Run Rabbit Run: What One Analyst In China Predicts
Alaris Consulting Group in Shanghai published a report Sunday predicting trends and outcomes in business and geopolitics in China for this Year of the Rabbit.
“This year we hope to see increased diplomatic efforts that implement protocols and procedures that help limit confrontations to near misses with at most some bloody noses, skinned knees, and the occasional broken bone,” Francis Bassolino, managing partner at Alaris Consulting, wrote in a research paper. “We would not be surprised by another U.S. spy plane colliding with a Chinese jet and expect that this will be resolved without full scale war. Just friendly sparring and heated debate.”
Bassolino points to rumors that former campaign advisors to former President Clinton are consulting for the Chinese Communist Party (CCP) to implement a version of Clinton’s campaign strategy, which featured the phrase “It’s the economy stupid,” coined by James Carville, who was advisor and campaign strategist to Clinton in 1992 during an economic recession.
Voters in China have voiced concerns regarding mismanagement of the economy. Leadership has heard the call to get on with things that can Make China Great Again, he wrote. “The CCP will promote variations on a theme that reinforces Party support for the private entrepreneur, equal opportunity and not equality of outcome,” Bassolino wrote. “There has already been some limited but useful regulatory and monetary relief for small businesses and the basic steps for this dance are well ingrained in muscle memory from the past few decades.”
He provides an example: “Regulators, please stay out of our way. Make our lives easier and we will all make money.”
Bassolino expects private employment to grow, and the state to continue to recede in most markets outside of Alcohol, Tobacco and Firearms, only in markets deemed central to the Party.
It’s not clear how business will address some of the main structural instability in the economy — for example, “what to do about debt levels in real estate and local governments” and “how to break the addiction to land sales and infrastructure investment as the main sources of growth and income.”
Overall, the expectation is to see little to no movement on major reforms as the government focuses on stability and growth. Bassolino wrote that “there is little appetite for revolutionary reform.”
Expect the first half of 2023 in China to deliver abysmal economic results.
“The economy is in a dismal state, and it will take time and more than words to shake people out of the three-year hibernation,” he wrote. “However, by the end of the Year of the Rabbit, animal spirits will have rekindled, and things will be hopping.”