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Year-ender: How multinational execs view China's economy in 2020
2020-12-21 

Editor's note:

China will be the only major economy to achieve growth this year, according to the IMF's latest World Economic Outlook reports. The Organization for Economic Cooperation and Development also noted China is the only G20 country expected to see positive economic output this year.

Although the epidemic continues to cause great uncertainty in the world economy, the Chinese economy has maintained sustained recovery thanks to a series of measures taken by the Chinese government to promote economic development, which has improved the resilience and productivity of the Chinese economy.

How has China's economic performance been in 2020? What are the expectations for the country's further reform and opening-up? We asked multinational executives from industries such as pharmaceutical, consulting and financial services six questions to get their thoughts on China in 2020. Let's take a look.

Allan Gabor, president of Merck China. [Photo provided to chinadaily.com.cn]

1. How do you view China's economic performance in 2020 amid the COVID-19 pandemic?

China has shown to the world the resiliency of its economy. China is the first nation to not only contain the pandemic and but also launch a series of initiatives to restore its dynamic market. Today, we are seeing various positive signs from different industries, and the business activities.

2. How do you evaluate the Chinese government's efforts in epidemic prevention and control?

We would all recognize that China's response to the COVID-19 situation was really effective. The serious measures that were taken in the beginning followed up by systematic tracking, tracing, testing and treatment are truly innovative and effective. This is proof that with good policy and science together, we can manage through these difficult circumstances.

3. What are your comments on China's improvement of its business environment this year?

China has continuously advanced reforms and opening-up for the past years. We are seeing great progress on streamlined administration, improved regulatory environment, upgraded services by authorities, and faithfully implemented tax and fee reduction policies. The greatly shortened negative lists for foreign investment market access are also attractive to foreign investment.

This year, given the pandemic impact, the quick actions on allocating low interest loans and subsidies on venue rental are very efficient policies to help businesses recover.

We are also seeing many initiatives that not only benefit businesses to grow but also help to steer the industry to a high level of development. Taking Merck as an example, we are a global leader in life science R&D and manufacturing solutions, and we are actively involved in the COVID-19 vaccine-related development together with our partners in China on virus research, test kit development and the optimizing of technological process. This year, at the third CIIE, we signed a memorandum of understanding with our local partner in China, that Merck became the first international company to pilot the new custom clearance process. This will certainly benefit the life science industry and accelerate the development in China.

4. What are your expectations for China's further reform and opening-up?

As a leading science and technology company, we see three of our core businesses as a perfect match to China's dynamic market. Today, China is one of our strategic markets. The further reform and opening-up of the market will certainly build our confidence in the market.

5. How do you view your company and the industry's performance in China this year?

Overall Merck has had double-digit growth so far. And we've been able to do that because the three pillars of our business -- life science, healthcare and performance materials -- all contributed. While we were challenged by the pandemic situation, each one of those businesses was fundamental to recovering during the pandemic.

Our life science business was very much involved in vaccine-related development and benefited from the dynamic growth of the industry. In healthcare, we are supplying critical medicine to patients who need their chronic disease treatments. And of course in the electronics industry, we saw fast development in China, accelerated by the digital living, 5G, artificial intelligence, autonomous vehicles and the recent launch of the new infrastructure investment plan, which are all driving the economic recovery in China. We can tribute to all of these initiatives.

6. Do you plan to deepen your company's footprint in China next year? If so, how?

We know the 14th Five-Year Plan is about to release, along with many other economic initiatives, and we believe China's ambitions to be a leading high-tech nation are attainable. And we are committed to playing an active role in this transformation.

We have been in China for 87 years. We are here to stay, invest and be even closer with our customers. We want to become a fully integrated part of the local ecosystem. We will continue to develop our partnerships with key players in China, enhance our capability across all three sectors, and continue our journey in seeking the best talent in the market.

Emmanuel Daniel, chairman of The Asian Banker. [Photo provided to chinadaily.com.cn]

1. How do you view China's economic performance in 2020 amid the COVID-19 pandemic?

China took the opportunity to deepen domestic consumption as a pillar of the economy during this time. The policies for this pillar were being carefully put in place long before the pandemic. It was a thrill to watch how the elements of these policies, from tax treatment to trade, came together during this period.

2. How do you evaluate the Chinese government's efforts in epidemic prevention and control?

The story of China's ability to manage the epidemic was built quietly since the 2003 SARS pandemic. The role of the Chinese Center for Disease Control and Prevention was strengthened considerably by the law on infectious diseases revised in August 2004. A new electronic notifiable disease reporting system was also put in place communicating directly to the CDC from all health sources.

Both these capabilities were subsequently tested several times in dealing with imported epidemics such as MERS and Ebola. The prominence of this agency during the 2020 pandemic is a testament to the strength and skills of public service. This relationship between agencies like the CDC and the central government is at its strongest in China today, while in many developed countries it is increasingly dysfunctional.

3. What are your comments on China's improvement of its business environment this year?

Everything actually achieved this year has been domestic. The immigration, labor, tax and business-related bureaus worked hard to keep processes developing in very challenging and constantly changing circumstances. For this, we are all grateful. China also took the opportunity to align its regional and international trade relationships through RCEP and other more bilateral arrangements. The effects of these alignments will become clearer in the years ahead.

4. What are your expectations for China's further reform and opening-up?

Much of China's reforms have been to attract foreign investment, especially in targeted sectors. As a global superpower and an economic engine for the global economy, the word "access to China" will mean different things to different countries. Success as a global player is assured only when other economies tie their own success to China. It also makes for a better world.

5. How do you view your company and the industry's performance in China this year?

The financial services industry worldwide is undergoing a tremendous transformation right now. China's commercial banks as well as new fintech players are realigning their relationships to accommodate this transformation. While the financial sector, even in China, has not been badly affected by the pandemic, its role is transforming because of all the new social norms arising from it. So this year continues to be good, but clearly the relationships with our clients and the industry at large are changing in profound ways.

6. Do you plan to deepen your company's footprint in China next year? If so, how?

Yes, we absolutely are. These are exciting times for us. The evolution of our business in China has been mirroring the evolution of the finance sector. When we first started in 2000, the year before China joined the WTO, our relationships were solidly with the banking industry. Over the past 10 years those have expanded to include the technology sector. Today we are moving into impact investments and the utilization of capital according to environmental and social governance considerations. We have also started helping Chinese domestic corporations internationalize their brands and reach. We are growing, just as China is growing.

Neil Wu, Principal, Roland Berger [Photo provided to chinadaily.com.cn]

1. How do you view China's economic performance in 2020 amid the COVID-19 pandemic?

The COVID-19 pandemic has hit the global economy and put intense pressure on countries around the world. China is the only major economy to expect positive GDP growth in 2020 and its GDP growth has rebounded rapidly starting from the second quarter, thanks to its successful control of the virus outbreak, orderly resumption of work and production, and the implementation of supportive government policies. With the pandemic under careful control and society returning to normal, the pre-existing innovation and digitization trend in China will continue to support its future economic growth.

2. How do you evaluate the Chinese government's efforts in epidemic prevention and control?

China's response to the COVID-19 outbreak and its measures to control the pandemic, including dealing with movements of a large population, shows the strength of its epidemic preparedness and management. The Chinese government has been continuously working on improving its epidemic response capacity to deal with future outbreaks since SARS. We see that comprehensive, strict and thorough control measures have been taken under strong leadership, with prompt decision-making and a people-oriented philosophy.

3. What are your comments on China's improvement of its business environment this year?

Considerable progress has been made in China over the past few years in terms of advancing reforms to streamline administration and optimize public services, and the pace of opening-up is accelerating even amid the global pandemic. In 2020, China reduced import tariffs on selected goods while the Foreign Investment Law has been officially implemented. Meanwhile, the country's new development paradigm of "dual circulation" encourages domestic and foreign markets to complement each other, creating a better business environment to spur higher-quality development.

4. What are your expectations for China's further reform and opening-up?

I believe that with the government's commitment to promoting higher standards of opening-up, we can expect a stronger business environment that is market-oriented, law-based and internationalized, reinforcing China's attractiveness to foreign enterprises and investments.

5. How do you view your company and the industry's performance in China this year?

As a global consulting firm operating in 35 different countries and with China representing one of our most important markets, we are facing many challenges just like many other international enterprises this year. Our business is slowly returning to normal through global collaboration and mutual support, and our clients continue to keep their faith in us.

Proximity to our clients is the key, and our consultants work hand in hand with them to jointly develop new approaches, to help them steer through this crisis and regain business confidence. As management consultants, we hope to create impact for our clients to achieve sustainable business success – both on how to navigate the crisis, and more importantly how to prepare for a ramp-up in the post-pandemic era.

6. Do you plan to deepen your company's footprint in China next year? If so, how?

China represents a critical part of our global footprint, and we have strong confidence for the great potential and resilience of its economy. Therefore, we will commit to continuing our sustainable and robust growth in China and serving our local and international clients here to achieve business excellence together. In order to provide our clients with new solutions to manage disruption and transformation in China, we will focus on our core values – empathy, entrepreneurship and excellence. Continuous emphasis on innovation and solutions, and the care of our people will be crucial to strengthening our resilience.

Kitty Fok, managing director, IDC China [Photo provided to chinadaily.com.cn]

1. How do you view China's economic performance in 2020 amid the COVID-19 pandemic?

COVID-19 has impacted the global economy with an expected fall in global GDP of 4.7 percent for 2020. China has been one of the few countries where the economy has been able to achieve some growth for the year because it was able to bring the outbreak in China under control, and IDC expects China's GDP to grow at about 2 percent in 2020.

2. How do you evaluate the Chinese government's efforts in epidemic prevention and control?

The Chinese government has been highly effective in the prevention and control of the epidemic in three key ways:

Firstly, they prioritized rapid action at all levels from the central to local governments.

Secondly, they implemented timely and effective control programs, such as:

• Pro-active testing and tracing of close contacts of COVID-19 cases

• Targeted community lock-downs to reduce the spread of the disease and associated economic impact

• Improved emergency response from the public health services

Thirdly, they developed and implemented many advanced technologies, such as:

• Mobile communications and GPS positioning technologies to control mobility with health and travel codes

• AI-based equipment for rapid contactless temperature measurement

• Rapid effective nucleic acid testing technology

3. What are your comments on China's improvement of its business environment this year?

China's overall business environment continues to improve:

The government first increased efficiency by decentralization. Next there was an increased focus on the value of data in provinces and cities, with Big Data programs improving data integration and utilization. In October, China issued an associated draft policy on the protection of personal information. Thirdly, there was increased marketization, including the introduction of the registration-based initial public offerings system, and fourthly, there was a strengthening in the supervision of the financial sector and reduction of systemic risk.

4. What are your expectations for China's further reform and opening-up?

Under the dual-circulation development paradigm, further opening-up of the China market will balance competition between State-owned enterprises, private enterprises and foreign enterprises. The government also is trying to further enhance their efficiency.

5. How do you view your company and the industry's performance in China this year?

The consulting industry was affected during COVID-19 and IDC has been impacted from the limiting of in-person meetings, marketing events, and data collection processes. However, IDC continued to conduct all necessary research by leveraging technology so that conferences and surveys moved online and modeling utilized AI.

This year, IDC has written over 200 reports related to COVID-19, and we also created the "5 stage path to enterprise recovery" model to help enterprises know what to expect and how to respond in the different stages of their business journey. Using all this additional research and technology, IDC China has maintained business performance.

6. Do you plan to deepen your company's footprint in China next year? If so, how?

IDC will continue to invest and to expand their business in China.

IDC will continue to provide intensive research on China's market trends, in particular, to help enterprises with their digital transformation strategy and insight into the technology demands arising from the government's 14th Five-Year Plan and associated infrastructure projects. At the same time, IDC will continue to support Chinese companies to develop more global expansion strategies, particularly at this unprecedented time.

Most important, we will continue to develop cases to help form the right technology ecosystems, and to develop all the necessary benchmarking tools for both technology companies and enterprises.

How Jit Lim, managing director, Alvarez & Marsal, Shanghai [Photo provided to chinadaily.com.cn]

1. How do you view China's economic performance in 2020 amid the COVID-19 pandemic?

China has successfully weathered the pandemic, with its economy performing much stronger than expected compared to the rest of the world. According to the latest official figures, China's GDP grew by 3.2 percent and 4.9 percent year-on-year in the second and third quarters of 2020, respectively, as the country continues its recovery. While 4.9 percent growth appears to be slightly below certain forecasts, industrial output - a good barometer of state-controlled activities - came in above expectations, with an increase of 5.8 percent year-on-year in the third quarter.

2. How do you evaluate the Chinese government's efforts in epidemic prevention and control?

The Chinese government has been very effective in terms of epidemic prevention and control. While many other parts of the world continue to see rising COVID-19 cases, new infections in China have remained in the single digits or low double digits for a sustained period of time.

3. What are your comments on China's improvement of its business environment this year?

In spite of global demand disruption, the business environment in China has improved as the country continues to promote its domestic consumption to help boost internal demand, including continuous efforts at modernization by investing in new tech infrastructure (5G, IoT, AI, etc), the interconnection of urban cities, and the rehabilitation of old cities. In the meantime, monetary policies remain flexible with low interest rates while China is determined to help businesses withstand the short term impact of COVID-19 by rolling out measures such as tax reduction for small and medium-sized enterprises.

4. What are your expectations for China's further reform and opening-up?

China continues to open up different market sectors, while focusing on investing in technology such as semiconductors, to help improve supply chain efficiency and reliability. At the same time, China is leveraging its huge domestic market to attract more foreign companies to invest and operate in China.

5. How do you view your company and the industry's performance in China this year?

2020 has been a strong year for A&M across the globe and in China. As a leading global consulting firm with a focus on business value creation, performance improvement and turnaround advisory, we focus on delivering hands-on DNA and leadership in helping businesses to drive transformation. This focus has proved incremental, as many businesses impacted by COVID and the market disruption seek to either improve their performance or transform their operations in order to stay competitive in the market. During this time of uncertainty in particular, we partner with businesses to go through the weeds of challenges and help them come out stronger.

6. Do you plan to deepen your company's footprint in China next year? If so, how?

Looking ahead into 2021, A&M is committed to investing further in the growth in China. While China is on a recovery trajectory, the global economy continues to fluctuate. We see an increased level of M&A activities and businesses continuing to seek transformation or performance optimization going forward. A&M will continue to invest in growing our China team's capability at all levels to support clients in China and beyond.

Helen Koo, Asia-Pacific CEO, Crestridge Consulting [Photo provided to chinadaily.com.cn]

1. How do you view China's economic performance in 2020 amid the COVID-19 pandemic?

No doubt China has taken the lead in economic performance in 2020 in spite of the pandemic. While most of the countries still suffer from higher infection and death rates, China has served as the economic engine for the world under the successful control of COVID-19.

2. How do you evaluate the Chinese government's efforts in epidemic prevention and control?

Chinese government has been exercising stringent control throughout the country to minimize potential outbreaks of COVID-19. Apparently, the efforts have paid off and allowed China to get back to more normalized working and living conditions.

3. What are your comments on China's improvement of its business environment this year?

To revive the economy after the shutdown early this year, the Chinese government continued to improve the business environment for domestic as well as international firms in China. In addition, many new policies and bold steps were immediately established to help businesses to survive in the economic downturn.

4. What are your expectations for China's further reform and opening-up?

We are optimistic China will continue to reform and open up to retain domestic businesses and attract foreign businesses. In recent months, foreign capital has been pouring into the China stock market. This indicates the confidence of international investors on China.

5. How do you view your company and the industry's performance in China this year?

Due to the pandemic, it was difficult for our company to execute China outbound merger and acquisition deals in 2020. This was true for most of the cross-border M&A firms in various parts of the world. However, we have been approached to work on deals related to China's domestic market, including a Cayman company to build AMOLED manufacturing facilities in China.

6. Do you plan to deepen your company's footprint in China next year? If so, how?

We will continue to service Chinese companies' outbound M&A needs. So far, most of our clients are from the Yangtze River Delta and Beijing area. We hope to enhance our service to the southern territory including Guangdong and Fujian provinces.

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