Like its whole economy, China’s auto market grew at breakneck pace in the 2000s, and while it is slowing down, it still contains enormous potential in terms of both raw sales and innovation as China shifts toward electric. The Chinese government is actively promoting new-energy vehicles, offering subsidies that amount to about 23% of the price of a vehicle. And consumers, many of whom no longer consider car ownership as a status symbol, are more willing to buy electric cars. Yet despite favorable policies and growing market demand, there are challenges ahead: lack of power stations, fragmented manufacturing of power batteries and insufficient innovation.
In the summer of 2017, MSCI finally agreed to include China mainland stocks in its global benchmark equities indices. The decision means Chinese stocks will become a must-have part of many investor’s portfolios. Indeed, it’s a big opportunity for foreign investors, but the risk management is tricky in many regards. For one thing, speculative mom-pop retail investors have been dominating the Chinese stock market and for another, the state-owned firms have intervened in the trading market to a worrying degree. How will the market change and what can investors expect from this volatile yet promising market?
The sharing economy exploded in China this year, with companies for all kinds of shareable objects taking part in this new business model. While there are businesses familiar to Westerners—shared offices, cars and rides—there are also ideas that seem a little kooky, such as shared basketballs and umbrellas. Although some call it innovative, many realize these companies are just “rental 2.0” companies, assisted by digital technology. As the concept reaches fever pitch, however, it is also facing a reality check, especially as many firms, ballooned by venture capital funds, start to show signs of failing.
For the past few years, China has been pursuing a new and ambitious state-owned enterprise (SOE) reform program. SEOs are huge in terms of size, yet they only provide 16% of jobs, less than a third of national economic output, and a return on assets of only 2.9%. Hugely inefficient, debt-ridden and responsible for most of China’s ballooning corporate debt, SOEs are a drag on an economy that Beijing wants to transition—unlike past efforts which is about privatization, but just the opposite—from investment and export-driven to services and consumption-driven.
Many developing nations see China as a champion and as an investor. Western countries wish to see China shoulder a greater share of the burden of global leadership, and a growing number of Chinese citizens want China to reclaim its ancient role of international dominance. But is China ready to “lead the world?” Has it reached the stage where it can set the international tone, take the central role on global issues and provide preeminent guidance toward the future? To many the answer might be “yes”, but as the foundations of the powerhouse economy are actually weaker than they seem, that assessment may be premature.
Interesting and important China related facts you should care about—from China’s service sector growth to the drastic increase of e-sports players and their audience. You may also care about the country’s new fusion reactor setting a new record in July, and that international sewage and water treatment companies are set to chase big opportunities because the central government has pledged to lay 126,000 kilometers of new sewage pipes by 2020, enough to circle the globe three times. Plus, unknown to most, the Middle Kingdom has quietly grown into a cannabis superpower with half of the world’s legal cannabis cultivation, which is used in textiles and pharmaceuticals.
China led the world technologically in the early 15th century, yet Europe surpassed it overnight. How did this come about? Maverick economist Deirdre McCloskey offers an answer in her work. Although in her youth she fell under the sway of socialist economists, she brings an iconoclasts’ view to her subject believing it is wrong to limit the achievements of humanity to academic theories concerned solely with maximization of utility. Her latest book, Bourgeois Equality, is the concluding volume in a trilogy that seeks to explain “The Bourgeois Era,” which she believes laid the basis for the material and spiritual wealth enjoy by the modern world.
Although China’s official GDP for the first two quarters and industrial growth exceeded expectations, the industrial economy has not yet bottomed out, according to the latest CKGSB study. Led by CKGSB Professor Gan Jie, the study shows that overcapacity remained at a historical high in the second quarter, and product and cost prices continued to rise, while production stayed flat. Meanwhile, the gap between the BSI of state-owned enterprises and that of private enterprises kept widening. The latest BSI findings show that the structural problems of China’s industrial economy remain a significant concern.
For decades, China has been a top destination for foreign firms to move their operations abroad, now the trend is reversing—Chinese firms, especially manufacturers, are now moving to the US, not only to lower the cost of production but also to build their brands in global market. Indeed, China is losing its old advantage of cheap labor and raw material, and in certain parts of the US, the land is much cheaper than in China. Meanwhile, the re-booming US economy, flexible financial system and beneficiary tax policies are also driving ambitious Chinese entrepreneurs, who are changing the “Made in China” to “Made in the US”.
The fourth industrial revolution (4IR) is “a fusion of technologies” that blurs the lines “between the physical, digital, and biological spheres,” according to Klaus Schwab, the founder of the Davos Forum. This fusion of so many fields will ultimately see 4IR change the world far more fundamentally than the first three industrial revolutions. Any analysis of the many technological breakthroughs that now define this new 4IR business world is incomplete at best if it misses the China factor. At the dawn of the 4IR era, China is much better positioned than in the past to seize the opportunities offered by an industrial transformation.