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Article: China has much to celebrate!

 

The Communist Party Congress is an event taking place twice a decade versus the four-year cycle which is operated within the United States. At this Party Congress President Xi Jinping will be elected to his second term and during the event the new top leadership going forward will be elected. It is likely that Xi Jinping’s successor will be identified among the newly elected members. According to tradition, the successor will take charge at the next Party Congress in 2022; the year after the Communist Party’s 100 years anniversary. On the Party Congress you will experience a proud China celebrating themselves.

 

This is more than fair because China indeed have a lot to celebrate and be proud off. It is amazing what China has managed to achieve since their ascendance into the WTO in 2001. China is the largest economic comeback history the World has ever experienced. Today China accounts for no less than 20% of the World production, compared with only 2% in 1991. The development’s impact on China’s reduction of poverty is indescribable.

 

On top of this, China is today the absolute leading nation in areas like mobile communication and Fintech solutions. This being within hardware (smartphones), software (within apps) and within the area of e-payments. As an example, China produces one out of two smartphones produced in the World. The app industry in China has a much broader functionality than we know of in the West and 65% of all smartphone users in China use their telephone as a means of payment, among others payment of electricity-, gas- and water bills. This has led the market for mobile payments in China to become 50 times larger than in the United States, from more or less nothing five years ago.

 

I have previously advocated that we should be careful not to rule out China as a growth adventure which have had its time and a country in which it no longer makes sense to engage in manufacturing. The Chinese Government has been inspired by Germany’s focus on “Industry 4.0” and introduced their own plan named China Manufacturing 2025 (CM2025) with a stated purpose to realize its unused production potential by including digitalization, big data and robot technology in the production value chain. The potential is huge due to the historical lack of robot implementation at the Chinese production sites. With a successful implementation of these technologies, it is likely that China will be able to uphold its growth at a high level to year 2030. Successful digitalization of the production and implementing robot technology will – as a bonus – also result in higher quality and value add, and at the same time become more energy efficient and thus less polluting.

 

China and Denmark are today advocating free trade and globalization as some of the few in the World. Because of the implementation of CM2025 the West should expect intensified competition from China; particularly in areas of large production series. We should welcome and embrace this competition, as the consumers in the World will stand to benefit and it will keep our industry at its toes. Foreign companies should also expect an intensified competition within China, as many manufacturers will come to realize that “nice to have” products will not be sufficient in the long run as they are threatened by Chinese produced alternatives.

 

President Xi at the time of his inauguration in 2012 divided China’s reform process into three periods, all lasting a 30-year cycle. The first period was the establishment of the People’s Republic in 1949, the second with Deng Xiaoping’s opening the country to the World in 1978 and the third beginning with Xi’s own inauguration in 2012, during which China, in the coming period, will re-conquer its rightful place in the World and thus its influence in the World. China should likewise be praised for its involvement and contribution at peacekeeping missions around the World.

 

What could arouse concern is China’s growing self-confidence, which increases the risk for China not adequately taking the rise of nationalism in the West seriously. Thus, China might not sufficiently grasp that the World quite rapidly have moved away from globalization, which both China and Denmark have benefited so much from. The World is changing rapidly. Just look at recent developments, the election of President Trump in the United States, Brexit in the UK, Macron in France having the lowest support at the pole ratings in recent history and the lately success of AfD in the German election.

 

Driving political forces in the United States and Europe show interest in implementing restrictions on what sort of companies and specific strategic technology China should be allowed to buy in the future. This protectionist track should be avoided at all cost, only with exception from cases of strict national security considerations. To help avoid such restrictions China needs to provide equal opportunities for European and Western companies in the rolling out/implementation of e.g. the CM2025 project. Western companies ought to have similar conditions in China as Chinese companies have in e.g. Europe. If not, national forces will ensure that countermeasures by way of screening and other protective measures will be implemented. Much of the responsibility falls back to China. Due to the fact that China have obtained so much from the global international trading system, as we know it today, China should come to realize that they themselves will have to be the largest warrantor for upholding the concept of free trade. The alternative will not be pretty. If the system is misused it will for sure break and this is not in the interest of neither China nor Europe. It ought to be the last thing that China wants, as China, as already mentioned is the country which by hard work and diligence have obtained most advantages from the globalization and the institutional set-up supporting World trade as we know of it today.

       

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Hans Henrik Pontoppidan
Secretary General, DCBF 
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