What might 2014 hold for China?
Foreign Policy and McKinsey recently published two prospective studies speculating on what this new year may hold for China. From these urban, economic, social, technological, and political perspectives on China, Modu 陌都 has prepared a short selection of hot topics for 2014.
With a growth target fixed slightly above 7%, Chinese officials want to emphasize more balanced development and focus on the domestic market. To offset the increase of the production costs, economic policies will work towards streamlining productivity, particularly through technological innovations. There will also be an emphasis on the creation of jobs to absorb an estimated 12 million new entrants to China’s labor market in 2014.
Inaugurated in September, the Shanghai Free Trade Zone (FTZ) seemed to be a significant step towards the transformation of Shanghai into a global financial center similar to the likes of Hong Kong. Yet intriguingly, even as the event marked an important moment in China’s financial liberalization, this pilot project could, however, turn out to be not much more than an empty gesture. As McKinsey explains, much of this ambiguity stems from Shanghai’s municipality issuing a “negative list” of prohibited and restricted enterprises just a few days after the FTZ’s launch. Consequently, it remains to be seen whether the status quo will largely be maintained, or whether bolder liberalization will be pursued under the FTZ.
As for environmental issues, the focus in 2014 will be on new “green industries”. This comes on the heels of the rebound of the solar industry, boosted by higher demand from Japan and a fast-growing domestic market. The trend is not likely to be reversed in 2014, even with the World Bank’s guarantee of assistance and prices driven down as the result of cheaper production costs. Foreign Policy also reminds us that efforts to reduce intensive carbon use are expected to continue in 2014 as the deadline for China’s 12th Five-Year Plan (2011-2015) fast approaches. The Plan aims to reduce carbons emissions by 17% within this time period. The new year may also be a turning point in the field of electric cars as the Shenzhen BYD Daimler New Technology model launches.
New digital territories are also considered in these projections, which is only fitting as China remains the world’s largest market for e-commerce. The recent trend, which indicates that rural residents actually spend more online than urban inhabitants, is expected to accelerate in 2014 with the creation of e-commerce services specially dedicated to these populations. As significant sectors of the economy increasingly move toward virtualization (procurement, financial services, online education, etc.), McKinsey warns against the appeals of real estate developers soliciting investments in new shopping centers. Many of these solicitors, primarily from the public sector, are facing bankruptcy for these huge but empty malls as their demand quickly drops.
If one accepts the Chinese government’s official pledge to more comprehensively incorporate social concerns in its process of urbanization, social policies should be applied in 2014 in favor of social protection, the status of migrants (particularly the hukou system’s slow reformation), and the creation of new jobs. The destruction of existing housing may continue however, and most likely create new challenges and complications in various locales in the coming year. Chinese authorities will reportedly debate these urbanization issues during the coming months at the National People’s Congress, which is to be held from March 3 to March 8, 2014, in Beijing.