Page 74 - 2020 White Paper on the Business Environment in China
P. 74
0 White Paper on the Business Environment in China
First, China is going through its slowest pace of
expansion in more than 27 years due to external
trade disputes and subdued domestic demand. A
closer look reveals that the slowdown is primarily
due to lackluster growth in private sector and
manufacturing investment, despite mild rebounds
in real estate and infrastructure investment. At the
current pace, policymakers may have to double
down on easy measures such as local government
infrastructure projects and interest rate cuts for the
economy to expand according to the goal. If this is
the case, policies that may dampen China’s growth
in the short run, such as SOE reform, may require a
revision of the timeline.
Second, Shenzhen’s technology industry is under
the shadow of the ongoing negotiation between
China and the US, not only for trade disputes but
also the sanctions on US tech components since
16 May 2019. While China has continued to press
ahead with its lead on 5G technology, the related
uncertainty continues to affect the technology’s
adoption globally.
A leading role model for other cities in China
With the support of favorable policies,
nevertheless, we are optimistic that Shenzhen
will soon enter a new stage of transformation
and become a world-leading city by 2035. As a
demonstration area, it suggests that Shenzhen’s
experience will also be replicated and shared by
the rest of China, especially other major coastal
cities that share similar development constraints.
Therefore, we consider the new designation as
a unique pilot scheme for Shenzhen on high-
quality growth with Chinese characteristics.
74
First, China is going through its slowest pace of
expansion in more than 27 years due to external
trade disputes and subdued domestic demand. A
closer look reveals that the slowdown is primarily
due to lackluster growth in private sector and
manufacturing investment, despite mild rebounds
in real estate and infrastructure investment. At the
current pace, policymakers may have to double
down on easy measures such as local government
infrastructure projects and interest rate cuts for the
economy to expand according to the goal. If this is
the case, policies that may dampen China’s growth
in the short run, such as SOE reform, may require a
revision of the timeline.
Second, Shenzhen’s technology industry is under
the shadow of the ongoing negotiation between
China and the US, not only for trade disputes but
also the sanctions on US tech components since
16 May 2019. While China has continued to press
ahead with its lead on 5G technology, the related
uncertainty continues to affect the technology’s
adoption globally.
A leading role model for other cities in China
With the support of favorable policies,
nevertheless, we are optimistic that Shenzhen
will soon enter a new stage of transformation
and become a world-leading city by 2035. As a
demonstration area, it suggests that Shenzhen’s
experience will also be replicated and shared by
the rest of China, especially other major coastal
cities that share similar development constraints.
Therefore, we consider the new designation as
a unique pilot scheme for Shenzhen on high-
quality growth with Chinese characteristics.
74
