Arnab Banerji, head of the Emerging Markets Group, Lansdowne Partners
China and globalisation
Recently, I heard Senator Phil Gramm compare trade with skiing; the correct position to adopt is deeply counter-intuitive. We live in a world in which the US runs a huge trade deficit while China alone has amassed a foreign exchange reserve of over a trillion dollars. Daily, we hear about manufacturing jobs relocating to the newly industrialising nations and even some professional activities, such as software and accounting, relocating to destinations such as India and Israel. With labour costs running at a fraction of those found in the developed world is competition possible? Is the process itself desirable? In these circumstances, championing free trade seems to run counter to common sense. That is the very reason that the case for it needs to be made.
Consider a world with only two nations trading within it, the US and...