Geraci on Class CNBC: comparison of China and Italy’s economic recovery


Welcome to all the viewers and all the viewers of Class CNBC, we are ready for a new episode of our special Class CNBC, dedicated in particular to China.

We’re going live to Shanghai to Professor Michele Geraci, professor of Practices and Economic Policies at Nottingham University in Ningbo. You’re in Shanghai, aren’t you, Professor?

Currently yes, greetings here from a Shanghai that as we have said normality has restarted, life has recovered completely. Both the health part and the economic part are on the way to resolution. So, a greeting right from here Shanghai.

Look, is it true that you’re shooting without masks? They are mandatory only in shops, how is life day by day, Covid side? Of course you will read what is happening in Italy with dramatic figures, both in terms of hospitalization and in terms of deaths.

And unfortunately, yes, because, I’ve been saying it for a year… I’m always sorry to repeat it. We in Italy have not understood that the health emergency and the economic emergency are not two objectives in conflict, where you have to choose which to do and which to sacrifice.

But here in China they understood this and they solved both, because they had an iron lock-down of two months, they blocked the economy completely and then restarted everything. The health part was resolved in May of last year, the economic part was divided up and the movements of people opened up a bit. Today you make a very intense use of the apps, without mobile phone you practically do not go anywhere: you do not enter the offices, you do not get on the trains, when you arrive in a new station (I travel almost every day and when I return to Shanghai) without the green code that proves that I have not been in one of the now very rare zones of outbreaks, I can not enter the city, I can not get on the train, even in taxis ask me and in any case also in all offices and in all shops.

So a normality, but with the support of technologies because when they then find the outbreaks, they go in a very heavy way so the economy has its problems, has its difficulties but still starts again. It is now a single market, not only China but also the rest of Asia is fine and unfortunately we in Europe are here after 14/15 months to chase, never to anticipate the problem.

Even here there are very few vaccines, they made about 100 million, I know it is obviously a very high number but here is just under 10 percent of the population, precisely because there is no need because the virus does not circulate, so in order, let’s say the priorities, The only people who get vaccinated are those members of the government, those managers, of course all the doctors.

Obviously there is no debate here whether one can do it or not, which are nevertheless exposed, but the rest the population does not need to do it.

And so not even foreigners, professor, as you now living in China are proposed the vaccine?

Proposed yes but it is not mandatory. So who wants to do it, can do it.

The advantage of having a vaccine is that if one were to leave China and then return, it can come back a little more easily without having the need for an invitation letter from the employer but anyway, whether with or without vaccine quarantine on arrival in China is mandatory.

Be careful with the police picking you up on the flight ladder, escorting you to the hotel, and one is there two weeks without being able to get out, not like us, so the vaccine here is also seen as one of many components, not the only solution but one of a range of solutions that can help, together with the apps (so tracking), the use of masks obviously (when you go to the closed places but that there is not so mandatory), the vaccine, the quarantine on arrival so it is obviously a clear communication, because it is not that here you go on TV and there are those who think in one way, who thinks in another, here the communication has been very clear since the beginning of January, I’m sorry to say, now from last year 2020 and the people have reacted and there is also an Asian sense of citizenship that is common here in China but also in other areas such as Korea and Japan, in Vietnam have also resolved thanks to the cooperation of the people.

Cooperation, however, helped by clear communication from the government, we have not yet resolved this duality.

Listen, Professor, you’ve been a member, remember as Undersecretary, of the first Conte I government, what assessment do you make of the first steps of the Draghi government?

On the aid front too, we said, we are an economic television, which still the Italian economy does not really see the light at the end of the tunnel, we see this vaccination passport that should allow perhaps in a summer a little more open and then to return to welcome tourists, we know how important the tourism sector is to our gross domestic product… an assessment of these first steps of the government of Mario Draghi.

I think it was a positive change, I think President Draghi has absolutely centralized key competences surrounding himself with smart people.

It’s a bit like saying leaving who was there or who stayed to do a little bit of the deputy minister, the undersecretary with anyway we say responsibilities and reduced so there is a centralization of power that is fine, and in this time of crisis it is right that it is so, because this gives a speed of implementation even of very broad directives.

The new commissioner is in a very high position, so this is obviously a good thing, be careful, the problem that Prime Minister Draghi finds is that he finds an Italy destroyed on the supply side.

That is, we have 300 thousand companies that have closed, I felt in a few weeks in Rome the economy destroyed, she spoke of tourism so the problem is not only on the demand side. How to stimulate consumption by giving some of the bonuses to people who then have money in their pockets to spend, because here the problem is that there is nowhere to spend it, because the shops are closed and many will never open again. So we have unfortunately, for the reasons we have said, stuck in a situation where both the supply and the demand have limits and unfortunately here we must make a really brave decision, that goes against our market philosophy, that is, the state must also take back control of the productive part.

It’s not to be statists, it’s not to want to be dirigists, because we don’t like those words, but that’s how you get out of crises.

Keynes also said the rest, so you do not have to be on the side of absolute dirigisme, otherwise the private can not do it because no one will invest in Italy, It is a task that only the government and in the various forms through state companies but also through solutions to problems such as that of VAT, the Alitalia on which I have worked must really take control of a large part of GDP and not limit.

Professor, I’m sorry to interrupt, but Minister Giorgetti, who I imagine you know well, said on Alitalia: “it must be lighter otherwise it does not fly”.

Alitalia cannot be light, Alitalia must have a ladder, that is we compete in the long run, on the medium-haul with Ryanair and Easyjet which now have 300/400 aircraft each and watch the turn over between when the last passenger drops from a Ryanair plane to when the first passenger of the next plane goes up is 8 minutes, now to achieve this operational efficiency you can not have 100 aircraft, among other things many also at price, that is we know I go to Palermo from Rome to 300 euros per flight, I don’t know what Giancarlo Giorgetti means when he speaks of lightness, If it speaks of costs that we agree because a lot of the staff we know that is not useful to a modern company and that’s why I proposed that the staff from Alitalia comes, as if to reuse in other parts of my plan, that a little predicts the present state in other sectors so absolutely the jobs must be guaranteed but 3/4/5 thousand people can continue not to work in Alitalia but will certainly have skills that are useful in other companies, in other sectors.

At that point Alitalia would be, read from the point of view of costs, would not have the weight of staff but attention, must expand that is, must reach a scale must go to 200 even 250 aircraft and move from 320 that are short-haul to 330, 350 because we have to go and compete with the broad lines that make intercontinental flights because in the short haul, the competition is ruthless of those eight minutes that even with all my goodwill, by Giorgetti and who will be the manager of Alitalia we will never make it because we also have an inertia on employment contracts, while of course the Easyjet has them there in Austria, in England, in Ireland they also play in such a way as to say opportunistic obviously is clear, maintenance, safety in the first place so much so that they have never had problems with accidents but here too we must understand that the world is unfortunately not that of fixed work forever so I also appeal to friends and employees, I also know some very good Alitalia pilots who, among other things, are our excellence and work a lot, We must at all events recognize that we are working in a global market and I believe that Alitalia must be in the hands of the State, I want to nationalize it and therefore with participation of the State, which will not therefore be concerned with profits, but will be concerned with being, to have a company that drives tourism because tourism is 15 percent of our economy and without a flag line Japanese tourists, Chinese and Australians fly with Air France and the Air France flight as I know when flying from Tokyo to Paris arrives too late casually, to be able to take a connecting flight to Rome and then the Japanese tourist will have to do one more night in Paris then they make him do two, The same on return understands that it is not alone, Alitalia must be seen not in the context of the money lost to save it is a strategic asset that is save 240 billion GDP of tourism induced and at this time is on its knees. So don’t put the victory on the market because the only one won’t make it.

Very interesting his analysis on Alitalia and tourism, we are asking Minister Garavaglia to participate so maybe we can really organize a comparison. look we are just in conclusion, we continue to read that in China, shops like H&M but also Burberry, Adidas and Nike are in the crosshairs we understand that we are talking about a very important issue, that of human rights, of Uighurs, it helps us to understand in Shanghai but the shops are still open of H&M? Have you been there, Professor?

I was just there half an hour ago it was empty, there were two people, four floors, here they are at 18 o’clock in the afternoon just now so at a time we say quite important, shortly before dinner and you very few customers a couple among other things I believe two foreigners and two Chinese in four floors of the store.

So yes this is very important because we must understand that here the power of internet users, both autonomous, is driven by national interests, really creates overnight the collapse of a brand.

We have two thousand years of history even more, a Made in Italy on which we have been marching for 500 years, since the time of Leonardo, of Michelangelo. Beware because in a few hours it is destroyed and is not only a brand but it goes to the peak all the export of the country and not only in Asia, because China is driving all the other Asian countries, for example, those of the RCEP agreement and the other 14 countries so China as well as a little Japan was in the past and in a certain way also Korea, is the trendsetter then H&M if it will have problems in China, hopefully everything will be resolved of course, this problem will not only be in China which is already a good blow but could affect other countries, so my warning to our friends in Italy is: caution, caution, because the Chinese market and we have seen in the past unfortunately we have suffered for some inconvenience, does not forgive here 35 percent of the economy is online, in a few minutes the brand is created and destroyed and when it really destroys in a few minutes you destroy centuries of Made in Italy so attention, attention.

And then we will see what emerges precisely remember here we are talking in particular about the protection of workers in the cotton sector and this for a statement, For the other of the last year H&M has just testified our host about what is happening right in the Shanghai store of H&M. Thanks very much to Professor Michele Geraci who teaches practices and economic policies at Nottingham University in Ningbo, he spoke to us live from Shanghai.

Thank you, Professor, see you very soon!


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