China Research

A discussion forum on emerging markets, mainly China – from a macro, micro, institutional and corporate angle.

E-health in China

July 12, 2016

About a dozen years ago, I visited Japan and got there the opportunity of watching some demonstrations of it- related health/sickness treatment connections from patients’ homes to hospitals.

I really got impressed then which resulted in an article in one of the major Swedish morning papers, thinking about future applications in Swedish precautionary and medical care. However, too little happened in Sweden in this specific area.

Now I have visions that China may take advantage of all the new opportunities that e-health may offer already now but particularly in the future. Swedish firms and institutions should make every effort to be invited to this development.

The theoretical potential is enormous. China is a gigantic country with almost 1.4 billion people living there. Demographic changes will be substantial in the forthcoming decades. The Chinese are getting older. More sickness from the poor environment will show up. Precautionary healthcare will become increasingly important.

China’s healthcare system is still very underdeveloped. Hospitals are underfunded, affected by bureaucracy, corruption and long waiting times. Improvements are really needed.

IT solutions could help, for example, to prepare bookings, medical information, consulting, diagnosis, treatment, e-prescriptions etc. – not only in the regional neighborhood but all over the whole country.

However, there is still a major catch. Appropriate regulations for the e-health sector do not exist yet. We remember that deregulation is not the only word for China’s future. Sometimes even regulation may be more suitable.

Hubert Fromlet
Senior Professor of International Economics, Linnaeus University
Editorial board

 

Back to Start Page

An interesting impression from HongKong

June 22, 2016

The economic performance of Hong Kong is quite poor these days. The PMI shows that the private sector should do much better. Tourism and retail sales are also badly hit – partly reflecting the slowdown of the mainland economy. Major progress does not seem to be possible in the forthcoming months or quarters.

Most analysts dealing with Asia are probably aware of these problems in Hong Kong. I recently started talking with a businessman from Hong Kong about his city during a flight back to Stockholm, touching upon quite a different topic. He informed me about a development at home which really was striking me.

According to my neighbor on this flight, one third of Hong Kong’s population will be 65 years or older by 2035. This I knew. But I was not aware of the enormous need of apartments for the retired residents who are not sick or disabled – who are indeed healthy. There is obviously a major apartment shortage for these people.

This need urges for creative new business plans, incentives, solutions, practical planning, and partnerships for this major residential construction.  Could Swedish companies participate in these developments?  If yes and they were successful, a lot of the experience from Hong Kong could be applied to Mainland China simultaneously or shortly after the Hong Kong experience. Also to Stockholm?

Despite the current problems in the Chinese economy, we should not forget all the future opportunities in Asia and Greater China. Many of them are still there.

Hubert Fromlet
Senior Professor of International Economics, Linnaeus University
Editorial board

 

Back to Start Page

Poland – do (central) banks ever learn?

June 15, 2016

Trying to lower costs for interest rate payments is a natural human ambition. But nothing is free of charge. Risks may be increasing when potential gains seem to be achievable. In credit terms this is often about exchange rate risks for borrowing in foreign currencies. (This problem is, by the way, usually part of my classes in the first semester).

These considerations on credit conditions may happen by applying three alternatives: comparing nominal interest rates between two countries, expectations of a stronger own currency or both of these two alternatives as a simultaneous mix. However, the mostly existing exchange rate risks make things particularly difficult and speculative; the calculations have to be based on a forecast – and everybody should know that currency forecasts in principle are impossible. In other words: a lot of luck is needed if a credit in foreign currency really turns out to be profitable. In my view, taking such a risk is neither prudent nor smart.

But these speculations happen again and again – despite all the negative stories about it. In Sweden, we have some bad experience from the times of devaluations around 35-40 years ago when greed or limited intellectual capacity led to massive loans in Swiss francs to Swedish farmers; later on, accidents happened with lending in yen for pure domestic Swedish purposes. The same kind of mistake was also committed before the eruption of the so-called Asian crisis in the late 1990s, with several countries in mainly South East Asia being heavily involved. And the story behind the financial crisis in the Baltic countries more recently was not very different either.

Unfortunately, Poland also went into this trap – an accident I did not expect ten years ago after having met so many well-educated and well-understanding leaders at this country’s central bank from as soon as the early 1990s. From around 2006 onward, however, too many new Polish mortgage loans were granted in Swiss francs, combined with strong expectations of an ever strengthening zloty. In 2008, finally, this development was reversed. The zloty weakened on trend. The central bank and the banks should have reacted before that. The zloty moved at last on a long-lasting downward trend. Thus, previous expectations of very favorable credit conditions were not met anymore.

Consequently, many mortgage credits in foreign currency have become very expensive in the past few years. For this reason, the Polish government now tries to launch a package for converting these burdening credits in foreign currency into stable zloty loans. However, his transmission will not be easy – and very costly, too.

The question remains: Will banks – and even central banks – ever learn?

Hubert Fromlet
Senior Professor of International Economics, Linnaeus University
Editorial board

 

Back to Start Page