CKGSB Knowledge - China Business and Economy Fall 2020

The world has been fighting the COVID-19 virus for a year now and China is the only major economy to see GDP growth in 2020. This issue of CKGSB Knowledge looks toward the future and considers China’s ever-expanding role in it. China is now a crucial player in the global community, but there are clearly unique elements to the way Beijing views the world and runs its economy. In considering the relationship between China and the world, our cover story, “The Infinity Loop” (page 11), examines what China’s new “Dual Circulation” policy means, what its goals are as well as the possible outcomes. “An Awkward Fit” (page 31) also looks at the prospects of China’s evolving role in the global financial system. As usual, we look at key developments in the Chinese…

Over the past decades, the wired world of tech and business have come to dominate economies around the world, and nowhere more than in China and the United States. Interestingly, the power of these massive, almost monopolistic, tech giants, as well as their role and impact on society, are now finally being reconsidered in both places. The star of private enterprise high-tech in the China world is Jack Ma, who launched China’s most valuable private Chinese company, Alibaba, in 1999. The company and its offshoots dominate e-commerce and digital money in China and have a growing influence in other places around the world, particularly Southeast Asia and Africa. But his latest venture, Ant Financial, hit a problem last November. The company’s initial public offering (IPO) planned for both Hong Kong and…

veteran of more than a decade as a journalist and economist in Beijing, Tom Orlik’s new book shines a light on China’s banks and borrowers, explaining why the system many see as a bubble ready to pop has so far managed to defy the doubters. Q. To what extent is the China system that you describe in your book unique and unprecedented, and what are the characteristics that make it so? A. China’s development model borrows heavily from South Korea, Japan, and other Asian neighbours, which accelerated up the GDP rankings thanks to the combination of engagement with the global economy and determined industrial planning. Despite those similarities, it’s also important to recognise what’s unique about China. An important contrast with Japan and South Korea is China’s enormous size. A home market of 1.3…

The words “giant panda” have taken on a new meaning in the central city of Datong. A patchwork of dark and light solar panels glittering in the sun resembles nothing more than a standard solar farm from the ground. But from above the panel arrangement forms the image of a panda, the perfect representation of China’s bid for energy self-sufficiency. Despite being the world’s biggest coal producer, China has long relied on other countries for its massive energy needs. It imported more than $238 billion-worth of oil in 2019 alone, around 60% of its total oil consumption. With international tensions rising and attitudes about globalization changing, this is one of many dependencies Beijing wants to reduce. What does China’s new Dual Circulation policy mean for international trade and will it be successful? In…

Everything seemed to be moving smoothly for China’s leading dairy producer Mengniu, one of the world’s biggest industry players, in its takeover of Australia’s second-largest milk processor, Lion Dairy and Drinks. Then suddenly, in August 2020, Australian Treasurer Josh Frydenberg told the bidder that the investment would be “contrary to the national interest.” Mengniu had to walk away from the deal worth an estimated $423 million. The Australian government’s decision raised eyebrows as Lion was already foreign owned by Kirin, a Japanese brewery company. The conclusion was that the decision to ban the sale was related to Australia’s growing diplomatic and trade dispute with China. For two decades, China has been one of the world’s biggest M&A players with state firms, private enterprises and individuals buying up assets around the world at…

In a buzzing auction house in the affluent coastal city of Shanghai, the throng of buyers shuffle to their seats. Up at the podium, the auctioneer begins calling out works by celebrated contemporary Chinese artists Shang Yang and Zhou Chunya, but it is the names of Western artists—Marc Chagall, Salvador Dali and Pablo Picasso—that captivate the audience. When the final bids are tallied, the lots from Western greats pull in double those of the Chinese. That 2015 Christie’s international art auction personified a notable change in the tastes of Chinese buyers that the industry is still grappling to understand. In earlier years, the Chinese preferred traditional artworks and antiques, long considered particularly sound investments. But over the previous two decades, both the number and sophistication of buyers has been gradually increasing.…