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Vectra Bank Expert Jeff Thredgold

English

Written by Jeff Thredgold, President, Thredgold Economic Associates

December 14, 2010

It’s the year 2012…

…your employer, a major global firm, announces that within two years all meetings and written communication within the company will be based on or conducted in Mandarin, the primary language of China

Imagine our shock…our anger…our displeasure at the need to suddenly learn an extremely difficult language, all in the name of keeping our job…

Welcome to the global community in 2011!

English has increasingly become the international language of business.  More and more nations are demanding that their business executives become fluent in English.

English learning courses are popular around the globe.  While perhaps one quarter of the world’s population can now converse to an extent in English, that share could rise to one-half by 2015 (businessreviewusa.com).

Japanese English
A number of major Japanese companies have already mandated that English is, or soon will be, the primary language of internal communications.  Rakuten Inc., Japan’s largest online retailer, has mandated that English will be the “standard language” by March 2012.  Major employers such as Nissan Motor, Sony, Fast Retailing, Sumida, and Nippon Sheet Glass have made similar mandates, or have already implemented such a reality (The Wall Street Journal).

By 2012, Rakuten employees will be required to speak and correspond with each other in English.  The risk of dismissal from the company if English is not mastered is clear.

While we might think of Japan, now the world’s third largest economy behind China, as a manufacturing haven, roughly 70% of that nation’s GDP is now in services.  If you are aiming at be a player in the global marketplace, you must communicate in English (npr.com).

Ironically, it is fiercely independent Japan where English skills lag other
nations.  Among the 34 nations designated as “advanced economies” by the International Monetary Fund, Japan had the lowest scores during 2009 on the Test of English as a Foreign Language, a proficiency test given to foreign students who want to study within the U.S. (The Wall Street Journal).

European English
Meetings within the European Union are routinely held in English…written documents the same.  It is simply a reality that a much larger share of senior politicians within the European Community speak English as a second language rather than French, German, Italian, etc.

It has long held true that the aspiration of thousands of gifted students around the world is to study and graduate from a major American university.  The combination of gaining a degree in business, or finance, or engineering, or chemistry, etc. from what most still consider the world’s best, most up-to-date universities, combined with perfecting verbal and written skills in English, is a ticket to prosperity for those students who return home.

Student English
As one might expect, many nations around the globe have required their youth to routinely study English in the primary grades for years.  What might have once been seen as a way to expand the horizon of younger people, such English language skills now provide people across Asia, across
Europe, across South America, across
Africa, across the Middle East, etc. with a vital tool to succeed in life in coming years.

Unfortunately, the rise of English places less need for Americans to study other languages than ever before.  More schools do offer Chinese languages than before, but other language courses have been trimmed in many schools because of budget pressures.

What do you call a person who speaks three languages?  Multilingual.  What do you call a person who speaks two languages?  Bilingual.  What do you call a person who speaks one language?  An American.

Sad, but true

Trade

The U.S. trade deficit with the rest of the global community shrank in October to its lowest level in nine months, one more sign that the American economy is slowly picking up speed.  The net difference between American exports and imports declined to $38.7 billion in October, better than consensus expectations.  The trade deficit was $44.6 billion in September.

U.S. exports to the world jumped 3.2% to $158.7 billion in October, the highest level since August 2008.  Imports dipped 0.5% to $197.4 billion.

US Trade ImbalancePerhaps contrary to common belief, the trade imbalance does not just measure the difference between “merchandise” or “goods” exported out of and imported into the U.S.   It also includes a smaller component of “services,” including financial services, insurance, travel, professional services, etc.  The U.S. typically runs a trade deficit in goods or merchandise and a surplus in services.

A Lofty Goal
The Obama Administration has announced a goal to double U.S. exports to the world over the next five years.  While this is a noble and desirable objective, you can take it to the bank that every other nation on the planet has identified a similar goal.

The Administration and the Federal Reserve have drawn criticism around the world that both institutions are following a “cheap dollar” policy to boost U.S. exports to the world.  The theory is that a weaker U.S. dollar relative to other major currencies leads to lower global prices for American-made goods and services, while also making imports into the U.S. more expensive.  As usual, the Administration and the Federal Reserve each indicate support of a “strong dollar” policy.

Chinese Pressure
China remains under enormous global political pressure to allow its currency to rise in value as a means of reducing its enormous trade surplus with the world.  While the Chinese have allowed modest currency
appreciation in recent years, many feel that their currency, the yuan (which does not float or trade openly in global foreign exchange markets), is still 20% -40% undervalued.

China, now the world’s largest exporter, runs an enormous trade surplus with the U.S.  Despite record American exports to China in October, the two nations ran a $226.8 billion trade surplus in favor of the Chinese during 2010’s first 10 months, up more than 20% versus the same period a year ago.  Additional U.S. and global political pressure on the Chinese to boost their currency’s value will remain center stage for years to come.


Finance Expert Right Boarder