• MNCs should not “give up eating for the fear of choking.” From our perspective, the fundamental advantages of the Chinese economy have not substantially changed. Its market size, consumption capabilities and potential and its skilled and disciplined workforce are still evident. There are clear concerns about China’s short term economic outlook as outlined above. But as long as China has the ambition to become a “modern socialist nation” by 2035, there is no way for its leadership to forego reliance on private capital and markets, despite current headwinds.

• “Crossing the river by feeling the stones.” It is imperative for businesses operating in China to map out both risks and opportunities as well as prepare executable scenario plans. Extensive “win-win” opportunities have gone. It’s time for a new strategy of careful analysis and gradual iteration of opportunities. 

• The “real economy” is the apple of Xi’s eye. The 20th Party Congress highlighted again that a significant area for economic development will be in the “real economy,” i.e. strategic emerging sectors such as aerospace, transportation, cyberspace and digital development, as well as agriculture and green energy. 

• The “stakeholder economy” is coming. Expect a boom in ESG, CSR and stakeholder engagement for businesses in China. The expectation and requirements from the Chinese government around “wealth accumulation” reform, carbon footprint reduction, and for Chinese companies to become more internationally engaged means corporate citizenship will become an indispensable trait for businesses operating in China.

Engaging a wide variety of Chinese stakeholders will be more important than ever.