By John Richardson
Does your company employ an independent economist who forms her or his own view of where China is heading, or does it instead just accept the conventional wisdom dished up by the big institutions, such as the Asian Development Bank (ADB) and the International Monetary Fund (IMF)?
A management consultant we spoke to two years ago had the answer. “All but one of the major chemicals companies sacked their independent economists many years ago.”
Oh dear. As this excellent article by Dr John Lee of Sydney University points out, relying on the ADB and the IMF etc for entirely objective views of what is happening in China is very risky.
Non-governmental organisations, such as the ADB and IMF, need the cooperation of national governments to effectively do their work, wrote Lee.
“When the IMF, for instance, analyses the debt and fiscal crisis in the European Union and policies responding to these problems, it can do so without fear or favour because EU governments will see it as their duty and obligation to cooperate with IMF researchers no matter the conclusion of the research,” he continued.
“It would be unthinkable for Italy or Spain to deny IMF officials access to briefings, interviews, data or other information if the IMF were to make an adverse finding against the policies of governments in Rome or Madrid.”
“In contrast, cooperation by officials in Beijing cannot always be assumed, while Chinese officials are not afraid to attack and even intimidate organisations (and individuals) that publish adverse findings. At the very least, denial of access to briefings, interviews, data and other information is not uncommon for individuals and organisations publishing findings that contradict those of the Chinese government.”
Because of the pressure brought to bear on institutions and individuals, Lee added that “the result is usually institutional self-censorship for fear of stirring controversy with a very defensive country despite it being the second-largest economy in the world.
“The final product also tends to be a watered down document that is agreed upon by consensus between researchers, and even sometimes with the subject country when it comes to China.”
And because of all the complexities confronting not only China, but other economies as well, the blog feels that it is essential for chemicals companies to employ their own economists – and to be prepared to accept iconoclasts, both internally and externally, who challenge conventional wisdom.
But as one chemicals industry source told us recently: “Nobody wants to rock the boat because, if you do rock the boat, within chemicals companies you have to come up with an alternative and that’s very difficult. If you are seen as being too pessimistic, people want to know what your back-up plan is, and that just takes too much time and effort and is too politically risky.
“You cannot raise uncomfortable questions in big corporations because you will end up as the only person without a project, and then where will your career be?”
Lee offers the following four-point plan on how to deal with those who are willing to take risks:
1. Don’t exclude awkward evidence or lines of argument.
2. Dissect and attack the arguments of those with whom you disagree, not their standing or motivation – and avoid labels like ‘alarmist’ or ‘provocateur’.
3. Do not defend your errors at any cost. Remember the allegedly famous quote by John Maynard Keynes: “When the facts change, I change my mind. What do you do, sir?”
4. If you are in a position to do so, reward those who stick their necks out – provided that they give sound evidence and arguments for doing so.