LOCAL GOVERNMENTS
Another defining feature of China’s modernisation is the role of local governments, which is evident in Suzhou.
Martinez noted: “Their active involvement through urban planning, and then the subsequent development of high-end industries, creativity and innovation – these are all areas in which the local governments, the city governments in China are heavily involved.”
Suzhou Industrial Park is one of China’s top industrial zones, churning out innovative tech products while drawing on the city’s long history of making sought-after consumer goods.
Since the 14th century, the city in Jiangsu province has also been China’s leading producer of silk – arguably the tech product of its time.
HOUSING SLUMP AMONG OTHER HEADWINDS
However, three years into an unprecedented housing market slump, some local governments – which typically get more than 40 per cent of their revenue from land sales – are now financially hamstrung.
China also faces other headwinds including youth unemployment, an ageing population, and powerful countries wary of sharing technology with it.
Jin said that China needs to revive its equity and bond markets, as well as reform its financial system in the long run.
“Geopolitical tensions have taken a toll, but that has led to reorganisation and a rethink of globalisation around the world,” she added.
“I think that there’s an enormous potential to reduce the skill and education mismatch of the young generation to take care of some of the job creation problems.”
DBS China investment strategist Raymond Deng said that China needs to raise its technology and help companies get more funding.
“In the 2008 financial crisis, many countries implemented quantitative easing, but for China, shortly after 2008, we started slowly soaking up the excess money supply,” he added.
“So now when we need the stimulus, we do have the headroom and monetary position to help develop the key industries that we need.”
China did just that to boost its electric vehicle industry – a sector it now dominates. But the move has also sparked retaliatory tariffs from the West, including the European Union and United States.
With China having options for growth, the ripples from whatever it picks will be felt worldwide – and may even ricochet backwards.
