Craig, I know you've been watching all of this very closely when you look at
their meeting, the kinds of things they discuss, but particularly this latest
message from XI, what do you make of this?
Well, firstly, thank you very much, President Biden and President Xi had a
three and a half hour meeting earlier this week.
And I think that the main outcome of that meeting would be the establishment,
or at least the announcement of some working group mechanisms on a number of
important issues, including climate and also trade and investment.
So we'll have to wait to see how that's fleshed out.
But it's a positive sign. Talking is better than not talking.
You can. I can agree with that for sure.
That's what keeps us in business. In terms of the business community in
the U.S. and also those doing business in China
now, are they eager? Are they?
Do they believe that something can change in the right direction?
Are they still skeptical? Still worried?
So I think that 20 21 was a excellent year with trade and investment both
increasing at a very rapid clip. 2022 has been much more difficult.
And in 2022, we're suffering from the impact of the zero Covid policies and a
sharp slowdown in the Chinese economy. So visibly, 2023, I think it depends on
the policy choices made by both governments and therefore we're happy
that there will be at least some form of dialogue on the important economic
issues. Whether or not they will be able to make
any breakthroughs remains to be seen in early December.
The Chinese will have their economic conference to talk about these major
problems. And I think at the close of that
conference, we'll have some indicators as to where economic policy will go and
how they'll address the very acute cyclical problems that they're facing in
real estate, youth unemployment, local finance, among others.
To what extent? Because we talk about.
Yes, yes, you have signs from high level leadership to a large extent, people to
people business to business relations continue.
That certainly has been the case when it comes to Australia and China, despite
that relationship deteriorating. Is that the case for American businesses
or is there an increasing sense, no doubt, compounded by Covid 0, that China
is a market that has become too hard and they feel too unwelcome?
So the American companies that have an installed base already have investments
here very much committed to the market. Most of our companies are in China for
China, the produce in China, they sell in China, and that is continuing and
indeed expanding. However, on the supply chain side, there
are investments. The marginal investments are going to
other economies. Incremental investments as companies
choose China plus one or China plus two strategy.
Everyone is trying to avoid a single point of failure in their supply chain
and that just makes good economic sense. So we see a complex mixture of large
companies in particular doubling down on China,
but companies worried about their supply chain and the resiliency of their supply
chain adding investment elsewhere. The main concern that I would have is
that there are relatively few new entrants into the market.
So those who are not yet in China are finding it easy to look elsewhere rather
than at this 20 percent of the world's population.
At the Bloomberg New Economy Forum, we spoke to Gary Schell, as well as any
slowdown from Human Capital Partners. And among the likes of teaming the likes
of Sequoia, we have seen a lot of these V.C.
funds focused on China still managing to raise funds.
Is this likely to continue? And is there a concern that some of
these kind of really hot spots of the investment, like biotech, like pharma,
could come under regulatory strain? I do believe that there is a movement in
Washington to bring greater government regulation to U.S.
investments in various high technology areas, particularly those that may have
national security implications. For example, in the semiconductor area,
quantum computing and a I if there are American investments that are going into
Chinese companies that may be supporting the Chinese military, then I think that
they should expect additional regulatory scrutiny.
In addition to that, both government. Clamping down on data and particularly
cross-border data flows in a very broad sense.
Be it personal data or national security sensitive data.
There is a great deal of regulatory efforts underway in both governments and
that could also slow business integration.