Year of the pig – the capitalist pig
In this new Year of the Pig, head of multi asset investments David Coombs celebrates the entrepreneurial spirit spreading across China and concludes that, despite communist roots, it may actually be doing capitalism better than the capitalists.
I’ve been to see Baidu and the whole thing could be American. There’s a real entrepreneurial spirit in China that can be seen from youngsters working furiously to better themselves to the massive businesses like Tencent and Alibaba that have risen like shooting stars above the modernised Chinese economy. About 60% of Chinese people live in urban areas today, only 24 years ago that was the proportion of Chinese living in the countryside. Hundreds of millions of Chinese now live in some of the world’s largest metropolises, many of which didn’t exist a generation ago.
The expansion in China’s economy and wealth has been breath taking. It hasn’t been all roses, of course. The nation’s human rights record is atrocious, labour protections are limited and were reluctantly extended only because of mutinous workers. Consumer product scandals have been rife, with dangerous gadgets and poisonous food. But it’s exactly this lack of restraint that’s allowed the economy to leapfrog from 10th to the second-largest market in the space of three short decades.
China has come to an interesting crossroads now. It is no longer an underdeveloped nation hustling its way to affluence. Yes, much of the country is tremendously poor and lagging behind technologically, but as a nation China has arrived as a major global power. This is true economically, militarily and culturally. It has tried to continue snubbing internationally-recognised intellectual property rules and trade laws that are generally agreed at the top table of geopolitics. This will become much more difficult as time goes on. You’re seeing it now with President Donald Trump’s trade vendetta.
China doesn’t need to rely on corporate skulduggery or questionable practices to succeed. In fact, these old habits are now probably hindering the nation.
Read more about David’s outlook for the year ahead in Ditch the Models.