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.