CMG Insight #23 – Caixin Summit analysis deck+ webinar / Special Offering CEO Luncheon / Trump 2.0 / Webinar XU Qiyuan / Transcript Webinar YU Miaojie
China Macro Group (CMG)
CMG provides original, fact-based & calibrated China analysis to support strategic decision-making of European business
With the 23rd edition of CMG Insights, we have the confirmation who will be the 47th US President. Donald J. Trump will return to the White House on 20th January 2025, and with him likely again a more volatile US-China relationship.
But before saying more about Trump 2.0., we want to put our focus on the state of China’s economy. As we have done regularly in past years, CMG two weeks ago attended Caixin’s annual flagship event, the Caixin Summit, in Beijing, and to make sense of all the diverse viewpoints we heard there, we – in partnership with Caixin Global – put together a deck summarizing and calibrating the current debate in Beijing regarding the most pressing issues facing China’s economy. You can download the deck below and sign-up for a CMG read-out webinar next Thursday morning 9am CET / 4pm CST to learn about our analysis and raise your questions.
?Further updates and corporate news from CMG in this edition:
As always: Send us your feedback and questions [email protected].?We look forward to hearing from you! Thanks also for forwarding CMG Insight to friends and colleagues who you think could be interested in CMG’s work.
CMG Analysis: Caixin Summit, 8th / 9th November 2024, Beijing
Understanding key debates in Beijing on the most pressing issues facing China’s economy
An analytical digest of what we heard at the recent Caixin Summit held on 8th/ 9th November 2024 in Beijing.
With China’s post-Pandemic recovery a crucial juncture, CMG is making a deliberate effort to make sense of the many and diverse viewpoints we heard at the recent Caixin Summit in Beijing about key economic and reforms issues facing China’s economy, to better ground our analysis and judgment in the real-world complexity of China’s policymaking.
Overall, we heard six key economic and reform issues being at the center of the debate, with different viewpoints shared by academics, SOE representatives, think-tanks, entrepreneurs and businesses, as well as policymakers. We thus use this influential economic conference held in China as our key proxy for gauging the broader debate in Beijing, thereby being both pragmatic and aware of limitations related to sample and speaking context.
CMG has analyzed all viewpoints expressed during the Summit– based on the transcripts of all public sessions made accessible to us by Caixin Global – and aggregated them from a content perspective, further separating their focus on challenges or policy responses. On this basis, we use a matrix to organize all viewpoints we heard during the Summit first by how close they are to the general consensus as heard at the Summit, or not, and – second – by how they relate to current official policy stance, ranging from affirming existing policy to proposing policy refinements or new policy. Finally, in six snapshot analyses, we summarize each of the six issues for easier reference.
Apart from the bucket of minority viewpoints suggesting policy changes, some key general findings suggest a broad affirmation of the current policy trajectory, but insistence on the need to use additional fiscal policy tools to help revive the economy, as well as that there is broad consensus on urgency and approach of the innovation and “total factor productivity”-agenda of Chinese government.
Download our analysis deck here.
Sign-up here to join our digital “read-out webinar” discussing this analysis.
This webinar is taking place coming week Thursday 9am CET / 4pm CST and will talk interested participants through the deck and answer your questions. Our Senior Analyst ZHOU Zheng will lead this discussion from CMG side. Moreover, LI Zengxin, Deputy General Manager of Caixin Global will join at beginning of this webinar to introduce the Caixin Summit.
Special offering for CMG’s Europe-focused networks: nominate your Global CEO or C-level Executives to the Caixin CEO Luncheon at the sidelines of the WEF’s Annual Meeting in Davos
Caixin Media will host its annual CEO Luncheon at?the iconic Grand Hotel Belvédère in Davos, Switzerland on 21st January 2025 from noon till 2pm at the sidelines of the WEF’s Annual Meeting in Davos. The target group of this luncheon invited through CMG are CEOs or C-level Executives from European MNCs, kindly invited to engage with senior guests from China and broader Asia.?
This invitation-only luncheon previously featured guests including Larry Summers (former US Treasury Secretary), Paul Chan (HK Financial Secretary), Yang Yuanqing (Chairman and CEO of Lenovo), Bonnie Chan Yiting (CEO of HKEX), Jin Zhongxia (former DG of the International Department of the PBoC), William Ford (Chairman and CEO of?General Atlantic), and others.?
As one of the most influential Chinese business media groups, Caixin is playing an increasingly prominent role in building the bridge between China and the rest of the world.?For nominations and inquiries, kindly contact Markus Herrmann, [email protected].?
Trump 2.0: Beijing has a variety of levers at its disposal – how will it respond?
The Trump administration 2.0 will be inaugurated on 20th January 2025. What does this mean for US-China relations? Listening to recent statements by Trump and his likely new cabinet, trade policy is expected to be back front and center – and not only, but first and foremost in the US' relationship with China.?
At this point, however, a lot remains unclear. Will Trump follow through and impose the announced tariffs on China and other parts of the world despite the expected inflationary impact this will have on US consumers? So far, he and people like Robert Lighthizer – a candidate for the role of USTR in the new administration – seem bent on making extensive use of this tool to reduce the US trade imbalances and revive domestic manufacturing.?
With China considered the US’ key strategic adversary, what will Beijing prioritize in terms of policymaking to deal with Trump 2.0 strategically? CMG believes this will be centered around 6 'action arenas'.
Zooming in on the consequential US-China relation, Beijing in fact possesses a number of levers to respond, whether or not a trade deal can be struck with Washington. Should the trade war indeed escalate, we see 6 key retaliation types – centered on trade – along which Beijing may respond. To that end, China in recent years has also built up its formal retaliatory toolkit, with tools like the Unreliable Entity List (2020), the Export Control Law (2020), the Anti-Foreign Sanctions Law (2021) or the Tariff Law (2024).?
Past cases of Chinese retaliation indicate that Beijing has indeed repeatedly resorted to trade measures, often responding asymmetrically. The exceptions to this “rule”, however, are the EU and the US, where Beijing has responded more cautiously and measured.?
In Europe understood as a response to the EU’s anti-subsidy investigation and subsequent tariffs on electric vehicles made in China (up to 35.3%), China’s Ministry of Commerce in October this year announced it would impose anti-dumping tariffs between 30.6-39% on liquors, mostly on cognac from France. And in response to various US Section 301 tariffs imposed on Chinese imports under Trump 1.0, China retaliated with tariffs on US imports that broadly matched the value of US tariffs.
To prevent an escalation, however, Beijing could in the coming weeks test the waters with the incoming administration and see whether a deal can be struck. China has a number of "gives" that it could offer to Trump: similar to the Phase One trade deal agreed under Trump 1.0, these would likely again center on purchases of US products to rebalance US-China bilateral trade. Plus, Beijing could try to address US’ worries about its own de-industrialization and offer collaboration in areas like infrastructure, nuclear energy or – a different field – in counter-narcotics. (slide deliberately partly blurred)
European businesses with operations in China can do their homework now and conduct exercises into how these likely geopolitical, economic and domestic policy adjustments – e.g. an escalating US-China tariff war, or new on/-reshoring incentives by China, the US or the EU – impact their China business and their overall sector – possibly going so far as to further localize operations, or to evaluate what “no-regret” moves should be considered to better shield off China operations.?
To stay on top of these fast-paced developments, CMG – besides Executive briefings or strategic support, e.g. with decision-aiding intelligence – can offer its clients tailored monitoring services along four high-level service types that cover overall strategic, sector/market, economic and geopolitical dimensions (slide deliberately partly blurred):
Would you like to learn how CMG can help your company navigate these strategic complexities? Get in touch ([email protected]) and request our monitoring service credentials deck.
2024 "Staying in Dialogue with China" webinar series – closing webinar
Webinar #6: Prof. XU Qiyuan on China's "Domestic Demand System"
Tuesday, 10th December 2024, 9-945am CET / 4-445pm CST
In our sixth webinar of this year’s “Staying in Dialogue with China” series, we look forward to talking to Prof. XU Qiyuan, Deputy Director at the Institute of World Economics and Politics (IWEP) at the Chinese Academy of Social Sciences (CASS), about China’s “Domestic Demand System” as the fourth structural transition as per CMG’s conceptual framework of China’s political economy.?
With all eyes on the Chinese government's attempt to break a deflationary spiral, the topic of a “domestic demand system” could not be more timely, referring to China’s attempt to pivot to more consumption-oriented economic growth, while reducing its reliance on fixed asset investments and the trade surplus – a legacy from Beijing’s export-oriented growth model. China should rely more on domestic demand to drive economic growth, thus, in a state of overall elevated marketization, household consumption should decisively shape supply of services and manufacturing.?
The concept of “domestic demand system” was first prominently mentioned in President Xi’s arguably most important geoeconomic speech delivered in April 2020 at the 7th meeting of the CCP Commission on Economy and Finance, and was subsequently enshrined into the 14th Five-Year-Plan (2021-2025) as part of the “Dual Circulation” strategy. The concept can further be seen as a critical supplement to the “Supply-side Structural Reform (SSSR)”, a broad reform initiative started in 2015 aiming to phase out excessive and outdated capacity and trimming the state sector for higher productivity, address issues of corporate debt and construct new-type infrastructure – all to start dealing with slower trade growth, stagnating total factor productivity (TFP) growth, and the financial consequences of the GFC in 2007/2008 with a rapidly rising leverage ratio.?
Against the backdrop of the Covid pandemic, it remained unclear how much policy emphasis would be placed on the building of “domestic demand system”. In China’s short-term policy goals over the past five years, the “demand side” received primary policy focus only once, during the Central Economic Work Conference (CEWC) in 2022, whereas the three preceding years as well as the 2023 CEWC all consistently prioritized the “supply side”, or the goal of achieving the so-called “modernized industrial system” over the “demand side”.?
Notably, the new reform plan released during the latest Third Plenum also placed “domestic demand system” at a strategically lower position than the supply side. Nonetheless, it should not be ignored that the State Council published a comprehensive blueprint for “Domestic Demand Expansion Strategy” in December 2022, unifying diverse policy areas ranging from trade and public services to digital and urbanization into one overarching framework.?
The bottom-line is that among the six structural transitions, CMG’s assessment concludes that the “domestic demand system” has seen comparatively least progress compared to the 18th Central Committee’s Third Plenum in 2013, as evidenced by the still very low household consumption as share of GDP of about 40% only.?
So, key questions we want to discuss with Prof. XU in this coming webinar include:
This webinar will be moderated by Markus Herrmann Chen, Co-Founder and Managing Director of CMG. Take the opportunity to listen in and ask your questions to Prof. XU.?
This webinar will not be recorded, but a transcript will be published following the webinar.?
When: Tuesday, December 10, 2024, 9-945am CET / 4-445pm CST
Where: Zoom?
Register here
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Dr. XU Qiyuan is Deputy Director at the Institute of World Economics and Politics (IWEP) at the Chinese Academy of Social Sciences (CASS). In the past, Dr. Xu also took up the role of advisor to the international collaboration department in China’s Ministry of Finance. Xu also sits on a working group of Global Macroeconomy in IWEP. This working group issues a quarterly report on the world economy, and he has been responsible for the research on China’s economy and macro policies since 2012. Since 2019, he has headed the research group of China Finance 40 Forum that is China’s currently most influential think tank platform in finance. Xu has published 60 academic papers, hundreds of columns mostly published in leading medias in Chinese but also in Financial Times, Financial World in English.
Review: Staying in Dialogue with China – Webinar #5: Prof. YU Miaojie on “Economic Globalization”
It was a pleasure to host Prof. YU Miaojie, President and University Chair Professor of Liaoning University, and concurrently Liberal-Art Chair Professor of Peking University on 23rd October 2024 in our 5th webinar of this year’s “Staying in Dialogue with China” series on the structural transition of “economic globalization”.?
It was a pleasure to host Prof. YU Miaojie, President and University Chair Professor of Liaoning University, and concurrently Liberal-Art Chair Professor of Peking University on 23rd October 2024 in our 5th webinar of this year’s “Staying in Dialogue with China” series on the structural transition of “economic globalization”.?
A key point he made: “China’s export will – for geopolitical reasons – diversify away from the EU and the US, targeting more Asian countries”.?
Download the complete transcript of the webinar here.
In the webinar, Prof. YU touched on the following topics:
Professor Yu Miaojie specializes in international trade and Chinese economic development. He acts as expert advisor to the UN, Asian Development Bank, Ministry of Finance, Ministry of Commerce, Counselors’ Office of the State Council, and various local governments.?
Revamped CMG Associate program and (Senior-)Analyst role
We have fully revamped our approach to recruiting our future colleagues by 1) defining a three-cycle annual recruiting schedule and 2) adjusting our requirements for Associate candidates and separating our recruiting efforts of Associates from Analysts.?
Check out all information on the career tab of our website (www.chinamacro.ch/career) and apply on time to join one of our three digital recruiting events in 2025, as suits your schedule.?
For your easy reference, please find below the three Digital Recruiting Event dates in 2025:
In parallel, we have adjusted our requirements for the (Senior-) Analyst role with CMG to more clearly delineate from our Associate Program. (Senior-)Analysts must bring multi-year experience relevant for CMG’s business model including demonstrated business interest, understanding and familiarity.?
Thank you for your interest in CMG and we are looking forward to receiving your application.