China’s economy faces challenges, prompting government actions to boost demand while addressing concerns over Trump’s re-election and potential tariffs. Three policy responses include increased stimulus, free trade maintenance, or a Global South Green Development Plan.

Economic Challenges in China

China’s economy is facing both cyclical and structural pressures that have led to a slowdown in growth. In response, the Chinese government initiated measures at the end of September 2024 aimed at boosting aggregate demand while promoting ‘quality productive forces’ to foster new growth drivers. These actions are crucial for revitalizing the economy amid increasing challenges.

The Impact of U.S. Politics

The re-election of Donald Trump has introduced additional uncertainty into China’s economic landscape, particularly with Trump’s campaign pledging potential tariffs of 60% on Chinese goods and threats of further decoupling. This situation prompts China to consider strategic responses to navigate these economic headwinds, as external shocks loom on the horizon.

Strategic Policy Options

China has several policy options to address these challenges. A widely supported approach is to enhance policy stimulus to boost domestic demand. Alternatively, some advocate for maintaining a free trade stance rather than retaliating against protectionist measures. Lastly, I propose the ‘Global South Green Development Plan’ to assist in the energy transition in developing nations, thereby stabilizing China’s economy while combating climate change.

Source : Can China lead the global energy transition?

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Party City’s product development team abruptly cut their China trip short due to financial instability, leading to bankruptcy and layoffs, leaving employees feeling blindsided and betrayed by management’s lack of communication.

Party City’s Sudden Trip Cancellation

On December 4, 2024, Party City’s product development team found themselves abruptly told to end their trip to China after just two days. Initially intended for twelve days, this visit was crucial for meeting suppliers of party supplies. However, internal communications revealed urgent issues at home, with management urging employees to return due to unpaid vendors and looming bankruptcy threats.

Unfolding Chaos and Confusion

Team members were left in disbelief, demanding clarity that never came. Stranded in a foreign country without support, they struggled to secure their return flights. Employees voiced concerns about safety amidst unresolved debts to suppliers, expressing dismay at being sent on such a risky endeavor without proper guidance.

A Troubling Outcome

Days after their return, the company announced it was filing for bankruptcy and liquidating, leaving employees blindsided. Many staff members now face layoffs and legal battles stemming from the process, articulating feelings of betrayal as they remember promises of a stable future made by their leaders.

Source : Just before bankruptcy, Party City sent employees to meet suppliers in China: ‘You sent us there and you left us out to dry’ | CNN Business

Navigating business in China is increasingly complex due to geopolitical risks, supply chain pressures, and economic slowdowns. Despite challenges, it remains a vital investment hub. Investors must stay informed and adapt their strategies, as outlined in Dezan Shira & Associates’ publication.

Doing business in China is getting more challenging than ever. With heightened geopolitical risks, growing pressure to diversify supply chains, a slowdown in China’s economic growth, and uncertainties surrounding the potential implications of Trump’s second presidency, companies must navigate an increasingly complex environment.

Despite fluctuations, China will likely remain one of the most important investment destinations in emerging Asia for most foreign investors. Under these circumstances, it is vital that foreign investors stay informed about the changes in China’s business landscape and adapt their strategies accordingly. By identifying potential risks in advance and preparing for new market opportunities, investors can remain agile in an otherwise challenging environment.

Designed to introduce the fundamentals of investing in China, this publication is compiled by experts at Dezan Shira & Associates, a specialist foreign direct investment firm providing corporate establishment services, business advisory, tax advisory and compliance, accounting, payroll, due diligence, and financial review services to multinationals investing in emerging Asia.

Designed to introduce the fundamentals of investing in China, An Introduction to Doing Business in China 2025 is compiled by experts at Dezan Shira & Associates, a specialist foreign direct investment firm providing corporate establishment services, business advisory, tax advisory and compliance, accounting, payroll, due diligence, and financial review services to multinationals investing in emerging Asia.

Doing Business in China 2025 covers:

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