Fears about China’s slowing economy are overblown, authors Jeffrey Towson & Jonathan Woetzel argue in this adapted excerpt from the follow-up to their 1st book.
There has been an eerie calm in Chinese real estate for the past couple months. People have noticed that real estate developers are cutting prices. They have noticed that banks are pulling back on lending. They have noticed that China’s first bond defaults since 1997 have occurred. It’s like everyone has stopped (or at least slowed) the real estate game they have been happily playing for the past decade and are quietly re-assessing the situation.
A lot of people view China business as mysterious. Relax. Consumers behave pretty much the same everywhere. Competition is pretty much the same everywhere. You just need to ignore the hype and focus on the basic fact that in China today, there are six big trends. That’s it. Six trends shape most of the country’s industries and drive much of China’s impact on the Western world.
You can’t go a week without hearing of a new acquisition by Baidu, Alibaba or Tencent. While China’s Internet giants have been doing acquisitions for years, the last three months can best be described as a frenzy.
This week, China’s big four state-owned banks are set to announce their 2013 financial results. And the numbers, if predictions are accurate, should show a significant slowing in earnings growth across the board. Likely 11% year over year growth for a combined net income of approximately $130 billion. So solid growth in a very big number, but also their lowest growth rate since the 2008 financial crisis.