A blog post by a self-styled financial veteran knocked the wind out of the Chinese business community recently. The author, Wu Xiaoping, argued that the country’s private firms should step aside and allow the state to increase its dominance of the economy. The private sector has “fulfilled its task of assisting the state-owned economy in achieving its rapid development,” Wu wrote. The article went viral on social media, sparking criticism from entrepreneurs and support from left-wing commenters. Under normal circumstances, a blog by an obscure middle manager would never garner so much attention. But Wu’s post touched a nerve. These are tough times for private firms.
A new year is a time for fresh starts and new beginnings. At least, that is what policymakers in Beijing will be hoping. The second half of 2018 produced some negative headlines on the economy as a domestic deleveraging drive and the intensifying trade war with the US slowed growth and undermined confidence. Will these headwinds continue battering the Chinese economy or will Beijing be able to engineer a recovery? There are few people better placed to answer this question than Shen Jianguang, one of China’s most respected economic analysts, whose career has included stints at the European Central Bank, IMF and OECD.
The rapid deterioration in relations between China and the US over the past 12 months has left many scratching their heads and wondering how we got here. Stephen S. Roach is not one of those people. A former Chief Economist of Morgan Stanley and currently Senior Fellow at Yale University’s Jackson Institute for Global Affairs, Roach has been watching the development of Chinese-US relations closely for more than three decades. For him, a tariff war between the world’s two largest economies was as predictable as it is harmful.
The Sino-US trade tussle has had the greatest impact on multinational corporations in China—precisely the group that the US started out trying to support. Many have begun considering radical courses of action to stay in business.
After years of enjoying the fruits of a booming economy and sharply rising disposable income, life for many of China’s higher earners is getting harder. Amid mounting debt levels and economic headwinds, urban middle-class consumers have responded by scaling back their discretionary spending and reducing luxury purchases—an emerging phenomenon known as the “consumption downgrade.” The newfound frugality of middle-class spenders may be good for their wallets, but it is an unwelcome development for Beijing.
For many in Beijing, the trade war confirms long-held suspicions that the United States is determined to thwart China’s rise as the world’s next superpower. As a result, US demands that China abandon Made in China 2025 have also tended to be viewed by Beijing as being motivated not by concerns over fair competition, but by a desire to make sure America keeps its lead in the global innovation race. Public statements from senior figures in the Trump administration have fueled these concerns—the trade war not as an isolated incident, but part of a longer history of US attempts to undermine rival powers.
Beijing faces some big challenges in 2019. Over the past few months, a catchphrase from the hit HBO drama Game of Thrones seems to have been on everyone’s lips in China: “winter is coming” to the Chinese market. The gloomy sentiment has solid reasons. More businesses are struggling to access credit and a sell-off in the stock markets has exacerbated many firms’ difficulties. Meanwhile, the trade war with the US is making life tough for exporters. How worried should we really be? In this issue, we dig deeper into the issues driving recent headlines, and in many cases arrive at some unexpected conclusions.
“Human beings cannot see with their eyes in absolute darkness, but they can see with their mind,” says Cai Shiyin, an entrepreneur who started the social enterprise Dialogue in the Dark in China.
Tattoo culture has exploded in China in the last few years, as the country’s younger generations abandon centuries-old prejudices against the practice and embrace it as an expression of individuality. Chinese millennials are getting tattoos in record numbers, but some are being forced to keep them hidden.
What a difference a year makes. Last summer, there was a sense of unstoppable momentum behind the Belt and Road Initiative (BRI), China’s trillion-dollar plan to build a network of infrastructure connecting Africa, Asia and Europe. When China hosted its 2017 Belt and Road Forum, 29 heads of state and delegations from another 100 countries traveled to Beijing, hoping to cash in on what President Xi Jinping described as the “project of the century.” This year the landscape, at least from the media’s perspective, looks dramatically different as even China’s closest partners make more cautious noises about the BRI.