At the same time as the China-US Strategic and Economic Dialogue, a seminar was held in Milan with Edward Tse, Booz & Company’s Chairman for Greater China and one of the major experts on the Chinese market. The meeting was an opportunity to discuss the economic context businesses find in China, as well as the Chinese government’s main choices in this phase of serious international gravity. The key to understanding the Chinese system lies in the mixture between initiatives brought on by political authorities – still frequent and pervasive – and stimuli from today’s international and domestic markets that create competitiveness. The business spirit present in China produces a greatly dynamic society, even in the presence of persistent political and administrative constraints. And the government’s approach is inspired by gradual change when it is considered indispensible. This is true in the introduction of modern trade law, openings for joint ventures with foreign companies, restructuring of the banking system and the delicate management of monetary policy. The latter aspect obviously has a significant impact on the others, and it is no accident that it attracts a great deal of international attention. Beijing continues to consider a completely convertible currency as protection in the face of world market instability.
The difficulties for foreign operators are undeniable, but they should be seen against the backdrop of China’s extraordinary potential. China is not only a gigantic market with a rapidly growing middle class and imposing urbanization (with all the implications for sectors such as infrastructures, energy and green technology). It is also a center of innovation with its own impetus that has become a model for other emerging countries and is based on the theory by which a form of “state-run capitalism” can better face economic-financial crises.
Naturally, there are some weak points in the Chinese model. First, there is the risk of excessive domestic diversification and the great challenge of guaranteeing some social services to the entire population. And there is still a wager underway: that of high economic growth on which the fate of the entire political and social system of the People’s Republic probably depends.
Three priority areas can be identified for anyone interested in medium-term investments in China. They are: advanced technology (given the Chinese aim to continue accrued value added); lifestyle (given the growing interest in quality of life and tourism in a society that is evolving rapidly, even in its customs); “green” initiatives (related to energetic efficiency as well as the quality of life and health, particularly given China’s process of mass urbanization).
The discussion underscored some concerns that many Italian operators share regarding the particular conditions of the Chinese market. However, participants also expressed a strong interest in maintaining and expanding the presence of our country-system in all key sectors. In this prospect, the prerequisite for Italy to benefit from the opportunities of these years is an open, not excessively defensive approach, partly in consideration of the great competitive push that comes from the Chinese economy.
