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We shall be unable to turn natural advantage
to success unless we make use of local guides.
-The Art of War, Sun Zi

At the Start of its fifth Decade of (re-)Development, where is China Heading?

At the Start of its fifth Decade of (re-)Development, where is China Heading?
January 2020

International Frictions

As much as we would like to think differently, the US-China conflict will unfortunately not be solved by a trade agreement. The worldviews and systems applied in the two countries have such different roots, that it is prudent to assume that the conflict will last for years, if not for the whole decade that is now starting. The announced agreement, however, should have the benefit to yield a modus vivendi and to allow a step by step resolution of the conflict, which will minimize business disruptions. Meanwhile, China’s and the USA’s growth (and by consequence the development of the rest of the world) will unavoidably be negatively affected.

Development of the Chinese domestic market

In order to rely less on debt and investments for growth and, in addition, to avoid relying on the rest of the world, China’s government will continue to push for the development of domestic consumption and innovation. At the same time, consumers are becoming more and more quality conscious, generating fast growing demand for high quality products. This is true both for equipment goods (such as machinery) and consumer goods. As a result, the incredible rise of the middle class and the increasing sophistication of Chinese consumers will continue to provide numerous opportunities for foreign enterprises. In fact and despite the growth slowdown and the numerous headwinds, we see that Swiss companies continue to develop new businesses and to expand in China. cut full size2 Indeed, the market in itself, regardless of the level of its growth, has now become a key opportunity for most international companies. Dealing with China is becoming day by day more complex, but the Swiss and all those who believe in following regulations are certainly best equipped to keep growing in China.

We do wish you a most healthy, happy and prosperous start of this new decade, which will bring us, undoubtedly, its numerous lot of new opportunities!

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