China continues to dominate discussions about the health of the world economy. Many are concerned about the country’s slowing growth and its ability to manage the difficult transition from a controlled economy dominated by manufacturing to a more open economy with greater reliance on domestic consumption. Some policy decisions last year also scared the market.
While the risks are many and real, they are manageable and well-understood by China’s policy makers. This is not the time to sell China short.
The government is determined to achieve its average 6.5 per cent growth target between now and 2020 and it has the means to do so. We expect increased investment in regional development, support for production of higher value goods, and improvements to infrastructure.
The government also plans to reduce the cost of doing business. And it will buffer the social and economic dislocations that inevitably arise as economies evolve. Recent official figures and our bank’s experience on the ground suggest such measures are taking effect, building the foundations for a more balanced economy.
For many in the west, China is the land of export-oriented smokestacks and assembly lines, but the economy is already rebalancing. The dynamic, innovative services sector makes up more than half the economy and is growing annually at high single digit percentage.
Alibaba has become the world’s biggest retailer by building an ecosystem customised for more than 400m Chinese on-line consumers who increasingly shop on mobile devices. Wanda, China’s largest commercial property company and cinema operator, has built and runs shopping malls in 100 Chinese cities and is growing a financial services business to serve the 30,000 tenants of those malls. TAG: