With the right keys, China is still a most attractive investment option

Is China still investible? This has been a hot topic. Experts all over the world have been expressing all kinds of views, many of which are quite different and even contradictory. For investors and entrepreneurs seriously thinking of doing business in China, this leads to three main puzzles: how to understand China’s economy correctly; how to assess its potential and risks comprehensively; and how to access the Chinese market conveniently. First, how to understand China’s economy correctly. Besides the comments of experts one trusts, three types of official material are a must-read. The first are the five-yearly report to the Communist Party’s national congress and the five-year plan for China’s development, which help one to understand the medium- and long-term policies. The second are the economic plan outlined at the Central Economic Work Conference at the end of each year and the government work report at the beginning of each year, which help one to understand the annual economic priorities, including the growth targets and policies for various sectors. The third are the important speeches made by the president and premier at major events. These three types of materials are important because Chinese government officials at all levels will follow them. Second, how to assess the prospects and risks of China’s economy. Two things need to be pointed out. One, a reading of China’s economy through the lens of classic Western economics may not be sufficient or accurate. The modern economy is highly sophisticated. Global supply and industrial chains are highly differentiated. New trends in the global economy, such as the platform economy, digital economy and green economy, keep emerging. Analysis models of traditional economics developed during the industrialisation era may not apply well to these new economic realities. With China being a supersized economy, each province matches that of a medium-sized country in terms of economic output, and differs greatly in terms of development level and natural endowment. These factors make it harder to analyse China’s economy with classic economic tools. This probably explains why the assessments of China’s economy by Western economists often deviate from the realities. The same happens with the Indian economy. As economies around the world transform from the industrialisation era to the “informatisation” era, new economic theories and frameworks need to be developed to analyse them correctly, particularly for big, diverse economies. Two, China’s economy is unique in some ways. One is its sheer market and population size, which enables better-than-expected economic outcomes and performances. China’s big market makes it possible to develop and leverage its comprehensive industrial chains. Its economic development is further supported by a talent pool from the world’s largest skilled labour force, including over 60 million certified engineers. Once an industrial chain or cluster is formed in a region, it is quite difficult to break. Besides, local economies have every reason to roll out more favourable policies to make competitive industries stay. A virtuous circle where market, talent and government work together is thus created. This is one strength of China’s economy. Another unique characteristic and strength of China’s economic system is the strong government coordination capacity. This has ensured a high degree of stability in Chinese markets and policies over the long term. China’s economy could easily defy the naysayers this year The strong coordination capacity also means China could bridge the development gaps between regions, urban and rural areas, ensuring the vast country and its huge population as a whole move towards modernisation. This, in turn, also helps to prevent the social ills common in modern societies, such as social division and confrontations triggered by developmental imbalance. A strong government also guarantees a rapid roll-out of nationwide infrastructure projects, including 5G base stations and cloud infrastructure. It is also in the best position to lead and promote regional development strategies, such as for the Greater Bay Area, Beijing-Tianjin-Hebei and Yangtze River Delta. Take the “Eastern Data and Western Computing” project for example. The project aims to achieve intensive and low-carbon development in building a nationwide computing network. The western region, with its vast land and abundant solar and wind energy, is an ideal place to power data centres and meet the increasing demand for data computing in the eastern region, which faces rising land and energy constraints. The western region can also significantly increase its revenue by offering high-end services to the eastern region, thus bridging inter-regional gaps. To make this possible, an information superhighway across regions is needed to transmit the voluminous data; interprovincial consultation and coordination is needed to achieve synergy; and favourable policies are needed to incentivise businesses to pitch in. All these require strong national coordination. China’s economy has encountered problems in the past years, some of which are quite prominent. Still, it is growing robustly as a whole and many problems are resolved in the process of development. Its unique features are one major reason for it to survive and thrive. Third, how to enter the Chinese market conveniently. There are many channels. One expressway is to leverage Hong Kong, the “super connector”, and the Greater Bay Area, the “super centre”. Hong Kong has long been an international trade, shipping and financial centre. Over the years, it has built networks of trusted partners and established close links with Singapore and other members of the Association of Southeast Asians. And with the strong support of the central government and the Greater Bay Area as its hinterland, Hong Kong now has further strengths in the areas of hi-tech, industrial chains, talent and market. All these make Hong Kong the expressway to tap the great potential of the Chinese market. Indeed, investment decisions have to be made cautiously. But I have confidence that one will find that China is still a highly investible place. China’s mainland and Hong Kong open their arms to investors and entrepreneurs from around the world. Sun Haiyan is China’s ambassador to Singapore. This piece is based on her keynote address at the Post’s China Conference: Southeast Asia, on March 30 in Singapore

With the right keys, China is still a most attractive investment option

.css-1mniedq{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;}The key is to gain a good understanding of the economy, honestly assess its potential and risks, and seek the best entry points to the market – such as Hong Kong

The key is to gain a good understanding of the economy, honestly assess its potential and risks, and seek the best entry points to the market – such as Hong Kong