China's 14th Five Year Plan

China's plans have always been ambitious, especially in terms of growth rates. But of course, as the world's second-largest economy, quality aspects have been on the rise already long before the latest "Two Sessions" of the People's congress. China's economy is in transition, and it is clearly becoming harder to improve "one dimensional". While in recent history, plainly "horsepower" of the economy also reflected in the general improvement of quality of life and poverty reduction, now efficiency and resilience come more into play. Revealing the draft of the 14th Five Year Plan, it also becomes clear that China will deal with long-term structural issues, starting from overaged demography, socially unsettling topics to further economic reforms and strengthening of domestic innovation. The numeric targets of what has to be achieved by 2026 have become far less assertive than in the previous year, except those which directly measure the quality of life and successes in e.g. the reduction of Carbon-dioxide emissions. A compilation of some of these targets by Merics you find by clicking here.

The year of pandemic, following four years of a trade conflict with the USA and uncertainty about the new US administration, continuing a "tough stand" has left its traces. The American rhetoric is less vulgar but still appears to follow similar principles than the previous administration. Meanwhile, China continues to attract FDI and continues opening up sectors for foreign investment. Economic recovery started earlier in China than in many Western countries, giving some headspace for tackling unemployment, strengthening the middle class, domestic consumption and laying the foundation for becoming more independent in key components and technologies.

Externally, the RCEP Free trade agreement is now combining markets of 3.6 billion people, and some of its member countries, which pick up production of low-cost, labour-intensive industries from China, can now export their goods duty-free to China. Beyond this, China stays committed to partnering with and investing in countries along the One Belt, One Road Initiative. For the relation to Europe, the recently signed China-EU Investment agreement forms a platform on which further co-operation will be achieved. The likely effects of this agreement will also fall into the period of the 14th Five Year Plan.

With reaching the threshold of transitioning away from an emerging economy, China takes another role in the international community. This reflects a stronger economic and cultural presence abroad and is seen in joint efforts tackling global challenges and threats.

Whatever specific measures will be taken to roll out the 14th Five Year plan, we will see changes that go far beyond the "reform" of previous plans in terms of quality before quantity.

Silkroad explained - Facts and Commentaries on the One Belt, one Road Initiative

We started a new initiative in a network of academics, researchers and practitioners committed to explaining the implications of the One Belt, One Road Initiative. Since 2013 a number of infrastructure projects have been funded, constructed and built on the back of Chinese government funding, including lending to governments along the New Silk Road. These provide a foundation for new commercial and cultural exchanges between countries along the route, and new business opportunities to both transnational and SME companies. 

Our team consisting of academics, policy experts and management consultants are offering information, views, news and analysis of developments in the New Silk Road area. This is backed by links to a variety of databases and opinion pieces. Our advice can be found in a range of publications, events, and opinion pieces. We also provide bespoke projects to clients on a confidential basis. Our group is independent and neutral with a commitment to providing accurate information and views. 

Events and further publications are in the making. Please visit our newly launched website and sign up for the mailing list: www.silkroadexplained.com

We are committed to growing this network for the benefit of a wider audience of researchers and executives. Please get in touch, if you are interested to explore collaboration.

Follow the bubbles

Malta’s economy has been growing steadily and at impressive rates in the last few years. Like so often, this has been orchestrated and facilitated by a few clever policy moves. And also, as it happens frequently, the phase where physical reconstruction sets in, is stressful to the inhabitants, and besides all the improvements and advantages, bears the risk of falling victim to the own success. There has been a discussion on a property bubble building up, and experts say, as long as the influx of well-paid buyers continues, things there will be a soft landing. Not quite sure, where we land though. But I hear the message. Currently, vast amounts of residential units are in the pipeline and will come to the market in the next few months or year. Asking prices jump up on the rumour that somewhere else the price was jacked up 20 %. Transaction prices are opaque because they are not published. Construction quality is generally low, and architectural finesse is often that of garages, which is painful to see in the otherwise charming heritage of Malta. Meanwhile, yes, companies are moving into Malta - still mainly for regulatory loopholes and tax purposes - and some as an effect of Brexit. Primarily these are service companies which do not need much technical talent. But still, it is hard to fill positions locally. Low education levels and inefficient unreliable work culture make Malta a tough hiring place. And then, beside the shortcomings in capabilities, Malta currently has a massive lack of infrastructure. It is worked upon that, but it will take time. Luckily, many Maltese buy their properties in cash and should there be a downturn this would not put the stress on the banks. But still, as there is not that much corporate lending in Malta, the books of banks are packed with mortgage loans and not very diversified. Should a property bubble burst, by people not coming anymore, or an otherwise induced economic downturn, then we would have all wished the economy of Malta would have had a few more dimensions. But luckily, so far, all is going well. Construction is a bit annoying. It changes the character of the island state, for the good and the bad. I also share the fear that the natural environment is suffering. In the end, a lot of the residential developments look a bit like there is not much oversight. And unfortunately, Malta seems to have not much of a vision, of what it wants to become. That may be why a lot of developments look somewhat inconsistent to me. But let me see what comes out. In the end ther is not much else we can do than folloing the bubbles.

Birgu is one of my favorite places. It is one of “The Three Cities” and it is mainly up to the local community that it is preserved and cultivated tastefull. That’s not the norm in Malta, unfortunately. This building is one of my favorites on my way home from the Birgu central square.