Impressions from China

The week before last, I posted some bits and pieces of my impressions from a trip to Shanghai and Hong Kong. Now comes the full version.

It has four parts: 1) Mostly negative news ahead 2) Modern Chinese Communism 3) Swift renminbi internationalisation and 4) Doing business in China.

The key points are:

• The economy is slowing, house prices are falling, market-based construction has stalled and local government debt is a key concern.
• We expect mostly negative news in the coming months as the government prioritises social stability over short-term growth.
• Yet the real challenges are in the medium term – in modernising China. That’s why politics are important at the moment. The upcoming leadership change has prompted a struggle for power that will be crucial for the modernisation of China.
• The renminbi has been stable so far this year because of the ongoing slowdown, but full internationalisation of the People’s currency could be done in five years.
• Doing business in China is a must for most international companies, but challenges are numerous. We got a lot of good advice and contacts, not least from Nordea Shanghai.

I’d be happy to elaborate more on these impressions.

Anders

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