Beijing (dpa) – The mood in the boardrooms of Chinese companies has not been so good for almost ten years. Since China has largely had the corona virus under control, the second-largest economy has grown again.
Foreign trade is recovering, industrial production is increasing, and China will be the only major economic nation to post growth again this year; in the third quarter it was already 4.9 percent. With the recovery of Germany’s largest trading partner and its new five-year plan, opportunities are opening up again for the German economy.
The new confidence is causing the important economic barometer of the business magazine “Caixin” to swing higher. Its Purchasing Managers Index (PMI) for the manufacturing sector rose from 53.0 to 53.6 points in October, the highest level since January 2011. The industry is growing by more than 50 points and below that it is growing. is reducing. The index hasn’t been much above the critical 50 mark since the recovery from the 2008 global financial crisis.
China shows that fighting the virus is also fighting the recession. Once the pandemic has passed, the economy can grow again, not the other way around. In the most populous country, the first infections were discovered in December in the metropolis of Wuhan. After initially slow and inappropriate handling of the new Sars-CoV-2 virus, China has cracked down on tough measures since late January. The virus could be controlled with strict quarantine measures, mass testing, contact tracing, and strict entry restrictions.
Since the summer, China has only experienced a few small local outbreaks, such as the most recent in Kashgar, in northwest China, for which strict measures are taken immediately. Otherwise, there are only a few imported cases. So daily life and economic activity have normalized. The industry is recovering because both supply and demand are improving, reports “Caixin” economist Wang Zhe. “Companies are very inclined to expand their inventories. The prices are stable. Business is improving and entrepreneurs are confident. “
However, the new wave of virus infections in Germany and other countries is causing demand from abroad for “Made in China” products to grow a little more slowly. After all, new export orders in October continued to rise for the third month in a row. “The twists and turns of infections abroad are still headwinds for exports,” said Wang Zhe.
The Chinese leadership also knows that the great exporting nation is vulnerable here. Similarly, America’s trade and technology war with China has made it painfully aware of foreign dependence. With the new five-year plan, to be approved in the People’s Congress in March, the Communist Party leadership has embarked on a new economic course, described by the slogan “two cycles.”
The strategy of state and party leader Xi Jinping is to promote “internal circulation”, that is, internal demand and innovation itself. China wants to become more independent from the United States and the rest of the world. The “external cycle” – trade and foreign investment – is supposed to support this main engine.
The new plan ties in with the 2006 “national innovation” policy and above all the 2015 “Made in China 2025” master plan. This project is no longer mentioned today after irritations over arrogant efforts and in the perceived as a threat to China’s tech leadership, along with allegations of copyright theft by US President Donald Trump.
The address remains unchanged. And with all the efforts for independence, investment and research cooperation with foreign countries in strategically important areas are more important than ever. This opens up opportunities. If German companies wanted to participate, “China will roll out the red carpet,” says Max Zenglein of the China Merics Institute in Berlin.
“In general, foreign companies that have advanced technology, industrial processes, finance or other services that China needs and from which China can draw insights to strengthen its own businesses will continue to find opportunities in China,” believes James McGregor, Greater China. Head of the APCO consultancy and former director of the United States Chamber of Commerce in China. “Even distributors or companies that offer quality products at low prices and help promote consumption will find scope,” McGregor analyzes for the Hinrich Foundation.
With all their commitment to China, foreign companies must be careful to protect the long-term future of their global businesses against future Chinese competition. When it comes to dealing with other countries, China’s leadership is following old strategies, emphasizes McGregor. It is useful to recall a saying from the Qing dynasty that revolutionary Mao Tsetung also liked to quote: “Let the past serve the future, let foreign things serve China” (Gu wei jin yong, wai wei zhong yong).