At the Start of its fifth Decade of (re-)Development, where is China Heading?
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Facing slower growth, resurging inflation, rising debt and bankruptcies, increasing state controls, sinicisation of minorities and international frictions, should our enterprises keep seeing China as a business priority?
Before trying to evaluate the economy and its opportunities, it is important to try and understand the reasons why China is behaving the way it does today, after 4 decades of unprecedented and highly successful development emphasizing economic freedoms and social progress. This period has lead to the rise of an extremely dynamic private sector, contributing now about 80% of the employment. It is particularly extraordinary when we remember that, before that, China had practically only state-owned enterprises! To illustrate the incredible distance that China covered over these decades, one cannot avoid looking at economic measures. In 1980, China’s GDP was only 75% of Switzerland’s; today China adds more than the equivalent of the Swiss GDP to its own, every year! Those who travel to China also realize how mobile technology pervades every aspect of life, including paying everything and everyone, having fresh food ordered online and delivered home within 2 hours, ordering taxis or using bikes to rent at every street corner. This embrace of the internet has made life extremely convenient for all Chinese, it also shows that China is now developing its own social and business models. China’s basic research and hard technology may not be at the peak, as Huawei’s and ZTE’s dependence on US components has shown, still China is forging ahead with its own, different socio-economic ecosystems. This came as a surprise to many, particularly to leaders of western societies who were convinced that China’s economic liberation would, as in some other areas of the world, follow a one-way and reasonably straightforward road, leading to its population undertaking ever more responsibilities and freedoms to become more and more prosperous. But we forget two important historic factors when we extrapolate China’s economic and social development.
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