Page Welcomes Year of the Rabbit

Sunday, January 22 marks the end of the Year of the Tiger, and the beginning of the Year of the Rabbit, as China celebrates its most important holiday of the year, the Lunar New Year. By most measures, the Tiger Year (February 1, 2022 - January 21, 2023) has been one of the most difficult in China's recent past. Characterized by China's strict adherence to a Zero-COVID policy (and subsequent relaxation), a fraught US-China relationship, the Russia-Ukraine war, South China Sea skirmishes, and declining economic conditions, this was not a year for the faint hearted.

On December 15, 2022, Page invited Scott Kennedy, Senior Advisor and Trustee Chair in Chinese Business and Economics at the Center for Strategic & International Studies, to speak to members throughout Asia about his recent China visit and views on 2023. Central to Scott's comments were the challenges China faced from its COVID policy, ranging from economic, social and political stresses. Days later, amid dissent across China, the leadership did a reverse course, rolling back its policies and relaxing mass testing and quarantines.

What China is currently faced with is caring for the millions of people being infected and the corresponding potential of massive casualties. Chinese New Year is famous for mass movements of people throughout the country, and for the third year running the government has been sending out travel safety precautions as people leave for their hometowns. This is also happening globally where Chinese travelers are being required to test before travelling to many countries, and in some cases to test upon arrival.

Many experts believe it will be months before Chinese citizens become vaccinated or build immunity. The beginning of the Year of the Rabbit will focus on maintaining social stability while responding to surges in COVID cases in China. It should not last the whole year, however, and like other countries that have wrestled with opening-up, by mid-year we should begin to see some normalcy.

Beyond tackling COVID, the Communist Party of China (CPC) outlined priorities for the next five years at its closely watched Party Congress held in October 2022, with many priorities focused on building a system that revolves around domestic needs such as common prosperity for all citizens.

Common prosperity was first proposed by the then-President Mao Zedong in 1955 when New China was founded, and the current President Xi Jinping has emphasized this in many speeches outlining the country's direction. In the past year since the idea of common prosperity was re-emphasized, there have been various debates around the competing priorities of "accumulation of wealth" vs. "division of wealth," and "efficiency first" vs. "fairness first."

The business community has also seen a number of major policy moves, with a focus on anti-monopoly measures for many of the leading Chinese technology companies, and distribution of capital leading these.

Towards the end of 2022, there was much debate in China around the topic of the "people's economy," with one expert describing this as an economy that is "autonomous" and free from being monopolized by foreign capital; focused on "local benefit" with revenue earned going back to the local market; and "comprehensive," meaning the purpose of an enterprise is not to make profits, but to achieve autonomy and localization.

This concept was challenged by many free-market economists as protectionist and an attempt to reverse the course of China's economic growth, constituting a U-turn from 'Reform and Opening.' Such debates have continued as we entered 2023, and it is expected we will see more of this discussion in the Year of the Rabbit.

Beyond wrestling COVID, the major focus in the Year of the Rabbit will be efforts by the government to reignite the Chinese economy. In 2022, economic growth slowed to a low of 2.7%, with differing forecasts have the economy rebounding to somewhere around 4-5% in 2023. With the interdependence of the Chinese and U.S. economies, and the need for the U.S. to spur growth as well, we could see some easing of trade tensions in this most important relationship. For those responsible for global communication, this could be wishful thinking, however.

Remaining on the radar for 2023 are continuing pressures coming from the Russia-Ukraine war and issues related to Taiwan. Many China experts continue to observe the emergence of China as a global superpower, how it relates to other countries and the role it plays on the global stage as something to watch in the coming year.

What COVID did do over the past three years was emphasize the importance of global collaboration around industries like healthcare, and there are signs of greater cooperation on the horizon in health-related industries.

The silver lining for the Year of the Rabbit is the impending travel boom expected to come out of China. Prior to the pandemic, the Chinese were travelling in record numbers overseas and this is expected to eventually return with the lifting of China's travel regulations.

According to Scott Kennedy, our December 15 guest speaker, "there is nothing that replaces face-to-face interaction in building stronger relationships."

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