China orchestrates its political transition
China’s international impact is now felt globally. Having shown its ability to recover from the downturn of 2008 through a massive stimulus package, the world’s second largest economy faces crucial questions. The new leadership taking the reins in late 2012 will have to decide how to circumnavigate the political and economic challenges of rebalancing away from investment and exports, and towards consumption.
The current economic model of cheap labour and capital courting export markets is running out of time. Although we do not expect a hard landing, growth has fallen. China wants to move up the value chain, but it still has to guarantee employment and defend existing industries. In our view currency appreciation will be limited.
We analyse the macro-economic and political factors at work and relate these to relevant areas such as infrastructure, industry and trade in order to produce uniquely rounded and compelling insights.
Our local presence, in-depth knowledge, analytical skills and sources enable us to track often opaque politics and policy developments to provide a rounded picture of how China is moving. This goes well beyond the frequently confused (and confusing) monthly data and instant analysis of immediate numbers. A key element is our analytical knowledge of how policy is framed and the factors affecting key issues such as inflation, the fiscal balance, currency and monetary policy, and social stability.
The scale of the issues at play in China and the role of the government in directing the economy make our model of policy research particularly appropriate by analysing both macro-economic trends and the effect on specific sectors within the often misunderstood political context. Only by melding the economic numbers with social pressures and political objectives of the leadership can one get a true picture of China's evolution in both a domestic and a global context.
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