What are the attributes of the Ox?
According to the Chinese horoscopes, these are: Diligence, Dependability, Strength, Determination, Patience, Belief in consistent effort, Detailed planning, Determination/stubbornness, Poor communication with others.
I read these attributes and think of China and its current leadership in Beijing.
Put simply, China’s game plan is to grow wealthier and assume its rightful role as the ‘Middle Kingdom’ it once was. Zhongnanhai, the seat of the leadership of the Chinese Communist Party, particularly wants to prove that its brand of communism can and does provide the structure to deliver a responsive government, a clean environment and economic wealth. The words ‘social justice’ appear to mean ‘stability’ and this can be enforced, if necessary.
In some ways, the restructuring of the domestic Chinese economy away from a manufacturing industry and towards services renders the US tariffs less effective. Since 2013, Chinese GDP growth has increasingly been driven by the services sector and domestic consumption. That move to urbanise and raise the living standards of the rural population is set in place and this confrontation with the US will not derail it.
In that context, 2021 will bring a continued focus on the Big Themes for the Middle Kingdom:
Climate Change related investment
- Gas and Renewables in power generation
- Health and Food security
Self-sufficiency in technology
- Semiconductor production
- Communications, 5G, AI, Automation and Quantum Computing
Growing China’s sphere of influence
- Leveraging the Belt & Road investments for geopolitical gain
- Assertive diplomacy
The sectors that are vulnerable to geopolitical aggression are technology and finance. The less controversial ones, where there is a real need for both sides to continue to maintain the linkages are commodities and agricultural produce.
In the domestic Chinese market, expect the same pressures to regulate Big Tech as we are seeing in the West – but more effective and quickly enacted. Nevertheless, Chinese consumer oriented businesses are of interest, as are the beneficiaries of the three broad themes named above.
The reality is that Beijing and Washington, DC hold very different views of how the international order ought to work and as the US ratchets up the pressure, Beijing digs in. Bluntly, if the US and China cannot find a workable arrangement that supports the normal functioning of the international system, they will each line up their respective teams. Many countries will not be able to resist the call, because of their geographical proximity and economic linkages, like Mexico (for the US) or Pakistan (for China). Meanwhile the rest of the world is in limbo, pressured by both sides and trying to remain neutral.
