Economy

Despite US efforts to reduce reliance on China and decouple from it, the process will not be easy, given China’s enormous economic influence. Even with countries such as Vietnam trying to take China’s place as the “world’s factory”, their capacity is limited. However, this does not mean that China’s position is assured, as other countries are noticing China’s penchant for using its economic might as a bargaining chip.

From media companies to hotels and football clubs, the Chinese have gone on a shopping spree in the Czech Republic over the past few years. Hong Kong commentator Chip Tsao notes that the Czech Republic was the first European country to fall in love with China, allowing the latter to acquire large stakes in Czech entities. But now, it seems that the love affair is not so rosy any more. The recent visit of Senate Speaker Miloš Vystrčil to Taiwan is just one chink in the relationship’s armour.

Chinese President Xi Jinping has recently emphasised the concept of “domestic circulation”, or focusing on domestic markets. But while this might prompt concern that China’s economy may be shut off from the rest of the world, given current circumstances, this is unlikely. What China needs to guard against though, says Zaobao associate editor Han Yong Hong, is the groupthink generated by a closed loop of ideas.

Beijing has pledged financing, materials, technology and manpower to build railroads, hydropower stations and other infrastructure projects in Southeast Asian countries under the BRI. But China continues to face enormous challenges getting projects off the ground in countries that need the investment most. US academic Murray Hiebert examines why.

Media commentator Cai Enze frowns on the beggar-thy-neighbour approach of improving one’s business at a rival’s expense. In his view, big names in China’s internet market — Baidu, Alibaba, Tencent, and JD.com (known as BATJ) — should practise more openness and cooperation rather than rivalry and mutual blocks.

“Little sisters” — young women urbanites between 20-40 who have high spending power and little financial commitments — are the new darling demographic for those targeting China’s domestic market. In fact, the 2020 market size of the “little sisters economy” in China is expected to reach five trillion RMB. In keeping their buy-in, integrating e-commerce with social apps is key.

As the coronavirus continues to affect supply chains worldwide, especially with China being a key hub, Japan is taking steps to diversity its sources and be less reliant on China. However, contrary to previous speculations, Japanese academic Shin Kawashima does not think that the Japanese government is attempting to decouple from China, in the way that the decoupling of advanced industries is being carried out in the US.

The West has been setting up new rules and regulations targeting China's economic system, which they regard as a non-market economy that could undermine the proper functioning of international trade. These rules and regulations are formulated through international organisations, multilateral and bilateral trade agreements, and even as unilateral domestic laws. However, Chinese academic Zhu Ying says China is not buckling under pressure as its market economy is a mere means for China’s economic development, and not the end goal of its economic system.

With Covid-19 uncertainty and downturns pummelling its export-dependent economy, China’s leaders are trying to steer companies towards the domestic market instead. This may seem like a case of putting old wine in a new bottle, as China has tried this route before. Significant challenges are proving yet again that achieving export sales domestically is no mean feat. Can export-driven companies brave the storm while they reinvent themselves and recover?