•As Chinese firms position themselves as innovative leaders on the global stage, Gary Greenberg, Head of Emerging Markets at Hermes Investment Management, assesses the impact on the country’s political structure.
There has been a continual debate on whether China moving to a more open market would spell the end of the Chinese Communist Party’s hold on the economy and population. The Party’s recent move to formalise its role in major state-owned enterprises has cast doubt on views that Beijing would loosen its grip on the market. The 19th Party Congress in autumn will be a key indicator as to whether President Xi Jinping will again espouse the “decisive” influence the market is to have on the economy. But the impressive growth of the internet and ecommerce may have unexpected effects on China’s policy.
For those of us in the West who grew up with the epithet ‘Made in China’ as shorthand for a cheap facsimile of the real thing, the concept of China as a hub of innovation is challenging. However, we would do well to remind ourselves this is the culture which invented gunpowder, moveable type and rockets.
Chinese innovation is now returning to the fore, as the government ramps up funding for research and patent awards rapidly outpace the rest of the world. China graduates far more students in the STEM (Science, Technology, Engineering and Mathematics) fields than the US, and now ranks as the most influential country in four of eight core scientific fields.