*The following is an excerpt from our new One Hour China Contrarian Book (which is available here.).
“Jonathan Woetzel (McKinsey & Co, Peking University) and I have written three speed-read China books together. In this latest one, we have put together a collection of our essays that basically make four main contrarian points. These are:
Point 1: China needs smarter, not faster growth.
Point 2: Yes, Chinese consumers are rising. But they are changing even faster. And they are disrupting everything.
Point 3: China can innovate big time.
Point 4: At home and abroad, Chinese companies can beat you fair and square.
On Point 1 (China needs smarter, not faster growth), the fall in China’s nominal GDP growth from 10% to 5% has been a huge story for the past several years. And every year, there is a lot of media commentary when China’s latest GDP growth numbers get released. For example, there was a ton of discussion when growth recently fell from 7.6% to 6.8%. And while this is entertaining, it is mostly nonsense.
First, keep in mind, nobody knows what the real GDP for China is, let alone the GDP growth over 12 months. Measuring the economic output of a country of 1.4B people is difficult – and it is impossible without a huge amount of uncertainty. So these reported growth numbers are directional at best (i.e., it’s slower than last year). And they are certainly not accurate to a tenth or even a single percentage point.
Second, slowing growth is just fine. What matters is whether it is smart, productive, and good growth or whether it is bubbly, over-leveraged, and fake growth. It also really depends on where you are looking. Car sales in China are at about 5% growth now but SUV sales are growing at over 10%. Growth in e-commerce, online gaming and healthcare is currently phenomenal. But economy beer is growing at only around 0-3% now. And so on. So it really depends where you are looking.
Finally and per our opening statement in this book, China is now just really big and really complicated. Trying to boil all this down to one surprisingly specific number is becoming ridiculous. If you are looking at growth in China, you need to look for real growth. You need to look for smart growth. And you need to go industry by industry, and probably even smaller than that.”
The above is from our book – the One Hour China Contrarian Book. It is available here (for $3.99).
I write (and speak) about the fight for Chinese consumers and digital China.
photo by Steve Webel, Creative Commons license with link here.