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2023: Seek certainty amidst uncertainty

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If the past 3 years can be summed up in one word, it would be uncertain. The new crown epidemic has brought too many reversals, accidents, and pains. It has added a huge variable to our already very difficult life, and it has changed almost all our plans and expectations for life and our human society. mode of operation.

History has its regularity and contingency. If the three-year plague of the new crown is an accident of history, then 2023 is a return to the laws of history to find certainty. The most important of these is the certainty of economic life.

From the restrictions on the real estate industry, to the suppression of the Internet and education and training industries, coupled with the frequent apocalyptic closures in the past one or two years, almost all private enterprises have been hit hard. For the first time in 40 years, China’s economic growth of 3.2 percent in 2022 may be at or below the global average, according to the IMF.

The IMF expects that the spread of the new crown epidemic will have an impact on the economy in 2023, but growth will accelerate to 4.4%. The World Bank’s figures are similar, predicting that China’s growth in 2023 will be 4.5%. Most international mainstream economic institutions predict that China’s economy will contract in the first quarter and rebound in the second quarter. In a recent research note, HSBC economists forecast a contraction of 0.5% in the first quarter but overall growth of 5% in 2023.

A very important milestone for China this year is that India’s population will surpass that of China in April and become the most populous country. In addition to population, many people believe that China’s economy has passed its peak. Until recently, many economists believed that with an annual growth rate of 8%, China’s GDP would surpass that of the United States by the end of the century,

But other economists question whether China will eventually overtake the US. In an interview with Bloomberg News in August last year, former U.S. Treasury Secretary and current Harvard University professor Summers believed that China’s aging population and the government’s increasing tendency to intervene in corporate affairs, together with other challenges faced, made him significantly lower expectations for China’s economic growth. He sees similarities between predictions of China’s rise and earlier predictions that Japan or Russia would overtake the United States.

But I think whether China’s economy can surpass the United States in the future is not an important thing in 2023. In 2023, we should be more concerned about whether China’s economy can return to normal. That is to say, whether China’s economic construction-centered and market-oriented certainty in the past 40 years can be re-anchored. This is the crucial question for each of us ordinary people, that is to say, whether we can continue to walk on the broad road of creating unprecedented economic miracles.

We do see some hope for that.

The Central Economic Work Conference on December 15-16 sent a clear signal that the Chinese government is shifting its focus back to promoting economic growth.

According to the “Wall Street Journal” report, for the real estate industry in the credit crisis, state-owned banks are providing a large amount of loans and other credit commitments to domestic real estate developers, with a credit line of 1.2 trillion yuan. These new pledges by state-owned banks, along with a recent expansion of the government-backed bond guarantee scheme, are meant to help developers stay in business and complete projects. These measures will help solve the short-term liquidity pressure on real estate companies, but the bigger challenge is to regain the trust of the Chinese people and home buyers.

Driven by more support from the state for highly indebted industries, Chinese property companies raised a total of 101.8 billion yuan in December, up 33.4 percent year-on-year, according to market researcher CRIC.

In recent weeks, the central government has begun to re-examine its policies on technology and education and training industries, and is preparing to end a long-running investigation of Internet companies. One of those considerations is preparing to relaunch the mobile app of ride-hailing company Didi on domestic app stores. On Saturday, Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, told the media that relevant government departments have concluded investigations into the financial operations of several Internet companies.

Analysts on Wall Street generally predict that the growth of Chinese technology companies will accelerate again in 2023 as the country’s economy is about to reopen, but the growth rate is unlikely to reach the past level, which has seen quarterly revenue growth of 30% to 40%.

According to estimates by Refinitiv, one of the world’s largest providers of financial market data and infrastructure, Alibaba expects revenue to grow by 2% year-on-year in the fourth quarter of 2022, before accelerating to more than 6% in the second quarter of 2023, and reaching 3% in the third quarter. 12%.

Regulators are also starting to re-approve games. On December 28 last year, the State Press and Publication Administration released information on the approval of domestic online games in December. A total of 84 games were approved, which is the largest number of approvals in 2022; Approved after a month.

The liberalization of the epidemic policy and the adjustment of the above-mentioned policies have given people hope for China’s economy, and international investors are full of confidence in China’s economic recovery this year. At the beginning of the new year, the onshore renminbi rose continuously against the US dollar. On Monday, the onshore renminbi reported 1 US dollar to 6.7712 yuan, a surge of 2.6% in five trading days this year. At the same time, foreign capital continued to buy Chinese assets such as Hong Kong stocks, A shares, and Chinese concept stocks on a large scale, bringing strong support.

And just after the unblocking, despite the turbulent epidemic situation, so many Chinese companies have already chartered flights to look for overseas trade opportunities. This kind of strong desire for a better life and the diligence that is willing to make great efforts for it is also rare in the world. The Chinese are the most intelligent and industrious nation in the world. They can grow as long as they are given a little sunshine, and they are willing to struggle as long as they are given a little opportunity. The market economy has mobilized the Chinese people’s intelligence to the greatest extent. In 2023, we need a kind of The certainty that allows the Chinese to continue to work hard.

So what kind of certainty is there in Sino-US relations, which are crucial to the Chinese economy?

The perfect economy of the US “Chinmerica” ​​where China manufactures and the US consumes is breaking apart, and the term win-win is no longer in vogue.

The U.S. manufacturing industry is enjoying a renaissance, and a large number of jobs that were lost are returning on a record scale. A report by the Reshoring Initiative, a nonprofit that previously advocated for industrial reshoring, said a record 350,000 manufacturing jobs would return to the U.S. from overseas in 2022.

In addition to returning home, American companies have begun to gradually transfer their overseas supply chains out of China. In the past, we were familiar with the transfer to Asian countries such as India and Vietnam, but now Mexico has sprung up because of its geographical location closest to the United States.

Early last year, Walmart needed to source $1 million worth of company uniforms — more than 50,000 in a single order — but instead of buying from regular suppliers in China, it opted for family clothing in Mexico, according to The New York Times. Enterprise Pusiluo (Preslow). In 2021, U.S. investors will spend more in Mexico — buying companies and financing projects — than in China, according to an analysis by the McKinsey Global Institute.

The shift to the rest of Asia and Mexico represents a marginal redistribution of global manufacturing capacity over the next few years due to risks of a geopolitical adjustment and deterioration in U.S.-China relations. But China will almost certainly remain the heart of manufacturing.

At the beginning of the new year, two world-class companies announced on almost the same day their completely different attitudes towards the Chinese market, perfectly showing this trend.

U.S. PC giant Dell Technologies plans to stop using Chinese-made semiconductors by 2024 and has urged its suppliers to reduce sourcing of components from China amid concerns over escalating tensions between Beijing and Washington. Dell is also expected to shift about 50 percent of its production out of the world’s second-largest economy by 2025.

On the other hand, Panasonic Holdings plans to invest more than US$375 million in three years to expand production in China, betting on China’s long-term potential after the epidemic. Panasonic’s first Chinese home appliance factory in 19 years will start production in Zhejiang in 2024. The factory will have the capacity to produce microwave ovens, rice cookers and other small appliances worth $290 million a year.

The decoupling of the US and China is becoming a bigger challenge for us, Panasonic CEO Yuki Kusumi told the Financial Times recently. “But the U.S. and China are both major markets that will see steady growth,”

For any enterprise, whether to stay in China in the next few years is a question that will torture the soul.

Glo, a Mississippi startup, makes novelty gadgets like tiny plastic cubes that glow when dropped in water. Not surprisingly, Glo products are made in China. Due to the epidemic, Glo’s freight from China will increase 10 times in 2021. But CEO Hagen Walker told me that in 2022 he is still cooperating with three factories in Ningbo, Dongguan and Shenzhen to order. He said to me, “No way, you can’t buy these low-cost consumer goods made in America anymore.”

Glo is a small company, so what about Apple, the largest corporation in the world?

It is no coincidence that Apple’s rise from near-bankruptcy in the 1990s to become the world’s most valuable company coincided closely with China’s economic rise. It is actually the perfect product of the combination of American technology, Chinese manufacturing and the world market after China’s economic take-off. Even the iPhone’s design is getting more and more Chinese influences.

But now Apple is thinking more about how to speed up the transfer of the industrial chain out of China, especially in India and Vietnam for assembly. Although Apple has a strong desire to decouple from China, the reality is another matter, and the difficulty can be seen from a set of figures. The Vietnamese and Indian markets can only provide tens of thousands of workers—a fraction of Apple’s production scale in China, which already employs more than 3 million manufacturing workers.

So transferring the supply chain out of China is an arduous process that is easier said than done. And that means opportunities for China. If the certainty of focusing on the market and aiming at economic development is recognized by multinational companies again, then the wave of industrial chain transfer that started with the epidemic and the deterioration of Sino-US relations may become slower and slower. Because not only China’s manufacturing base but also China’s market is very attractive to multinational companies.

HSBC Holdings plc bought a 39 percent stake last April from state-owned partner Qianhai Financial Holdings, raising its stake to 90 percent from 51 percent. “The increase in HSBC Qianhai Securities reflects our continued commitment to the fast-growing Chinese market,” David Liao, co-chief executive of HSBC Asia Pacific, said in a statement.

The Chinese government has also released some positive signals as the new year approaches.

The securities regulator said in December last year that for the first time, foreign companies mainly listed in Hong Kong will be eligible to be included in the eight-year-old “Hong Kong Stock Connect”, which means that as long as they meet market capitalization standards and other relevant requirements, these companies will have the opportunity to directly contact Active retail investors in China. It is hoped that this will attract multinational companies to list in Hong Kong.

After all, the tide of economic development is a long-term consensus reached by the vast majority of Chinese people after 40 years. Such historical laws should provide considerable certainty for the future. The cake of domestic and international economic development in the future may be smaller than before, but it is still a colorful and attractive cake, and it still needs to go all out to work hard, bake, and share.

(This article only represents the author’s point of view. Responsible editor email:

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