Opening
of
China
From the early 19th century till the 1970s, China went through very turbulent times - from civil wars, regional wars to world wars and the fight against foreign invasions. Moreover, there were misconceived economic policies that exacerbated the poverty and famine within the country.
Chairman Mao Zedong was a founding member of the Chinese Communist Party and considered to be the "Founding Father of modern China". On 1st October 1949, he established the People's Republic of China and subsequently declared "中国人民从此站起来了" (The Chinese people have stood up). In 1972, American President Richard Nixon met with Chairman Mao to formalise relations with China.
Chairman Mao was a great military strategist and a visionary. After decades of civil wars, he was able to unify China. However, his economic policies were not successful and by 1970s, China was still struggling with a booming population, poverty and famine.
"Paramount Leader Deng was keen on economic reforms and said "不管黑猫白猫,能捉到老鼠就是好猫."
Deng Xiaoping is the "Paramount Leader" of the People's Republic of China from 1978 till 1989. In 1978, after the death of Chairman Mao Zedong, Deng Xiaoping became the leader of China and reformed the country. He visited foreign countries in Southeast Asia and in 1979 and he made an official visit to America, meeting President Jimmy Carter.
Paramount Leader Deng was keen on economic reforms and said "不管黑猫白猫,能捉到老鼠就是好猫" ("it doesn't matter whether a cat is black or white, if it catches mice it is a good cat."). His aim was to have economic development and modernisation for China. From 1980, he created special economic zones to attract foreign companies and investment. Deng Xiaoping kept reforming and liberalising the Chinese economy. Economic growth and development in China gained traction. With new jobs, people were pulled out of poverty and started accumulating wealth.
In 2012, during the 18th National Congress of the Chinese Communist Party, President Xi Jinping replaced former President Hu Jintao. He is still the current President of the People's Republic of China. He launched an anti-corruption campaign and enforced strict discipline among party members. In 2017, his thought on "Socialism with Chinese characteristics" became part of the constitution of the Chinese Communist Party.
In 2013, during his visit to Kazakhstan, he announced his Belt and Road Initiative, involving massive investment for infrastructure development and linking China with the world. In 2015, his Premier, Li Keqiang, announced the "Made in China 2025" strategic plan, that would enhance China's manufacturing capabilities. In 2020, President Xi announced the "Dual Circulation" strategy.
The Five Elements (五行 wǔ xíng) - Metal (金 jīn)
The concept of Five elements is a Chinese thinking and belief that everything is inter-connected. The Five Elements are the main fundamental elements that interact within each other. The same concept can be applied in the business context.
The Metal element can represent the Finance industry. Many of the world largest banks are Chinese. In terms of total assets, four Chinese banks are in the top 5. In terms of market capitalisation, five Chinese banks are in the top 10. Within the top 100 banks by totals assets, there are 19 Chinese banks. The largest Chinese bank by total assets and market capitalisation is Industrial and Commercial Bank of China (ICBC).
.jpg)
China has also been internationalising its currency, the renminbi. The Chinese currency is already included in the IMF SDR Basket. Moreover, China has been gradually opening its financial markets and building its commodity markets. Many Chinese companies are now included in global index funds. Lastly, China is testing and experimenting with its digital currency. A digital yuan, based on blockchain technology, may be launched widely in the near future.
The Five Elements (五行 wǔ xíng) - Wood (木 mù)
The Wood element can represent Sustainability. Since the 1970s, China has been battling desertification in its northern region from the Gobi desert. The Three-North Shelter Program (Green Great Wall), that started in 1978, is designed to prevent further expansion of the Gobi desert. This long term program is aimed to be completed by 2050.
.jpg)
Moreover, China has set very ambitious environmental goals. Last September 2020, President Xi Jinping announced that China's carbon emission would peak by this decade and that China would be carbon neutral by 2060. China is already taking steps towards these goals. China is already the world largest solar panels manufacturer and many of the largest wind turbine manufacturers are Chinese. China is also moving away from the internal combustion engine and it is the biggest market for electric vehicles. In addition, China has the largest high speed railway network.
(Picture: Green Great Wall)
The Five Elements (五行 wǔ xíng) - Water (水 shuǐ)
Global business trade can be represented by the Water element. China is the world's major trading partner, and it is the main trade partner for 128 countries. Its global trade in goods and services represents about 20% of its GDP. China traded about $4.6T worth of goods and about $758B worth of services.
(Picture: Port of Shanghai, China)
.jpg)
.jpg)
The Five Elements (五行 wǔ xíng) - Fire (火 huǒ)
The energy sector can represent the Fire element. China is now the second largest economy in the world. To support its economy, it needs massive amount of crude oil. China consumes around 14 million barrels of crude per day (mb/d) and it imports more than 10mb/d to meet its needs.
The largest oil field in China is located in Daqing, Heilongjiang province. Some of the largest Chinese oil companies are China Petroleum and Chemical Corporation, China National Petroleum Corporation and China National Offshore Oil Corporation.
(Picture: Daqing oil field)
The Five Elements (五行 wǔ xíng) - Earth (土 tǔ)
For the Earth element, it is related to real estate and infrastructure development. China's Belt and Road Initiative (BRI), that is focused on infrastructure development and investment, may be used to describe Earth. In 2013, during a visit in Kazakhstan, Chinese President Xi Jinping announced the Belt and Road Initiative.
Since then, more than 100 countries have joined the Belt and Road Initiative. In 2017, the BRI was included within the constitution of the Chinese Communist Party. This is an ongoing initiative that China is supporting across the world.
(Picture: The Khorgos dry port at the border of China and Kazakhstan)
.jpg)
More Updates @STEELAdvisoryPartners & @STEELAdvisory