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1 IntroductionThe most important aspect of any new understanding is whether it empowers people to do things which could not be done previously.Shimomuran-Wernerian macroeconomics is just such an understanding, becauseIt empowers governments, in co-operation with the energies of their people, rapidly to increase the rate of economic growth by co-ordinated actionIt creates widespread prosperity of the people of a country by creating a high-growth economic miracle and producing within a few decades a more fully developed modern economy which laissez-faire economics has taken centuries to produceIt enables, through capital abundance, the more rapid resolution of major world problems such as poverty, global warming, and inadequate social provision and infrastructureIt ignites the inventive and innovative capabilities of mankind wherever it is fully practicedIt leads to a world of "abundant capital" and may be the key to the starsBUTIt requires that all governments act in the interests of all their people and not mainly for their ruling class or monied elite (which is mainly what they do in the West)It requires long-term, creative and competent governments to act altruistically (as the greatest geniuses of the human race have usually done) both within their economy and internationallyIt requires major international co-operation to avoid the runaway disasters which can result as a largely unintended side effect of high economic growth and new understandingsIn short, greater economic understanding requires governments to exercise greater responsibility and higher practical knowledge with altruism, in a co-ordinated international approach to deal with major world problems competently and constructively.This is more fully set out below.1.1 Definition of The Three Major Dimensions Of Wernerian-Shimomuran MacroeconomicsThere are three major dimensions to that new understanding, because it is:A realistic, practical economics based upon a detailed, meticulous historical observation of the recorded resulting higher economic growth in a dozen locationsBased upon parts of the writings of the six major master economists (Wang Anshi (1021-1086), John Maynard Keynes (1883-1946), Joseph A Schumpeter (1883-1950) Dr Osamu Shimomura (1910-89), Kenneth K Kurihara (1910-72), and Richard Werner (1967-? )An inclusive system of interlocking policies reflecting the more complete range of policy options available to governments, andA recognition of the position of individual invention and the role of Small Business Enterprise innovations as the major source of future economic development in all economies.So this Shimomuran-Wernerian macroeconomics is a realistic understanding, belonging to the German Historical school of economics, and is a complete system, not only founded upon the capability of the central bank of a nation to create credit but encompassing all the ways that credit can be focused, allocated and used, and acknowledges and includes the role of Schumpeterian invention and innovation in SMEs as the source of economic progress in all economies. Like this:https://georgetaitedwards.quora.com/The-Most-Successful-Economic-Policy-Of-All-Time-The-German-Historical-Economics-Development-of-Shimomuran-Wernerian1.2 CaveatsThe following paragraphs set out the major historical observations, and briefly indicates the role of master economists in explaining these, the range of policy options this new economics makes possible, and the local sources of invention and innovation as illustrated by history.Finally the rise of China and the new possibilities for effective international action to upgrade the world's future is suggested.The range of this discussion is inevitably incomplete due to the scale of the issues under consideration.The reader is invited to dig deeper into the quoted sources and elsewhere to examine the foundations of this essay. I may quote wherever possible the best book I know about each particular economic miracle, but many such texts may exist, often not in English.This essay is a result of my ongoing studies at the University of Southampton where the agreed focus of my research is "the integration of Shimomuran macroeconomics with Wernerian macroeconomics." It is a "story so far" rather than a “final definitive text" which I hope to produce to the best of my ability within a further two years or so.Eight previous attempts partially to answer this question are atGeorge Tait Edwards's answer to What should everyone know about Japanese history?George Tait Edwards's answer to What did China get right in its economic and social development which the US got wrong?George Tait Edwards's answer to What kind of economic system does modern China use and how does it differ from the modern US economy?George Tait Edwards's answer to What makes a GDP grow high or stay high?https://www.quora.com/Is-China-the-best-example-of-world-economic-growth/answer/George-Tait-Edwardshttps://www.quora.com/How-is-the-future-of-economics/answer/George-Tait-Edwardshttps://www.quora.com/What-is-Shimomuran-economics/answer/George-Tait-Edwardshttps://www.quora.com/What-is-the-hypothetical-scenario-of-the-highest-possible-world-GDP/answer/George-Tait-EdwardsI have stopped at eight articles but there are seven relevant books and over 350 relevant articles, with perhaps another three or four books and a hundred articles on the way.1.3 The Insight of Kurt Godel (1906-1978)Perhaps the greatest insight of Kurt Godel was that all intellectual systems are either inconsistent or incomplete.See https://en.wikipedia.org/wiki/Kurt_Gödel#Incompleteness_TheoremExperience shows repeatedly that historical reality often produces unintended consequences, particularly when the elite of any country rule that nation only in their interests. Those who do not learn the difficult, sometimes negative but often positive lessons of economic history are usually condemned to play a smaller part in it in future. As Charles Maurice de Talleyrand-Perigord observed"History teaches nothing, only punishes those who do not learn its lessons."After over 46 years of private economic research by me and often others, I am keenly aware of the occasional inconsistencies and continuing incompleteness of my understandings. All research covers a continually widening range and is inevitably incomplete particularly when it is summarised.1.4 Why is this Macroeconomics called Shimomuran-Wernerian?This new economics is Shimomuran - because it is based upon the no-cost investment credit creation policies explained by Dr Osamu Shimomura (1910–1989) and practised to produce the economic miracles in the Tokyo Consensus Zone economies (Japan,South Korea,Taiwan and China) and Wernerian because“The prime requirement for continual economic development is the existence of a local (preferably public) banking system which funds the establishment, development and growth of the SMEs which are everywhere the source of the continual invention, innovation, most employment, and better living standards on which economic development depends.” That’s the central theme of Wernerian macroeconomics. Only Germany and to a lesser extent China has such a system. SeeWhat makes a GDP grow high or stay high? andGerman public bank - Wikipedia”and see George Tait Edwards's answer to Is Democracy a prerequisite for economic growth or is economic growth a prerequisite for Democracy? where the above quote originates.2 The Historical Evidence About Economic DevelopmentThis section will list the twelve major historical economic miracles and will encapsulate these tremendous events in very few words. The interested reader is invited to dig deeper into the references quoted and other sources to discover the ever-widening context of the reality of these economic miracles.Modern Western macroeconomics generally does not recognise the importance of the banking systems and money and the use of credit and promissory notes in the process of bringing about rapid economic development. Since money and credit (and all banknotes are promissory notes) is central to the production of economic miracles, there is a hole at the heart of modern Western economics. Major surgery is required to place money and particularly investment credit creation at the heart of Western economic understanding where it belongs.2.1 The First Industrial Revolution in the Song and Ming Chinese EmpiresAfter the Chinese invention of paper money in the 9th century, the Chinese economy exploded into a fuller employment mass production economy in the 11th century Song Empire under the Prime Minister of Wang Anshi and his friend the Emperor Shenzong. See part 2 ofhttps://www.quora.com/What-are-major-Chinese-innovations/answer/George-Tait-EdwardsWhere the role of Wang Anshi is more fully set out. And see the Wikipedia entry on the Song Dynasty (960-1279) atEconomy of the Song dynasty - Wikipediawhich begins"For over three centuries during the Song dynasty (960–1279) China experienced sustained growth in per capita income and population, structural change in the economy, and increased pace of technological innovation. Movable print, improved seeds for rice and other commercial crops, gunpowder, water-powered mechanical clocks, the use of coal as a source of fuel for a variety of industries, improved techniques for iron and steel production, pound locks and many other technological innovations transformed the economy. In north China, the main fuel source for ceramic kilns and iron furnaces shifted from wood to coal.During the Song dynasty, there was also a notable increase in commercial contacts with global markets. Merchants engaged in overseas trade through investments in trading vessels and trade which reached ports as far away as East Africa. This period also witnessed the development of the world's first banknote, or printed paper money (see Jiaozi, Guanzi, Huizi), which circulated on a massive scale. Combined with a unified tax system and efficient trade routes by road and canal, this meant the development of a truly nationwide market. Regional specialization promoted economic efficiency and increased productivity. Although much of the central government's treasury went to the military, taxes imposed on the rising commercial base refilled the coffers and further encouraged the monetary economy.[1] Reformers and conservatives debated the role of government in the economy. The emperor and his government still took responsibility for the economy, but generally made fewer claims than in earlier dynasties. The government did, however, continue to enforce monopolies on certain manufactured items and market goods to boost revenues and secure resources that were vital to the empire's security, such as tea, salt, and chemical components for gunpowder.These changes made China a global leader, leading some historians to call this an "early modern" economy many centuries before Western Europe made its breakthrough. Many of these economic gains were lost, however, in the succeeding Yuan dynasty."The Mongols had no idea about how to use created credit for positive productive purposes but created credit for their own consumption and produced the massive inflation which partly led to the fall of their Chinese dynasty. The Yuan Dynasty (1271-1368) refused to allow the Han Chinese to learn Mongolian and their major (or minor) legacy to Chinese culture is in the name now given to Chinese currency. Ashttps://en.wikipedia.org/wiki/Ming_dynasty puts it"Explanations for the demise of the Yuan include institutionalized ethnic discrimination against Han Chinese that stirred resentment and rebellion, overtaxation of areas hard-hit by inflation, and massive flooding of the Yellow River as a result of the abandonment of irrigation projects.[8]"The succeeding Great Ming Empire (1358-1644) understood productive credit creation during the years of the Ming Treasure voyages (1405-1433). SeeMing treasure voyages - WikipediaThe rise of the elite-serving Conservatives in China led to the contraction of the Ming Empire after the death of the Yongle Emperor in 1424. And as I say at"As The Ming Voyages | Asia for Educators | Columbia University records under the heading “The Fateful Decision”“The Ming court was divided into many factions, most sharply into the pro-expansionist voices led by the powerful eunuch factions that had been responsible for the policies supporting Zheng Ho's voyages, and more traditional conservative Confucian court advisers who argued for frugality. When another seafaring voyage was suggested to the court in 1477, the vice president of the Ministry of War confiscated all of Zheng He's records in the archives, damning them as "deceitful exaggerations of bizarre things far removed from the testimony of people's eyes and ears." He argued that "the expeditions of San Bao [meaning "Three Jewels," as Zheng He was called] to the West Ocean wasted tens of myriads of money and grain and moreover the people who met their deaths may be counted in the myriads. Although he returned with wonderful precious things, what benefit was it to the state?"Linked to eunuch politics and wasteful policies, the voyages were over. By the century's end, ships could not be built with more than two masts, and in 1525 the government ordered the destruction of all oceangoing ships. The greatest navy in history, which once had 3,500 ships (the U.S. Navy today has only 324), was gone.”The Great Zheng He Fleets could have formed the foundation of the Sea Silk Road covering almost precisely the same sea “road” routes of the modern OBOR development. China had the option of becoming the world-leading hegemony based on its industrial strength and the high levels of wealth and welfare of its people soundly based upon the towering levels of invention and innovation in its people. The dominance of China's Conservatives resulted in the destruction of their great navy and Chinese decline."That history has recently repeated itself in the decline of the UK navy, once the most powerful in the world, under "Conservative" policies and the reduction in funding of the US Navy under the the Republicans. And in the decline of the British and American hegemonies in the 20th century which accelerated after 1980 when, under Thatcher and Reagan leadership, rule for the benefit of the rich was installed in both of these countries.2.2 The Dutch as a Major Colonial PowerThe small country of Holland (now known as the Netherlands) became a major world power through the creation of credit targeted at funding overseas shipping ventures to trade and colonise many locations all over the world.What the Dutch did is one of the least well recorded triumphs of the successful use of investment credit creation in the foundation of a vast Empire. Because the victors write the histories, the place of the Dutch Empire and its enormous success is either ignored or more usually relegated to a footnote of most Westernised world history books written in English. But see the Wikipedia entry athttps://en.wikipedia.org/wiki/Dutch_Empirewhich does quote 98 sources and 16 books. (The Wikipedia entry on the now defunct larger British Empire, for comparison, quotes 247 sources and hundreds of book references.)One exception to the above comment is the recent book by Noah Harari which describes the Dutch Empire and its enabling major company, on pages 359-363, which begins with"The Netherlands was a small and windy swamp, devoid of natural resources, a small corner of the King of Spain's dominions." and on the same page"The secret of Dutch success was credit." And on the next page:"Financiers extended the Dutch enough credit to set up armies and fleets and these armies and fleets gave the Dutch the control world trade routes which yielded handsome profits."See Yuval Noah Harari, Sapiens, A Brief History of Humankind, Penguin Random House,London 2011.2.3 Three of the The American Colonies Three of the original colonies of what became the USA - Maryland, Virginia, and North Carolina - grew to be very prosperous on the back of the slave trade which was founded on the basis of Tobacco Lord promissory notes. These notes, monetised in relation to pounds of tobacco and backed by the provision of goods in the 125 Tobacco Lord shops, became the most stable alternative currency in these colonies. These IOUs cost the Tobacco Lords nothing to create yet the use of these notes as currency - to buy slaves, wives, settle debts, act as a store of value and medium of exchange - was the major reason for the immense early development of these three colonies. I have not yet researched this issue adequately, but a paper on this issue is the first in my PhD and I cannot publish here the results so far of my researches without prejudicing my academic studies.One of the major driving factors behind the American Declaration of Independence might have been the wish of at least two the signatories of that document to repudiate Tobacco Lord loans. George Washington and Thomas Jefferson had large tobacco farms with loans to match.In much of history there is often the political cover story imbued with high ideals and a more financial foundation of the advantage conferred to individuals or groups by legal or constitutional changes. So it is with the USA. Of course, the US historians do not wish their founding fathers to be besmirched, as they may see it, by money motives. But whatever the motivational foundation of the brilliantly written US Declaration of Independence, the financial facts are beyond dispute.The repudiation of the Tobacco Lord loans was a great advantage to the largest tobacco farmers but it ruined the tobacco industry for the majority of its farmers. It is often thus.2.4 The First Western Industrial Revolution In Scotland 1700-1800 The Tobacco Lords used their money to establish the first banks in Scotland, led by the almost undocumented Murdoch Bank in Glasgow in 1730, and to fund the early ground-breaking commercial companies in Scotland. A complete list of all of these companies may be difficult to determine, but the data in Tom Devine's book has provided me with this list:Source: Calculated by me from:And see The Scottish Industrial Revolution, or The Scottish First Industrial Miracle 1700–18002.5 The English Industrial Revolution 1750-1880 The earliest part of the English industrial revolution was the smuggling prior to 1750 of a large amount of hogsheads of tobacco into Scotland via Whitehaven in the English Lake District (now called Cumbria).The English Industrial revolution was driven by three major circumstancesthe massive inventiveness of the Scots, who for centuries had (and still have) a much better educational system than that of England and Wales and which led to the development by James Watt of a much more effective (six times more efficient) steam engine, which was the major driver of the first (steam engine) and second (railway era) Kondriatieff Cyclesthe permissive parliamentary framework of new local "Country Bank" creation as illustrated by the fact that there were 116 Country Bankers who were Members of Parliament- see pages 179-82 of Volume 2 of Country Banks of England and Wales, Privatre Provincial Banks and Bankers, 1688-1933, Margaret Dawes and CN Ward-Perkins, which names the MPs and the town banks in which they were involved. Here's page 179 naming some of these MP bankers:the easy creation by industrialists of local private SME-supporting "Country Banks of England and Wales" which provided the funding of local invention and its conversion to factory-floor innovation by means of an 1810 Stamp Office License (costing £20) "Banker's Licence in England" purchased at the Post OfficeSource: R.M Fitzmaurice, British Banks And Banking.a pictorial history, D Bradford Barton Ltd, Truro,Cornwall, 1975, p55.Any company wishing to issue its own banknotes could pay £20 for that privilege and could legally do so. It is a sobering reflection that this system led to Britain becoming the workshop of the world due to the local funding of local industry. No such system exists today - the restrictive legal requirements imposed by the BoE prevent any such banks now being founded in England.Where the local Country Banks of England and Wales were located looks like this:Source: Margaret Dawes and C N Ward-Perkins, Op. Cit., p 12. For a list of defunct banks in the United Kingdom seeCategory:Defunct banks of the United Kingdom - WikipediaA modern map of major “English”banks would show five dots in London. The decline of the UK is intimately linked to the lack of local financial support for small SMEs. The last "Country" (or Provincial) bank in Scotland, the Airdrie Savings Bank (1835-2017) was shut down partly due to (BoE) "increasing cost of regulation."See Airdrie Savings Bank - WikipediaSME-supporting Savings Bank legislation is positive and helpful to German public savings banks but wholly negative in the UK where the BoE supports the Clearing Banks. The Scots under the 1996 LA reorganisation have established eleven Municipal Banks in Scotland. SeeMunicipal bankingThese municipal banks are located in Airdrie, Bellshill and Coatbridge (where the late Airdrie Bank had branches and previously operated) and in Cumbernauld, Kilsyth, Moodlesburn, Motherwell, Norh Lanarkshire, Shotts, Viewpark, and Wishaw and these banks cover the Glasgow-centred area of major operation of the previous Glaswegian Tobacco Lords. This may be a coincidence, but maybe not.The later inventions of the Scots includedthe electromagnetic understandings of James Clerk Maxwell which led to the the third Kondratieff cycle of electrical power provision and generation (and Westinghouse/Tesla AC distribution in the USA)the invention of television by James Baird (and his early experiments with radar)the invention of the telephone by the Scottish-Born James Bell and the massive telecommunications industries based upon that.2.6 Germany 1778 and 1802-2018Probably from observation of how local banks in Great Britain stimulated local SME development, Germany's Sparkassen public banking system was set up and grew in independent public bank numbers from 630 in 1850 to 2,834 in 1903. As Wikipedia reports athttps://en.wikipedia.org/wiki/German_public_bank"The first savings banks in Germany were founded at the beginning of the 18th century in its major trading cities. One of the first institutions with the business model of modern savings banks was the Ersparungscasse der Hamburgischen Allgemeinen Versorgungsanstalt in Hamburg in 1778. Founders were rich merchants, clerks and academics. They intended to develop solutions for people with low income to save small sums of money and to support business start-ups.[14] In 1801 the first savings bank with a municipal guarantor was founded in Göttingen to fight poverty.[15] Between 1850 and 1903 the idea of the municipal savings banks spread and the number of savings banks in Germany increased from 630 to 2834.[16] Fulfilling public interests is still one of the most significant characteristics of public banks in general and the savings banks in particular."These purposes continue to be delivered to the present day, and although the number of Sparkassen Savings Banks has fallen to 431 the number of bank branches has grown to 15,600.The German Sparkassen Banking system is the most effective in the world at funding the establishment and growth of German SME industry.Here’s where these 431 banks and 15,600 branches are located in Germany:And they have produced the result thatAnd Hermann Kahn, a German author, has suggested that result is produced because Germany has about 50% of the “Hidden Champions”in the world:See Hermann Simon, Hidden Champions of the 21st Century, atThe Success Strategies of Unknown World Market Leaders: Amazon.co.uk: Hermann Simon: 9780387981468: BooksBecause Germany understands and practices a Sparkassen Public Banking System which encourages invention and its conversion to factory-floor innovation, Germany dominates the EU. But Germany’s “Hidden Champions” only grow to medium size. Germany does not practice Shimomuran economics, so many of its best champions become continental leaders within the EU but not world champions.In 1985 I tried to interest the German politicians in Shimomuran macroeconomics. One representative of the Anglo-German Foundation advised me then that Germany had no need of any Asian understanding of how to facilitate higher economic growth.2.7- 2.12 Other Economic MiraclesThe followIng economic miracles have been briefly covered atGeorge Tait Edwards's answer to What should everyone know about Japanese history? and athttps://georgetaitedwards.quora.com/The-Most-Successful-Economic-Policy-Of-All-Time-The-German-Historical-Economics-Development-of-Shimomuran-Wernerianalso quoted above.The circumstances of these economic miracles are therefore mentioned as relevant but not repeated in detail here. Relevant books are listed in the sources, except for these by Alice Hoffenberg Amsden (1943-2012) who authored one major book and co-authored another as listed at 2.10 and 2.11 below2.7 The South Manchurian Railway Company 1905-19452.8 FDR's Economic Miracle 1938-442.9 The Japanese Economic Miracle 1945-52 and 1953-732.10 The South Korean Economic Miracle 1960-80 (also see the brilliant book by Alice Hoffenberg Amsden (1943-2012) See Asia's Next Giant: South Korea and Late Industrialization, Oxford University Press, 1989.2.11 The Taiwanese Economic Miracle - also see Alice Amsden's book Beyond Late Development: Taiwan's Upgrading Policies, MIT Press, 2003, (with Wan Wen Chu).2.12 The Chinese Economic Miracle 1975-2018 See http://londonprogressivejournal.com/article/view/1620/the-historical-backdrop-to-the-third-economic-bomb-a-brief-guide-to-early-chinese-history-the-land-and-the-people-and-the-first-emperorand A Brief Guide To Early Chinese History: The Mongol Conquest Of China And Its Consequencesand China’s All-Inclusive Economic Miracle: The Third Economic BombParticularly from the section beginning“Chinese ICC development is more complete and on a broader front than Japan’s”which states that“The Chinese have used and are using Shimomuran economics to transform every aspect of China’s economy, given that the national income of a country is the sum of consumer, investment and government expenditure. The successive Chinese Governments have sought to maximise consumer, investment and government expenditure within achievable limits, and to increase each demand sector by the highest amount each year. That policy is entirely different from the Japanese Shimomuran policy of focused industrial growth (or “Economic Growth First”) based upon private-growth company-centred (eg machine tools, shipping) and consumer-goods-centred development for the sake of acquiring a trading advantage. The Chinese development focus is on the full development of all sectors of the economy, increasing the investment capacity of the country to provide for higher consumer demand, better housing, and higher government expenditure. Planning is on a giant and unprecedented scale - not only city construction but city-copying in China - and nothing required for the better functioning of the economy is left out of that development.Official Chinese data does not fully reflect the level of Chinese investment. As the CIA World Factbook comments:“official data; data cover both central government debt and local government debt, which China's National Audit Office estimated at RMB 10.72 trillion (approximately US$1.66 trillion) in 2011; data exclude policy bank bonds, Ministry of Railway debt, China Asset Management Company debt, and non-performing loans.”’and George Tait Edwards's answer to Why is China more outstanding in its economic growth than a having political figures like in Europe and the US?3 Brief Comments on The Significance of Six Major Economists3.1 Wang Anshi (1021-1086)Wang Anshi was the first investment credit economist whose understandings enabled the economic miracles of the Song and Ming Empires. SeeGeorge Tait Edwards's answer to How did Wang Anshi contribute to the economic world?and note the role of Wang Anshi as set out in Section 2.1 above3.2 John Maynard Keynes (1883-1946)John Maynard Keynes in his writings produced the three major insights which are the foundation of investment credit economics.The first is in what is usually called the General Theory.“While there are intrinsic reasons for the shortage of land, there are no intrinsic reasons for the shortage of capital” (Book 6, Chapter 24, Section 2, p. 376).The second great insight was his statement that savings can be created to fund investment prior to the returns which justify them.And the third is that“Central Banks can purchase no-debt assets by making claims against themselves - In the “Tract on Monetary Reform”, Keynes recognised that a Central Bank “may itself purchase assets, i.e. add to its investments, and pay for them, in the first instance at least, by establishing a claim against itself” (Keynes, 1923).”See Shimomuran Economics and the Rise of Japan and ChinaKeynes did not see the possibility that the Central Bank could create vast flows of investment credit annually, canalising that credit to enterprises through local banks and producing very high rates of economic growth. The Asian Keynesian who became the Asian Keynes - Dr Osamu Shimomura - made that observation the central pillar of his explanation about how to produce higher investment and growth in his Economic Model of the Japanese Economy.3.3 Joseph A Schumpeter (1883-1950)As Joseph Schumpeter - Wikipedia comments“Schumpeter identified innovation as the critical dimension of economic change.[35] He argued that economic change revolves around innovation, entrepreneurial activities, and market power. He sought to prove that innovation-originated market power can provide better results than the invisible hand and price competition. He argued that technological innovation often creates temporary monopolies, allowing abnormal profits that would soon be competed away by rivals and imitators.”Schumpeter made the crucial distinction between the inventor and the innovator, who took that invention to the factory floor and sold the products.3.4 Dr Osamu Shimomura (1910-89)I have written so much about this master economist that I find it difficult to select relevant published articles, because my books are best. But seeThe Master Economist – George Tait Edwards – Mediumand the Gresham College slides athttps://s3-eu-west-1.amazonaws.com/content.gresham.ac.uk/data/binary/260/03mar15longfinance_georgetaitedwardsfinal.pdfandhttp://londonprogressivejournal.com/article/view/1566/the-origin-of-shimomuras-japanese-economic-miracle-or-the-second-economic-bomb-japan-from-to-economic-miracles-partandDr Osamu Shimomura (1910–89) — His Major AchievementsandShimomuran Economics is the Most Significant Advance Ever Made in Economic Understanding and the…3.5 Kenneth K Kurihara (1910-72)Kenneth Kenkichi Kurihara was born in 1910 in Kuchan, Hokkaido, Japan but immigrated to the USA where he worked for the US Government, became a noted growth economist and in turn Professor of Economics at Princeton University, Rutgers University and the State University of New York. SeeKenneth K. Kurihara - WikipediaHis insights into how Shimomuran macroeconomics propelled the rapid development of Japan were largely ignored by US and Western economists. Seehttps://medium.com/@georgetaitedwards/the-key-relevance-of-the-writings-of-professor-kenneth-kenkichi-kurihara-the-world-expert-on-high-99d1f80e1733. 6 Richard Werner (1967-? ) Richard Werner has not simply postulated that increases in investment credit cause economic growth, he has used the recently invented technique of Granger Predictive Causation analysis to show that annual increases in investment credit at the Bank of Japan is a leading “Granger Predictive Indicator” of subsequent Japanese economic growth. And he has used the same technique of Granger Predictive Causation analysis to show that increases in speculative credit at the Bank of Japan is a leading “Granger Predictive Indicator” of subsequent asset bubble growth in Japan.4 The New Capabilities of China4.1 Large Capital Investment Projects The full practice of Shimomuran-Wernerian Macroeconomics enables very large and historically unprecedented capital investments successfully to be made. Of course, we can only clearly see the first of these, but there are many other potential international projects which can be Chinese led. Some of these projects are essential to the future of the world.4.2 The Associated Scientific Advantages Emerging from The Chinese and the World Rennaissance In addition to these greater capital projects, there are likely to be advances in scientific understanding that will have an immense significance. Some of these are part and parcel of the increased invention and innovation associated with higher local funding of SMEs, but still others will arise spontaneously as the boundless ingenuity of mankind and womankind becomes more activated.By their very nature, these developments are less forecastable. I think these might include the drug stimulation of intellectual development, much more effective mood control drugs, easier genetic modification techniques, and the improvement of the partly developed and developing researches of Professor David Andrew Sinclair about life extension and health improvement. I cannot fully cover all of these here.4.3 The Actual and Likely Very Large Capital Projects4.3.1 OBOR - a $5tr Project Over 5 YearsSee George Tait Edwards's answer to How will China's One Belt One Road influence urban development in Central Asia? andGeorge Tait Edwards's answer to What is it about the Chinese “One Belt, One Road” initiative (beside the economic aspect of it) that has a lot of European leaders critical of it? One said it threatens western liberalism, for example.There is no genuine comparison between the OBOR project (costing $5tr in all) and the Marshall Plan for the recovery of Europe which would cost about $160bn in current prices. OBOR is monumental: the Marshall Plan, while it was not trivial, was and is not really comparable in scale.OBOR will have a gigantic positive effect on the economies it connects.4.3.2 Reversing Global Warming - A more than $29tr Project over 30 yearsSee The Drawdown Project at DrawdownWhich is one of the best listings of the likely costings of reversing global warming is the list of approximately costed policies which estimate the extent of global CO2 reduction and the net benefits of eighty activities.4.3.3 Educating Willing Nations About Shimomuran-Wernerian Macroeconomics - a 30-year programme involving trillions of dollars a yearSee The Chinese have set up a New Structural Economics Department at Peking University under the…which contains the sentences“Needless to say, the Western media as usual has no idea about what is going on.I think the Chinese are going to get round to teaching the Rest of the World (RoW) about how to produce rapid economic growth and I’ve suggested I might possibly lecture there, if they’d have me.”I have so far had no response to my email to Mr P H Yu or from his two colleagues at Beijing University. Perhaps the Chinese during the 2010s are as self-confident about Shimomuran Macroeconomics as the Germans were during the 1980s about Sparkassen Banking economics. We’ll see.The current ($2017 PPP) best estimate of the GDP of the world is c$129 tr. Investment credit economics in the entire world requires CB credit creation of about 10% to 15% of GDP pa for decades. This will produce a final rise in finance of about 20% to 30% pa with the usual 14% to 20% fixed investment plus 6% to 10% of financial liquidity investment and an increase in government incomes of between 5% to 7% of GDP pa. World economic growth would initially increase by about 5% to 8% pa.But these are whole-world figures and what is most likely to happen is the faster development of particular countries.Subtext: The Menu of Economic ChoicesThere is a complex menu of political choices in Shimomuran-Wernerian Macroeconomics, both sets of options illustrated on two slides during the Gresham College lectures by me and by Professor Richard Werner. My presentation was headed asand contained Slide 19 which saidWhile Professor Richard Werner’s banner wasAnd his Slide 23 wasThese two slides briefly set out the available choices in the use of credit creation.4.3.3.1 Accelerating India’s Economic Growth RateThe indian Government has recently set up The National Instute For Transforming India, (NITI) headed by Amitabh Kant. That organisation has the objective of increasing India’s growth rate to 10% for the next thirty years.I have tried over several decades to interest India in increasing its rate of economic growth. SeeI agree that India needs to grow rapidly for decades in order to improve the prosperity of its…Maybe the Indians via the NITI are now looking for Answers. I do hope so.4.4 Leading Disaster Recovery - an ongoing $1 to $2tr tr project a YearThe deteriorating weather over much of the world - the emergence of very powerful hurricanes over 300 mile an hour winds in the Atlantic, and the historically unprecedented downpours of very large amounts of rainfall in a few hours in many locations in much of the world - is the natural result of global warming.I calculate about one to two trillion dollars worth a year of property damage is being caused outside the USA by that much worse weather.China could lead and partly fund an international disaster recovery programme, which is sorely needed by many nations.4.5 The Mars Project -Perhaps a $20tr project over 20 yearsThe Americans went to the moon. The Chinese are going to be able to afford to colonise Mars by setting up substantial numbers of colonists in the Martian tunnels.Astronauts previously were all damaged by radiation. Prior to the recent epigenetic advances of Professor David Andrew Sinclair a trip to Mars would kill the astronauts all of whom would be suffering from cancer on arrival.NASA has invested in these epigenetic researches so as to acquire a pill which will protect interplanetary travellers. But that’s not all it will do. See 5.1.1 below. And seeAnd the article is athttps://news.nationalgeographic.com/2018/06/mars-organic-compounds-methane-curiosity-space-science/?cmpid=org=ngp::mc=crm-email::src=ngp::cmp=editorial::add=wildscience_20180618::rid=89305642155 The Chinese Renaissance and Likely New Technological Advances5.1 In Biochemistry5.1.1 The Epigenetic Control of the Aging Process and The Epigenetic Key to Interplanetary TravelThe only major government in the world which appears to be talking to David Andrew Sinclair is the Chinese Government. SeeThe Transition to the Long-Living Society Part 5 – George Tait Edwards – Medium particularly section 4.11 which points out:“Astronauts experience DNA damage in space that can lead to cancer and premature aging, so when news of the study began to circulate, NASA got in touch. Sinclair has another project now — “What we’ve been working on with the NASA scientists is to formulate the [NAD] pill for a journey to Mars,” Sinclair said.”At present, the radiation on a trip to Mars would kill the occupants of the spaceship, but Sinclair’s research is very likely to provide a survival pill for that journey, with profound implications for human life on Earth.And Section 4.2 says“4.2 ChinaThe most intelligent government in the world — the Chinese one — are in discussions with Prof Sinclair. The highest levels of the Chinese Government appear to be involved in these discussions, as Professor Sinclair reports atDavid Sinclair’s beginner’s guide to anti-ageing“In passing, he [David Andrew Sinclair] mentions he’s advising a large Asian nation (China, he clarifies after some questions) on how economic growth and a healthy population intersect.“This gets down to how do you transform the planet economically and not just [with] health,” he says.“The advice I’m giving that nation — and it’s at the highest level — they now want to know how do they raise up not just the economics, but the health [of their people]. Because they are very clever, they know [the two] have to go hand in hand.”If the Trump administration understood that principle, Obamacare would be extended and not reduced. If the British Government understood that principle, the underfunding of the NHS would cease. But these governments would also have to understand the Shimomuran Macroeconomics which makes such policies affordable and an assistance to growth.”5.1.2 The stimulation of intellectual capabilityThere are many drugs which improve the duration and often the intensity of intellectual endeavour. Most of these so-called "nootropics" do not have any proven effectiveness but a few seem to be effective.Drugs that are used to treat Alzheimers, for example, seem to reverse some of the outcomes of mental decline. Hydergine (or ergoloid mesylates) appears to work by reducing the increases in monamine oxidase (MAO) in the blood, where it assists cognitive impairment or recovery from a stroke. Side effects from Hydergine are minimal.Other substances which elevate dopamine and safely limit MAO appear to be effective. Pharmaceutical advances in this area are likely to have a major effect in future and will improve the basic level of inventiveness across the world.5.1.3 The "vital arts" - the genetic modification route to the futureGenetic modification of DNA will be one of the industries of the future. When frozen mammoths are again discovered in the Siberian ice, it may become possible for their cells to be implanted in and delivered by a female elephant. The repopulation of the Mammoth plains by herds of Alaskan elk, Sami reindeer and re-born mammoths could make a great contribution to global cooling. One image from the drawdown project shown below illustrates that possibility.5.1.4 The improved understanding of the electromagnetic foundation of gravityI think that should be possible.SeeGeorge Tait Edwards's answer to Can we use the scientific method to combine electromagnetic and gravitational forces into a unified field theory?6 My Caveats - The Downsides of Rapid Economic DevelopmentI can only see these potential developments in capital projects, in biological issues and in scientific developments in which I happen to be interested. The above list is inevitably incomplete and may be inconsistent with the stable economic development of nations. There are downsides in these new developments which are too large to be fully considered here.6.1 The Sterility of Conservative Rule Governments only come in two flavours, in the Progressive and the Conservative varieties. The Chinese concept of the Mandate of Heaven, that governments are only stable and successful when they act in the interests of all their people, is highly relevant to the future of mankind.6.2 The Fractious Nature of Rapid Economic AdvanceMany of these advances can be made within a nation without external assistance. This too has immense implications which are too large to be considered here.6.3 The Spread of Low-Income Limited hours or No-Hours contractsThe widespread adoption of low-income jobs in many nations is discouraging the formation of marriages. This problem seems most developed in Japan where many young men perhaps are disappointing their more realistic female potential partners, resulting in a significant dip in the Japanese birth rate. The Japanese Government has recognised this phenomenon and has produced a report upon it. See The Mystery of Why Japanese People Are Having So Few Babies. The Japanese Government at present sees no solution yet to this issue. But the re-adoption of Shimomuran-Wernerian macroeconomics by Shinzo Abe could lead to many more generations of the Japanese economic miracle.7 Conclusions7.1 Shimomuran-Wernerian macroeconomics opens the door to a new world by providing a newer and fresher intellectual universe, partly consistent with but vastly superior to the current level of Western economic understanding.7.2 The people of the world stand on the edge of a human explosion which is unprecedented in history. That parcel of changes leads to the abundant capital of a much better world and can be enormously beneficial to the prosperity and achievements of mankind, and may be brought about by the widespread adoption of Shimomuran-Wernerian Macroeconomics.7.3 Shimomuran-Wernerian Macroeconomics is the key understanding in the future of mankind because it empowers people to achieve things they could could not possibly do before, such ascreate a much richer capital-abundant world with widespread prosperity,reduce and resolve the problem of global warming andgo to Mars and perhaps elsewhere in this galaxy.We'll see. This collection of essays is perhaps most relevant:George Tait EdwardsBristol, England18 June 2018

1 IntroductionThe situation on the ground in both Germany and the EU is complicated and partially and well addressed by Oliver Maor’s Answer below. But that answer is incomplete because it does not refer to, or take into account, the political bias inherent in EU organisations or the different nature of financial-industrial systems throughout the EU.2 My ExperienceWhile I was working as the Head of the Postal Business Long-Term Planning Section, I was nominated the UK representative to an Economic Co-ordinating Committee of the EU. It was very interesting to attend these multi-language head-phoned instant-translation meetings in Brussels and to observe how French, Germany and Italian Committee members operated within the EU framework for their common commercial and national benefit. I cannot be totally frank about this because I have signed the British Official Secrets Act and know that a fully detailed disclosure about who said what would offend against the assumed Chatsworth-House-like-rules and might be potentially illegal and in any case very unwise.But what I can say is that the official published minutes of these meetings did not reflect the detailed discussions and proposed actions of the EU and the nations within it. The basic economic bias in the EU is continually to advantage the nations and companies inside the Union by creating, preserving, and acting within a high tariff wall. Free trade within the Union and the prevention of such trade with outsiders are two major aims of EU economic policy.There are many illustrations of that reality. National EU jet-producing and aircraft companies could be and many were advised (if they turned up for meetings - often the invited British administrators and companies did not) about upcoming EU legislation on jet noise levels and that information was not placed in the public domain, thus disadvantaging non-EU companies, who were surprised by that legislation rather than being pre-informed about it. In general, EU legislation can be used to deny the import of goods not meeting specific environmental and other Health and Safety standards and although these (often environmentally uprated) changing standards are pre-advised to EU companies which have taken the trouble to stay in the loop, most UK companies did not and non-EU companies could not.During the 1970s for nine years I was an officer in the Postal Branch of the Royal Engineers Reserves of the British Army. I visited many German locations for two weeks’ training and although twice based at BHQ Rheindalen, I enjoyed the supper evenings in Beerkellers at Bremen, Hamburg, Hannover, and Munster. I was once given the task of auditing many of the Germany-based BFPOs and assigned a Land Rover with a driver and enjoyed visiting all over West Germany, from Kiel in the North to Frankfurt, Koln, and Strasbourg and to so many other locations in Germany that I no longer remember them all. The shipyards at Kiel were impressive and similar to how Glasgow once had been and the rainbow-painted German factories looked much better maintained than those in Britain. And everywhere I looked there was a Small-Enterprises-based prosperity.Again, when I became the Head of Letter Mail Transport in the UK I visited Germany to examine how their nightly inland airmail service worked. I enjoyed seeing how the German Post Office had connected up all the states of Germany by a system serving all of Germany’s key cities which became an effective model for the British nightly airmail service I introduced centred on Speke (now John Lennon) airfield. The Germans were highly effective at making their airmails run to time, and so did their British counterpart.Another Committee I attended in 1973 was the Annual Meeting of the British Long-Term Planning Association which met in Skinners’ Hall 8 1/2 Dowgate Hill, London EC4R 2SP. In that magnificent setting, James Abegglan (1926–2007) who was then a Professor at Sophia University and others gave their viewpoints about the economic rise of Japan. Abegglan did not accept my comment from the floor than it seemed to me that the Japanese were using a superior economic understanding to achieve economic development and my comment was dismissed by Abegglan as a reference to “economic trickery” but at that time I had already read Professor Kenneth Kenkichi’s window into Shimomuran macroeconomics (see The Key Relevance of the Writings of Professor Kenneth Kenkichi Kurihara) and was disappointed but not discouraged. My nearest dinner companions were one of the three major Heads of Department in the British Industrial Re-Organisation Corporation and the Managing Director of one of the major German commercial banks. The difference in attitude between the German banker and his British IRC companion was made very clear, because the German expressed his view that only in Germany were the workers sufficiently expert and highly trained so as to enable good results and great benefit from high investment, while his British counterpart stated at length the idea that British management and workers were close to useless. I was aware of the excellent 1972 paper by Ben Cant, also a leading light within the IRC, about the economic history of the UK and was surprised by the negative attitude of one of the IRC Assistant Secretaries.The Germans I have met within all their organisations have been - almost without exception - highly educated and often skilled and capable, and possessing both the double desire to perform well for themselves personally and for their nation of Germany.3 BackgroundThe EU was set up as a Common Market to co-ordinate economic policies and trading standards throughout that Marche Commune. It was directed at enabling free access to the large European consumer markets initially of the first six EU nations of France, Denmark, Germany, Holland, Italy and Luxembourg to insiders but preventing access to outsiders via the tariffs imposed on imports from abroad (typically at about 45%). These have always been a major feature of that expanding union.The founders of the EU intended that a democratic commonwealth with progressive economic policies would be established over the entire area of the union to create an economic convergence. The failure to deliver that is probably the greatest shortfall of the EU.The EU has become the Fourth Reich, a German-dominated association of states which is far from unified. German economic might has produced that result. There are many illustrations of this. First, the intended economic convergence of investment levels and living standards throughout the Union has not occurred. Germans enjoy on average a higher living standard than the other nationalities in the EU. The differences in financial-industrial systems and the EU inability to rationalise these - and make them an improved common foundation for economic growth to confer a convergence advantage - has not occurred.Second, the German Sparkassen Banking System has produced the most effective funding of invention and its innovative transfer to the SME factory floor in the world. As Simon Hermann has pointed out in his articles and books, the German funding of their Mittelstand has produced the astonishing result that Germany, with less than 81 million people, did for many years export more goods than China, which has 1,327m people.Third, when Germany provided loans to Greece after their economic collapse some 90% of these funds were earmarked to repay German bank loans, which was a great gain for these banks but of little help to that EU nation.Germany neither understands nor practices MMT/Shimomuran macroeconomics although it does seem to practice (although the ECB does not understand) SME-improving local banking. Perhaps that is because Germany does not have any experience of no-cost credit creation earmarked for investment purposes, and only associates credit creation with the great inflation of the 1930s. Many German companies become market leaders in Germany and sometimes even in the EU but cannot become world leaders due to a lack of adequate German finance. Only German motor cars and perhaps pharmacy are an exception to that rule.4 The Effectiveness Of Germanic Economic PolicyGermany has the most effective SME-supporting local banking system in the world. But although the Mittelstand have tried to develop similar systems in Greece and in Spain and although there is strong local support for such a system in Ireland, the ECB has acted to prevent these systems from developing outside Germany. Why?The ECB appears to be a kind of Washington Consensus advocate of the rationalisation of banking systems and has reduced the number of local SME-supporting banks in Italy. The British bankers currently in Brussels are currently drafting potential EU legislation aimed at destroying Germany’s success story of local public banks. One of the greatest German/EU gains from Brexit, should it occur, would be the departure from Brussels of the totally negative and economically useless British Bankers who wish to replicate in Germany the big speculative industrially-useless major banks which exist in Britain and which have been complicit in the takeover of two-thirds of the local banks which produced the Scottish and English industrial revolution between 1730 and 1880.The ECB does not have a positive policy towards the local Sparkassen Banking System which has produced the most capable technologically competent SMEs in the world.4.1 Europe At Present Is A Federation, not A Union of StatesAlthough the fathers of the EU intended a more perfect Union, the German-led EU acts more like a bunch of competing quasi-independent states operating within a Zollverien (the German word for a customs union) than like a collection of co-operating states which genuinely aim at economic convergence of growth rates and living standards across Europe. If the leading-economy Germans cannot act more like like European politicians and less like German mercantilists then that hopeful union is more likely to fail.The cracks in the EU are now visible than its Union. Its centrifugal forces are now more obvious than its centripetal forces, so the EU now seems more likely to fly apart than stay together.The undemocratic Brexit vote, caused by the Conservative Government removal of the right to vote from over five million of the Britain’s poor, its underprivileged, its disabled, its BME community and its students, is the appalling result of partisan disenfranchisement for political gain and not of any valid popular referendum. See George Tait Edwards's answer to Does it matter if British are in favour of the Brexit today?The Yellow Jacket riots throughout France are another phenomenon showing the deep-rooted French opposition to the enforcement of the Washington Consensus Macroeconomics Austerity programme to reduce and partially shut down France’s Social Contract and the employment in its major nationalised industries. The BBC reportage of these riots and the general disregard of these in the UK media gives the impression that the riots are purely a Paris event. My eldest daughter married a man who was French-English. One of her four sons is pursuing a degree in Marseilles, where he has seen the Yellow Jacket riots there.These “Yellow Jacket” riots are no longer just French - see French Yellow Vest Protests Are Spreading Through Europe5 Industrie04: The German Move Into The Fourth Industrial RevolutionThe Federal Minister of Germany has announced that Germany is implementing the “fourth industrial revolution” of an Artificial-Intelligence-Managed/G5-Enabled/Rapid-interacting “Internet of Things” (an AI/G5/IOT revolution).This revolution will place German factories in the forefront as a very high productivity high quality producers involving interacting environmentally optimised “smart factories” producing “smart products” for use by “smart customers.”A few days ago I had lost the wheel nuts of my Audi so visited the Audi car sales centre in Cribbs Causeway, Bristol, to replace these. I took the opportunity to try to discuss the Industrie04 that was happening in Germany with the Audi salesman. He was fairly well informed about it and had visited Germany and seen the Audi self-driving car which still had “several problems.” That Audi salesman showed me a better appreciation of German developments than any of the recent media of Brexit-obsessed British politicians.Industrie04 has not so far made the upward leap implicit in the Chinese ChinaIn2025 policy of a “smart services” economy (with a ”smart transport system” and “smart education” with a “smart healthcare system” and other “smart private and public services”) but these are all obvious future extensions to the existing policy.6 The Future of Germany and the EUWhy is the Germanic Industrie04 not upgraded to EuropeanUnion04? All of Europe needs a fourth industrial revolution based upon the inventiveness and innovation of its people.China is leading in this issue. Why not Europe?7 Conclusions7.1 On balance, German investment acts in favour of the German industry and is not a factor in improving the productivity of the EU. That is an enormous pity.7.2 Investments are not highly regulated in the EU. Each nation is involved in a semi-devolved scramble for resources within which national ”targets” (of budget deficits, for example) are set by the Germans via the EU, but not enforced.7.3 EU economic policy should, under the guidance of Germany:Spread the highly effective Sparkassen Banking System across all of the nations of the EU and introduce and set up “Mittelstand Europe” to implement that policyCreate a programme for the creation of more than two dozen national “EUCountry04” so that Germany can lead a Europe2030 movement for ALL of the countries of the EU to have an advanced AI/G5/IOT manufacturing, services and social system revolutionGerman leaders should investigate and adopt the Shimomuran-Wernerian economic model and should create the three key enabling institutions of the European Economic Planning Agency, The European Investment Bank and the European MittelstandThe role of the ECB should be to serve the objective of achieving the economic growth needs of the European Union and the achievement of economic convergence across all of Europe.7.4 EU regulatory frameworks are usually more helpful than negative, although many do not accept that, and want the “freedom” which has produced such sub-optimal results as those in the USA.

(Answer based on observations in Pakistan)This is interesting to me because I've noticed a generational shift in how Chinese products are viewed over time in Pakistan.It’s true that during the 90s, Chinese products were viewed as low quality . They were purchased by the poorest of the poor and not expected to last long. I remember them being cheap toys that laborers bought for their children and other trinkets.It was during the 2000s, Chinese products acquired two reputations:a) A niche market supplier for areas not covered by Western firmsb) Making consumerism affordable in developing countriesa) A niche market supplier for areas not covered by Western firmsThis is best demonstrated by 2 different examples to give you a feel of what this point means.During the Eid ul Azha annual festival, i was at the cattle market to purchase a goat for the annual animal sacrifice associated with the festival. While chatting with the goat herder, i noticed a gadget he had slung around his neck. It looked like a radio and i asked him what it was. He showed me the device and on observation i was surprised to see that it was a solar powered radio with an added cassette player and even a USB port on the side. There was also a cell battery casing on the back. I asked him where he got this and why. A summary of his reply was:“I get bored when i take my cattle out to the mountains for feeding. There are barely any cell phone signals there and i don’t want to waste too much cell credit chatting for hours anyway. So i got this device from the local bazaar that sells Chinese products. I can keep it charged using the sun only and have a few cheap cells to keep it going if need be. I can listen to the radio, some songs on cassette. This helps pass the time in the remote areas where i have to feed my goats as the radio and cassettes keep me entertained while the solar charger keeps the device running.”But why this particular device? Why not some other?“It’s made in China and cheap enough for me to afford it. But also because i couldn’t find any other device that met my needs like this one”.He had bought the device from one of the bazaars that specialize in selling Chinese electronics.The second example is based off of my travel on the Daewoo bus routes that traverse our cities.Travelling by bus between Pakistani cities can stretch on for hours. The in bus entertainment is shoddy at best, playing old films on repeat with bad headsets.The only real way to kill the time is to bring your own entertainment in the form of movies/TV shows on cellphones etc. This requires the compromise of turning down your brightness, power saving mode and so on to save your battery and make sure you can stay entertained the whole trip.Well, once i was travelling next to a Punjabi gentleman in the last row of the bus which is usually empty and allows us to sprawl out across the seats. While i struggled to watch my movie on dim settings, he had his screen set to 100% brightness the entire time and seemed to be having an ok time managing his battery.I asked him if he kept a spare battery in his wallet. He said no, i have this power bank. He had also bought his from a bazaar which also sold Chinese electronics. The power bank was cheap, did it’s job of keeping his phone charged on long routes as he traveled between his small town and his city job. I suspect the power bank manufacturers may be a western firm who had outsourced production to China or a western company that had failed to find a market in their home country and sold the business to China.The Power bank he used was something like this but off white only:2018 Zzyd Portable Ultra Thin Slim Powerbank 4000mah Charger Power Bank For S8 Mobile Phone Tablet Pc External Battery From Smartmaster, $3.72 | Dhgate.ComThe Chinese, understanding that customer behaviors in Central and south Asia are vastly different from customer behaviors in Europe and North America, decide to export the power banks to our country where they are an instant hit with the local populace.Consider this: How many times have we read articles in Western tech magazines gushing over the battery life of a certain device? But when you gauge the interests of say a lower-middle income, working professional in Pakistan, you find that he has a a completely different attitude towards the product. For e.g. he has no issues pairing his device with a separate power bank which might not be the case for someone in Europe who could consider it a hassle. A customer here might focus more on the camera or the processor than the cloud or internet features which the infrastructure here can’t support and so on.What this all means is that there’s a market for a product here that hasn’t been detected by manufacturers and brands in the west but is being serviced by the Chinese and this is noticed by customers here.How many boardrooms in Europe are talking about the best way to entertain goat herders in remote mountains?In this generational phase, Chinese products simply had a reputation for fulfilling localized needs in the developing world that Western firms weren’t fulfilling.This isn’t to slight say Apple or Google for not knowing what the local needs of a working professional in the middle income bracket of Pakistan. Or the needs of the guy who needs some entertainment while herding his cattle in the mountains. Apple for example wants to target the premium wealthy Japanese, European, North American customer with deep pockets and lots of disposable income to spend on pricey phones and brands.The customer here just wan’ts functionality that is suited for their local environment which has bad internet, more wired than wireless networks, load shedding and regions without cellular coverage.China, perhaps due to their geographical proximity to us or their more broad spectrum of firms willing to explore these local markets in their backyard, simply filled the needs of the customers here when no one else was. So Chinese products acquired the reputation of being friendly to the developing world and it’s unique conditions during the 2000s.b) Making consumerism affordable in developing countriesThe second reputation Chinese products acquired was the “affordable copy”.A good excerpt that conveys what this means is given in the passage below from an analysis of Chinese products in Rawalpindi’s “China Market”:It is quite late in the night but Rawalpindi’s China Market is still swarming with customers. An array of shops in narrow alleys selling imported Chinese goods next to the bustling Raja Bazaar, the market is stuffed with all kinds of merchandise, leaving little space for the tired customers to move around. “Be careful; you may break the vase. It is expensive,” a salesman in a crockery shop warns a little girl trying to feel the smooth surface of a vessel on display.At another shop, a woman is haggling over the price of what looks like a Versace handbag. She knows it is a copy – a good one though – and wants the shopkeeper to give her a hefty discount on it. “You are demanding a lot of money for a copy,” she politely reproaches the man at the counter who reminds her that it is a “first” copy and not just an “ordinary” bag. But then he agrees to give her a handsome discount.Able to buy the copies of branded luxury goods, which look as good as originals, and at prices that are within the shopping budgets of most middle-class households across Pakistan, customers in the country have much to thank traders in China Market for. “The best thing about these goods is that our middle-class people can now afford to live in style,” says Noshad Sheikh who runs a shop at China Market. “[Shopkeepers selling these goods have] brought international brands within the reach of local customers who, otherwise, would see those brands only in movies and on television shows,” he says. “Of course, I am talking about copies and not the original products,” he adds with a smile.Shopkeepers in the market are not bothered by the fact that they are dealing in counterfeit products. On the contrary, they take pride in what they are doing. “We are helping middle-class consumers access new trends and fashions in the world,” says Mohammad Ishaq, another trader at China Market.Mother China: A 'Chinese revolution' sweeps across PakistanBasically it conveys the following picture:The purchasing power for branded items has always existed in Pakistan among the middle class who have become a major market for goods and services in the past 2 decades.But foreign brands have always been priced beyond their ability to purchase them due to the devaluated currency (to facilitate exports), the tariffs and duties on our ports and the country’s middle income status which allows only limited spending money for branded items from the west.So the lower and middle classes use their disposable income to buy the Chinese versions of those branded items instead. Note that the customers didn’t care whether the bags or clothes they were purchasing were branded or not. A lot of firms assume that there is enough of a stigma around “copies” to prevent people from staying loyal to the original branded item, but the quote shows otherwise. People are content to buy the copy that is good enough and is affordable.Because they will buy SOMETHING at the end of the day, that’s the essence of consumerism. And Pakistan is very much a consumer economy, there is no savings culture here like in Japan. Buying goods as status symbols, to give as gifts, to throw lavish weddings and so on is a common cultural phenomena here (the only restraining factors being children’s educations or saving for weddings etc).This is why a lot of economic analysts in the country during the 2000s said that Pakistan’s retail and consumption based sectors had blossomed because the Chinese had made consumerism affordable for middle income, developing countries like Pakistan and the consumers who existed in them.So our second observation of the time of Chinese goods is: The affordable brand item.If you had money and wanted to buy branded items or any goods just to get a taste of the 21st century, consumer experience you didn’t have to go window shopping in a posh, elite market where the guard probably wouldn’t let you in because you didn’t look rich.You could now go to the many China markets across the country and just get a solid copy of the item and get that same consumer high.The 2010s: Why are we still buying iPhones? The rising technological quality of China’s exportsAt some point consumers in the developing world have to think: how much is a brand worth to be honest? Do we really care anymore about brands or do we want functionality?Chinese quality cellphones have gradually risen in quality to the point that it’s making more sense for consumers to switch to them rather than buy pricey branded phones.Let me give an example. I bought a Samsung Galaxy Note 4 in 2015 for around Rs. 68,000. This year, i bought a Xiaomi Redmi Note 4 (a Chinese cellphone) for my mother for Rs 17, 000.Look at the spec comparisons of both phones:Xiaomi Redmi Note 4 vs Samsung Galaxy Note 4 - Phone specs comparisonCompare Samsung Galaxy Note 4 vs Xiaomi Redmi Note 4X - Samsung Galaxy Note 4 vs Xiaomi Redmi Note 4X Comparison by Price, Specifications, Reviews & Features | Gadgets NowThe Samsung Note 4 still has a few advantages and obviously, when bought in 2015 it’s price would be greater as it was closer to it’s release date.But good lord, look how much the tech gap has closed and how vastly different the prices are.And I've used the Xiaomi Redmi myself for a long time and i’m surprised at how good the functionality is. At a fraction of the cost, you can have a Chinese cell that is fairly close to the tech of a major, branded cell phone.And this brings us to our observation of this decade: China’s tech investments and R&D spending is REALLY coming into play now. The companies in the PRC are beginning to replace other major brands from market sectors where they had unchallenged dominance for the past few decades.And they’re combining this massive increase in tech capability with lower prices than their competitors because the Chinese themselves are off sourcing labor abroad as their own labor costs grow and they have a massive industrial base set up which permits economies of scale to depress the prices of their products.Other than that, the Chinese have taken advantage of their better diplomatic PR and their massive foreign investments to get FTA deals which let their products in the gate in several developing world economies without the tariffs or duties other products get.So the last observation is basically: Chinese products are moving up the value chain while keeping their costs low. And this is displacing foreign brands in areas ranging from air conditioners, TVs, Fridges, motorcycles and cellphones. They aren’t hit with the “low quality” label much anymore and there is serious consumer interest in getting products that are fairly high up the tech chain but at a fraction of the cost of branded items from companies like Apple and Samsung.A Xiaomi Note 4:Xiaomi Redmi Note 4 32GB Price & Specification in Pakistan - Mi PakistanA Case study: The Air conditioner Market of Pakistan.To illustrate the points i discussed in this answer, here’s a case study about Chinese businesses competing in the Air conditioner market of Pakistan:Pakistan’s air-conditioner (AC) industry has witnessed interesting developments. With penetration standing at a meagre 10% (source: The Pakistan Credit Rating Agency, 2016), significantly lower than the 90% mark of developed countries, combined with an expanding middle class with larger disposable incomes, the demand has been on the rise. This has prompted several Chinese manufacturers to enter the market in the last three years, bringing with them innovative technologies and extensive marketing campaigns.The production volume of the market in Pakistan is estimated at 600,000-650,000 units per annum. In terms of share, Chinese brands Haier (at 23%) and Gree (at 22%) enjoy the lion’s share, with local manufacturers such as Orient (at 16%), PEL (at 6%) and Dawlance (at 4%) struggling to keep up.As Gallup Pakistan statistics indicate, the industry scenario was very different before China’s entry. Window ACs dominated the market and PEL controlled 75% of the market (along with GE), mainly because it was one of the first local brands to launch window ACs and therefore enjoyed the first-mover advantage. Split ACs were almost non-existent due to the lack of trained technicians to service them, the non-availability of replacement parts and the considerably higher price tags (approximately 80% higher, according to the Federal Bureau of Statistics, 2012). However, things began to change when more affordable split AC brands (local and international) began to enter the market and slowly encroached on PEL’s substantial customer base.Up to this point, because of exorbitantly high power tariffs and electricity guzzling outdated technology, ACs were considered luxury appliances. With increasing imports from China of affordable split ACs, consumers suddenly had plenty of cost-effective brand choices. Retailers in Sindh and Punjab (the two provinces that constitute more than 85% of the market) attribute PEL’s decline to higher prices and delays in bringing energy-efficient technologies to market.However, according to Muhammad Shahid, Category Manager, PEL, “our focus has always been on providing quality products that are durable, and we believe that jumping on to the latest technologies without proper R&D is irresponsible and unsustainable as a business strategy.” Shahid believes that in the end, brands offering quality rather than cost-effectiveness will survive.Zeeshan Ali Khan, Media Manager, Orient has a contrasting viewpoint. In his opinion, the negative perceptions about Chinese products have changed over the years and “the average buyer is looking to save electricity and the brand that delivers this benefit will be the quickest to disappear off the shelf.”This observation was validated by an informal audit of the electronics market in Lahore.Within the last three years, Chinese brands have flooded the market, and according to retail sales estimates, account for almost 80 to 90% of the total annual sales. According to Iqbal Riaz, owner of an electronic appliance outlet in Gulberg (Lahore), “the two most frequently asked questions are how quickly it cools and by how much will the electricity bill increase.”This suggests that the value-added features, such as air filtering, cellular or Bluetooth connectivity and smart compressors, are secondary variables. In Riaz’s opinion, the reason why Chinese brands have gained such a strong foothold is because they introduced ACs that functioned on inverters, thereby promising energy savings of up to 60%.Chinese brands that have created the most buzz on media, and subsequently in the market, have primarily been Gree and Haier.Shoaib Younus, Senior Marketing Services Manager, Gree, attributes the brand’s success to superior technology, but more importantly, to the extensive advertising campaigns executed throughout the year. A review of Gree’s campaigns thus far reveals that the brand opted for functional advertising to increase awareness of how inverter ACs are different and what benefits can they deliver.With taglines ranging from ‘Khoob chalain, khoob bachain’,‘Khoob thanda karey’ and ‘Aaj, kal parson, chaley barson’, the brand has focussed on conveying the fact that not only do Gree ACs cool a room quickly (and are therefore cost-effective in the long-run), they are also very durable.Humayoun Bashir, Marketing Manager, Haier, concurs with Younus’ assessment. “We invested heavily in advertising to make the market aware about inverter technology. Initially people were apprehensive, and it took a while to gain their trust that this was not a marketing gimmick.”Muhammad Kashif Amin, Executive Director, Blitz Advertising (Haier’s creative agency), said that glossy campaigns would not have helped. “Instead our focus was explaining the specifications of our inverter ACs through our TVCs and print ads.” This is evident from the visuals of Adnan Siddiqui (their brand ambassador) operating different controls and explaining the utility of each in the TVC; added to this were the print campaigns which highlighted the cost savings Haier offer. ‘Chill out and look ahead to 100% saving’ and ‘Kill Bill offer’ are some of the taglines Haier has used this year.Local players PEL and Dawlance have also launched their inverter ACs and most of their advertising has been reactive. PEL came up with ‘Saving waala AC’ campaign and Dawlance came with ‘It’s almost free’. Judging from the sales trends reported by retailers, these campaigns failed to leave their mark on consumers.How China is keeping Pakistanis coolNote the following takeaways in this study which strengthen the central thesis presented in this answer:The entrance of Chinese products in a developing world market with an emerging middle class turned what was once a luxury product (the AC) into a more accessible product for the middle classes.The Chinese managed to beat out competitors who had dominated the market before them.Their market strategy involved focusing on cheaper Split Air conditioners that were more affordable.They focused the tech on the inverter technology for more cost savings, correctly identifying that the customer here was a working class salaried professional whose main worry was about monthly electricity bills. The customer did not care much about air filtering, smart ACs, blue tooth connectivity etc which a Western audience may have been more concerned about as they already have cheaper electricity than us.Their marketing strategy correctly advertised electricity savings as the primary focus.Interestingly, other brands actually tried copying the Chinese rather than the other way around.We have the confirmation of Chinese products being able to compete technologically with already established brands. And how they allow a burgeoning middle class to access products that were once considered luxurious and beyond their means through technological innovation, lower prices and costs of operation and understanding the customers of our developing world regions better than western firms (who are after a different audience).Haier Air conditioners in Pakistan:Haier DC Inverter | DC Inverter | Air conditioner | Haier PakistanConclusion and thoughts on the futureIf i were to speculate on the future, I think in a few years the Chinese will being moving into markets dominated by high-tech manufacturers like Germany and Japan. The US and UK are currently undergoing some political turbulence which has hit their trade abroad and they might be set to lose market share in a variety of sectors to the Chinese who are offering high tech products at lower prices to replace them.My observations are based on a period ranging from the late 90s till present. It would be interesting to see what the future would hold. But if the current technical progress of the Chinese continues moving upwards, it might mean that they begin to push into the “luxury” and “premium” category of products that previously brands like Prada, BMW, Apple etc had maintained their dominance over for a while.Of course, you should recall that i said at the beginning of the answer that this was a fairly regional perspective. There is a network of FTAs and Chinese investments which makes the region fairly conducive to their products. There’s also the very specific economic conditions we have here with an emerging middle class. The key phrase here being “emergent”: New families having increasingly disposable incomes and steadily growing in terms of wealth. They are starkly different customers from what you have in say France or Canada in both wealth, mentality and needs. China’s proximity to South East Asia, Central Asia, South Asia etc also lends them a greater level of insight into markets here that others might miss.But overall, the central thesis presented in this answer holds. As China’s entire economy moves up the value chain, it’s reflected in their exports as well. The Chinese are making major inroads into markets across the globe based on the factors presented here and this has largely moved their image away from a “poor quality goods exporter” to “affordable good quality products” that are replacing foreign brands at an increasing pace. And in the future, their goods might hold the same brand and quality value we mentally associate with Japan and Germany if their progress up the tech-quality ladder continues unabated.Questions i’d like to ponder about their future are:How will they maintain their lower prices compared to competitors in high tech sectors like cell phones, laptops etc? Will OBOR be tied to FTAs to keep Chinese products free of tarriffs and duties and thus better able to penetrate Asian markets compared to other brands? Will the Chinese offshore to cheaper labor markets in the future? Will they maintain a large economy of scale at home instead to ensure cost effectiveness?While the case study presented in this answer shows a pretty adept Chinese advertisement and marketing campaign, can they replicate this marketing and branding success in more high tier sectors like fashion and luxury products? Regarding this point, there is a Chinese fashion brand that opened in Pakistan called MiniSo. They opened as one store but have quickly expanded to 9 stores. The brand was started by a Chinese entrepreneur Ye Guofu and Japanese designer Junya Miyake and features accessories, bags, clothing etc that is aesthetically very close to similar Japanese products. This raised the issue of Chinese businesses operating under the guise of Japanese firms to raise their brand value. Basically Chinese brands would operate under the cover of “Japanese” and “German” branding while handling business operations themselves. I’m obviously no marketing expert so it would be interesting to see how this works. The Air conditioner case study showed that Chinese brands can operate and win market shares under their own China brands. But perhaps the market dynamics are different in fashion, luxury and premium products hence necessitating the current cover of other countries with brand value. Perhaps later down the line about 5–10 years from now this practice will be discarded as China’s own brand as a country continues to gain momentum with their political stability and economic growth.While Pakistan is a market under the influence of OBOR and the Pak-China FTA, can such marketing success be replicated in other countries without such beneficial conditions?Will we reach a point where China’s moves to higher tech but begin pricing themselves out of export markets as their currency becomes stronger relative to other countries and their domestic labor costs and economies of scale do not remain favorable? Will India replace China then? Or some other country?These are all important points to consider. But they are for another time. For now, the answer lays out the case that the POV of Chinese products being low quality, easily broke down, unreliable is fast becoming a thing of the past and new perceptions are being attached to Chinese products, some of which have been expounded on in this answer.China’s MiniSo store in Pakistan:Source: https://trending.pk/2018/01/famous-chinese-fashion-brand-aggressively-expanding-pakistan/