Book contents
- Frontmatter
- Contents
- The Contributors
- Foreword
- Opening Remarks by Wang Gungwu
- 1 An Overview of ASEAN-China Relations
- 2 Securing a Win-Win Partnership for ASEAN and China
- 3 China's Peaceful Development and Relations with its East Asian Neighbours
- 4 Strengthening Cooperation in the ASEAN Regional Forum: An ASEAN View
- 5 Strengthening ASEAN-China Cooperation in the ASEAN Regional Forum
- 6 ASEAN+3: The Roles of ASEAN and China
- 7 Ways Towards East Asian FTA: The Significant Roles of ASEAN and China
- 8 Japan and the United States in ASEAN-China Relations
- 9 U.S.-ASEAN, Japan-ASEAN Relations and Their Impacts on China
- 10 India's Approach to ASEAN and Its Regional Implications
- 11 The Dragon, the Bull and the Ricestalks: The Roles of China and India in Southeast Asia
- 12 Evolving Security Environment in Southeast Asia: An ASEAN Assessment
- 13 Evolving Security Environment in Southeast Asia: A Chinese Assessment
- 14 China-ASEAN Maritime Security Cooperation: Situation and Proposals
- 15 ASEAN-China Maritime Security Cooperation
- 16 ASEAN-China FTA: Opportunities, Modalities and Prospects
- 17 Building ASEAN-China FTA: Opportunities, Modalities and Prospects
- 18 China's Business Environment: A Macro Economic Perspective
- 19 Business Environment and Opportunities in Shanghai
- 20 Yunnan's Greater Mekong Sub-Region Strategy
- 21 ASEAN-China Cooperation for Greater Mekong Sub-Region Development
- 22 South China Sea: Turning Suspicion into Mutual Understanding and Cooperation
- 23 The South China Sea Disputes after the 2002 Declaration: Beyond Confidence-Building
- 24 China and Ethnic Chinese in ASEAN: Post-Cold War Development
- Index
18 - China's Business Environment: A Macro Economic Perspective
Published online by Cambridge University Press: 18 November 2017
- Frontmatter
- Contents
- The Contributors
- Foreword
- Opening Remarks by Wang Gungwu
- 1 An Overview of ASEAN-China Relations
- 2 Securing a Win-Win Partnership for ASEAN and China
- 3 China's Peaceful Development and Relations with its East Asian Neighbours
- 4 Strengthening Cooperation in the ASEAN Regional Forum: An ASEAN View
- 5 Strengthening ASEAN-China Cooperation in the ASEAN Regional Forum
- 6 ASEAN+3: The Roles of ASEAN and China
- 7 Ways Towards East Asian FTA: The Significant Roles of ASEAN and China
- 8 Japan and the United States in ASEAN-China Relations
- 9 U.S.-ASEAN, Japan-ASEAN Relations and Their Impacts on China
- 10 India's Approach to ASEAN and Its Regional Implications
- 11 The Dragon, the Bull and the Ricestalks: The Roles of China and India in Southeast Asia
- 12 Evolving Security Environment in Southeast Asia: An ASEAN Assessment
- 13 Evolving Security Environment in Southeast Asia: A Chinese Assessment
- 14 China-ASEAN Maritime Security Cooperation: Situation and Proposals
- 15 ASEAN-China Maritime Security Cooperation
- 16 ASEAN-China FTA: Opportunities, Modalities and Prospects
- 17 Building ASEAN-China FTA: Opportunities, Modalities and Prospects
- 18 China's Business Environment: A Macro Economic Perspective
- 19 Business Environment and Opportunities in Shanghai
- 20 Yunnan's Greater Mekong Sub-Region Strategy
- 21 ASEAN-China Cooperation for Greater Mekong Sub-Region Development
- 22 South China Sea: Turning Suspicion into Mutual Understanding and Cooperation
- 23 The South China Sea Disputes after the 2002 Declaration: Beyond Confidence-Building
- 24 China and Ethnic Chinese in ASEAN: Post-Cold War Development
- Index
Summary
A macro perspective on China's business environment is important because business executives and investors need to understand what is driving China's growth in terms of both cyclical and structural factors, so that they can plan and manage with better market insights that are anchored in a broader and longer-term perspective. Accordingly, this chapter seeks to answer three key questions, covering both the short and the long term, which could help develop such insights. These questions are:
(i) What is the outlook in terms of the “hard” and “soft” landing debate and what is really driving China's growth?
(ii) What are some of the real bottlenecks to growth?
(iii) What are some of the most critical challenges to China's longer term growth prospects?
OUTLOOK IN TERMS OF THE “HARD” AND “SOFT” LANDING DEBATE AND WHAT IS REALLY DRIVING CHINA's GROWTH
The whole debate over “hard” and “soft” landing is completely misguided. The primary distinguishing feature of the current economic expansion in China is that it is led by the private sector. This marks it as completely different from all previous cycles of expansion since the 1978 opening of the economy. The private sector in China today is driven almost entirely by business profitability, which is in turn dependent on buoyant demand. They have had little access to bank financing, and because they invested with their own funds, they are insensitive to either bank credit tightening or higher interest rates. As long as they are enjoying high returns, which they are, they will continue to expand, and there is little the government can do about it. China's private sector entrepreneurs live and die by their profits, and hence are closely tuned to changes in the market.
So what is the big fuss about the government bringing in new measures to curb investment and to “cool” down economic growth? The fact is that the government acted earlier this year in a proactive way to curb excessive investment in the public sector, primarily the state-owned enterprises. This is a reflection of how much the Chinese leadership has taken to heart the lessons learned from the last boom-bust cycle of 1993–94.
- Type
- Chapter
- Information
- ASEAN-China RelationsRealities and Prospects, pp. 260 - 272Publisher: ISEAS–Yusof Ishak InstitutePrint publication year: 2005