Asian Financial Forum 2018

Chinese Economy today has the largest number of middle income earners and thrives to further extend that over the next 8 years – meaning all of 14th plus remaining term of 13th 5-year plan horizons. Although China has evolved from the largest factory of the world to the most promising consumer market, it still has the deepest industrial integration. While State Owned Enterprises [SOEs] for consumer goods did very well in turning themselves into market leaders the supply side reform will become key in changing the manufacturing sector to follow the customers, now taken as the most important in China. For that imports will have to become easier and markets held by SOEs opened to private & international investors meaning liberalization. International competitiveness will have to go all across SOEs to SMEs, driven by Quality, Efficiency, Internet plus and made in China2025 objective. Changing to Qualitative Growth however needs a longer term view as it will have to be built on Entrepreneurial Spirit.
Currently China’s Growth is driven by internal consumption (67%) and National Investment (38%). But China is flipping over a new page, leaving old growth models behind. Property investment will go down due to new regulatory price limitations against bubbles in some regions. Public Investment also must be reduced to control debt. And it can now, as e-Commerce having benefited extremely from earlier Infra- structure investment, has been changing the whole game, expected to go on further. In 50 years tourism is estimated to become the biggest industry. Together with healthcare and services for convenience it will potentially out-place Hardware Technology Industry.
China has recently become the 2nd largest but most stable economy in the world. What currently happens, is China’s reboot from an economical reset of focus to Quality, mainly carried by Efficiency. So how to manage an opening economy with growing demand from consumers? How to govern such rapid unprecedented change in a world, so far historically built on economic orders of the US, which is now stepping back from them? Since the US had to start sharing leadership, its politics developed into a contradiction to the financial sector! And in this weakness it is also ambiguous whether we are heading into a Twin peak world or if Common Europe would take its chance to make it a Tripple peak providing potential for a flexible majority interest representation world leadership. In this context by the way China’s invitation for participation in the Belt and Road agenda is still widely underestimated.
The Belt & Road started with “going overseas” via E-Commerce (Alibaba). What had always been underestimated was the missing marketing structures of Chinese manufacturers. So as soon as e-tailing broke that wall for them, they got access to markets not covered by their prior existing international retailors. The Asian Financial Forum estimates that E-commerce can open the so far elsewhere realized marketing margins on China produced consumer goods to manufacturers at a potential of doubling the GDP contribution of those product manufacturers. At first for its domestic and neighboring countries’ consumers reaching out into the Middle East. Today the Belt and Road is already described by 45 routs, 6 cooperation economic corridors and various urbanization projects connecting logistics, medical services, education, etc. In a world of increasing trade barriers from its outsourcers China must grow out of its own historical economy. So the question how China can interact with the other countries became most crucial. From China’s historic trading experience the Road being terrestrial has always been quite vulnerable to target countries’ peace and collaborative intents but requiring investment in the infrastructure of passage to the countries beyond. Therefore also the Maritime Belt concerning rather more developed countries and providing more flexibility making it easier to deal with political crisis has been made part of the agenda.

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