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Summary

Following its first economic contraction since Mao Zedong held office, China has set precedent as the first major economy to return to growth. While the road to recovery has been riddled with bumps indicative of lopsided development, Q3 results, paired with well-targeted policy support, are painting a promising outlook for China’s development into Q4 and beyond.

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As the novel coronavirus emerged, mandatory government-enforced quarantine measures resulted in the closures of factories, shops, and corporations alike, and consumers curtailed spending to prepare for hard times. Ever since, both developing and advanced economies have been colored red by recession characterized by widespread layoffs and plunging stock markets. …


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Summary

To achieve its goal of carbon neutrality by 2060, China needs to ditch coal-fired electric power plants for renewable alternatives. However, doing so will require dismantling an antiquated system of incentives that are in place for local officials and power producers. Whether Beijing can summon the political will to overcome powerful vested interests opposed to these changes will be an important indicator of China’s capacity for meaningful reform.

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On New Year’s Eve 1879, the modest town of Menlo Park, New Jersey, welcomed visitors to bathe in the unfamiliar light of Thomas Edison’s latest invention — the incandescent lightbulb. In the days preceding Edison’s grand unveiling, The New York Herald had published a full-page article dedicated to the newfangled contraption responsible for producing the “bright, beautiful light, like the mellow sunset of an Italian autumn,” that would take the world by storm. While the light bulbs themselves emitted no smoke nor foul odor, the commercialization of electricity spawned the construction of coal-fired power plants, which culminated in the environmental impact the world is now grappling to contain. …


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Summary

Navigating the Chinese market had been challenging for international luxury fashion brands even before the pandemic, but shifting consumer trends in the world’s largest luxury goods market now threatens the bottom line for major brands worldwide. To remain competitive, luxury brands must identify the challenges within the market and restructure their China strategies around the culturally-charged consumer market.

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As the pockets of China’s upper class deepen and the size of its middle class grows, so does the world’s largest luxury goods market. In 2019, Chinese consumers accounted for 90% of industry growth in the global personal luxury goods market, leading growth models to project Chinese consumers to account for nearly 50% of all luxury goods by 2025. For now, however, prolonged social distancing and mandatory quarantine measures due to the pandemic have sent shockwaves through the cash-strapped global luxury fashion industry. …


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Summary

China’s rapid economic development and rising household incomes have enabled a broader consumer base to invest in a healthy lifestyle by means of vitamins and dietary supplements. While domestic brands compete via localized advertisements and low-price leadership, foreign brands still reign king in terms of luxury, quality, and prestige.

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Healthy living has always played an important role in Chinese society. Whether partaking in taiqi or evening walks, Chinese culture has long emphasized a balanced lifestyle. As the Chinese middle class has expanded to approximately 350 million people, more consumers have been empowered to further invest in their bodies and wellbeing. …


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Summary

Over the last decade, Beijing has spent billions of dollars developing AI technologies to become a global leader in autonomous vehicles. If domestic tech giants can lower the marginal cost of AVs, offer a safe and secure form of autonomous transportation, and secure full-scale adoption within the world’s largest consumer market, China will revolutionize the automotive industry and earn trillions in revenues.

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The recent market entrance of electric vehicles (EVs) from leading US and China-based firms, such as Tesla and BYD, have challenged the dominance of traditional gas-powered cars and ushered in the future of on-car intelligence features that control throttle, brakes, and steering. However, these vehicles still require human intervention to operate safely and cannot anticipate or avoid potential accidents due to the limits of their computing platforms and smart road technologies. Leading Chinese technology firms Baidu and Didi Chuxing are looking to overcome these technological hurdles and create true autonomous vehicles which rely on high-powered sensors, AI accelerators, and smart road infrastructure to alert motorists of traffic accidents and provide real-time road information within milliseconds. …


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Summary

China’s leaders are meeting in October to finalize proposals for the country’s fourteenth Five-Year Plan (2021–2025). As tensions with the US intensify and economic growth slows, Beijing is under pressure to produce a five-year plan that delivers its “Made in China 2025” ambitions on time and is likely to turn to increased state intervention in strategic sectors of the economy as a central tenet of the upcoming five-year plan.

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Having more than doubled its GDP and GDP per capita since 2010 as well as sharply reduced extreme poverty domestically, China can reasonably claim to be a “moderately prosperous society,” reaching the first of its two centenary goals. Sights have now been set on achieving “national rejuvenation,” its second centenary goal, by 2049. Although the exact implications of “national rejuvenation” remain undefined, the term often refers to the restoration of China’s political and economic significance on the world stage. Innovation-driven development remains a cornerstone of “national rejuvenation,” and Beijing established benchmarks in the 13th Five-Year Plan (2016–2020) for measuring China’s progress in next-generation IT, robotics, high-end manufacturing, and a myriad of other high-tech industries. …


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Summary

China built its economic engine on the back of its strong manufacturing capabilities. However, 2020 has presented unique challenges for its producers as the nation contends with global trade tensions amid the pandemic fallout. While China’s manufacturing industry still may have a bright future ahead, Beijing and manufacturers will need to navigate the pitfalls on their road to recovery.

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As we near the end of 2020, the worldwide pandemic has taken its toll and exposed the weaknesses of numerous systems around the globe. In the beginning, China took center stage as the world watched the first signs of the COVID-19 outbreak appear, forcing workers to be sent home during the Chinese New Year holiday. …


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Summary

As a global initiative unprecedented in scope, the “One Belt, One Road” initiative often gets a negative reputation. News pundits accuse Beijing of using OBOR as a means of forcing unsustainable levels of debt onto weaker partner countries to seize the precious loan collateral. In this piece, we examine OBOR projects in Kenya and Sri Lanka to determine whether Beijing is engaging in debt trap diplomacy.

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Critics of the “One Belt, One Road” initiative tend to conflate China’s lending practices, asset seizure, and debt distress in a way that makes China out to be the villain of the OBOR story. But, in reality, the devil lies in the details. China’s lending practices are often not predatory in nature; instead, most cases show debt forgiveness accompanied by additional lending as opposed to asset seizures. Still, while Beijing’s original intention may not be to bend its partners to its will, the viability of various projects is questionable to say the least. Many projects along the Belt and the Road are riddled with corruption, poor logistics, and bad financial management. In this article, we will look at two particular OBOR development projects, namely Kenya’s Standard Gauge Railway and the Hambantota port in Sri Lanka, and unravel the true cost of funding these projects. …


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Summary

Since Deng Xiaoping’s 1979 Reform and Opening Up Policy began, Western brands have faced headwinds entering the Chinese market. Some have succeeded, but there have been many more failures. We’ll take a longer, historically informed view to think about what separates the winners and losers of Western brands trying to make it in the Middle Kingdom.

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As technological advances are made in the smartphone and telecommunication industries, companies and countries both have recognized the growing importance of semiconductor chips. These tiny electronic devices, smaller than a postage stamp, act as the data-processing brain for a range of products from smartphones to computers. …


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Summary

Since Deng Xiaoping’s 1979 Reform and Opening Up Policy began, Western brands have faced headwinds entering the Chinese market. Some have succeeded, but there have been many more failures. We’ll take a longer, historically informed view to think about what separates the winners and losers of Western brands trying to make it in the Middle Kingdom.

Written by TCG contributor, Lee Moore.

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Most fashion companies look to the runway as the jumping-off point for next season’s fashion, but one company stands out as one of the most spectacular crashes in the history of Western clothiers in China. In late 2015, the luxury brand Dolce and Gabbana featured what it claimed was a salute to the Chinese tourist but what many Chinese critics panned as a mildly racist caricature. This fashionista faux-pas began a multi-year long series of missteps that led to charges of racism against the brand. …

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The China Guys

We’re a team of China watchers dedicated to empowering your business through accurate and insightful China Analysis.

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