China‘s New Normals

The 19th National Congress of the Communist Party of China in October 2017 developed the credo of One Thought One Dream: Socialism with Chinese Characteristics to achieve the rejuvenation of Chinese Nation. What is often forgotten is the fact that historical China had already been number one in many professional, cultural and economic fields until the early 15th century. There had been also quite friendly relations with the European Royal Houses practicing cultural and economic exchanges until their falling apart in World War One. Unfortunately then China underwent the destructiveness of so called Opium war, where after the country was almost bankrupt. The start of industrialization in China had been its only chance to rebuild itself. And under the burden of reparation and internal disciplinary measures necessary to overcome poverty this industrialization may have never had a chance to develop comprehensively in an organic way. Now industrialization is spread out to the underdeveloped world and China takes an angel‘s role to mitigate shortfalls of their own development which particularly happened, when Mao had overstayed. Since the Reformer Deng Xiao Ping only, China has been opening up again without intending to discredit any achievements by the Maoist People‘s Republic of China. The children of the liberation armies‘ generals have now become China‘s senior leaders and want to see their fathers‘ well intended achievements go forward in an originally intended way. Namely to give the people a quality of life allowing to develop culture, qualitative societal progress and global friendly relationships again.

This background may explain why President Xi Jingping speaks of Two Centenaries, namely 1921 – 2021; and  1949 – 2049 divided in the Two contemporary Stages, namely 2020 – 2035 and 2035 – 2050. Whereas in stage one China should become a moderately prosperous society representing the basic accomplishment of the socialist modernization, in the second stage China should succeed in full modernization of its society performing to the benefits of its people and their (foreign) relations.

To master such progress President Xi Jingping defined:

Four Greats: -> Great Struggle;    -> Great Project;    -> Great Cause;    -> Great Dream      &

Four Confidences:   -> in Path;     -> in Theory;          -> in System;        -> in Culture       and outlined

Five Progresses for lifting Agricultural trough Industrial to Eco Civilization:

Material Progress ->  Cultural Progress =>  Ecological Progress  <=  Social Progress    <-  Political Progress

by focusing on the following Six Tasks:

1.   Moderate Growth        (> 5% has to be qualitative and shall avoid middle income trap)

2.   Real Economic Activity (built on Innovation as backbone by financing as Vene vessel)

3.   Championing State owned Enterprises (taking societal role like EU Family Businesses

4.   Ecological Progress       (Human community of common destiny = Eco Civilization)

5.   Belt and Road Initiative (mitigate Country – Industry – Corporate risks shown below)

6.   Significant Progress in achieving a Beautiful China (by shared mass Innovation)

ad 3) State owned enterprises [SOE] are considered:

– the political and material one for the governance of China

– a talent pool broadening the channels for recruitment of political elites

– needing to become bigger, stronger and better (by efficient and decisive governance)

– needing loyal, transparent and responsible management teams

– to belief in Public Ownership Economy as well as in non-Public Ownership Economy

– to follow Market Orientation as well as Government Regulations

– needing to reform into mixed ownership economy to improve global competitiveness

– introducing incentives, free movement of production, competitiveness (survive fittest)

ad 5) Country Risks:    Politics       Public Perception         Economy            Religion

           mitigations:   Free Trade Agreements         Int‘l Financing           less Capital Control

           Industry Risks: Standards |Business Environment |Professionals |Market Environment

            mitigations:   Trade Associations     Themed Investment Funds        Local Knowledge

            Corporate Risks:      Labor        Financial Capacity         Rules & Law         Taxes          Forex

             mitigations:     Soft Capacity Building      Evaluate from different angles (scenarios)

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