Sadly, it looks like China is closing out 2015 with another tragedy. Sunday morning, a precipitously huge pile of discarded construction soil and debris collapsed, causing a massive landslide that now covers as much as 380,000 square meters in the city of Shenzhen. The slide has swallowed an area the size of 60 football fields and covered it over with as much as ten meters of muck. Under it lie at least 30 factories and dozens more apartment buildings. As of Monday, 85 people have been declared dead, and there was no estimate of how many were still missing.
The disaster follows a series of industrial failures that have been plaguing China all year. In spring, an explosion in an eastern car parts factory killed at least 75 people and left more that 180 injured. In summer, explosions rocked the Tianjin industrial community, killing hundreds of workers and nearby residents. In early fall, asbestos was discovered in children’s crayons manufactured in China, forcing a huge recall. In each incident, the reality of “human negligence” was determined to have played a significant part in causing the varied systems to fail.
2016 Promises a Brighter Year:
However, in the same year, China has made some significant changes in how it’s doing business today, and how it plans to do business tomorrow:
Economic Stimulus For Stability:
In the summer, the government introduced numerous financial stimulus measures to stabilize its overall economy while its services sector works to keep up with (and eventually match) its immense international manufacturing industry. At the time, analysts were concerned that the activity represented “instability” in the country’s economy, not the opposite. However, by the end of November, its fixed-asset investments had, indeed, settled down and demonstrated their stability for the first time since June, indicating the success of the financial policies.
Rethinking the One-Child Policy:
In November, China announced the revision of its 35-year-old “one child” policy. In the late 1970’s, the country was concerned about feeding an anticipated explosion in its population. It declared that every family could have only one child. The consequence has been (according to some commentators) disastrous, with the age of workers rapidly increasing and not enough younger people to fill in those voids. This fall, the country announced its intent to permit eligible families to have two children, with the hope that the resulting population boom will provide long-term workforce stabilization.
IMF Recognizes China’s Value:
Perhaps the most significant indicator that China has earned a permanent place in the global economy was the International Monetary Fund’s (IMF) elevation of its currency to its “Special Drawing Rights” reserve fund. On November 30, the IMF announced this decision and, on October 1, 2016, the Chinese yuan will join the British pound, the U.S. dollar, the European euro and the Japanese yen as one of the five international currencies used by the World Bank to assist struggling economies around the world. Despite China’s struggles in individual aspects of its complex, national economy, the IMF’s decision certainly demonstrates its confidence that China will continue to make positive contributions to the international economic community.
Made in China 2025:
Perhaps its most promising announcement in terms of future growth, in June, China announced its “Made in China 2025” plan to comprehensively improve its industrial practices and policies. Inspired by international leaders like the United States and Germany, China intends to keep its position at the top of the global supply chain by retooling its manufacturing sector with technology. The goal is to improve quality throughout its entire manufacturing sector while improving its environmental record with the use of greener, cleaner practices.
Past Growth Supports Future Growth:
In just five years (2010 through 2014), China’s Gross Domestic Product (GDP) almost doubled, going from AU $6,278 T to AU $10,544 T. At the beginning of 2015, predictions were that the GDP growth would slow to just 6.7%, down significantly from those double-digit economic explosions. In fact, Q3 showed a growth of 6.9%, more than was expected, and another indicator that, despite appearances, China continues to maintain a strong economic advantage.
Optimally, China’s future will see a reduction in the number of disasters (environmental and otherwise) that its population has suffered throughout this year. Along with these promising developments, there are other aspects of China’s economic outlook that promise entirely new opportunities. I’ll discuss those in my next piece. If you’re interested in chatting about how your enterprise will be faring as China moves into its new year, contact me.
You might also want to read some of my other blogs. A sample of recent blogs can be found here: