CMG Insight #24 – First-ever ‘Made in China’ definition/ Caixin Summit 2024: webinar recording+slide deck/ Yu Miaojie transcript/ Season's Greetings
China Macro Group (CMG)
CMG provides original, fact-based & calibrated China analysis to support strategic decision-making of European business
This is the last CMG Insight in 2024.?
Thanks for reading us throughout the year and sharing your feedbacks!?
While we know that there are many newsletters related to China targeting audiences in Europe, it is our goal at CMG to be consistent with our effort of building a community interested in reading us actively. We will thus continue tracking China’s top-level policymaking also into 2025 through our publications and webinars for you, as well as share analysis and viewpoints on topics we think are key for European business’ strategic decision-making on China.?
Key content items in today’s edition:?
?
As always: Send us your feedback and questions to?[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.
First-ever draft definition of what “Made in China” means
Since the Third Plenum 2024, we at CMG observe that China vows treating state, private and foreign capital more equally based on its shift to a (geoeconomic) supply capacity logic since the 14th Five-Year-Plan, thus putting less emphasis on ideological differences between capital forms in its strategic self-interest.?
The Ministry of Finance’s (MoF) new draft regulation published last week on Thursday shall be seen as a notable step for this too. For the first time, it proposes a (draft) legal definition of what “Made in China” means in public procurement, in response to the lack of a clear definition as well as past discriminations incurred against some FIEs in public procurement.
Below are the key points from our preliminary analysis:
CMG offers extensive experience in helping European business to devise China strategies, localization and local partnership concepts, as well as M&A strategies.
Caixin Summit 2024: CMG's analytical digest
Understanding key debates in Beijing on the most pressing issues facing China’s economy
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 CMG Analysis slide deck here.?
You can re-watch our Read-Out Webinar held on 5th December 2024 featuring Caixin Deputy GM Li Zengxin alongside our CMG colleagues Zhou Zheng and Michael Settelen as speakers.
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
Register here for the webinar, starting today at 9 am CET / 4 pm 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.?
领英推荐
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?
?
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”.?
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 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.?
CMG Season's Greetings
2024 was eventful for us: besides our client work as the core of our activities, we managed to publish the “Riskful Thinking” report in partnership with EUCCC, ran the 3rd edition of our webinar series “Staying in dialogue with China” (with the last webinar taking place today), we worked in-depth on what the 20th Central Committee’s Third Plenum held in July means strategically for FIEs and European business, broadened our partner network both in China and in Europe, plus started revamping some of our internal processes at CMG such as our approach to recruiting Associates and (Senior-)Analysts.?
In the name of the entire CMG team, we would like to wish you a good transition into 2025, a festive Xmas season and best health. We will continue striving to act as trusted service provider to assist you in navigating the complexities and opportunities of the Chinese market through strategic advice and tailored solutions. We look forward to building new client relationships, further expanding our cooperations with partners and engaging with stakeholders and media interested in our work also in the new year.
?We appreciate your continued interest in our work and value your support.?
Merry Christmas and an early happy New Year,?
Your CMG team