Having spent much of his career in Asia, the Chairman of VitalBriefing’s International Advisory Board, David Schlesinger, is among the most astute China observers on today’s scene. He is the former Chairman of Thomson Reuters China, appointed to that role after serving as the global Editor-in-Chief of Reuters News, running the 3,000-journalist strong international news service.
Currently, he is the founder and Managing Director of Tripod Advisors, a Hong Kong-based consultancy that advises on political risk analysis, strategy and on running complex, dispersed global organizations with an emphasis on China and the media sector. He also is the Chairman of Poseidon Research, a leading provider of reputational due diligence investigations.
David recently led a VitalBriefing webinar to explore the issues affecting China and anyone interested in investing or doing business there. VitalBriefing’s Head of Editorial, Simon Gray, offers this summary:
China is a graveyard of received wisdom, Schlesinger argues, noting that just in the past few years, the country has confounded expectations that:
• New leader Xi Jinping would be a reformer
• Members of the Politburo and the military leadership were immune from arrest
• GDP growth of less than 8% would lead to unrest
• The Communist party could never tackle the country’s endemic corruption.
Xi has consolidated power more quickly than anyone anticipated, Schlesinger argues, and his aim is to deploy it in pursuit of clear goals:
• Extending the country’s urbanisation,
• Asserting its economic and political influence both across Asia and globally
• Using popular anger at corruption as a weapon against his enemies at home, while clamping down on public expression, especially via the internet and social media. He is also seeking to bolster the rule of law, albeit “with Chinese characteristics.”
David’s observations about the state of China today and near-term outlook include:
• The fear of guilt by association from the anti-corruption campaign is leading to paralysis in some companies and public agencies whose leaders or officials have been arrested. Foreign individuals and companies have also been put on notice that they are not immune.
• Xi does not trust some of his fellow Politburo members and often sidelines them, but hopes to install a like-minded leadership team at the next Communist Party Congress in 2017.
• China will ease monetary policy further to avert a hard landing that could derail Xi’s ambition of financial reform and internationalisation.
• How Beijing deals with Hong Kong and its pro-democracy movement is a test for its ambitions of economic liberalisation in centres such as Shanghai.
• Xi and colleagues face challenges in assuring security of food and water in the more urbanised China of the future, inhabited by an ageing population, while arresting today’s chronic damage to the environment and quality of life.
• Xi’s New Silk Road initiative could help bring the economic benefits of reform to restive regions of western China and help dampen ethnic tensions.
• Online service providers such as Alibaba and Tencent are being encouraged to challenge the country’s banks, especially through technological innovation, but not to supplant them.
• As the regional headquarters of China’s leading banks and now a founder member of the Asian Infrastructure Investment Bank, Luxembourg is well placed to help China engage with Europe as a single entity.
Feel free to watch the full webinar presentation. It’s a great way to spend 45 minutes.