When traveling in mainland of China and you probably want to get a SIM card and activate a data plan in order to use the internet and avoid hefty international data fees (despite the fact that there is a lot of free WIFI at the airports, hotels and restaurants). By the way, Internet access is now a basic human right according to the United Nations Human Rights Council (gizmodo.com 2017). It is easy to get a local SIM card in China, the two major telecommunication companies are China mobile (中国移动) and China Unicom (中国联通). 4G covers most of Chinese cities. 3G Coverage is over 99% of China population. Coverage is nearly everywhere except some rural part of Tibet & Xinjiang. A prepaid SIM card can be used immediately after simple activation.
After the happening of the 2007-2008 global financial crisis, a number of economists and even famous businesspersons had predicted that the next global crisis would stem from China because of the fear about the slower economic growth, large fiscal deficits and real estate bubble. For example, as early as 2013, Hong Kong property tycoon Li Ka-shing had been selling his assets in mainland China and Hong Kong and moved his family wealth to UK. Many believed that Li’s withdrawal from China showed the market fear of a possible hard landing of the Chinese economy. However, similar to the fact that economists always failed to predict a financial crisis, China is actually NOT on the edge of a financial crisis for the below reasons:-
Last year, China surpassed the U.S. and became the largest plug-in electric car markets in terms of total annual sales, China was therefore ranked as the best-selling plug-in electric passenger car country market in the world in 2015. With strong government support and relevant encouraging policies, China is on track to become the global leader in electric vehicle (EV) market. Below are the main reasons:-
Since economic reform in the 1980s, China keeps buying U.S. Treasury Bonds for more than 3 decades. What’s more, the US trade deficit with China is the largest in the world (about 30 billion per month) which is usually regarded as a sign of global economic imbalance (census.gov 2016). While China’s huge holding of U.S. securities is widely evaluated as a nuclear bomb, below are the big reasons behind the long-term national behavior:-
In August 2015, the People’s Bank of China announced a surprising decision to depreciate the Chinese Yuan by 2% against the U.S. dollar. The central bank said in a statement that “The reform of Chinese Yuan exchange rate formation mechanism will continued to be pushed forward with a market orientation, the market powers will play a bigger role in exchange rate determination to assist the balancing of international payments” (cnn.com 2015).
“Made in China” really doesn’t mean what it used to be, quality of Chinese-made products is rising fast. In addition, China is moving very fast in technological innovation. For example, in the past five years, China saw a rapid growth in its IP (invention patent) community, reflected by its innovative companies and the whole society, according to WIPO report (wipo.int 2015). Since opening up its economy and market in the 1980s, China has been successful in growing its economy and utilizing its demographic bonus efficiently.
China has a great consumer market. But still recently it is not easy for people to ignore the news about a slow-growth dilemma that China seems to be heading into. What is actually happening is that the consumer wealth and spending in China will keep growing rapidly. Those who are pessimistic about economic significance and position of China, they are seeing the performance of the Chinese market from an incorrect perspective.
Figure 1.0 Chinese consumers love shopping overseas
China’s continual slowing economic growth seems to be an inevitable trend, a difficult position that fears the world. The concern among the international investors is that the second largest economy and world’s long trustworthy growth engine may stop contributing its significant part to the global economic growth. This fear is intensified by the oil-price slump, subdued economic expansion in Eurozone as well as other geopolitical worries.
1. Basic concepts & facts
Since the end of September 2008, China had passed Japan and become the largest foreign holder of US government debt (people.cn 2008). According to Department of the Treasury, as of October 2014 China held $1252.7 billion of U.S. debt or about 7% of the total U.S. debt (zerohedge.com 2014, treasury.gov 2014). Calculated based on a total resident population of 320,064,285 as of January 5, 2015, per capita debt owed to China of the United States was $3914.