Wednesday, June 23 2021 | ASIA TODAY INTERNATIONAL - Reporting the Business that Matters in Asia
A time for giving...
CHINA needs to cast aside the historical baggage of a nation subjugated by foreign powers and left with an innate sense of needing to protect itself . . .
CHINA’s remarkable transformation over the three decades since it first made tentative moves to rejoin the world has been a marvel to both friends and foe.
It was in July 1986 that Beijing applied to GATT (the General Agreement on Tariffs and Trade), predecessor to the World Trade Organisation, seeking to resume membership of the world’s trading club.
It took the next 15 years for China to negotiate — principally with what were then known as the QUADs (the U.S., EU, Japan and Canada) — the terms for its accession to the WTO.
The period since 2001 has seen China leap from its position as a relatively small global trader to the leading role it has today. China has benefitted hugely from an influx of foreign investment and the opening of its markets to the multilateral trading system.
China has acted as the world’s factory, and, in the process, transformed itself from being a poor country to one with US$3.3 trillion in foreign reserves.
China harvests the fruits of globalisation with great zeal and increasing aplomb. Today, it uses its capital to buy supply security in food, energy and more, while its citizens buy holiday and investment homes around the world.
More is to come.
Blessed with a wealth of business acumen and entrepreneurial spirit, and importantly having the imprimateur and will of a Government with very deep pockets, the Chinese people are poised to deliver greater surprises to the world.
Technology will pave the way forward for the next stage of China’s progress. It will further transform from what we know as China today to another dimension.
Already a global force in digital technologies, China is set to experience huge shifts in revenue and profits as businesses digitise to boost productivity and international competitiveness, according to the McKinsey Global Institute.
The current value of China’s e-commerce transactions is believed to be larger than those of France, Germany, Japan, the UK and the U.S. combined.
One in three of the world’s 262 unicorns is Chinese, commanding 43 per of the global value of these companies, just two pegs down from the U.S., with 45 per cent.
McKinsey says creative destruction is happening globally as the world digitises, but it is likely to happen more quickly and on a relatively larger scale in China, given a combination of inefficiencies in traditional sectors and massive potential for commercialisation.
China is in the top three globally for venture capital investment in key types of digital technology, including virtual reality, autonomous vehicles, 3-D printing, robotics, drones and artificial intelligence.
It has already achieved an annual surplus in digital services of between US$10 billion and US$15 billion over the past five years, while Chinese outbound venture capital totalled US$38 billion between 2014 and 2016 – up from just US$6 billion in 2011-13. China’s spend on venture capital accounts for almost one in every four dollars invested in venture capital around the world.
As Mckinsey sees it, China is already a global leader in the consumer-driven digital economy. The next wave of digital transformation in China is likely to come from broader adoption of digital technologies by businesses in different sectors.
And while China still lags behind the U.S. in the digitalisation of industries, that gap is closing fast.
The question some now ask is whether China will “share” its new technologies with the rest of the world – in the way that the Internet and the smart phone, first developed in the U.S.,
are now available to one and all. Some are uncertain because new Chinese technology is developed for the huge Chinese market in the first instance.
Whether it can be adapted and then adopted by other countries is unclear.
In terms of both social media and e-commerce platforms, the Chinese have, so far, run their own show.
But if, as some believe, the next big breakthrough in technology does come from China, it will be interesting to watch how that technology is shared with the rest of the world —will it have universal application?
There is a niggling concern that what China has developed belongs to China because the word “reciprocity”, it seems, is missing from the Chinese vocabulary.
Many foreigners who have done business with China complain about the lack of reciprocity, whether it is investing in China or buying Chinese assets. They claim there is no level playing field.
Where China gives to poor countries, as in the form of direct overseas investment, the price evidently is high. China seeks to access the resources of these countries, to export Chinese labour, or to strengthen its own strategic position.
If China can put aside its mercantilism and self-interest to truly embrace the spirit of globalisation, it will be seen to have “grown up”, casting aside the historical baggage of a nation subjugated by foreign powers and left with an innate sense of needing to protect itself.
The hope is that, as it becomes more sophisticated and comfortable in its own skin in terms of geopolitics and economic might, China will stand up for the common good of the global community. Not just China for China.
Florence Chong is Editor of ATI Magazine.