Newsletter By 2023-01-20
In an article published in
the Diplomat,
ANBOUND’s founder Kung Chan talked that the struggles of 2022 highlighted six crises China will have to face now and into the future. These six crises, termed the “Six Horsemen of the Apocalypse” for China, either take place at present, or in the not-so-distant future. The first is aging. The disastrous effect of this is clearly seen in the current pandemic. The second would be food crisis, which has a lot to do with how to harness the land. The country is also in a state of crisis regarding debt. With problems constantly emerging and property constantly depreciating. The fourth is the geopolitical crisis. Like it or not China has to face the onslaught of the marching wheel of geopolitics. The next is the supply chain crisis, a result of the era of globalization. The final crisis facing China is the urbanization. As a byproduct of this rapid change, cities have in one sense remained villages, with rural-style management imposed on urban administration. These crises would surely make their appearance, unleashing shock waves that will be transmitted to the deeper level of society.
>>Whether or not and when Japan's monetary policy will be shifted would be the biggest "black swan" in global finance in 2023, an uncertain factor for the global economy. In other major economies, the development trend is clear. Yet Japan's policy changes become difficult to figure out. Especially in December 2022, the unexpected move for the Bank of Japan who relax the upper limit of the yield curve brought the market so worrying. The BoJ unchanged loose monetary policy will not alleviate the pressure of inflation and economic recession, while the market is much concerned about policy uncertainty. The countries in Asia-Pacific region where are closely connected with Japan will be even more negatively affected by BoJ’s shift, remarked
Wei Hongxu, senior economist at ANBOUND.
>>In 2022, China experienced the second-lowest economic growth rate in 47 years, which is the manifestation of its economic problems under both internal and external factors. What China urgently has need of now is recuperation, gradual recovery, careful use of limited economic resources. It is required to place its people's livelihoods as priorities in decision-making. The economic data in 2022 indicated a severely traumatized Chinese economy. The strict pandemic policies carried out several years that have depleted the foundation of its economy. From private enterprises to ordinary residents, confidence in the economy and the future has been eroded. This greatly affects market entities and consumers. Any changes in the international geopolitical and geoeconomic situations are taken into the account as well, next, more uncertainties right here waiting for the country, said
He Jun, Director of Macro-Economy Research Center and Senior Researcher at ANBOUND.
>>The continuous decline in China's foreign trade has sent warning signals to the country’s overall economy, and policies. Researchers at ANBOUND noted two main points that policymakers shall be thinking at the domestic strategic level: The first is to adhere to reform and opening up that guide the formulation of various policies. Over 40 years, the nation undoubtedly cannot return to isolation. In the game of geopolitics and geoeconomics, China should continue to break through the containment and decoupling imposed by other powers. Second, China shall carefully balance the relationship between its huge domestic market and the international market. What’s necessary to aim for is the drive for the country’s industry and foreign trade, instead of slipping into "domestic circulations" merely. Within any closed system, the long-term internal circulation would lead to its vitality reduced. Eventually, the downfall comes to the entire system as a result of energy dissipation. Well managing its domestic-international dual circulations will be crucial for China to integrate with the world, and to mutually drive the growth.
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