China’s economic resurgence, military might & leadership in technology – all within a short span of 30-40 years has been no less than an impressive feat. The most populous country on the planet & a traditional manufacturing giant has now transitioned to a tech hub with the second largest economy in the World ($23.3 trillion estimated GDP).
More recently, however, the two biggest economies, U.S & China, have been at loggerheads over trade tariff dispute which has taken a tech dimension lately with the U.S banning the Chinese technology companies citing national security concerns. Huawei, the Chinese tech giant which has a massive global footprint has been the primary target of these sanctions. While the markets suffer from the uncertainty emanating from the prolonged trade dispute, the U.S suppliers to Huawei have found a loophole in the export restrictions imposed by the U.S government and have started shipments to it again. It has been my opinion from the beginning that trade sanctions reflected American’s uneasiness with China’s challenge towards the economic & technological might of the former.
Anyways, not here today to discuss the trade war, but how China has emerged as a major power on the global scene powered by the relentless double-digit economic growth of the past few decades. This has enabled China to climb rapidly in the Global Competitiveness Index – currently ranks 28th out of 135 countries as per the chart above. Let’s review some of the other things to see how China stands out from the rest.
Rapid Economic Strength
Preceding the current decade the Chinese economy grew at a staggering average rate of 10% since initiating economic reforms in 1978. The unstoppable growth has lifted 850 million people out of poverty as per the World Bank overview. As the country transitions from an export-oriented economy to one driven by domestic demand, the growth rate has steadied to 6.4% in the first quarter of 2019. This is despite the country’s continued trade conflict with the U.S. With 3.09 trillion worth of cash reserves alone – more than any other country in the World – it has room to undertake ambitious projects, build infrastructure & invest on futuristic technologies. The Chinese central bank has still been hard at work to keep the economic growth going by pumping easy money into the domestic markets. The country is well on its way to eliminate absolute poverty by 2020.
China’s Tech Hub & Unicorn Powerhouse
The country’s tech dominance can be gauged from the fact that on a global scale, every 3 out of 10 unicorns (companies valued at more than a $1 billion) come from China. 2018 alone, it had a total of 186 unicorns, fostering 97 unicorns in the last year alone at an average of creating one every 3.8 days. It is also building a Tech hub comprising of 11 cities (picture above) to rival the supremacy of Silicon Valley (California, U.S.A). The greater Bay Area is home to almost 70 million people which contributes an eighth of China’s GDP with a combined economic output if $1.5 trillion.
World Leader in Artificial Intelligence
China has been aggressively investing in emerging technologies like AI, Fintech & Blockchain etc. According to the Artificial Intelligence patents lodged with the World Intellectual Property Organisation last year, an overwhelming 473 of the total 608 were filed by Chinese businesses. The Chinese government is also investing billions of dollars on developing local research talent – one example of which is the creation of a $2 billion AI development park in Beijing, housing 400 enterprises with an estimated annual output of 50 billion yuan. The park will also attract companies working on other tech areas like Big Data, Biometric Identification, Deep Learning and Cloud Computing.
Ambitious Space Exploration
The unmanned space rover Chang’e-4 probe touched down near Moon’s South pole. This mission was sent to analyse the unexplored region on the far side of the moon. It was important to China on two accounts – for putting the country on the map as a strong player in space exploration & secondly to do something that no one has attempted before. Most of the previous missions have only explored the Lunar surface facing the Earth. The mission also had a collaborative touch as it carried experiments from Netherlands, Germany, Sweden and Saudi Arabia. Things don’t stop here as the country is going to start building its own space station next year which is expected to be operational by 2022 – Missions to Mars and Jupiter and a manned Moon landing are all lined up next.
Renewable Energy Giant
Last year saw China building more solar and wind generating capacity than any other country in the World – currently three of the World’s five largest floating solar plants are in China. Global climate change initiatives, declining air quality of the sprawling metropolises & booming electricity demand have also pressured the biggest carbon dioxide emitter to wind down coal-fired Power stations and move to renewable energy which is becoming cheaper & provides a cleaner and more sustainable alternative.
Biggest Market for Electric Cars
With a push towards renewable energy, China also dwarfs the global growth in Electric Vehicle sales. Chinese drivers bought 1.1 million new electric cars in 2018. This has also encouraged a homegrown industry to flourish with Chinese carmakers unveiling 10 new electric cars models at the Shanghai Motor Show 2019. China has 400,000 electric buses, which account for 99% of the World’s electric bus fleet – Shenzen was the World’s first major city to replace all its traditional buses with electric bus fleet & now intends to do the same with the taxis as well.
Chinese tourists are also driving global growth in tourism. The growth rate of Chinese citizens taking foreign holidays is increasing at 6% per year. 2017 alone saw Chinese tourists spending $257.7 billion, more than any other country in the World. A McKinsey report suggests 160 million Chinese will take foreign holidays in 2020.
Apart from the impressive climb in the World Economic Forum’s Global Competitiveness Index, China scores very highly in innovation behind only Germany, the US and Switzerland. The rapid economic growth over the decades, however, comes with its challenges like environmental sustainability, inequality between urban & rural areas, external imbalances and aging population, which China will need to address. The Competitiveness Index also suggests China work on its performance in diversity, collaboration and various aspects of openness in the domestic market.