The best China News & Insight from the web in one place.


Pictorial: Chinese Street Food, Chuan`r 串儿

Pictorial: Chinese Street Food, Chuan`r 串儿

The Variety and depth of Chinese street food is incredible, however for this pictorial we have chosen one of our favorites: Chuan`r 串。

All Images © Patricia Calvo













The Globalization of Chinese banking

The Globalization of Chinese banking

With increasing integration into the global economy. There is good reason to believe that the Chinese economy has reached a point where its status as the biggest export country will also soon become the biggest in outbound direct investment.



This new model requires not only Chinese enterprises to expand their global businesses, but also China's banking sector to accelerate its internationalisation. One particularly striking feature of the multipolar world over the past decade has been the rapid appearance of emerging market multinationals, in particular from the BRICS. These multinationals benefited from globalisation, and, in turn, have played increasingly significant roles in driving globalisation.



Global business and its conventions have changed in many ways, capital flows are no longer one way - from developed nations to the developing economies. Now both have become capital exporters. In contrast to the weakening of consumption in advanced countries, there is huge from new consumers emerging in developing markets.



As part of its ‘Go Abroad’ policy the Chinese renminbi has become the second most widely used currency in trade and finance, and ranked fourth in payments, sixth in international inter-bank loans as well as new bond issues, seventh in foreign exchange transactions and eighth in terms of outstanding international bonds. These figures show the main driving force for Chinese banks to follow their customers abroad.



Meanwhile, with the renminbi's ongoing internationalisation, there have been a new choices for Chinese firms and banks to freely choose their settlement and investment currency, making it easier for them to lower the cost of finance and conversion by raising funds from different onshore and offshore renminbi markets. And so it is unimaginable that the renminbi can become a global reserve currency without support from Chinese international banks.



Admittedly, Chinese financial service providers lag well behind other enterprises going abroad. There is room for further improvement in providing enterprises with more cross-border products and services.



Historically, the years before the global financial crisis saw a rapid growth in the cross-border activities of banks. According to the Bank for International Settlements, the average year-on-year growth rate for cross-border bank credit to non-banks from 2000 to 2007 was 15.2 percent. European banks were in the vanguard, with around one-third of their assets outside their home markets. However with the homeward migration of European banks opportunities have opened up.



Whilst Chinese banks may be facing slowing growth in profitability in the domestic market as financial reforms and the slowing economic growth begin to bite. To some extent, developing their international business can help them diversify income streams and disperse risks.



Choosing regions of growth is vital to the success of banks' internationalisation. With Chinese trade and investment with the rest of the world becoming increasingly diverse, Chinese banks must further expand their global network so that they can have a larger coverage of overseas businesses: banks are giving greater importance to delivering financial services in Asia, Africa, the Middle East and Latin America. Organic growth within the chosen region will be a fundamental way of developing Chinese global banks, though it may take time to achieve this goal.



In the early stage of internationalisation, Chinese banks are placing a strong emphasis on corporate banking and cross-border services, rather than retail banking. There is a huge potential in corporate banking in growth areas such as international settlement and cross-border payment, which bring fee-based income. Trade finance, cross-border cash pool management and bank loans have all played important roles in facilitating world trade, investment, manufacture and innovation.



Risk management capabilities are vital for any bank's survival during its journey to internationalisation. Since global businesses may encounter more challenges than domestic ones, Chinese banks need to revitalise their risk management processes in order to ensure that their capital, liquidity, credit and national risks are all controlled at a level aligned with the bank's global strategy.



While the Chinese Big Five banks are now on the list of the World Top 10 Banks by market capitalisation, there is still a long way to go to make them truly international. Whilst Chinese banks will continue to pair with Chinese business expanding overseas this will naturally lead to the globalisation of the RMB and an increase of RMB reserves held by foreign nations.



A Tale of Two Economies

A Tale of Two Economies

By Andy Mok for China Brain.


For China’s economy, 2016 is both the best of times and the worst of times. To carry on with the Dickensian analogy, many in China bask in a balmy spring of hope while others endure a punishing winter of despair.



At the national level, as the table below shows, China is doing well compared to its peers. While the size of China’s economy is comparable to those of the developed countries, its growth rate remains a multiple of theirs. Also, because China’s GDP methodology relies on direct reporting by large enterprises but only a sampling of SMEs, the smaller (and fastest growing ones) are likely to be under-represented. As such, actual GDP growth is higher than reported.



Meanwhile, despite India’s growth rate being comparable to that of China’s, it lags far behind in both nominal and per capita GDP terms with the kind of political and other structural impediments that make it unlikely to close this gap in the near term.



More importantly, the rebalancing of China’s economy is well underway with services recording a real increase of 8%, which is above overall GDP growth, and now accounting for 50% of total output. Solid retail sales growth of 10.6% also points to the growing importance of consumption and positive long-term changes in the composition of GDP. 



  China Euro Area US Japan India
Population (million) 1,375 338 322 127 1,254
GDP, nominal ($ billion) 10,355 13,410 17,419 4,601 2,067
GDP YoY 6.7% 1.6% 2.0% 0.7% 7.3%
Inflation rate 2.3% 0.0% 0.9% 0.3% 4.8%
Unemployment rate 4.1% 10.3% 5.0% 3.3% 4.9%


This is all well and good from a macro perspective. But the headline GDP figure also masks both the strength and optimism in China’s new economy while also perhaps understating the severity of the structural challenges facing China’s old economy. Jim McGregor, author of One Billion Customers, has referred to China as both the world’s biggest startup and the world’s biggest turnaround. The startup is booming while the turnaround is struggling.



The new economy is led by the post 90s generation: Brash and optimistic, well-educated, service-based and mostly centered on the coastal cities of China. Meanwhile, the old economy is traditional and conservative, older, blue collar and manufacturing-oriented, slower to adapt to new global realities and mostly based in the Tier 2+ industrial cities of Northeastern and Northwestern China.



As shown in the table below, the economic disparities are striking (and, absent government intervention), likely to grow even larger.



  Beijing China Shanxi Gansu
Population (million) 21.56 1,375 36.48 25.91
GDP, nominal ($ billion) $369.60 $10,355.00 $205.60 $109.06
GDP per capita, USD $17,143 $7,925 $5,636 $4,209
GDP per capita vs Beijing 1.00 0.46 0.33 0.25


The new economy is firing on all cylinders. Investment capital is abundant with traditional VC funds like GGV having recently raised $1B+ new funds while corporate titans like BAT (Baidu, Alibaba, Tencent) continue to invest ever larger sums in startups and acquisitions both inside and outside of China to bolster their competitive positions. According to a recently released survey by SPD Silicon Valley Bank 85% of Chinese startups surveyed expect business conditions in 2016 to be better than that of last year, which was higher than the 64 percent in the US and 58 percent in the UK.



The explosion in e-commerce is one cause for this optimism. According to eMarketer, China’s shoppers spent $672 billion online in 2015 with $1.21 trillion forecast for 2017. While growth rates are anticipated to fall from 42% in 2015 to 30% in 2018, the opportunities are enormous in both absolute GMV (gross merchandise value) and percentage growth terms. It’s also worth mentioning that online sales in China accounted for 16% of all retail sales in 2015 and are expected to rise to 30% in 2018.



The further mainstream adoption and globalization of augmented reality/virtual reality, drones and robotics will also bring rapid and large benefits to Chinese entrepreneurs and their investors, both domestic and foreign.



Inland, things are bleak. Not only are key economic indicators generally below national averages, but former pillar industries undergirding the proletarian ideal such as steel, cement and mining are in secular decline. Furthermore, because both labor and capital goods are not as fully fungible as microeconomic theory describes, systemic redeployment of these factors of production is doubtful.



The good news is that the central government has both the financial and intellectual horsepower to address these problems. Besides one-time ex gratia payments to laid off workers, it would not be surprising to see cutting edge policy responses such as an unconditional basic income as part of an integrated set of policy responses to ameliorate the structural dichotomy between China’s new and old economies.



So, while China’s two economies face very different prospects, the country is governed and united by a strong single-party system that has the will and capacity to address the challenges of the old economy. While past performance doesn’t predict future performance, that is certainly the way to bet. Given the success of China’s leadership in navigating past development crises, perhaps this is just one more victory on the road to the rejuvenation of the Chinese nation.




Andy Mok currently runs Red Pagoda Resources, a Beijing-based professional services firm that helps startups in China secure money, key talent and media attention to accelerate their growth and success. He holds an MBA from the Wharton School and an MA in China Studies from the Johns Hopkins School for Advanced International Studies. His research is currently focused on One Belt One Road-related investment opportunities.

China`s land connectivity: thinking...

China`s land connectivity: thinking big

Focused on spreading growth and development to China’s less-developed areas by linking north-western and north-eastern Chinese regions to Central Europe, South and West Asian countries, China`s 21st Century Silk Road Economic belt is gaining traction.



Volumes of container cargo travelling between China and Europe by rail are growing as operators increase frequencies and state organisations along the route lend their weight to the development of new services. Two-way services from Asia’s largest railway hub in the city of Chengdu (China home to more than 260 Fortune 500 companies) in southwest China’s Sichuan province to Lodz in Poland have been increased from twice weekly to five times per week. The overland route appeals in particular to electronics and automotive industry manufacturers because the value lost on goods such as computer components and engines during the longer sea journey is relatively high.



The Chengdu-Europe Express Railway Service, which started in April 2013, carries IT products, automobile parts, and clothes from China to Europe, and food and beverages in the other direction. German-owned DHL offers temperature-controlled container services on the route.



Other landbridge services are also expanding. Trans Eurasia Logistics (TEL), a joint venture between Germany’s national rail company, Deutsche Bahn, and Russian Railways, launched a new regular weekly service between Wuhan in central China’s Hubei province and Hamburg earlier this year.



TEL operates one of the largest and most famous landbridge services between China and Europe. The ‘Yuxinou’ service is an 800 m-long container train that travels between Chongqing in southwestern China and the German port city of Duisburg three times a week and five times in peak season.



Rail services to Europe are now also offered at several other Chinese cities, including Zhengzhou and Changsha in central China, and Shenyang and Harbin in the northeast.



As the world’s top exporting nation, China has an interest in simplifying its transport access to Europe, its leading market. Diversification away from sea transport through the creation of more land-based routes, especially high-speed train links is reducing average transport times by several working days. Initial activities have be geared towards building basic infrastructure, a sector where China is well-equipped to provide engineering skills, construction experience, machinery and equipment as well as materials such as cement and steel in which it has excess capacity. EU-China trade is likely to get an important boost from the expected reduction in transport time and costs while EU exporters and investors will gain access to new growth markets in inland China and Central Asia.



Environmental & Economic issues are also at the fore where the carbon footprint of rail transport is typically about one-thirtieth that of air freight, whilst delivery times are about half of that required by sea freight.



Increased EU-China connectivity is increasing bilateral trade, investments and creating new business opportunities for European, Central Asian and Chinese enterprises as well as boosting employment, growth and development.



Chinese growth trends to note

Chinese growth trends to note

139.2 million outbound tourists, Chinas hottest export



Consumer demand is growing so fast that China just can’t contain it. Burgeoning consumer demand and an increasingly globally minded populace saw China became the largest global source of outbound tourists in 2015. 120 million Chinese travelled out of China last year, spending a whopping $229 billion overseas and charting a 19.5% increase y-o-y on the 109 million outbound tourists in 2014.



This growth is set to continue growing. Total tourists and spending are estimated to grow 16% and 21% y-o-y respectively in 2016 & 2017, which basically adds up to another year of 139.2 million projected outbound Chinese travelers!



The spending power of China’s internationally mobile HNWIs, business travelers, and middle-class is having such an impact on travel markets that it’s dominating business class air travel. The Global Business Travel Association Foundation estimates that business class spending by Chinese travelers will increase to $322 billion in 2016 and rise to $420 billion by 2019, overtaking the US market as the largest source of business travel bookings.




China’s silver screens worth US$8.2 billion in 2016



Western film companies are increasingly eager to cash in on China’s movie market and, let’s face it, they have 8.2 billion reasons to do so – that’s the amount of revenue (in US dollars) that Citigroup research expects will be spent in mainland box offices in 2016.



That 28% y-o-y increase means China is closing in on the US – the world’s largest film market, which is expected to see approximately US$11 billion of box office revenue in 2016.




With this huge potential market in mind, Western movie companies have been offering more parts to Chinese actors and actresses, and featuring mainland locations prominently in their latest releases. However Chinese companies are also funneling investment into film studios, with firms such as Dalian Wanda and Hony Capital particularly active. Dalian Wanda, helmed by China’s richest man Wang Jianlin, has recently acquired a major stake in Legendary Entertainment, the studio company that brought us Jurassic World, The Dark Knight, and the Hangover.



Overseas education remains a key driver for investor demand



China looks set to retain its place as the world’s largest source of international students. Competition for top-end positions in China is as fierce as ever, and the allure of a Western education abroad remains strong. An estimated 460,000 mainlanders studied overseas in 2014 alone, up 11% y-o-y compared with 2013.



The Chinese student market is so important that it is being regarded as ‘priority number one’ by Times Higher Education Rankings, with universities bending over backwards to market their courses in China and expand the range of courses on offer to Chinese students. As such, many governments, including the UK, US, Canada, and South Korea, have moved mountains to make visa processing simpler and more accessible for the thousands of potential Chinese students looking overseas.



With policies such as these, and a strong demand outlook, extra support is being provided to property investment demand, since Chinese parents often prefer setting their children up with their own homes while studying abroad. 



Financial sector reforms will open up capital floodgates



As more Chinese companies and citizens look outwards for business and investment opportunities, China’s financial system will be moving to adapt to meet their needs. Further reforms to open up China’s financial system to the outside world are expected in 2016.



Measures such as expanding the Hong Kong-Shanghai Stock Connect, permitting non-residents to issue financial products on domestic markets, and giving foreign investors easier access to China’s capital markets will all feature prominently, as Chinese authorities look to promote full convertibility of the RMB with foreign currencies within the next five year plan.



Simply put, removing controls on capital outflows and allowing investors to move their money in and out of China whenever, wherever they want.



Outbound property investment to soar 50% y-o-y



Chinese companies are slated to ramp up their overseas investments over the next 12 months, and total investment will likely exceed the US$104 billion recorded up to the end of November 2015.



2015 has seen a marked policy shift, with numerous measures implemented, such as an expansion of QDII quotas and other changes to free the wheels of outbound investment, and this is only going to expand under the newly-announced 13th Five Year Plan. Coupled with the financial sector reforms, plus increasing demand from business and individuals for overseas property investments, it’s likely to be another bumper year of outbound investment.



Colliers International estimates China’s 2015 total outbound investment in property alone totalled US$29 billion, and will increase by 50% y-o-y in 2016.


Chinese investment in key global cities


China to be closer than ever, with more routes set to open



The Chinese diaspora is set to grow. As China’s populace becomes increasingly internationally-minded and dispersed, airline operators are providing more connections.



Major airlines – including China Airlines, China Southern Airlines, United Airlines, Singapore Airlines, AirAsia, and Hainan Airlines – are setting up new routes to ferry China’s business and leisure travelers to increasingly diverse locations. It’s this trend that has seen air traffic doubling at major airports in China like Shanghai’s Pudong Airport, and also is also witnessing rapid growth at emerging hubs, such as Kunming. An important emerging trend to note is that new routes are not only linking up with major gateways, such as London and New York, but also with second- and third-tier cities in Europe and North America, such as Budapest, Birmingham, and Boston.



This clearly illustrates Chinese investors’ widening horizons as they become tuned into investment opportunities away from more traditional investment hubs. 



The beautiful game to boom in China



Almost by presidential decree, football is about to become big business in China. President Xi Jinping is an avowed football fan, and away from the dry statements about five year plans, top-level initiatives are being drawn up to boost the development of the game in the mainland.



Government support, plus the prospect of the growth of soccer and the marketing revenue and TV viewers associated with the sport in China, has already sparked huge investments in football clubs:

Alibaba’s Jack Ma famously invested US$192 million in Guangzhou Evergrande, which recently made the finals of the World Club Championship, and major automaker SAIC is about to invest RMB 1.5 billion in Shanghai SIPG Football Club, too.

Football fever is driving Chinese investors overseas too – Dalian Wanda scooped up 20% of Atletico Madrid, whilst China Railway bought a stake in Inter Milan.



Demographic policy changes to alter real estate demand



China reached a demographic turning point in 2015, when it became clear that the % share of young people in the population started to drop, while the % of old people started to increase.



Concerned about a dwindling workforce, the Chinese government released a spate of policies recently, including the stunning abolishment of the one-child policy, as the country promotes a new, more laissez-faire approach to family planning. The acknowledgement of the demographic problem and the roll-back on one of the government’s main policies is a major change in China and one that’s likely to feature at the forefront of investor’s minds, particularly when it comes to property investments.



Real estate developers like China Vanke have long been targeting China’s growing market of retirees for years, and marketing campaigns are now increasingly playing on the new policy rule on extra children. This turnabout will see more Chinese couples thinking in larger dimensions for living space to support their future families. This shift in mentality, combined with overseas property investment being more accessible than ever, will also likely generate a wave of couples and retirees who will be thinking more seriously about moving overseas, which may expand the range of investible properties buyers’ sights.



Cyber Insurance in China explained.

Cyber Insurance in China explained.

By Simon Gilbert for China Brain



The increased frequency and severity of cyber crime in several of Asia's tiger economies has dominated headlines in recent months. Statistics from the International Data Corporatation (IDC) indicate that the impact of cybercrime includes the impact of hundreds of millions of people having their personal information stolen. In 2014, more than 20 million people in China were affected.



The annual cost to the global economy from cybercrime is more than $400 billion. Notably, cyber crime losses from the four largest economies in the world (US, China, Japan and Germany) reached $200 billion in 2014, according to IDC.



Whilst the Chinese insurance framework is not as advanced as those in developed markets, it is moving in the right direction and the pace of change is high to adapt to international norms. The challenge for insurers and reinsurers in China is the speed at which the regulatory framework is developing.






There are only two types of companies: those that have been hacked and those that will be.  Even that is merging into one category: those that have been hacked and will be again. Cyber attacks are coming thick and fast and becoming almost an inevitability for business.   It is essential that Chinese businesses proactively manage their cyber risks. 



Chinese businesses in different industries will be feeling particularly vulnerable given the increasing realiance on computer networks and connectivity of data. Recent major cyber attacks in the US and EU serve as a strong reminder as to the importance of regularly reviewing cyber security arrangements.  The directors of a business must ensure they understand the most recent threats and are suitably prepared in the event of an attack.






Typically, the cyber insurance industry breaks an event such as TalkTalk into three parts: Event Management, Financial Loss and Liability.



Event Management involves the internal and external expenses of managing the response to a cyber event.  Cyber insurers vary in the extent of cover provided in Event Management, but in general they recognise that providing access to third party cyber security experts can mitigate the consequences of a catastrophic event. 



This is sometimes spearheaded by a cyber response coach, an industry expert responsible for advising a business on how to handle and manage a cyber event.  Typically this will start with an investigation by third parties to establish the extent of the issue.  If card data is compromised then insurers can indemnify the costs arising from a specialist Forensic Investigator.  Consultation on how to manage legal and regulatory issues will also be covered as well as a crisis communication strategy.  Establishing a call centre to field queries and providing credit monitoring are the last elements of cover.



Financial Loss takes into account the increased operational costs and reduction in profits as a result of the attack. This is known as non-physical damage business interruption, and is typically excluded from property insurance. Should any fines and penalties be issued by regulators and industry associations (for the loss of sensitive card payment data), then cyber insurers will cover this with the proviso that these are insurable by law.  Costs in managing a cyber-extortion situation — and the ransom itself — can also be covered.



Liability tends to impact some months later. Affected individuals or businesses may bring claims or written demands for failing to protect their information.  They may seek compensation for financial losses from hacking, or damages from identity theft. In cases where customers are claiming from multiple jurisdictions, cyber insurers can contribute towards defence costs and any resulting damages from multi-jurisdictional claims. 






Event Management

Financial Loss


Incident response consultation

Loss of net profits

Privacy defence costs and damages

IT forensics (including PFI costs)

Increased costs of working

Failure to notify defence costs and damages

IT professional services

Reputational loss

Hack or virus defence costs and damages

Legal & regulatory consultation

Regulatory fines & penalties

Defamation defence costs and damages

Notification management

PCI Awards

IP defence costs and damages

Crisis communications





Elmore research has found many Chinese Businesses are running a great deal of cyber risk on their balance sheets.  By effecting suitable cyber risk management, such as a robust cyber security framework, including penetration testing and effective threat detection through multi-layer monitoring, as well as suitable testing of incident response plans many cyber attacks can be stemmed from an early stage.  An incident response plan, which considers not just business continuity and disaster recovery, but also easy to implement steps and pre-contracted responders, can make the difference between a disastrous impact to reputation and a positive outcome for the entity in question.



Written by Simon Gilbert, Managing Director, Elmore Insurance Brokers Limited, Elmore Insurance Brokers Limited are a specialist international insurance and reinsurance broker, connecting it`s clients to innovative and competitive capacity.


Don`t underestimate China: Government...

Don`t underestimate China: Government support will allow increased market share.

The first days of 2016 showed that China hasn’t escaped its 2015 woes. On January 4, new data showed that manufacturing activity slowed for the tenth consecutive month in December, and the ensuing sell-off in the stock market forced Chinese officials to halt trading mid-day. Global markets sank, and another bout of volatility on January 7 forced Chinese officials had to halt trading once again. But all the recent talk of China’s troubles has obscured the fact that the country’s companies still pose a formidable competitive threat to many Western multinationals.



The first concern for multinationals is that after a long period of overinvestment, Chinese manufacturers have been slashing prices. Capital investment still makes up a disproportionately large share of Chinese GDP – 44 percent, higher than in Japan (36 percent) or South Korea (38 percent) when those countries were building industrial capacity in the 1970s and early 1990s, respectively. All that investment has created enormous excess capacity in multiple sectors – 94.5 percent of Chinese steel production is produced below cost, for example. That means Western steelmakers will have to weather downward pressure on prices from Chinese firms that are willing to incur losses to move product.



China’s National Development and Reform Commission estimates that $6.8 trillion worth of projects – equivalent to 70 percent of China’s GDP – are making “highly ineffective” returns. Net profit margins, long lower than in the developed world, currently stand at just 2.5 percent, compared to 9.6 percent in the U.S., 6.4 percent in the U.K., 5.8 percent in Germany, and 5.1 percent in Japan.



Cheap, readily available capital has helped sustain investment levels and should continue doing so, despite corporations’ thin profit margins. Chinese banks offer favorable financing to state-owned and formerly state-owned enterprises, bankroll unprofitable projects, and roll over non-performing loans rather than force firms into default. Banks fund these subsidies to borrowers by paying depositors very little interest – 1.75 percent in a country growing some 7 percent a year. They also lend a relatively small percentage of their deposits. The loan-to-deposit ratio in China is just 67 percent. Credit Suisse analysts believe Chinese banks will continue rolling over non-performing loans until the loan-to-deposit rate reaches 100 percent, at which point the central bank could simply print money to prop up loans.



Chinese officials rarely intervene aggressively to reduce excess capacity by forcing state-owned enterprises to slow production or allowing more companies to go bankrupt. Instead, they step in to help them when they run into trouble, because they’re loath to stir up unrest or jeopardize economic growth. “We think that China…is operating a policy of employment maximization at the expense of profit maximization,” Credit Suisse’s equities analysts wrote in their 2016 outlook. Instead, companies have been trying to export their excess production, slashing prices to lure buyers. In December, China’s producer price index fell 5.9 percent from the previous year.



The competitive threat goes beyond prices, as Chinese companies are increasingly producing high-quality goods. Chinese automakers, for one, are quickly closing the quality gap with the West. (See chart) Domestic companies have learned quickly from foreign partners, many of which were forced to form joint ventures to do business in China. Sometimes, officials require multinationals to develop some technology in China or allow Chinese firms to own or have exclusive license to intellectual property. Not all partnerships are official – or consensual – either. China has very weak enforcement mechanisms for intellectual property rights, despite official pledges to crack down on IP theft.



Evidence suggests that the quality of Chinese production will keep improving. China has more than doubled spending on research and development from 0.6 percent of GDP 10 years ago to 2 percent. Chinese innovators apply for 45 percent more patents a year than those in the U.S., though fewer applications are successful. China produces 15 times more college graduates a year than it did in the 1990s, and many have the kinds of skills that can be put to good use in the technical, industrial sectors that China has flagged as strategically important. Out of 7.5 million Chinese graduates in 2015 (compared to 3.3 million in the U.S.), 1.3 million received degrees in science and engineering, compared to 500,000 in the U.S.



In addition, officials have indicated that they will directly subsidize companies in strategic industries. In its most recent five-year plan, the government prioritized creating “national champions” – companies that can become global leaders – in 10 industries, including information technology, robotics, and aerospace equipment. Domestic robotics companies, for example, are expected to take significant market share from foreign firms over the next decade. Such government support will allow companies to rise faster up the value chain and continue taking market share.



Official policies already give domestic companies preferential treatment in China, including high barriers to entry in certain industries. Google, Twitter, and YouTube are blocked, for example, allowing Baidu, Sina Weibo, and Youku to thrive without foreign rivals. The Ministry of Commerce has also been criticized for antitrust rulings that appear designed to benefit Chinese companies rather than prevent monopolies. Many of its most important firms are quickly catching up to those in the West in terms of quality, and the government has no intention of letting major manufacturers fail or forcing them to make dramatic cuts in production to deal with an excess supply problem. Quite the contrary, officials are doing a great deal to push Chinese firms to global prominence. Investors in vulnerable Western companies shouldn’t discount the idea that they will succeed.


Source: Credit Suisse

Pictorial: New China, Harbin Opera House

Pictorial: New China, Harbin Opera House

The Opera House, located in the Northern Chinese city of Harbin and was designed in response to the force and spirit of the northern city’s untamed wilderness and frigid climate. The sinuous opera house is the focal point of the Cultural Island, occupying a building area of approximately 850,000 square feet of the site’s 444 acres total area. It features a grand theater that can host over 1,600 patrons.

















Source: MAD Architects

FOCAC- helping Africa break it`s three...

FOCAC- helping Africa break it`s three development bottlenecks.

The recent Forum on China-Africa Cooperation (FOCAC) in Johannesburg has provided a new direction for cooperation. Ballooning trade figures show the reason: when the forum was first established in 2000, the trade volume between China and Africa stood at 10 billion U.S. dollars. Now China has become the continent's largest trading partner, with the Chinese Ministry of Commerce expecting trade to reach 300 billion dollars at the end of 2015.



Cooperation with China is helping Africa break it`s three development bottlenecks of poor infrastructure, shortage of technical graduates and inadequate funding, accelerating its industrialization and agricultural modernization. The summit has provided strengthened consensus between the world's largest developing country and the continent with the biggest number of developing and underdeveloped countries.



Chinese President Xi Jinping announced that his country will roll out 10 major plans to boost cooperation with Africa in the coming three years.



Covering the areas of industrialization, agricultural modernization, infrastructure, financial services, green development, trade and investment facilitation, poverty reduction, public welfare, public health, people-to-people exchanges, and peace and security.



To ensure a smooth implementation of the initiatives, Xi announced, China will offer 60 billion U.S. dollars of funding support including: 5 billion dollars of free aid and interest-free loans, 35 billion dollars of preferential loans and export credit on more favorable terms, 5 billion dollars of additional capital for the China-Africa Development Fund and a Special Loan for the Development of African SMEs, and a China-Africa production capacity cooperation fund with the initial capital of 10 billion dollars.



  • China will establish a number of regional vocational education centers and several capacity-building colleges for Africa, train 200,000 technicians for African countries, and provide the continent with 40,000 training opportunities in China. Furthermore, China will offer African students 2,000 education opportunities with degrees or diplomas and 30,000 government scholarships. Additionally China will also invite 200 African scholars to visit China and train 1,000 media professionals from Africa.


  • On poverty reduction, President Xi said China will launch 200 "Happy Life" projects and special programs focusing on women and children and cancel outstanding debts in the form of bilateral governmental zero-interest loans borrowed by the relevant least developed African countries that mature at the end of 2015.


  • In order to help Africa accelerate agricultural modernization, China will carry out agricultural development projects in 100 African villages to raise rural living standards, send 30 teams of agricultural experts to Africa, and establish new cooperation mechanisms between Chinese and African agricultural research institutes.


  • On security cooperation, Xi announced that China will provide a total of 60 million U.S. dollars in free aid to the African Union (AU) to support the building and operations of the African Standby Force and the African Capacity for the Immediate Response to Crisis Force.


The Chinese government has also finalised a deal with the Djibouti to build its first international military base, granting China land rights for ten years. Whilst international critics have have focused on the threat of China’s military expansion in the region. The new base, reflects China’s long-term economic goals in Africa more than its current military objectives: as Chinese economic interests expand in Africa it is likely that their military presence will grow as well.  The base will serve a number of different functions: as a logistics hub for naval operations to support Chinese anti-piracy operations, as a staging point for operations similar to the deployment in South Sudan, and a means for ensuring that Chinese infrastructure investments remain secure.



It has become increasing apparent that Western FDI models have not been working in large tracts of Africa. South African President Jacob Zuma said at the summit "Western countries had been in Africa for centuries to rob Africa's resources. They should be admitting what they have done. Some (Western countries) are rich because of the resources they took from Africa. They never thought of helping Africa to develop". Still only accounting for less than 4% of the continents FDI, Chinese investment is equally distributed between good and poor governance countries in the Continent. China`s philosophy to “respect each other's choice of development path and not impose our own will on others” must be given an opportunity to work.



However this is not pure philanthropy. China is using African infrastructure projects to keep its construction industry busy: which has emerged over the years as one China’s most important exports. Constituting roughly one quarter of China’s $10 trillion economy it is slowing alarmingly on the domestic front. Chinese companies have achieved unprecedented penetration of the African construction sector and this trend now shows no signs of slowing. Infrastructure construction in Africa has now become an end in itself.


A 3x3 model for China-Latin America...

A 3x3 model for China-Latin America production capacity cooperation.

Each year route 163, in the Brazilian State of Mato Gross, becomes one of the busiest roads in South American during February and March, as it links soybeans, the country's most important agricultural export commodity, to their biggest market - China.



Numerous big trucks, fully loaded with soybeans, run thousands of kilometers from Route 163 to the ports along the Atlantic Ocean. The soybeans will be shipped to China, 20,000 kilometers away, and then processed into tofu, soy milk and soybean oil. As Brazil's largest soybean-producing area, this region exports 90 percent of its soybeans to China. Local farmers don't know much about China, but they know that China is their biggest buyer



These links between China and Brazil mirror the growing relations between the two peoples, which have been nurtured and consolidated by the strong growth of the agricultural trades between the two nations. During the last decade, the Sino-Brazil agricultural trade has increased six fold.



According to Brazil's Ministry of Development, Industry and Foreign Trade, in 2014, soybeans remained its biggest agricultural export product, with 45.69 million tons in volume and 23.27 billion U.S. dollars in value. Of this total, 33.17 million tons were shipped to China and this number is expected to reach 46 million in 2015. China surpassed the European Union (EU) in 2013 as the biggest market for Brazil's agricultural exports.



Sino-Brazil trade is just a part of the wider Sino-Latin America agricultural cooperation, as China has also made huge progress in agricultural collaborations with other countries like Argentina, Chile, and Peru over the past decade: Sino-Latin American agricultural trade increased from 5.28 billion U.S. dollars in 2003 to 35.33 billion U.S. dollars in 2013, with an annual growth rate of 21 percent.



Latin America has become a crucial source of agricultural products for China, currently making up 19 percent of China's total agricultural imports. To date, China has signed memorandums on agriculture cooperation with 16 Latin American countries, and formed joint committees or working teams with 12 of them. However there now needs to be an evolution in the relationship.



Since the start of the year a fund of 50 million U.S. dollars for Sino-Latin American agricultural cooperation had begun to finance joint projects. Chinatex has begun to provide financial services to Brazilian farmers and is also considering expanding into fertilizers, pesticides and machinery financing. COFCO, has established a strategic cooperation relationship with Nieddera (by purchasing a 51% stake in the Dutch company) and entered the Latin American market with the latter's logistics and warehouse networks in Brazil, Argentina and Uruguay.



Against the backdrop of falling commodities prices, Chinese Premier Li Keqiang has proposed a "3x3" model for China-Latin America production capacity cooperation: the first "3" refers to cooperation in building three arteries for Latin America in the fields of logistics, power and information; the second "3" refers to sound interaction among businesses, society and the government; the third "3" refers to the expansion of the three financing channels of funds, credit and insurance.


China increasingly provides a source of financing and export markets without pressures to adhere to the practices of transparency and open markets principals to Latin America. It is also filling a vacuum left by decreasing interest from US companies in the region.


Does India need to be a Superpower at...

Does India need to be a Superpower at all? An economic comparison of China & India.

There’s no reason why India shouldn’t achieve double-digit annual growth rates and join China as an Asian Superpower.  Whilst India has the resources and the population to become an Economic Superpower they have some serious internal problems that will hinder them becoming a global superpower in the near future. India continues to struggle with poverty, sexism, internal bureaucracy, corruption and regional power struggles. And so perhaps the question needs to be "Does India need to be a Superpower at all?”, whilst it is still dealing with its numerous domestic issues.



However for the scope of this article we will only consider in what economic areas could India catch up to China in the next few years? The following chart breaks it down using data from the latest Global Competitiveness Report.



1. Market size

As it currently stands, India is already a superpower when it comes to internal demand. According to the Global Competitiveness Report, India has the third largest market size – behind China and the US, but ahead of other regional economic powers such as Germany, Japan and Brazil.



But India does have some catching up to do if it wants to surpass China and the US. Both countries have a GDP, measured according to purchasing power parity, of about $18 trillion. India’s, at $7.4 trillion, is still much smaller.



That said, India’s growth rates will almost certainly surpass China’s this year. With an expected growth of 7.5% this year, India is, for the first time, leading the World Bank’s growth chart of major economies.



2. Financial market development

India and China are also close contenders when it comes to their financial market development, coming in at 51st and 54th place respectively in the Global Competitiveness Report rankings.



Both countries have been making great progress in recent years in the availability of venture capital. For example, both China and India have doubled their share in global venture capital in recent years: China jumped from an average of 9% before 2014, to 18% in 2014; India progressed from 3% to 6% in the same period of time.



Both India and China have also seen their stock market capitalization increase dramatically in the last decade (source: World Bank). India’s stock market tripled in size from 2002 to 2012, China’s almost quintupled, and has more than doubled in the last three years.



In June, total Chinese stock market capitalization stood at some $10 trillion, making the Chinese stock markets the second largest in the world, behind only the US. And it overtook India, historically one of the hottest stock markets in the emerging world, with its market cap to GDP ratio.



But as recent news reports have shown, there’s been volatility in the Chinese stock market, with the SSE Composite Index in Shanghai losing almost 40% since June. Meanwhile, India’s star index in Mumbai, has been more stable over the same period.



3. Health, education and work

In other key competitiveness rankings, such as health, education and the labour market, India falls far behind China. In fact, in many areas, it even falls near the bottom of global rankings.



In health and primary education, for example, India comes in at 98th of 144 economies, whereas China sits in 46th place. In higher education, India stands at 93rd, with China ahead in 65th. And in terms of labour market efficiency, India does not even make it into the top 100: it stands at 112th out of 144 measured economies; China finishes 37th.



This performance shows that merely surpassing China in economic growth won’t make India a superpower; it must also ensure its growth is inclusive.



While income distribution and GDP growth indicators in India and China are neck and neck, most of the other numbers suggest China is doing a much better job of taking care of its population of more than 1 billion people. More of China’s populace is getting educated, more Chinese citizens are covered by healthcare and the country has a much larger middle class.



In India large numbers of people do not have access to the basic necessities of life. There are almost half-a-billion people living in poverty: most of them are homeless, disease-stricken and in stuck in vicious circle of poverty. Thousands of people die due to the lack of basic nutrition. Life expectancy at birth is very low and infant mortality is high. Crimes are on the rise: murders, rapes, financial cons, human trafficking etc. Corruption is at all time high. Millions of Indians are still illiterate and the education system that is in place is not really effective. Thus results in large amount of unemployment.




Whilst there has been a lot of progress in the recent years there is still long way to go for India. Economic and military might is not going to solve its domestic problems. Though these factors are important in asserting Indians growing global position, it`s focus must remain firmly on human development issues

The psychology behind social media in...

The psychology behind social media in China: Just why is it so popular?

The collective nature of Chinese culture: Chinese people tend to make decisions collectively, and spend a great deal of time talking to each other. Consequently, recommendations play a critical role in their decision making process. A recent survey stated that 66% of Chinese consumers rely on recommendations; a figure far higher than other countries’.



Freedom of speech: many believe that freedom of speech is a key motivator, the opportunity of expressing oneself generally is a major step forward in Chinese culture. Often individuals do not have many opportunities to make their voices heard. With the equal opportunity provided by social media, anybody can make a statement and even become an overnight sensation. Increased mobile social media tools and devices also give users the flexibility to check, communicate and interact with one another at any time and in anywhere in China, or the world.


Immediate connection: by comparison with traditional media channels, social media enables a vast amount of first-hand information to be shared immediately with no time and geographic limitations. For China this symbolises an evolution of communication methods from one-way broadcast, to a two-way dialogue, now to group discussions.


The popularity of voice messaging: typing in English on a small mobile device can be a nuisance; the process of writing in Chinese on a phone is even more complicated. Not only do apps like WeChat enable the user to combine many methods to interact with one another, but also the user experience has also significantly improved. With many Chinese people travelling between one city and another and international jetsetters roaming around the world; this particular method is having an amazing effect on people’s lives.


However, whilst the Chinese social media scene is vastly different to that in the West, the ingredients for winning business are not so far apart. Similar to the West, social media influences consumers’ decision-making journeys at each and every stage and the basic rules for engaging with them are similar. This is because ultimately the key questions for all marketers remain the same worldwide: where and how can you find your target audience? What are the best ways to engage with the audience and convert them to sales? And how do you measure the effect of your marketing efforts, especially through social media? To help demystify how companies market themselves and their products through social media in China, let’s take a look at the Chinese social media landscape.


The popular social media platforms and tools enjoyed in the West such as Facebook, Twitter, YouTube and Google are not available in China. Instead, a range of local equivalents have taken their place: Sina Weibo, Renren, Kaixin, WeChat, Youku/Tudou. Momo and (a Chinese search engine). According to McKinsey’s China’s Social-Media Boom report, active social media users in China are mainly divided into four groups: social enthusiasts, researchers, readers and opinionated users. Therefore, companies will need to investigate and decide on the right channel for their research or message delivery before proceeding.



Using social media Companies are able to create a buzz before the arrival of their new product and pave the way for a successful launch. With the interactivity of social media, companies can learn from the feedback received from real customers or conduct market research to ensure that new products meet the demands of their customers. One recent success story is that of Volkswagen. Their 2010 marketing campaign started with a core brand proposition. Instead of “making cars for the people”, Volkswagen launched a campaign called “build the cars with the people, for the people”, called “the people’s car project”.


They stimulated and participated in millions of conversations on relevant social networks, listening to what potential customers had to say. They then challenged the local community to come up with ideas focusing on car designs and functions. The participants were given online design tools to create ideas, supplemented with videos, pictures or words if the ideas were too complex to convey. Then the ideas were shared again via social media for further discussion, with engagement incentivised by badges, points and test driving experiences. As a result, they received 50,000 ideas and 450,000 votes on unique and interesting ideas. Their fan base reached 2.9 million. The national campaign of their new models of cars also involves these very ideas. It is unsurprising that these clips were watched by more than 3 million people, creating 19 million views and clicks. With such a dedicated online following, 173,000 people made visits to their promotional events, generating 700 articles of PR. Clearly their ROI would have been significant.


Online and offline marketing activities must now be integrated and complementary to one another to ensure effective marketing outcomes. Perceiving Sina Weibo, Renren, Youku and Wechat, literally, as the equivalent of western platforms such as YouTube, Facebook etc., or applying the same strategies simply wouldn’t work. Overlaying what worked in the West is not necessarily a recipe for success in China.”


With the unstoppable economic momentum in China and the fact that social media is spreading at an explosive pace, it is vitally important for companies to gain a good understanding of how social media works and how they might work for their objectives in China.


Pictorial: Chinese Propaganda Posters...

Pictorial: Chinese Propaganda Posters 1949-2008

Propaganda posters are not only graphically powerful and aesthetically mesmerizing, they also offer an important window into Chinese culture. They represent the history of China from the Chinese government's perspective from 1949 onwards, and show us what the government wanted people to understand. Via these posters we gain an insight and understanding of what the Chinese people have been through and where they are today.



Carry the revolution through to the end.                                                      America out of Veitnam



Defend our Motherland and our Hometown


Long live great Marxism-Leninism-Mao Zedong Thought



Foster a correct spirit, resist the evil spirit, resist corruption, never get involved with it. Anti-American Empire to aim Japan.


Long live the brother friendship of China and Soviet Union.


Long live the friendship between the peoples and the armies of China and the Soviet Union.



Vaccinate everyone, to crush the germ warfare of American imperialism!


Under the red flag of Mao Zedong’s thought, pointing the way to advancement.



With the help of the Soviet Union, we will do our best to realize the modernisation of motherland. Work like the Daqing oilfield workers, run businesses like Daqing oilfield.


Work hard to make the country strong, transform heaven and earth.



Only socialism can save China, only socialism can develop China. The return of Hong Kong, One Country - Two Systems.


Carry out family planning, implement the basic national policy.


Not a government poster but of the style. Sui Feifei, Adidas Olympics poster.


I speak for socialist core values.


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