The rapid rise of China’s outbound direct investment (ODI) in the past decade is a significant economic phenomenon — one met with a lot of resistance in some destination countries, particularly due to the abundance of state-owned enterprises (SOEs). However, despite concerns over SOEs’ motivations and political connections, the recent round of SOE reform brings good prospects for further Chinese ODI.
On the International Day Against Drug Abuse and Illicit Trafficking, Chinese President Xi Jinping announced that the Communist Party and the Chinese people would stand firm and defeat illicit drug use through a ‘people’s war’. Xi, not shy about hyperbole, stressed that thousands of generations in China would benefit from a zero-tolerance drug policy. Disappointingly, although Xi frequently advocates for fair adjudication of all cases, he failed to mention how — or whether — due process will figure in China’s war on drugs.
When the Obama administration unveiled its New Silk Road Initiative in October 2011, officials asserted that it was about re-embedding Afghanistan firmly into the economic life of Central Asia through the provision of US assistance to develop infrastructural links between the country and its neighbours to both the north and south. The argument is that it would assist in ‘removing the bureaucratic barriers and other impediments to the free flow of goods and people’.
The Chinese economy is showing signs of renewed strength after aggressive stimulus efforts over the past year. China surprised analysts with a 7% annualized GDP growth and less housing price declines than expected.
On July 21, 2005, China surprised the world by abandoning its peg to the dollar that had been in place since 1995. It immediately appreciated by 2% and gradually appreciated until the financial crisis hit in 2008. It then looked to have been “re-pegged until late 2010, when it began appreciating again.
Five years ago, few would have expected that China would produce four of the top ten global internet companies (by number of visitors) — Alibaba, Baidu, Tencent, and Sohu — as well as innovative multinationals like Huawei and Xiaomi. Nor would most have anticipated China’s increasing provision of global public goods, including its One Belt, One Road strategy, which aims to provide the infrastructure needed to knit Eurasia into a single vast market.
China saw exports rise in a sign of improving global economic conditions, but imports fell just as China hopes to pivot towards a domestic demand-driven economy.
In the past two decades, China’s state-owned sector has experienced drastic reforms. Paradoxically, today the largest companies are increasingly productive, yet most remain state-owned.
In early summer, President Xi Jinping called on officials to deepen reform of state-owned enterprises. China would strengthen the “party’s leading role in supervising” these enterprises through anti-graft inspections and public scrutiny.
The Chinese stock markets have experienced significant turmoil in recent weeks, with the Shanghai Composite Index – the country’s major reference – falling by 32% since June 12. However, this fall was preceded by an equally sharp rise of 150% over the previous nine months. In the 20 years since I have been working in finance, I have never seen anything like this. So what is going on with the Chinese stock market?
China’s One Belt, One Road initiative is currently the most important program for deep economic integration. The program envisages the revitalisation of old trading routes with a continental Silk Road Economic Belt and 21st century Maritime Silk Road. Despite its awkward name, the initiative is a well-conceived way for China to connect its economy to the rest of the world, with an early emphasis on links towards Europe through the rest of Asia.
