillion compared to America’s USD 20.8 trillion”. This is a huge difference, for USD 3.4 trillion is lot of money.

After the IMF, the CIA also decided to switch from MER to PPP in its Annual Assessment of National Economies. The CIA Fact Book notes “The official exchange rate measure of GDP is not an accurate measure of China’s output; GDP at the official exchange rate (MERGDP) substantially understates the actual level of China’s situation, GDP at purchasing power parity provides the best measure for comparing output across countries”

Everybody knows that IMF is pro-US in its approach in matters of global finance and economy. In the 1970s, the IMF and the World Bank were restructured to serve neoliberalism which the US and Europe embraced and forced on the rest of the world, letting loose the market forces which have really ravaged the economies of the poor countries. Therefore the IMF could be considered a tool of the US and Western powers. It would not dare lie regarding the economy of its biggest sponsor. The CIA is the central intelligence service of the USA and it is advising the US government about the seriousness of the problem due to Chinese ascendancy. CIA too , will not give wrong information to the US government.

One cannot be surprised by the Chinese phenomenon. It’s economy has been growing at the mind-boggling rate of 10% in the last 30 years. Only the Covid-19 succeeded in bringing it down and that too, by a small margin. China is expected to contribute 1/4 th of the global growth next year, mainly in the manufacturing sector.

Joseph Needham who had studied ancient Chinese science and technology, has commented on the capability of the Chinese and the uniqueness of their culture.. The methods adopted by the Chinese have bewildered Western social scientists and economists. Some believe that it is the habit of thrift of the people that had contributed to the economic growth as the rate of savings in China ranges around 25%. Others think it is due to the concept of Township and Village Enterprises that has been adopted recently. However, Needham and his associates think the close affinity between the Chinese people and the government to be the secret of their success.

The world has to come to terms with China. The Western countries cannot continue to treat China as an outcast and do its utmost to undermine its development and spread of influence. Australia for instance, supports all such efforts of the US though China is its biggest trade partner. It had agreed with the US policies regarding sanctions on China and implemented similar measures, but complains to the WTO when China retaliates.

One hopes, for the sake of world peace and prosperity that these big powers would stop their childish rivalry and work together. One hopes the new US President Joe Biden would change their policy towards China. He must realize that greater benefit would result to the US, as well as the world by adopting a lesser confrontational approach. If the US and China come to be lesser rivals and greater trade partners the rest of the world could be expected to be more peaceful and conciliatory. Middle East could be less of a cauldron, South Asian rivals may mend fences. China itself would be less belligerent in its neighborhood.

More money would be available everywhere for health and education, employment and culture as the defense budget could be cut as there is no need to spend on weapons as there is no threat of war.

But is this wishful thinking. Would weapons industry allow Biden, even if he wants to, to make peace when their economy, employment, growth and power depends on the perpetuation of a war situation cold or hot in the world.

N. A. de S. Amaratunga

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Opinion

Reminiscences of Colombo University Arts Faculty and Library

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Whilst extending my felicitations to the University of Colombo on the centenary celebrations of the Faculty of Arts and the Library of the University, I would like to record my contribution towards these two units as the Registrar of the University.

It was during Prof. Stanley Wijesundera’s tenure as the Vice-Chancellor (VC) in 1980 that the proposals for the buildings in respect of the Chemistry Department, Physics Department, New Administration, Faculty of Law, Faculty of Arts and the Library were mooted and submitted to the Treasury. At that time it was the National Buildings Consortium that assigned the Consultants and the Contractors for the new buildings to be constructed. Within that year the Treasury allocated sufficient funds for the Chemistry, Physics, Faculty of Law and the New Administration buildings. However, no funds were allocated to the Faculty of Arts and only Rs. 7.5 million was allocated for the Library building.

With the funds allocated the Chemistry, Physics, Law Faculty and the new Administration buildings were able to get off the ground. The construction work in respect of the other two buildings could not commence due to non-allocation of sufficient funds, even though the consultants and the contractors and already been selected.

As the Minister of Finance at that time was from Matara, he was more interested in getting the required buildings for the newly established University of Ruhuna completed, which was in his electorate. This meant that the University of Colombo would not get any funds for new buildings other than those buildings where the construction work had already begun.

The university needed a building for the Faculty of Arts very badly as this Faculty had the largest number of students. The Vice-Chancellor requested me to draft a letter to the Minister of Finance. Accordingly, I drafted a letter and submitted to the VC for his signature. He told it was an excellent letter, and he signed without a single amendment and submitted same to the Minister. The Minister approved the releasing of the funds. Now the consultants to the building project studied the area required for the building and found that a small portion of land was necessary from the land of the Planetarium. My efforts to get the land from the person in charge of the Planetarium, the Senior Assistant Secretary and the Secretary himself were not fruitful. I told the VC of the position and that he would have to speak to the Minister in charge of the Planetarium, Mr. Lionel Jayathilaka. He got the Minister on line and addressing him by his first name and informed the Minister of the problem. The Minister immediately got it attended to. However, when the construction work started, they found that the additional land area was not necessary.

At that time, the payments to the consultants of building projects was 15% of the total value of the cost. So, in designing the building they tried to add various unnecessary items to jack up the cost. When the first phase was completed, the building looked monstrous and it was like a maze, as it was difficult to find your way out once you get in. I requested the architect to add some coloured tiles on the floors and the stairway and a few decorations on the walls. The university had a never ending tussle with the contractor as he was like Shylock asking for more, when everything had been paid. He tried various tactics but did not succeed in getting anything more as I was adamant not to give in.

When the second stage of the building project came up, I told the consultant to drop all the unnecessary items and have a straight forward building. This was done by the new contractor at much less cost to the university.

The Library building was the last of the buildings planned in 1980 that was awaiting construction. When Mr. Richard Pathirana became the Minister of Higher Education, I spoke to the two engineers who were assigned the task of supervising the building projects of the universities, and managed to get the funds passed by the Treasury for the construction of the Library building. When the Minister came on a visit to the university, he told me that the building that should have been done for Rs.7.5 million will cost Rs.253 million. I told him that the Treasury never gave any money after approving the initial funding of Rs.7.5 million. Anyway, I had achieved what I wanted to do and the building was successfully completed. Now the furniture for the Library had to be procured. When quotations were called the suucessful tenderer had brought a sample of the study tables. I rejected this as it was inferior to what I wanted and asked the officer concerned to get the design of the furniture from the library in the University of Peradeniya. This was done and the furniture was installed. The official opening of the new Library was arranged. By that time I had retired from the position of Registrar and was the Director of the Institute of Workers’ Education. Even though I was instrumental in getting the building done, I was not invited for the function. That is gratitude!!

 

H M Nissanka Warakaulle

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Opinion

Ali Sabry bashing

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Justice Minister Ali Sabry has appealed to his critics to spare him from the criticism that he was behind the calling of applications for the appointment of Quazis for Quazi Courts (The Island/23.01.2021). In my view, the allegations levelled against Justice Minister Ali Sabry are unfounded and uneducated. If you are an educated and unbiased citizen of this country, you’ll understand it better. The applications for Quazis for Quazi Courts have been called by the Judicial Service Commission, an independent Commission chaired by the Chief Justice of this country. If you aren’t happy with this decision, you have to take it up with the Chief Justice, not the Justice Minister. He has no control at all over the Judicial Service Commission. In a way, criticising that Justice Minister influenced the Judicial Service Commission, chaired by the Chief Justice, tantamounts to contempt of the Supreme Court. Moreover, Quazi Courts have been in existence for well over 70 years, and it hasn’t affected the Sinhalese or the Tamils nor has it been incompatible with the common law of this country. If there is any serious discrepancy, it can be rectified. But I wonder why the calling of applications for Quazis has now become an issue. I also wonder if the removal of Quazi Courts was promised as a part of the subtle 69 mandate. This is not the first time similar allegations have been made. When Rauf Hakeem was Justice Minister, Member of Parliament Pattali Champika Ranawaka  made serious allegations that more Muslim students were admitted to the Law College and led many protests and ultimately a group of monks stormed the Law College in protest. He had charged that Law College entrance exam papers were leaked and criticised the then Justice Minister Rauf Hakeem for it. He  knew very well that Law College came under the Council of Legal Education chaired by the Chief Justice and  Attorney General and two other Supreme Court judges among others were  members of this Council, yet he had made these allegations with a different motive. Amidst international outcry, Muslim Covid victims have been denied burial. To make the situation worse, some vindictive, venomous elements are now trying to create another bad scenario that Muslims can’t marry either according to their faith, and tarnish the image of this country internationally and drive a wedge between communities. Therefore I earnestly ask the law abiding and peace loving citizens of this country to work against these vindictive, venomous elements.  

 

M. A. Kaleel 

Kalmunai. 

 

 

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Opinion

What do Northern political parties seek?

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Political parties, based in the North, are reported to be getting prepared to attend the UNHRC sessions next month. For several decades, the only thing they did for their constituents is to spread feelings of hate among them, against the government and the people living in the South. Today, we have two important issues where India is involved – re. the Colombo Harbour and the death of four fishermen. There is another perennial issue of Indians fishing in our waters. Have these parties uttered a single word on those matters? What do they expect to gain, or achieve for the Northerners, even if they could prove SL war crimes allegations at the UNHRC? Can they honestly say that they were not a party to the LTTE and other terrorist outfits which looted, tortured and killed hundred or thousands of civilians, both in the North and the South?

Other than shouting about the rights of their people, have they done anything for the wellbeing of the people in those areas? Whatever was given to the people were those given by the Government on a national basis. Excellent example is the conduct of C V Wigneswaran, who held the high position of Chief Minister of the Northern Province for five years – had he done any significant service for the people? Those parties never complain about India for the killings, torturing and raping done by the IPKF, or the damage and loss due to the activities of Indian fishermen.

India too overlooks all that, and to keep Tamil Nadu happy, forces the SL government to grant whatever the Northern Parties demand.

 

K SIRIWEERA

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