Hello Interconnected Readers:
Ideology, demographics, decoupling -- these are the three driving forces behind everything that’s been happening in China, as identified by Kevin Rudd. Thus, they are the common thread of this September 2021 issue of “Tomorrow’s News”, featuring the following four stories:
- “What Explains Xi’s Pivot to the State?” (English Source: Wall Street Journal)
- “China moves to join the CPTPP, but don’t expect a fast pass” (English Source: Brookings Institution)
- “Every Chinese Company has a ‘NASDAQ Dream’” (Chinese Source: Huxiu)
- “Europe’s Largest Unicorn Klarna Enters China” (Chinese Source: 36Kr)
Before you read on, please check out our previous deep dive post: "HashiCorp: Past, Present, Future"
“What Explains Xi’s Pivot to the State?” (English Source: Wall Street Journal)
Why this will matter: this Kevin Rudd op-ed is one of the few commentaries on everything happening in China recently that’s nuanced enough to stand the test of time. Rudd was not only the former Prime Minister of Australia, speaks Chinese quite fluently, but has also been analyzing China’s politburo as a diplomat in Beijing since the 1980s. His thoughts are worth more than most. He identifies the three driving forces -- ideology, demographics, decoupling -- behind China’s policy making. And it’s not hard to map current events to one or more of these three forces.
After school tutoring reform? Ideology and demographics (reduce Western cultural influence and cost of child-rearing). Stricter data control and less foreign IPOs? Ideology and decoupling (reduce Western money and access to data on China). Evergrande and bursting the real estate bubble? Demographics and decoupling (reduce cost of family-formation and capital flight to the West).
The rationale may be clear, but how these policies will work in reality is anything but clear. As Rudd pointed out, what’s in front of the Chinese leadership is “...the horrifying prospect China may grow old before it grows rich.” The balance to strike is: how to achieve the ideological ends via decoupling while keeping the economy growing as demographics decline? This is a high wire act because “...in China, as with all countries, ultimate political legitimacy and sustainability will depend on the economy.” Rudd was Australia’s Prime Minister twice; he would know.
“China moves to join the CPTPP, but don’t expect a fast pass” (English Source: Brookings Institution)
Why this will matter: a desire to decouple does not mean isolation from the world. In fact, the Ministry of Commerce formally requested to join the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) earlier this month, which was quickly followed by Taiwan’s own request to join. CPTPP is what smaller APAC economies salvaged from the original TPP that got blown up after Trump decided to withdraw from it. This Brookings analysis provided a clear-eyed view of why China wants to join and its chances of actually being accepted. Spoiler alert: probability is low given that all current members have to agree, which includes Japan, Australia, and Canada -- countries that have more than a few misgivings about where China is now and where it’s going. How the CPTPP will take shape and which countries will be a part of it and why, may determine how the world’s economy will look like for decades to come.
“Every Chinese Company has a ‘NASDAQ Dream’” (Chinese Source: Huxiu)
Why this will matter: China’s goal to strengthen its own ideology through decoupling requires not only technological independence, cultural independence, but also capital market independence. Building its own NASDAQ has been a goal towards that end since 1999, yet the best Chinese companies continue to flock to the New York NASDAQ as the ultimate stamp of approval and success. This article provides a good historical walkthrough of China’s previous attempts to replicate the NASDAQ. Its newest attempt is the Beijing Stock Exchange (BSE), launched by Xi Jinping himself on September 3rd. Rumor has it that when the BSE becomes fully operational in the 2nd half of 2022, close to a 1000 companies will IPO on it. Will the BSE finally be the counterweight to the NASDAQ, after the Shanghai STAR exchange and others have thus far missed the mark? Chinese tech companies often like to quote a NASDAQ saying, “Any company can be listed, but time will tell the tale.” You can say the same about any stock exchange as well.
“Europe’s Largest Unicorn Klarna Enters China” (Chinese Source: 36Kr)
Why this will matter: while Chinese consumer-facing fintech like Huabei are feeling the regulatory squeeze, the European fintech unicorn Klarna is entering the Chinese market. This 36Kr interview of Klarna’s China head shows the pragmatism of the Sweden-based tech company when it comes to doing business in China in this day and age. Klarna pioneered the Buy Now Pay Later model in 2005, before other tech giants followed suit -- Ant's Huabei, Square, Afterpay (now also Square), and Affirm to name a few. Klarna is entering China by only working with brands like Shein, Cider, AliExpress, as well as smaller Chinese sellers to help them expand beyond China in a B2B model. It steers clear of direct consumer lending. From what I have observed, while paranoia is high among Americans seeking to decouple, Europeans are more calm and pragmatic when dealing with China. Klarna may be the first of many European tech firms to occupy this vacuum.
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意识形态、人口下滑、与西方“脱钩” -- 这是陆克文指出的推动近期中国政策变动背后的三大力量。因此，它们也是2021年9月本期《明日要闻》的共同主题。本期包括以下四条新闻:
- “怎么解读习近平从资本转移向国家”（英文来源: 华尔街日报）
- “中国申请加入CPTPP，不要指望迅速过关” (英文来源: Brookings Institution）
- “中国企业都有个’纳斯达克梦’”（中文来源: 虎嗅）
- “欧洲最大独角兽Klarna进中国”（中文来源: 36氪)
为什么重要：陆克文的这篇专栏是为数不多有价值的西方角度评论，其细致程度足以经得起时间的考验。陆克文不仅是澳大利亚前总理，能说相当流利的中文，而且从80年代是在北京当外交官的时候就开始分析解读中国政局。他的想法比绝大多数人的有价值。他点出了推动近期中国政策变动背后的三大力量 -- 意识形态、人口下滑、与西方“脱钩”。我们不难将当前的事件与这三种力量中的一种或多种联系起来。
道理很清楚，但这些政策在现实中如何运作就没那么清楚了。正如陆克文所指出的，摆在中国领导人面前的是 "...中国可能在真正富裕之前就老化的可怕前景。" 要达到的平衡是：如何通过“脱钩” 实现意识形态的最终目的，在人口下滑的同时保持经济增长？这可是套高难度的杂技动作，因为 "...中国，与所有国家一样，最终的政权合理性和可持续性将取决于经济状况。" 陆克文曾两次担任澳大利亚总理，他应该很了解这一点。
“中国申请加入CPTPP，不要指望迅速过关” (英文来源: Brookings Institution）
为什么重要：在像花呗这种金融科技产品感受到监管的挤压时，欧洲金融科技独角兽Klarna正在进入中国市场。36氪对Klarna中国负责人的这篇采访，显示了这家总部位于瑞典的公司在这个时代去中国开展业务的务实态度。Klarna在2005年开创了“先买后付”模式（Buy Now Pay Later ）。随后多个科技巨头开始效仿 -- 花呗、Square、Afterpay（被Square买了）和Affirm等都是如此。Klarna进入中国，只与Shein、Cider、AliExpress等品牌以及大大小小的中国卖家合作，帮助他们以B2B模式拓展海外市场，而完全避开toC业务。根据我的观察，想脱钩的美国人偏执情绪偏高，欧洲人则在与中国打交道时更加冷静和务实。Klarna可能是众多欧洲科技公司涌入中国占据真空的第一炮。