What can we expect in China in 2019? PRC State Council: “More exports and imports and SME support growth”
What can we expect in China in 2019? This year China-US trade war was one of the big epic in international finance. As Chinese and Americans experts underlined, the narrow short-term GDP impact on China of the tariffs alone is modest, on the order of 0.5 to 0.8 percent of PRC’s GDP. But if tariffs lead to job losses in China, a decline in consumer confidence could be expected.
In 2018, Chinese investment levels into the United States have fallen by more than 70 percent and will likely fall further in 2019. As a result, many Chinese strategic investors are simply turning to smaller amounts of organic investment.
©123rf.China will continue to support its hi-tech sector. Is PRC ready to change “Made in China 2015” project?
In the US start-up space, this means the loss of investment funds from China that offered enhanced access to the China market in return for investment. In some parts of the US start-up world, valuations could fall substantially as Chinese capital withdraws.
So, where might Chinese money flow instead? First step will be MENA area. Wang Qishan’s recent visit to Israel highlighted the importance of Tel Aviv as a source of investable start-up opportunities, from artificial intelligence to agritech.
©123rf. Chinese leadership promised to boost PRC opening to the world.
What about Europe? Beijing will continue to boost Belt and Road Initiative in East Europe while the UK start-up community continues to receive Chinese investment in fintech and healthtech as well.
2018 was the year of “grassroots reconnection” between Japan and China. Experts in Tokyo recently underlined that this tendency will continue next year. Chinese companies continue to explore acquisition targets, from luxury goods to tech, quietly in Japan, plus Chinese tourists will again descend on Japan in enormous numbers, potentially with 30 percent–plus year-on-year increases, to shop, eat, visit remote country inns, and more.
Recently President Xi Jinping said that China will continue its structural reforms next year. Finance and hi-tech two key sector.
Chinese government is highly active to continue its reforms. Most major leadership moves and ministry reorganizations in the Chinese government were completed in the first half of 2018. The annual Central Economic Work Conference recently has decided the priorities for China’s economy in 2019 as the country is to embrace a key year towards building a moderately prosperous society in all respects by 2020.
As reported by People’s Daily, China will continue to implement proactive fiscal policy as well as prudent monetary policy, make pre-emptive adjustments and fine-tune policies at proper time, and ensure stable aggregate demand. Beijing also promised more tax cuts and a relatively substantial increase in the issuance of special-purpose local government bonds.
More exports and imports: The meeting called for greater efforts to increase imports and exports, push for a more diversified export market, and cut institutional costs of importing procedures.
China will accelerate the development of the service industry and technological innovation , while improving consumption and boosting spending power. Chinese leadership will support private sector too. As PM Li Keqiang stressed “our intention is to support the growth of the private sector, especially SMEs, helps enhance the internal dynamism for economic growth,” Li said.
©Unsplash. Dubai, UAE. Chinese investment will flow in other strategic market such as MENA area.
“To boost the private sector of the economy and micro and small businesses, it is crucial to create a level-playing field, especially in property protection and market access, for these businesses to compete in a law-based, neutral environment.”
The private sector in China, which is mainly composed of SMEs accounting for 90 percent of all businesses, now contributes more than 50 percent of tax revenues, over 60 percent of GDP, more than 70 percent of technological innovations and over 80 percent of urban employment. The private businesses have become a key driving force for economic growth and social progress.
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