January 21, 2022

Beyond Going Long

Complete UK News World

Čínske problémy v 2022 a ako nás ovplyvnia

China’s problems in 2022 and how they affect us – Pavel Dvorak

International relations

I’ll start with international relations, let’s leave the worst first. Because international relations have deteriorated in recent years, and I think they will continue in 2022.

Relations with the United States will also deteriorate as Biden’s popularity wanes, he loses the support of citizens and the government, and he will have to do something to secure more supporters. It has always been a sharp rhetoric in America against China. The trade war will continue, the information war will continue, and the two sides will continue to conduct a communications campaign against each other. It is possible that the presidents of these two countries will meet and agree on some concessions, but I think the gap between the two largest economies in the world will continue to widen.

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On the other hand, geopolitical rivalry will not be a priority for either country. Both China and the United States will have their hands on domestic challenges. Both governments have enormous problems, of course they will blame the other, but at the same time the priority will be to deal with them without serious consequences. So this conflict may not get out of hand.

The EU economy will be bad for years to come, inflation, populist politicians with irresponsible policies and a lack of experts will make it worse, energy shortages, Russia is on the border…Europe faces many challenges and will need a partner. He does not have much choice, America is the only partner, so they will also have to start the anti-Chinese game. The gap between the West and the East will widen, and the era of globalization is over. Slovakia will most likely not be affected in this way, we have minimal trade and political relations with China. But the economic consequences will affect us. The auto industry in particular will feel the gap between China and the West, and that worries us.

China will also need a partner. It also doesn’t have a lot of options. Relations with Russia will improve, although I don’t think either side is very excited about that. Since the time of the Soviet Union and Mao, the friendship between Russia and China has been chiefly out of necessity, certainly not out of sincere love.

Of course, the landscape of international relations is traditionally the Olympic Games to be held in China. But I think it will happen quickly, no one will care too much and nothing will improve or make it worse. It will be in a strict Covid bubble, so almost no one will get there, politicians from other countries will not go there looking for Covid and also for the reasons I mentioned a moment ago. Personally, I think that for most of them there will be no opportunity to collect political points for free and at the same time avoid obligations that they do not want so much. Which politician would now like to travel to the Winter Olympics, be in a bubble and possibly in quarantine, and risk contracting the coronavirus variant?

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Nor would there be a chance for the Chinese Olympics to show to the world, and it wouldn’t be an important point of national pride, as it was the 2008 Olympics and the Expo in 2010, otherwise I have this video about it. The media will write about sports success, and for the first time China will try to break through in winter sports, where it has no history, but this will be. When the Olympics are over, you will immediately forget.

world Trade

International trade will change dramatically this year. China will try not to be as important to its economy as it has been until now. It will support the domestic market more, Chinese brands penetrate into foreign markets, but it will not support exports and the situation will only get worse. This trend has been around for about ten years, and it has accelerated in recent years. It will be a bad track, and it will be expensive to buy in China because that will increase the cost of production, especially labor, but for the sake of higher environmental costs. At the same time, the manufacturing sector will be weakened by energy shortages, as China has committed to limiting coal production and wants to switch to renewables.

What this means will continue to change Made in China. Mass production will be less and less for Western companies, but we will see greater penetration of Chinese brands into foreign markets, who sell directly to end customers. This trend has been running for some time, it started with Huawei, but America broke one leg and they don’t remember it yet. Then came companies such as Xiaomi and Heir, which produces white goods, Dji, which has almost a monopoly on drones and penetrated the professional video and film industries, BDY, a manufacturer of batteries and electric cars, Oppo, a manufacturer of mobile phones and, last but not least, TikTok.

We already know these companies and they are already in our market. Their position will be further enhanced and at the same time we will see new companies coming into our market. It will be primarily in the automotive industry, electric mobility, and consumer electronics, but also in medical devices, although found primarily through investing in local brands.

national market

The national market will be a priority for China and will need further strengthening and protection. In 2021, they began demining the technology and real estate sector, particularly through stricter rules on the corporate debt ratio. This ended up in big problems for Evergrande. In my opinion, the Chinese government is trying to control landmines, which will harm the economy in the short term, but it is avoiding an unexpected disaster. Indeed, if that happens, it will have dire consequences for economic stability. As the Chinese economy faces a period of transformation, they want to find the mines as quickly as possible and neutralize them. So, in my opinion, there will be more news about the bursting of real estate bubbles, and I personally believe that most of them will be targeted and will not jeopardize the entire market.

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The tech sector will be regulated more tightly because China does not want to grow its own Apple. Apple has become the fifth largest economy in the world, it has a GDP greater than England, or France and China do not want to have such a strong company at home. This automatically means a power of a second force. It will continue to break monopolies and control the entire technology sector. At the same time, they will pressure companies in this and other fast-growing sectors to generate wealth in China rather than abroad. So they will not be able to be listed on the US stock market, but will have to trade shares in China and Hong Kong.

Still unable to travel abroad and with the economy slowing, there will be incentives to support domestic consumption and spend money at home. In order to support domestic consumption, businesses will also be streamlined for sole proprietorships and small and medium-sized enterprises. Domestic tourism will continue to be one of the main tools for transferring wealth between the rich and poor parts of China.

company

The biggest changes will be in the redistribution of wealth in China. Between 2021 and 2025, the government pledged to launch some of the most ambitious economic reforms in thirty years. In short, the economic reforms of 1979-1981 meant that China realized that socialism did not have to mean poverty. Many people have become very wealthy. With the current reforms called public prosperity, China wants everyone to get rich. It introduces the responsibility of the rich to the wealth of the poor. They want to significantly expand the middle class and redistribute wealth in the form of olives, where the middle class should be the most numerous.

Tax reforms, increasing the burden on the rich, easing the burden on the poor. This applies to people, companies and cities. Big and rich cities like Shanghai will have to create new jobs for rural workers, particularly through infrastructure projects. Until that happens, there is a new building in Shanghai on almost every street today. People in cities will feel the economic pressure and money flowing abroad. Their money will be used to build a social system for people from backward regions, which will provide them with better health insurance, social benefits and tax breaks, as well as an influx of investment capital into these regions. Education reform will continue so that it does not favor the rich as before. It will create better access to employment opportunities for lower segments of the population and simplify businesses for small and medium-sized enterprises, which will become the center of the new economy focused on domestic consumption. The list of changes does not end there, it just begins.

As China faces major changes and economic transformations that a part of the population will have to push, maintaining the party’s social stability and power will be a top priority. This means tighter oversight, greater control of Western influence, and pressure for quick results that would legitimize change to a broader audience. Reducing the birth rate will remain an issue in this effort. China has not faced the problem of overcrowding for a long time, the problem today is that soon there will not be enough people to maintain economic growth and take care of the older generation, which will be huge compared to the younger generation. Chinese society is slowly but surely following the Japanese track, which is a big problem today as well.

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covid and travel

The epidemic may slowly subside this year. China will open its doors this year, said China’s chief sanitation expert. But I will go very carefully. The door to enter China will open, try, and if the virus does not spread, it will open further. However, as soon as the situation starts to deteriorate, they will be shut down immediately. If you’re planning a China vacation, I don’t think you can count on it this year yet. Initially, people come here mainly for work and families. Tourism will not be a priority, if we are lucky, the first swallows may appear, but I will not count on them. Although the rules for entering China will be relaxed, if they are relaxed, they will tighten quarantine conditions. No local quarantine, or even hotel quarantine, will become exceptions. China is building large quarantine centers at airports precisely so that it can begin to open the borders. Strict quarantine will be the norm for some time to come, and only this can ensure that China opens its borders. However, even that won’t happen until the second half of 2022 at the earliest, as China is currently grappling with the largest number of cases since the Wuhan pandemic.

Of course, the vaccination will continue, China is already receiving the third, and perhaps the fourth, dose. In Shanghai, pollen tents are now popping up like mushrooms after the rain, and they are on every other street, and no one can get vaccinated unless they walk around. Going for vaccinations today is as easy as going to buy croissants. In fact, much easier, because rolls are not sold in China.

I think the West and the East will soon begin to learn about each other’s vaccines. At the moment, you can only get in China if you have a Chinese vaccine, but it is not easy to get it in our country because it is not recognized. This is political pressure, individual countries are guarding markets and people, but I think once most of the world is vaccinated and it’s time to open the borders, this will finally get better.

So that was my prediction for this year. These are my personal predictions, some things may not happen and others may. I wonder how it will end.