Chief Economist & Political Strategist, CrossASEAN Research

Prasenjit K. Basu

PK Basu has 34 years experience covering Asia's economies and markets (equities, fixed income and currencies), including 20 years covering the global economy. He was Chief Economist (SE Asia & India) at Credit Suisse First Boston for 5 years, and Chief Asia (x-Jpn) Economist at Daiwa Securities for a similar period. Among other roles, he was global head of research at Maybank Kim Eng, Malaysia equity research head and chief ASEAN economist at Macquarie, Chief Economist at ICICI Securities, ASEAN economist at UBS and the first chief economist at Khazanah Nasional (where he was co-head of research, and led all agri-business initiatives). PK Basu started his career in the Asia Service of WEFA (Wharton Econometrics) in Philadelphia in 1990, rising to be Director of their Asia Service in June 1994. 
PK's book, "Asia Reborn: A continent rises from the ravages of Colonialism and War to a New Dynamism" won the Tata Literature First Book Award (non-fiction) for 2018. It is the first single chronicle of the modern economic and political history of the whole of Asia (from Iraq and Turkey to Korea and Japan, and everything in between), told from an Asian perspective.

Chief Economist & Political Strategist

REAL-Economics.com

Thematic (Sector/Industry)

United states Industrials / Thematic (Sector/Industry)

The 1930s provide a cautionary tale -- with rampant protectionism causing global trade to shrink, exacerbating the Great Depression and leading inexorably to war. But economists' dirty little secret is that, when used in a targeted manner (and without stirring a global pandemic), protectionism works. Every nation that has successfully industrialised has done so behind protectionist walls, from Britain (1760-1830), Bismarck's Germany, the US (1829-1939), to Japan (1931-70), Korea and Taiwan. The newest example are China's internet giants Alibaba, Baidu, and Tencent -- who have basked in the banning of Facebook, Amazon and Google from China. Politicians are fond of protectionism because it works over 2-5 year time frames, especially for large economies that are less trade-dependent.   Trump is a mercantilist who believes that trade is a zero-sum game. It took more than a year for Trump to begin acting on this core belief, but the consequences will play out over the rest of 2018 and into 2019 -- and they will be very negative for China, and slightly so for Japan and the EU. With 25% tariffs being slapped on US$200bn of Chinese imports into the US next month, China's ability to retaliate is limited. In the absence of China reforming its non-tariff barriers, enforcement of IPRs, domestic-content requirements for FDI, and broadly opening its markets for imports from the US, Trump will use a combination of crippling tariffs and "301" authority to clamp down hard on imports from China. The impact will be a near-permanent shift of China-centred supply chains and labour-intensive manufacturing to other economies (Malaysia, Taiwan, Vietnam, India, Indonesia). In the US, capacity utilisation will rise sharply in steel, aluminium and car industries, sparking new investment in those industries -- especially as a reformed NAFTA (initially just US-Mexico, but likely to encompass Canada soon as well) shifts production to north America from elsewhere. There will be some negative consequences to US users of steel and aluminium -- and to US exporters of farm products targeted by China -- but these will eventually find other markets. Importantly, China's domestic producers will benefit little from such retaliatory steps, because there is little scope to ramp up domestic production of those products in China. Overall, north America is likely to emerge as a big winner, and non-China Asia to gain at China's expense.

The 1930s provide a cautionary tale -- with rampant protectionism causing global trade to shrink, exacerbating the Great Depression and leading inexorably to war. But economists' dirty little secret is that, when used in a targeted manner (and without stirring a global pandemic), protectionism works. Every nation that has successfully industrialised has done so behind protectionist walls, from Britain (1760-1830), Bismarck's Germany, the US (1829-1939), to Japan (1931-70), Korea and Taiwan. The newest example are China's internet giants Alibaba, Baidu, and Tencent -- who have basked in the banning of Facebook, Amazon and Google from China. Politicians are fond of protectionism because it works over 2-5 year time frames, especially for large economies that are less trade-dependent.   Trump is a mercantilist who believes that trade is a zero-sum game. It took more than a year for Trump to begin acting on this core belief, but the consequences will play out over the rest of 2018 and into 2019 -- and they will be very negative for China, and slightly so for Japan and the EU. With 25% tariffs being slapped on US$200bn of Chinese imports into the US next month, China's ability to retaliate is limited. In the absence of China reforming its non-tariff barriers, enforcement of IPRs, domestic-content requirements for FDI, and broadly opening its markets for imports from the US, Trump will use a combination of crippling tariffs and "301" authority to clamp down hard on imports from China. The impact will be a near-permanent shift of China-centred supply chains and labour-intensive manufacturing to other economies (Malaysia, Taiwan, Vietnam, India, Indonesia). In the US, capacity utilisation will rise sharply in steel, aluminium and car industries, sparking new investment in those industries -- especially as a reformed NAFTA (initially just US-Mexico, but likely to encompass Canada soon as well) shifts production to north America from elsewhere. There will be some negative consequences to US users of steel and aluminium -- and to US exporters of farm products targeted by China -- but these will eventually find other markets. Importantly, China's domestic producers will benefit little from such retaliatory steps, because there is little scope to ramp up domestic production of those products in China. Overall, north America is likely to emerge as a big winner, and non-China Asia to gain at China's expense. 

Economists' Dirty Little Secret: Protectionism Works!