China at a crossroads: Can innovation outshine decline?

China have spoken out that they are dedicated to developing innovation-driven development……and why?

Let’s start with the “yin and the yang”, its meaning in China nuanced and complex.  They represent complementary forces, not in a battle against each other, but rather a dynamic, harmonious dance where one cannot exist without the other.

Image from Pixabay - ndv9612

So where is China now….

The dark (Yin)

China faces some real challenges with less people getting married or having babies and youngsters staying at home so less house purchases. As a result, the population is decreasing, house prices are in decline, over 30% in some areas, and unemployment is at 5% and for the under 24 years olds sits at 15%!

As a result, there is less disposable income so the domestic China market is weak, in fact they are seeing negative inflation, and with less tourism hotel rates in some areas are the same as they were 20 years ago in an attempt to drive business. Add to this the challenges in export, not just the US tariff situation but other regions are also slow.  Take Germany for example, this means on a business level there are no positives to shout about and put in the China GDP pot. There is even a disbelief of any reported figures on GDP of the current growth reports. 

The light (Yang)

We spoke to one finance executive who could not see any impending change to any of the previous statistics, stating they may well get worse. However, we did hear from a Chinese venture capital investment business who stated that they have approx. half a million hard working tech scientists working on the next big thing.  China are so far ahead being number 2 in Ai development, and number 1 in battery technology and EV innovation.  This could just be their North Star.

Moving forward

Playing to this last point, this now makes complete sense that China are investing in research aiming to deliver further breakthroughs and they also predict that their efforts will give fresh momentum to support global growth.

So if the Yin and Yang is to represent balance, those two fish will certainly be dancing beautifully together for the foreseeable future.