Is Xi Jinping finally walking the talk on opening up China’s economy as the trade war heats up?
- David Dodwell says Xi has been touting China’s commitment to globalisation but foreign players’ access to the country’s huge consumer market remains limited
- However, the World Bank’s ‘ease of doing business’ study speaks to the substantive progress China has made in some areas
As the US-China trade war deepens, it is the right time to remind the world of the importance of China’s increasingly affluent consumer market and of the policy shift away from export-reliance and towards a heavier focus on the domestic consumer market.
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Nationwide, China’s disposable income per capita has risen to 36,000 yuan a year compared with 7,000 yuan in 2000 – and the consuming power of the growing mainland upper-middle class is becoming noticeable. According to China’s National Bureau of Statistics, over 90 per cent of Chinese families today own a washing machine and refrigerator. And the average Chinese urban household owns between two and three mobile phones.
Spread across a population of more than 1.4 billion, this amounts to formidable consuming power – well illustrated by the spending extravaganza of Singles' Day. Last year, Alibaba reported a one-day shopping spree worth US$25 billion – around eight times the US$3 billion Black Friday sales on the Thanksgiving weekend in the US. Who knows how much will be sold on Singles’ Day this year?
Watch: Alibaba lets AI, robots and drones do the heavy lifting on Singles’ Day
Even if China’s spending is mainly concentrated in the nine wealthy eastern coastal provinces, this clearly explains why so many international businesses piled into the Shanghai expo last week, and why they are so truculent about the slow pace at which China is opening up its domestic market to international competitors.
That is, in its own right, not impressive. It reflects the still formidable barriers to entry to its market. But it compares with a ranking of 78th in 2017, and highlights intensive efforts to streamline bureaucracy surrounding setting up a business. Even its byzantine tax system has seen improvement – up from 130th place to 114th.
Here at last is measurement of substantive progress. Still too slow, perhaps, but substantive.
Such progress is far from persuading Trump to call off his attack. Many reforms are needed over access to China’s huge market. But as Xi makes his way through this autumn’s diplomatic round, there is a sense that progress is being made in showing that China is beginning to put its money where its mouth is. It needs to do so to succeed. The vitality of our liberal, multilateral trading system may depend on it.
David Dodwell researches and writes about global, regional and Hong Kong challenges from a Hong Kong point of view