The World Bank estimates that up to 77% of jobs in China could be made redundant by machines in the long term. Investing in robots will become more attractive for manufacturers. The Chinese government also pledges to make China a “world factory” of robots. But real changes are much slower. Reports say that large numbers of workers are still used on production lines doing repetitive tasks such as scrubbing speaker systems with toothbrushes. Despite the fact that China’s labor costs are six times higher than 10 years ago, workers are often still cheaper than robots in short term.
For many years, China’s emerging companies, especially those in the internet sector, have relied on foreign capital. Alibaba and Tencent were nurtured by overseas venture capital, and were eventually listed abroad. These two companies have today become world-class giants. The market value of Alibaba was $495 billion as of late May, while Tencent’s valuation was $605 billion. This puts them among the world’s top 10 most valuable companies. The success of China’s leading tech companies is an understandable source of pride to many in China. But for China’s policymakers, a question presents itself: why do so many outstanding Chinese companies end up going public overseas?
Central and Eastern Europe faces a tough balancing act as it looks toward China for investment and growth. Launched first in 2012, the “16+1” Cooperation Framework includes 16 countries in Central, Eastern, and Southeastern Europe. As a key part of the Chinese transcontinental economic and geopolitical vision, the heavily invested “16+1” becomes a perfect solution to some Central and Eastern Europe countries facing economic crisis. This closer tie with China, however, has made EU rattled. How to balance the relationship with EU and China becomes a head-scratching problem for many.
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.
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”.
After meeting with Chinese President Xi Jinping this year, Donald Trump backtracked and dropped his accusation of China being a currency manipulator. But the issue of currency manipulation is still debatable. The RMB is certainly not a free-floating currency and the controls are complex. China’s central bank sets the daily rate with movements only allowed in a narrow 2% band. This did not change for years, until August 2015 when the central bank reformed a bit by beginning to set the daily RMB rates based on the closing value of the previous day’s interbank forex market. But it’s not considered a major change and the way to achieve a more open currency remains difficult.
China’s property market was virtually non-existent 25 years ago, but it is now one of the most critical pillars in this country and the source of incredible wealth for many of China’s citizens. Last year property prices in China’s tier one cities made another gravity-defying leap last year. By September, new home prices had jumped 27.8% in Beijing, 32.7% in Shanghai and a meteoric 34.1% in Shenzhen year-on-year. The health of this pillar remains a top concern of the government and citizens alike. But is there a looming crisis? In the near term, the answer seems to be no.
A look at the China data you should care about–from China’s investment in an electric car factory in Germany to the 25,000 tons of avocado imports from Latin America. Plus, a look at China’s first homemade passenger jet, the C919, which took its maiden flight in May and seeks to compete with Boeing and Airbus; and technology giant Tencent’s USD 316 billion market cap, which makes it the ninth-largest listed company globally. More international trades are set to grow in the future: One Belt and Road Forum China signed more than 270 agreements with 68 countries and international organizations as China pushes its Silk Road revival.
Under the banner industrial policy “Made in China 2025”, China seeks to replace the advanced foreign manufactured goods that it has long relied upon with domestically-produced goods. But the effort is spooking the foreign business community, and the plan may not address China’s most genuine needs. Precise details of the implementation of the grand policy are only now beginning to emerge. For Chinese companies, the real long-term impact of the plan is at best unclear. But for foreign companies, although there will be business opportunities in the short-term, the plan as a whole presents big challenges to their future in China.
Fulfilling his campaign promise, US President Donald Trump took the United States out of the Trans-Pacific Partnership (TPP). With that failure, the spotlight has now fallen on the Regional Comprehensive Economic Partnership (RCEP), a proposed trade deal among 16 countries in the Asia Pacific region which is widely seen as a Chinese initiative and a way of pushing back against US influence in Asia. However, compared to TCC, the RCEP has a much narrower scope and labor, environment, IP, competition policy, issues screaming for attention will not be significantly discussed. Meanwhile, TPP is not completely down without the US: Strong incentives for the TPP or a “TPP-lite” will remain.