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China’s new economy is divided into “two decades preceding and following.”

The first two decades are from 2000 to 2019. The largest industrial chain and second-largest consumer market in the world have been created during this time thanks to China’s GDP, which has multiplied nine times. The launch of China’s new economy was enabled by the mega-scale market and industry.

The rise of consumer Internet platforms was the most significant result of China’s new economy in the first two decades. Because China has such a large market, a platform simply uses financial capital to support its continuous expansion, eventually achieving a monopoly position, aiming for a future monopoly, discounting it into a huge net present value (NPV) in the present, and then using this NPV as a valuation to help it achieve a monopoly. This is the closed-loop financial development model of consumer Internet platforms, and as a result, China has produced a number of world-class Internet giants.

However, in terms of technological development, a foreign think tank scholar conducted a study to determine each country’s position on the “smile curve.” According to her research, from 2000 to 2019, China’s economic industry, although the scale has increased significantly, has remained in the middle position, that is, manufacturing, assembly, compared to the two ends of the R&D, sales, the value added is relatively low.

However, China has achieved industrial upgrading in a few areas, including high-speed rail, new energy, 5G, and so on. Even so, these high-tech industries with high R&D investment are led by government departments, and the government is either an investor or a major customer. The venture capital and startups are not heavily involved.

So, in his speech last year, General Secretary Xi Jinping stated that the new round of scientific and technological revolutions and industrial change has provided a strong impetus to economic development, but has also had a profound impact on employment and income distribution, including some negative consequences that must be effectively addressed and resolved.

The first two decades of China’s new economy were essentially “capital leveraged the country“. 

The consumer Internet is primarily based on business model innovation, with little technical content. The QR code, for example, which we commonly scan, was actually invented in the 1990s. It has grown so fast because it can capitalize on the maximum positive external benefits generated by the country during the development process, such as increased disposable income for our residents, improved logistics and transportation, and popularization of information technology, all of which are done by the state rather than venture capitalists and entrepreneurs. 

However, the state bears the negative externalities of this capital-driven, winner-take-all development model, resulting in the emergence of “Gilded Age” problems throughout society, such as the widening income gap, the lack of social security for delivery riders, and the socio-economic problems caused by these monopolies, all of which must be paid for by the state.

As a result, the central government has proposed “high-quality development”, “common prosperity” to promote healthy economic growth, optimize the distribution structure, create opportunities for more people to become wealthy, and avoid “in-rolling” and “lying flat. This is a significant turnaround and an important opportunity for China’s new economy, as well as the start of China’s new economy’s next twenty years.

It should be “country leverages capital” in the next 20 years of China’s new economy.

Under the leadership of the national strategy, China’s economy will be able to transition from large-scale development to high-quality development through capital-driven and industrial upgrading. 

China should not only be large-scale, but also continue to move to the upper left of the smile curve. Moving up means increasing the industry’s value-added, which will result in more high-skilled jobs and higher per capita income, while empowering with technology to achieve cost reduction and efficiency and maintain Chinese manufacturing’s global competitiveness. At the same time, China’s position must shift to the left, that is, it must improve its R&D capabilities in order to solve strangleholds problem of key technologies.

Our investment in the new development stage should be heavily focused on “high-quality development and shared benefits“. Our company focuses on three main lines: 

The first, the transformation and optimization of the supply chain. China has the world’s largest industrial supply chain, but it is still relatively fragmented and generally lacks the ability to transform technology and information technology, leaving a massive value space to be explored.

The second is hard technology import substitution. For example, chips are China’s largest annual import amount of products because, following an epidemic global shortage of semiconductors and a significant drop in oil prices, China imported 350 billion worth of chips in 2020, more than doubling the second place of crude oil. Another example is medical equipment; China has a lot of drugs and medical devices that are dependent on high-priced imports; the space for domestic substitution is very large, and once localization is achieved, it can greatly reduce the burden of people going to the doctor.

The third is sustainable development. Now the world is trying to achieve carbon neutrality, China is very early in this layout, the investment is also the most. For example, photovoltaic power generation used to cost $100 per unit in foreign countries, but thanks to the continuous development of Chinese enterprises, the cost has now dropped to a few cents per unit, enabling for large-scale application. Similarly, Chinese-made electric vehicle (EV) batteries have significantly reduced the cost of EV production, explaining why EVs have grown so rapidly in recent years.

What kinds of businesses will thrive in China’s new economy over the next two decades?

Baibu, Daxiongxingzuo, BaiAoHeng, All of these companies have one thing in common: 

they are all entrepreneurial, but through a key technology, they have leveraged a large scale industry and have quickly grown into leaders in their niche industries. Such a phenomenon is also found in other developed countries, a large-scale industrial chain, able to support hundreds of so-called “invisible champions”. China is the world’s largest producer, there must also be hundreds of “invisible champions”. Therefore, in the latter two decades of the new economy with high quality development, investors should not blindly pursue the financial-driven scale as before, but should focus on quality and develop a deeper understanding of the industrial chain and supply chain.

The preceding is my interpretation of China’s new economy, as well as some thoughts on future high-quality development. Finally, I’d like to share two guidelines with you that we should always keep in mind when making future investments.

The first point is to focus on the direction of common prosperity. The essential requirement of socialism with Chinese characteristics is common prosperity, and we should look for entrepreneurial opportunities that create universal value in our investments.

The second point is the General Secretary’s discussion of capital. Marx and Engels did not face the problem of large-scale capital at the time, and the Communist Party of China explored the establishment of a socialist market economy, leading the country to “cross the river by feeling the stones.” The pursuit of profit, the pursuit of return, which is engraved in the DNA of capital, is the most essential characteristic of capital. However, capital in China must consider two principles.

First, it should carefully balance its own investment return interests with national interests, and it should actively play the role of production factors.

Second, it must not pursue its own interests in ways that are detrimental to the country’s and people’s long-term interests.

Source: https://www.guancha.cn/LiShiMo/2022_06_19_645291_2.shtml

There seems to be a lot of concerns about the China #economy and how geopolitics is affecting it.

The 🇨🇳 economy is transitioning towards a new development model. This is driven by China’s own national priorities with or without geopolitical considerations. The current geopolitical tensions are accelerating this process and also at the same time adding risks to this process.

China’s most important asset both for its own economic future and for its position in the world is its 𝗶𝗻𝗱𝘂𝘀𝘁𝗿𝗶𝗮𝗹 𝗰𝗮𝗽𝗮𝗰𝗶𝘁𝘆. China’s industrial capacity is bigger than the 🇺🇸 🇯🇵 🇩🇪 put together.

We make everything for the world but this capacity’s value is still relatively too low. We’ve been doing better of course. But overall our industrial capacities value still has much room to grow.

We make everything for the world but this capacity’s value is still relatively too low. We’ve been doing better of course, for instance the iPhone, 10 years ago only 3,5% of its value was created by China now it’s more than 25 %. But overall our industrial capacities value still has much room to grow.

To improve we need large-scale transformation of our industrial capacity so that it is enabled by technology, and also to build capacities in new industries such as those sectors driven by low carbon emissions.

China’s entire industrial capacity probably generates between 5 to 10 trillion US $ per year, 5 as industrial output and maybe 10 at the market endpoint. But the value-add of this capacity is still below 20%.

I would guess that our manufacturing generates perhaps 12 to 15 % gross margin, which is too low. Higher quality development would have it generate maybe 30 to 40 % gross margin. Now on such a large base this value increase would be enormous.

Semiconductors alone probably accounts for 5 to 10 points and we spend nearly half a trillion US $ importing semiconductor chips and related products.

This is more than crude oil and iron ore combined, as we know China is the largest crude oil and iron importer in human history.

China’s national priority going forward is not to chase mere the quantity of GDP growth but the quality.

The current geopolitical tensions make this process a national imperative. It’s now not just driven by economics but by national security.

In the next 10 years there will be tremendous investment and growth opportunities manufacturing, technologies, supply chain optimization, AI, semiconductors, life sciences and medical equipment, new alternative energy like EV and new materials.

All these makes the west particularly the U.S. feel threatened and insecure, and that’s understandable.

America sees its leadership position in technology innovation the bedrock of its global dominance. So they must compete.

But perhaps because their political system is inefficient and their society is polarized at the moment, they seem to feel they’re unable to compete effectively by improving their own national capabilities.

So they resort to geopolitical tactics to weaken its rival.

This adds significant risks to China’s path forward.

At the moment pessimism abounds about the Chinese economy, you know Covid lockdowns, real estate bubble, big tech blues, geopolitics, you name it, but these are short-term challenges.

Everyone faces short-term challenges; if not these, then something else will, but in the long run, I recommend that we refer to the 14th Five-Year Plan. It sets specific goals for a broad range of sectors manufacturing, technology, AI, semiconductors, Net-zero, R&D, and etc.

In the next 10 to 20 years, compared with the rest of the world China will be the continent of stability and growth.

Another key asset for China going forward in the future is political predictability. We know who will be in charge and what policies they will implement.

Don’t Bet Against the Five-Year Plan is a truism when it comes to investing in China.

Source: www.zaobao.com.sg

Today I received an email from Team Tony Robbins, and I would like to share it with you.

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Can you believe this?

It has been two years this week since the world shut down.

If you’re still feeling stuck, unfulfilled, or frustrated after all this time and you want to avoid another year of these same emotions, there’s good news!

You can turn it all around right now all on your own.

Because you can decide what to focus on, in every moment of your life.

Decisions – NOT conditions – are what ultimately determine our destiny.

There are three decisions we’re all making consciously or unconsciously…

And when you’re aware of these three decisions, you can strengthen your decision-making muscle, gain more CLARITY into what you want, and ultimately create more joy and more fulfillment in your life!

1. What am I going to FOCUS on?

What we choose to focus on affects our whole life.

Unfortunately, what most people focus on is what they fear – it’s human nature!

We have a 2-million-year-old brain designed to keep us safe and alert us of danger.

What we focus on, we feel – whether it’s true or not. And as Tony says, “where focus goes, energy flows.”.

What if you spent this time focusing on gratitude or cultivating a growth mindset?

2. What does this MEAN?

The meaning you assign to things will ultimately shape how you feel.

Is someone criticizing you, or instead offering valuable insights?

The most successful people in the world can take ANY experience and make it work FOR them.

Focus on creating a meaning that empowers you, and your brain will find the resources to make it happen.

3. What am I going to DO?

How are you going to respond? How can you grow during this time?

If you’re angry, you’re going to do something different than if you’re feeling grateful.

Meaning has a profound impact on the actions you take (or don’t take)!

Making these decisions helps you move from a world where other people are making decisions for you, to a world where you’re in control.

Tony has always said that your destiny is shaped by your decisions. And throughout a lifetime, you’ll make thousands of decisions.

These are three that you make DAILY that have tremendous influence in the present and the future.

It’s up to YOU to control your focus.

You can decide to be frustrated, angry, or scared…

Or you can decide to be grateful, joyful, and blessed.

One thing Tony’s mentor Jim Rohn taught him is “every day, stand guard at the door of your mind.”

During unique times like this, we need to stand guard – especially if we want to shift our habits and emotions from the last two years.

Only you can decide to raise your standards and make decisions that empower you to reach your next level.

And remember, even the smallest decision has the power to radically transform your life for the better.

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The Five Structures is a profiling system I learned in November 2021. The most interesting thing for me is that the five structures annual chart shows how my personal development will be like in the year.

The year of 2021 is almost ending. When I look back my personal development and skills upgrading with the five structures trend, I have to say it’s quite matching. It’s a year full of challenges for me in many perspectives. I call it a REFLECTION year – I do underground work or prepare for the coming years. In this year I stretched myself quite a lot in certain areas, like companion – connecting new people and seeking my tribes.

I have achieved two things in this structure. First, I have connected some important people for my future, which laid a solid foundation for my transformation in the coming years. Second, a plan for expanding my social connection is in place for 2022 (I will put some effort to execute).

I had quite some struggle in wealth, due to some factors partly influenced by the pandemic (I couldn’t easily travel back China to solve it). Luckily I got support from my family in China. It helped me to carry on my project initiated one year ago. Till today I have found the clarity of my path.

I appreciate that 2021 allowed me to meet important people, to learn from great mentors and peers and to reflect my values and life path.

I look forward to the year of 2022 because it looks prosperous and hopeful from my five structures trend. The chart on the top shows that the trend of 2022 switches the direction and the potentials of my upgrading.

In the coming year I have the potential to influence others and my field very well if I follow my path. I will have fulfilment by serving others as a supporter. I am able to bridge more people and business between the east and the west by providing resources and contacts. It sounds great, right?

Last, I would say 2022 will be transformation in action.

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P.S.

If you want to learn about your five structures in 2022, please send me a message by the contact form.

Before the summer vacation in the Alps, I spent some time to review my dreams in the past and the journeys I took to realise them.

The biggest dream so far I manifested is the cross-border dream. I have studied, worked and lived in the Netherlands for 11 years since I came out of China in 2010 September. I started my dream in 2002 with two best friends’ influence, and followed my heart, pushed through all the obstacles, failures and reached the destination. 8 years later, my dream came true. 

Till last year I found that the cross-border dream was not for myself alone, which is one part of my life purpose. I made other crossing over things during these years.

I studied computer science and technology then worked on IT for one decade in China; studied business administration in the Netherlands and work on Business-IT field. As I was first spiritually awakened in 2009, a new world was opened for me which is mystic and beyond my mind. The awakening experience transformed me to be a spiritual seeker living in a reality-spiritual world.

My life in the Netherlands spins fast, up down up down all the way. It took me 10 years to be 80% grounded in this low land. Through these years, I feel grateful for this life starting in China. Without the nourishment of deeply rooted Chinese culture, I wouldn’t realise my strengths of learning, adapting and empowering. My spirit that transcends time, space and national boundaries showed me a bird’s eye view that I came to the world for being the bridge between different worlds. 

In December 2020 all my dots were connected together after 11 years. Finally all the pieces of my life experience came to together and showed me the blueprint. With a calling a new dream is created. During this special time on our planet, I hope new dreams to manifest in a much faster speed. I believe self-realization is human high-level need and sacred life goal.

To all those who are struggling to chase their dreams, I would say “Never Give Up! Focus! Your dreams can come true.”

To all those who realised their dreams, be the light and spread the light for others who are on their journeys towards their dreams!