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.
China’s digital economy is booming and creating more employment opportunities, the number of jobs created from this sector is far more than jobs that will be eliminated by technology in future. Alibaba, the e-commerce giant which has expanded into cloud computing, financial technology and media and entertainment, could account for as many as 29.4% job opportunities in China’s digital economy by 2035. In this edition of China Data, we bring you data about China’s domestic debt, clean energy, debt-for-equity swaps and more.
In China, while state-owned enterprises dominate the monopoly industries like petroleum and telecom, the country’s private economy is still the major source for growth in production, employment and exports. Private companies are very sensitive to market changes: When profit margins shrink, they will jump out quickly. Expectations are low while the Chinese economy is under the ‘New Normal’, but the government is still concerned about private investment stagnation. The top economic agency has created a work team to look into the problem and made 60 proposals to solve the slow-down issue. But will top-down methods work?
Optimism for Chinese firms is increasing. As they’re making money, they also face different issues. The CKGSB Business Conditions Index posted a mark of 60.8 in November, up from October’s 58.5. This shows that for the survey’s sample firms, of which the majority is relatively successful in China, the next six months are viewed with increased optimism. The CKGSB BCI comprises four sub-indices. Of these, corporate sales fell slightly from 75.4 to 74.0, while corporate profits rose from 57.4 to 61.8. The fact that both of these indices are both well above the confidence threshold of 50 shows that company prospects are improving.
After several decades when most Western governments inclined toward freer and more global trade, the mood seems to be changing. In the US, the presidential candidates have agreed on little but the need to keep a closer eye on trade agreements. In the United Kingdom, the new Prime minister, Theresa May, seems determined to fulfill the British public’s wish to leave the European Union, despite the fact that the pound sterling sank recently to a 168-year low. Skepticism over trade deals seems likely to remain a stubborn presence in most of the mature economies, so what should Chinese companies do to react?
China has achieved almost miraculous advancement in a mere 30 years, but at the same time is beset with a host of structural problems and contradictions that it must grapple with, especially as economic growth begins to slow. In this interview, Kroeber, the author of China’s Economy: What Everyone Needs to Know, a comprehensive introduction to China’s rise from an economic backwater in the early 1980s to the world’s second-largest economy, offers his analysis to CKGSB Knowledge on how China got here, where it might be headed, and how to understand the changes and implications.
China is taking its place to be one of the world’s largest M&A markets. In the first six month of 2016, China’s outbound M&A volume surpassed 2015 full year record, and not only volume increase is obvious, the number and size of deals are also rising. In February ChemChina agreed to buy Syngenta AG for $48 billion; Haier, with an $5.58 billion M&A, has General Electric’s appliances business officially under its name; Midea engaged in a $5.0 billion bid for German robotics maker Kuka. In this edition of China Data, we bring you statistics on China’s professional sports market, labor productivity, domestic brands, and more.
For the past three decades, the general political consensus in the mature Western economies has been that trade liberalization is a good thing: most economists credit rising levels of global trade and cross-border investment with lifting nearly a billion people out of poverty in the developing world and reducing prices for consumers almost everywhere. Yet despite those successes, a growing segment of the public in the mature economies sees the impact of liberal trade policies quite differently— the revisionist view sees free trade as a major cause of the declining prosperity in the mature economies. Why has an anti-globalization consensus developed?
China’s corporate debt is rising fast, and is estimated to be between 145% and 170% of GDP, which is “very high by any measure,” according to the IMF. In most countries this would herald a wave of bankruptcies and be considered a lead indicator for an imminent correction. But in China, analysts are not so sure because the government has a high level of control and a low tolerance for slow growth. People also believe there will not be an imminent financial crisis because the government is the ultimate underwriter.