Dear Reader,
As the year comes to a close, I would like to take a moment to reflect on the past 12 months and the situation on the ground for MNCs operating in China. While the past few years have been challenging for many, there are reasons to be optimistic as we enter 2025.
Our observations indicate that conditions in China are stabilising and showing signs of improvement, and MNCs remain committed to the China market. China has become the number one player globally in several industries, such as automotive, manufacturing, and green energy, and it is doubtful that this would change any time soon. Some may point to threats of trade barriers and protectionism, but the reality is that opportunities for trade and cooperation are too great and will likely dissuade significant deviations from the norm. With its pivotal role in the global economy, access to the China market remains essential, and most stakeholders would be willing to accept a more than modest GDP growth rate of 5%.
Areas where there is room to grow are in the real estate industry, per capita consumption, and exports— but these issues are being addressed. The Chinese government has since September implemented stimulus measures aimed at stabilising the real estate sector, and consumer confidence has demonstrably risen: residents’ propensity to consume in the third quarter of 2024 was 0.5 percentage points higher than the average value in the same period from 2014 to 2019, and retail sales were up significantly in October. For the recovery to maintain this momentum, we hope to see continued application of stimulus in these areas. And while the growth rate of exports to Europe and North America has declined, it is being offset by a significant increase in exports to the Global South. This shift may pressure China’s economy in the short term due to lower profit margins, but it positions the country well for long-term gains as the gap narrows between great powers and developing economies.
Looking ahead, we will continue to monitor these trends and share our insights. Our MNC Channel Newsletter, updated quarterly, will return next quarter with a Spring update. Stay tuned, and we wish you a successful and fulfilling year ahead.
