Unidad Académica Profesional

Cuautitlán Izcalli
Unidad de Aprendizaje
MERCADOS INTERNACIONALES

Licenciatura en Negocios Internacionales

Estudio de caso sobre China

Nombre de Alumn@s:
Melanie Paola Frías González

Profesor:
Juan Gabriel Olvera Rios

Cuautitlán Izcalli, México a 17 de febrero de 2024

 First questionnaire of the International Markets.
“Solamente es duradero lo que con la virtud se consigue”.

Sófocles

URL

https://ca.finance.yahoo.com/news/why-china-best-days-already-
195022194.html?soc_src=social-sh&soc_trk=fb&tsrc=fb

1) Why China’s best days are already behind it?

It is said that they have been left behind by various factors that have affected
economic growth, this is a combination of economic, demographic, structural,
and geopolitical challenges, such as the economic slowdown due to the
shrinking population, debt-financed investments and restrictions on access to
technology. Also due to geopolitical tensions, the current geopolitical
confrontation between China and the United States, which led to the "Great
Decoupling."
China faces internal challenges, such as a debt-fueled real estate crisis and
losses in the financial sector.

2).- For the first time in more than 60 years, China’s population is shrinking. What
does it mean from an economic point of view?

It has economic implications that affect the country's economy. Some of the
economic consequences of China's declining population are: declining
workforce, aging population, changes in the consumer market, social security
programs, long-term economic growth.

3) At what percentage China Graw in 2022? Was the best year for them?

a) 1.3 pc
b) 3 pc
c) 8.4 pc
d) 10 pc
 4) The era of double-digit growth is
“continue”, Magnus says.

FALSE

5) Which country is now set to overtake it as the world’s most populous

country this year, according to UN projections?

a) Japan
b) Korea
c) India
d) United States of America

6) A shrinking population “aggravates” other issues, according to Magnus.

China, like much of the developed world, now faces the prospect of
_________ population that will put ever greater financial strain on its
workers.
a) a younger
b) an ageing
c) a skill
d) a technologically

7) “___________________in the last several years has taken a much more

authoritarian and controlling view about its relationship with private firms
and entrepreneurs. Lots of private firms and entrepreneurs have had
their wings clipped,” Magnus says.

a) Citizens
b) The government
c) Entrepreneurs
d) Banks
 8) Apple is a prime example. It has relied on Chinese labour to manufacture
its iPhones since they were first released in 2007 but has now begun to
shift manufacturing to markets such as _________________________.
a) India and Vietnam
b) Taiwan and Philippines
c) South Korea and Japan
d) Australia and New Zealand

9) “The all-encompassing geopolitical confrontation between China and

America, and the Great Decoupling it has led to, is by far the _______
important force driving global politics and economics,”
a) second
b) minor
c) less
d) most

10) Magnus says: “I think the _________________basically see a moment

in time when they think the West is in terminal decline and they see their
moment, rightly or wrongly, to exploit that.”

a) Ukrainians and Russians

b) Indians and Pakistanis
c) Americans and Europeans
d) Chinese and the Russians

11) Is it or not convenient to invest in this decade in China?

China remains one of the largest consumer markets in the world and offers
significant opportunities for businesses; China has been investing heavily in
technology and innovation, particularly in areas such as artificial intelligence, e-
commerce, and renewable energy. However, China's regulatory environment can
be complex and subject to sudden changes, especially in sectors such as
technology, finance, and healthcare.
Geopolitical tensions can create investment uncertainty and affect performance.
If you want to invest in the country, you must understand the political dynamics,
the commercial and economic environment and like everything, know that there
are risks but there are also opportunities.

12) Where would you recommend investing abroad? and why.

Factors such as political stability, economic growth, regulatory framework, etc.

must be evaluated.
Emerging markets have potential in sectors such as technology, e-commerce,
and renewable energy. In Latin America, countries such as Brazil, Mexico, and
Chile present opportunities in sectors such as agriculture, mining and
infrastructure development.
The United States continues to be a center of technological innovation, with
leading companies in sectors such as technology.
Investing in European markets can offer exposure to sectors such as healthcare,
clean energy, and advanced manufacturing.
Canada offers opportunities in sectors such as natural resources, finance, and
technology.
In conclusion, the right country to invest in depends on the sector you want to
target; Then it is important to consider political, economic and social factors of
the country to know the environment in which you are going to invest.

For decades, China’s growth stunned the world.

The country’s transformation into the “workshop
of the world” unlocked what has been dubbed an
economic miracle.
Now, however, the clouds are gathering over the
world’s second-largest economy.
For the first time in more than 60 years, China’s
population is shrinking. Growth is
slowing. Western investors, for years a source
of capital for growth-hungry Chinese businesses,
are shunning the country. China’s lucrative tech
sector is stumbling. And a slow motion
implosion is playing out in the country's debt
fuelled property sector, triggering billions in
losses across the financial sector.
“I think people have to get used to the idea that
in the next five to 10 years China's growth rate
will be quite pedestrian,” says George Magnus,
an economist at the China Centre at Oxford
University. “It won't be the force in the world
economy that it has been in the last 10 or 20
years.”
The evidence suggests China has passed its
peak economically, according to Magnus, the
author of “Red Flags: why Xi’s China is in
Jeopardy”.
GDP expansion has come to a juddering halt
after a year of zero-Covid policies followed by
an explosive outbreak of the virus.
While 2023 will be a year of post-Covid recovery,
with normal life resuming and consumers
spending money again, the country will struggle
to get back to the dynamism it enjoyed in the
early part of this century. Growth stalled to 3pc
in 2022, dropping from 8.4pc a year earlier.

Compared with many Western countries, 3pc is

high. For China, however, it is the lowest growth
in 46 years, barring the height of the pandemic
in 2020.
The era of double-digit growth is “all finished
now”, Magnus says.
“That ended really in the 2000s. The growth rate
in China has been halving each decade. So it
halved from about 10pc to 5pc between the
2000s and the 2010s. And it's going to halve
again in my view from about 5pc to about 2.5pc
between the 2010s and the 2020s.”
Capital Economics, a research business,
predicts the Chinese economy will grow 5.5pc
this year. The conditions are ripe for a short-
term growth spurt according to chief Asia
economist Mark Williams. But like Magnus, he
warns that looming structural issues will
resurface before long.
“Everything is aligning for near-term strength,”
he says. “But the structural challenges that
China faces haven’t gone away.
“Its population is shrinking. The economy still
runs on debt-funded investment, in property and
infrastructure, that no longer delivers rapid long-
run growth. The advanced economies are
restricting China’s access to cutting-edge
technology.
“China’s economy is getting back on its feet but
it can’t run like it used to.”
2022 marked a historic turning point for China
as its population fell for the first time in 61
years, shrinking by 850,000 to 1.4bn according
to The National Bureau of Statistics.
The decline is the product of Beijing’s decades-
long policy of restricting how many children
couples can have, motivated originally by fears
that overpopulation would exhaust resources.

Couples were restricted to one child from 1980

onwards. The policy was relaxed to two children
in 2016 before being scrapped altogether in
2021.

However, Beijing has struggled to boost birth

rates given the fact China’s entire society has
for decades been oriented towards single child
families. The country’s fertility rate has in fact
declined since the two-child policy was
introduced, according to the World Bank.
India is now set to overtake it as the world’s
most populous country this year, according to
UN projections.
A shrinking population “aggravates” other
issues, according to Magnus. China, like much of
the developed world, now faces the prospect of
an ageing population that will put ever greater
financial strain on its workers.
Even now, the economy is stuttering. A massive
credit bubble, which drove China’s bumper
growth over the past decade, is starting to
unwind.
“There's a lot of debt in China, it's over 320pc of
national income. A lot of that debt is
uncommercial. Borrowers are finding it very,
very difficult to keep current with their interest
payments and paying off their loans,” Magnus
says.
The unwinding of this debt bubble is triggering
serious problems in the property market.
Analysts at UBS estimate that China’s real
estate slump will cost the nation’s banking
system as much as $212bn (£170bn) in losses on
loans, bonds and other assets.

The country’s finance industry has already lost

ground to rival Asian centres like Singapore in
recent years. Many international banks have
turned their backs on Hong Kong in the face of
draconian Covid restrictions that have made it
difficult to do business there in recent years.
China's tech sector has also lost its lustre.
Revenue growth at some of its biggest
companies, including e-commerce giant Alibaba
and games company Tencent, has slowed as
Beijing has turned its draconian glare on the
industry.
“The government in the last several years has
taken a much more authoritarian and controlling
view about its relationship with private firms
and entrepreneurs. Lots of private firms and
entrepreneurs have had their wings clipped,”
Magnus says.
The most public example was at Alibaba. After
founder Jack Ma criticised regulation in a
speech in October 2020, Beijing launched an
intense crackdown on Ma’s business empire that
derailed plans to list his financial business Ant
Group. Ma himself disappeared from public view
for three months.
While Beijing has exerted greater control over
tech, it has come at a cost. Revenue from
customer fees at Alibaba, China's answer to
Amazon, fell by 7pc in November.
In recent months, President Xi Jinping has given
signals that the tight grip on tech could be
easing. This week, ride-hailing company Didi
announced it had reached an agreement with
China's authorities to begin adding new
customers to its app again. Didi had been forced
to pull its US listed stock due to data concerns
from Beijing.
However, the damage is done. China's position
as the world's tech manufacturing hub has been
severely weakened and US companies are
seeking to reduce their exposure to the country.
Apple is a prime example. It has relied on
Chinese labour to manufacture its iPhones since
they were first released in 2007 but has now
begun to shift manufacturing to markets such as
India and Vietnam.
Apple has good reason to fear disruption - trade
barriers are being erected. The White House has
moved to cut off China's access to Western tech
as geopolitical tensions rise. Using sweeping
sanctions, it has blocked Chinese tech
companies from accessing advanced chip
designs and Western machines used to build
semiconductors.
“There are conflicts, there are tensions and
those are not going to be swift to resolve,” says
Karen Jackson, a Reader in Economics at the
University of Westminster who specialises in
trade policy.
Restrictions like these can act as a drag-anchor
on China’s growth.
Not everyone is convinced China's star is
waning. Diana Choylev, the chief economist at
consultancy Enodo Economics, believes the
clash with the US will cement China's
importance on the world stage.
“The all-encompassing geopolitical
confrontation between China and America, and
the Great Decoupling it has led to, is by far the
most important force driving global politics and
economics,” she says.
As the West turns away from China, Beijing is
looking to Moscow. When Xi Jinping and Russian
President Vladimir Putin met in Beijing last
February, they issued a joint statement
asserting that the friendship between the two
knew "no limits" and had "no ‘forbidden’ areas of
cooperation”.
Magnus says: “I think the Chinese and the
Russians basically see a moment in time when
they think the West is in terminal decline and
they see their moment, rightly or wrongly, to
exploit that.”
However, that appears to be wishful thinking.
With problems mounting at home, Xi’s focus will
increasingly be domestic as Beijing battles to
recapture the momentum that has powered
China to the top table on the world stage. It is a
difficult struggle – all the signs suggest the
country’s best days may be behind it.