Trend watcher says China well-positioned

If you have built an international reputation as a major trend watcher, then you had perhaps better predict that the world was heading for a major financial crisis.

For Adjiedj Bakas, author of several books on the future and an increasingly well-known figure in China, that is exactly what he did live on television in 2007.

He was being interviewed on the Dutch television flagship current affairs program Nova when most economists were predicting the American economy was going to pick up again after a couple of years of stagnating.

At the time, there was little awareness there might be such a big black hole in the world's financial system.

"I could already sense that something was going on. The frantic dealing, the atmosphere of an end game, of more-more, of creating financial products more complicated every day, which no one, the designers included, could understand anymore," he said.

Bakas, 45, who perhaps appropriately has the slight air of a mystic, was speaking at his publishers' offices in western Beijing.

His new book, The Future of Finance, which he has co-authored with financial services expert Roger Peverelli, is about to be introduced to the Chinese public.

Commentators and economists in 2007 dismissed the views he expressed on television about the imminent vulnerability of the financial system, but Bakas was convinced he was right.

At the time, he was almost alone apart from US economist Nouriel Roubini, dubbed "Doctor Doom".

Bakas said the wild behavior of many senior figures in the global financial services industry was an obvious self-important bubble about to burst.

Bakas, whose grandparents emigrated from India to Latin America, was born in Surinam, a small country just north of Brazil.

He moved to the Netherlands when he was 18 years old to study communications science at Utrecht University. He is not an economist by training.

After working for Dutch television for two years, he set up his own company, specializing in looking at future trends.

"I had met a professor, Wim de Ridder, a renowned futurologist in Holland, and he inspired me to do this. I also wondered at the time if Star Trek might become a reality, after all," he laughed.

He has since written a number of titles on the subject and said he got around 70 percent of his predictions right.

Better than chance

"That is better than chance. A good trend watcher should have good intuition and should be open minded, nosy, unbiased, independent and should be able to discern valuable information from nonsense. There is a lot of nonsense available, especially on the Internet," he said.

Bakas, who was immaculately dressed in an Indian-style pink shirt, is a regular visitor to China.

He lectures in Shanghai at the China Europe International Business School, one of the world's top 50 business schools.

His books are being rapidly translated into Chinese. The next one to appear here will be Beyond the Crisis, which is about how the world will emerge from the current downturn. Chinese economist Wang Jianmao wrote the foreward.

"I have a great affinity with China. I've been coming here often during the past 20 years, and I've been collecting Chinese antiques and art for the same amount of time," he said.

"My office and house are full of statues from the Han, Tang and Ming dynasties. Pieces from my own art collection are printed in my books," he said.

Not all of his books focus on finance and economics. To coincide with Valentine's Day next year, he is introducing a new book, The Future of Love, which focuses on trends in human relationships.

"One of the trends I am looking at is something that is becoming quite common in Europe -- that of people's parents and even grandparents divorcing after many years of marriage and getting a new love life," Bakas said.

"This didn't happen before. People now are living longer, to 80 or 90 years, and they don't think they should be deprived of a new love life," he said.

An obvious question to ask a trend watcher is when the world will start moving out of its current economic downturn.

"I think the recovery will come after 2011, but it will be a very slow and jobless recovery, with growth in Europe and the United States of not much more than 1 percent or 1.5 percent," Bakas said.

Bakas said the recovery will feel more like a "very long recession" than growth.

"And a lot of companies will use it as an excuse to get rid of people. I think it will take a long time before any sort of normality returns," he said.

"In China, I think 7 or 8 percent growth may still be feasible, but you must not forget that China has lost a lot of money in this crisis, as well, and was an investor in Fannie Mae and Freddie Mac (the failed US mortgage banks)," he said.

The Iceland government, which might have wished it had seen the financial tsunami coming instead of being almost swept away by it, is now seeking Bakas' advice.

He has told them to do what China did under Deng Xiaopeng in the late 1970s and early 1980s and encourage expatriates abroad to invest in their home country. Iceland, too, apparently has a lot of expatriates.

"The Chinese government encouraged Chinese people living around the world to invest in China by offering high interest rates. China at the time was as poor as Somalia is now. This is what Iceland should do, "Bakas said.

He said he also believes Iceland should have an open door policy to those from China who want to set up factories in the country.

"It would be a good base for Chinese companies to serve the northern European and Scandinavian markets," he said.

Combined analysis

"I tend to mix know-how and experiences with that of other specialists. Tomorrow's world is a much more hybrid one, where hard science, economics and spirituality will mix more and more," he said.

Bakas has his own research team who helps him come up with predictions about the future. His corporate clients have included familiar names such as Shell, Unilever, ING, Nike and Pepsi.

Beyond the excesses of Goldman Sachs and investment bankers, Bakas has his own perspective on why the world has suddenly plunged into a downturn.

His thinking is to some extent inspired by the Russian economist Nikolai Kondradtiev, who insisted that capitalism would bounce back from the 1930s depression.

"The economy always goes like this, and this is the fifth major economic crisis in 200 years. It always starts with the banks and then goes out. It is exactly the same this time," Bakas said.

He said that recessions also occur when the economy is on the brink of new technological developments -- in the 1930s before labor-saving consumer goods industries took off and in the 1980s before the Internet and mobile phones.

The current recession is before the dawn of developments in biotechnology, nanotechnology, new energy alternatives, genetic breakthroughs and developments in recycling, Bakas said.

"It is like the Chinese saying, that you have to clean up the old stuff before the new things can begin," Bakas said.

"It is very psychological, because moving into a new technological period needs a crisis. Otherwise, people don't feel the need for change," he said.

Bakas said he expects China to be a beneficiary of the current downturn because it will emerge as a leader in some, if not all, of the new industries, which will set it on course to becoming the world's biggest economy in the 21st century.

"The winners of this crisis will be China and India, because they now have the opportunity to move into the next technological phase," he said.

"The Chinese government, for example, has decided to invest massively in renewable energy. Already, there are more than 100 million electric bikes, scooters and other two-wheeled vehicles here," he said, adding that if China becomes big on renewables, it can export this new product line to the rest of the world.

Bakas sees Europe being the big loser with failing industries unable to compete, higher rates of unemployment and with its people having to endure greater degrees of poverty.

"It won't be an African scale of poverty, but older people will have to work a lot longer. Someone of 70 might be expected to be a stewardess on a plane, for example," he said.

He predicted that much of Europe will become like a theme park or open-air museum for Chinese and other Asian tourists to marvel at the sites of what will become an outmoded civilization.

"It will only be the city-states like Hamburg and London that will do well. They will stay important, but I doubt whether the rest of their countries will be successful," he said.

(China Daily 08/31/2009 page12)