Has China taken a bite out of America’s top-economy status? Google’s new remote-area internet plan and how to bring back confidence. Readings from around the world on business, leadership and management.

Burgernomics: is China the new big cheese in economics?

The humble Big Mac may be predicting that China’s economy is stronger than the US’s. Credit: McDonalds/Instagram

China expert David Thomas, whom many readers will have seen at our previous Papua New Guinea Investment Conferences, looks at whether we have reached the long-speculated moment when China has taken over the US to become the largest economy in the world. And the evidence is somewhat surprising.

Instead of using traditional methods, he suggests that the recent Big Mac Index, a lighthearted measurement from The Economist to determine the correct levels of currency prices by comparing the prices of McDonald’s burgers in various countries, shows China has already taken over the US – in terms of purchasing power parity, at least.

His logic goes as follows:

‘In 2019, China’s workers produced over 99 trillion yuan worth of goods and services. America’s produced US$21.4 trillion worth. Since 6.9 yuan bought a dollar last year, on average, China’s GDP was worth only US$14 trillion when converted into dollars at market rates. That was still well short of America’s.

‘But 6.9 yuan stretches further in China than a dollar goes in the US. One example is the McDonald’s Big Mac. It costs about 21.70 yuan in China and US$5.71 in the US. By that measure, 3.8 yuan buys as much as a dollar. But if that is the case, then 99 trillion yuan can buy as much as US$26 trillion, and China’s economy is already considerably bigger than America’s’.

Food for thought.

Google aims high with its new internet delivery

Loon’s Internet-enabled balloons float around 20km above sea level, out of range of air traffic, storms and wildlife. Credit: Loon

When you are waving your phone around in the air looking for some decent coverage, you might soon be looking to the heavens.

Rolling out in Nairobi, Kenya, this week, the New York Times reports that Google is bringing the internet to tens on thousands of people in remote locations using high-altitude balloons.

Loon, a unit of Google’s parent company Alphabet, launched 35 balloons in recent months in collaborating with Telkom Kenya, the East African nation’s third-largest carrier.

The balloons, which fly about 20 kilometres above the Earth in the stratosphere will initially provide a 4G LTE network connection to a nearly 31,000-square-mile area across central and western Kenya, including the capital, Nairobi.

‘Kenya is an ideal place for us to begin this new era of stratospheric communications,’ Alastair Westgarth, Loon’s Chief Executive, said in an interview with the NYT. ‘The country has been incredibly innovative about finding new ways to connect unconnected populations. As a new, innovative technology, this is a great fit.’

Would it also be a great fit for somewhere as mountainous, and difficult to service, as PNG?

Confidence a ‘new currency’

Credit: AirBnB/Instagram

Considering we cannot be sure about anything right now, the pandemic has certainly meant that consumer confidence has taken a massive hit.

The MIT Sloan Management Review says that by, early May 2020, consumer confidence had dipped below 100 on the Organisation for Economic Cooperation and Development’s index, hitting its lowest levels since 2015.

This has particularly hit hard with brands that offer ‘an experience’ such as AirBnB or Uber (or PNG’s tourism sector), or brands that have bet the farm on tailored or personal offerings that can no longer be delivered during COVID.

How do businesses find their way back?

‘Thankfully, pandemics happen infrequently. But they are one form of an ongoing challenge that all organisations face: volatility,’ the article says. ‘As confidence is fast becoming a new business currency, every brand owner must now optimise its ability to empathise, adapt, and reinvent. Those that do so will be best positioned to face the many challenges – and capitalise on the opportunities – that lie ahead.’