China's Three Pillars
Global opportunities continue to be a key topic at Davos.
Orit Gadiesh, Chairman of Bain told Maria Bartiromo that “there is economic vibrancy in China, but there are things that China needs to change to continue that trajectory.”
Gadiesh stressed that China is export-oriented economy and now needs to change in to a domestic-oriented economy. Although China has been so reliant on exports, the country has to change. Wages are up and monetary policy that they have chosen have created inflation. China’s main export markets, which are the U.S. and Europe, represent over one-third of its exports so the company has to be more domestic. Also so the country can keep growing affluency. This is “critical for a country that plans to grow.”
China’s 5 year plan, kicks off this year with 3 pillars.
1) Increasing affluency of people. Develop service oriented businesses
2) Reduce inequity by bringing more infrastructure to rural area
3) Recreating a real social welfare system.
This is the plan, but the question lies is whether not it is possible.
Gadiesh commented that up until President Hu’s visit, it has been difficult for American companies to sell to China. The country is much more complicated in terms of social, demographic, regulatory issues than Europe or the United States. It is at a point in its development where things keep changing all the time.
Her advice? Don’t treat it as one country.
“Remember that if you’ve been there for a long time, you have quite a bit of experience so don’t be afraid if your Chinese competitors continue to use that experience and move as fast as population growth,” Gadiesh said.
— Donna Burton, Kerima Greene and Crystal Lau contributed to this blog.
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