Co-organised by the Singapore Institute of International Affairs (SIIA) and UBS on 26th May 2023 at the UBS Auditorium, “China’s Re-Opening: Prospects for Growth and Cooperation” centred around how businesses could navigate the re-opening of one of the world’s biggest economic players. The two-hour talk attracted over 125 attendees including C-suite executives and industry leaders.
After the welcome remarks by the SIIA Chairman Associate Professor Simon Tay and Business Sector Head of Singapore and Malaysia of UBS Global Wealth Management Ms. Patricia Quek, the SIIA was privileged to have Senior Minister of State for Foreign Affairs and National Development Sim Ann open the talk, and to have key business leaders with extensive experience engaging China as panellists to share their perspectives on the country’s re-opening. The panellists were Chief Investment Officer at UBS Mr. Kelvin Tay, Chief Executive Officer of China CapitaLand Trust Mr. Tan Tze Wooi, Regional President of Evonik Asia Pacific Dr. Claus Rettig, and the Executive Chairman of Pacific International Lines and immediate past President of the Singapore Business Federation Mr. Teo Siong Seng.
China’s post-pandemic landscape
The talk began with an assessment of China’s post-pandemic landscape. Described as “one of the most consequential in recent events”, China’s re-opening was one that was long hoped for and welcomed. As the largest trading partner to more than 120 countries, when COVID-19 forced borders to close and economic activity fell, the world acutely felt China’s absence. During China’s COVID-zero policy, the most frequently asked question from Singaporean businesses was when visits to China could resume. Now, China re-opens at a time of serious geopolitical challenges, while being embroiled in the simmering Sino-US rivalry.
Turning to Sino-Singapore relations, both Prime Minister Lee and Deputy Prime Minister Wong have already paid visits to China, demonstrating that government-to-government exchanges are off to a strong start. Additionally, numerous businesses have made a beeline for China, immediately wanting to refamiliarise themselves with an important economic partner. Businesses are keen to understand China’s recent developments and renewed potential, and what they should pay attention to after the pandemic.
China’s post-pandemic business environment
The enthusiastic beeline to China made by many world leaders and businesses after the re-opening demonstrates how many seem to forget the fact that China was put through an extremely arduous period of lockdowns just half a year ago. The panellists highlighted that, in order to facilitate economic recovery post re-opening, it is imperative that China earns back pandemic-eroded business confidence which had been built up since Deng Xiaoping’s opening of China’s economy in the 1970s.
The panellists observed that there are changing domestic tastes and preferences in China after the re-opening, with a focus on attracting higher quality investments, signalling that China is at its next phase of development, promising an increased demand for high-quality technologies. They emphasised the importance for businesses to have a strong team on the ground who are familiar with these changes so that businesses are better positioned to capture these new opportunities. China’s re-opening is not progressing uniformly across the country, however, thus requiring businesses to judge the ground and approach each city free of assumptions.
With their business expertise, the panellists concluded that China is an undeniably important market for business and investment opportunities. However, seeing as it is becoming an increasingly decoupled world, businesses must pay heed to politics, which play an increasingly important role in business decisions. As it is almost impossible to decouple China from the global supply chain, companies need to be as balanced as they can while manoeuvring within the Sino-US rivalry.
Efforts by the Chinese central government
The discussion then turned to the Chinese government’s efforts to recover the economy so far.
One panellist noted that there was an increasing bifurcation between what China says it would do and what it does. Currently, China is certainly not back to business as usual. However, the panel shared the view that China’s business outlook towards the close of 2023 would be more positive as its recovery would gain further momentum.
Furthermore, the Xi administration’s goal of a consumption-driven economy, driven by his Dual Circulation Strategy, which goes hand-in-hand with the Common Prosperity policy, would serve as an engine of growth for China. However, the success of these strategies is premised on the fact that Chinese citizens increase their level of spending. Hence, domestic economic confidence must be restored so that spending, especially on big-ticket items, is encouraged. Thus, it is imperative that businesses keep this in mind while returning or venturing into the Chinese post-pandemic market.
Overall, businesses should equip themselves with renewed vigour and wisdom gleaned from the pandemic to fully leverage these opportunities going forward. That said, there is a note of caution and special attention to China’s re-opening. It remains that a re-opened China is not the same as before.
