It’s a breezy evening by the lake. The walk on the pavement near a busy intersection is marred only by wafts of cigarette smoke. Petrol fumes are a thing of the past – electric vehicles dominate the tree-lined boulevard. Restaurants and cafes are packed, with an orderly queue forming in front of an internet-famous eatery (网红店). I’m at the scenic West Lake in Hangzhou. This is China in the year 2024.
For context, I was born and grew up in Malaysia and spent most of my adult life in the U.K. I’ve visited China briefly in the past but only around the Greater Bay Area. It’s a first for me travelling across the country for an extended period of time.
The following observations are surface-level and anecdotal.
Electric vehicles
Electric vehicles are everywhere. These are mostly Chinese designed and made.
As a long-time Tesla bull, it pains me to say that some Chinese EV companies have decent and – dare I say – better products. The latest to enter the market is Xiaomi SU7. Xiaomi (小米), a consumer electronics company, has long been called an Apple copycat. While Apple had scrapped its EV ambitions, Xiaomi has a car in production with a starting price of ¥215,900 (c. £24,000). The car, known colloquially as Porsche-Mi (保时米) because of its resemblance to Porsche Taycan, is well-received (judging by posts on Chinese social media).
Tesla has been forced to lower its prices in China to compete. Elon Musk has even resorted to announce the announcement of the long-awaited robotaxi. This does not bode well for Tesla – Tesla’s long term commercial viability hinges on full self-driving cars and high tariffs on EVs imported from China. I need to revisit my Tesla Thesis.
Infrastructure
China has world class infrastructure. It has well-maintained roads, prevalent EV chargers, high speed rail, affordable public transportation, expansive airports and train stations – all making “developed” countries look woefully inadequate.
Good infrastructure is not surprising and is almost expected because of stories we hear about China’s construction boom. But seeing and experiencing them first hand is a revelation. Admittedly, I experience these at first-tier cities and popular tourist spots; it’s likely that there are regional disparities in development.
Near cashless society
Every one, young and old, conducts life on the mobile internet, mainly on two super apps – Alipay and WeChat. Traveling in China without one of these apps is nearly impossible as the country is fast becoming a cashless society. Due to the heavy reliance on smart phones to make and receive payments, 5G connectivity and phone chargers are ubiquitous.
Digital renminbi, China’s central bank digital currency (CBDC) has been in testing for a few years. There hasn’t been widespread adoption because people are wary of CBDCs (and its implications) but there’s resignation that adoption can happen quickly if the powers that be nudge it along.
The economy
Economic growth is slowing and is being felt by people on the street. However, consumption demand seems undeterred; restaurants and shopping malls are crowded. The property bubble has burst but I still see construction and land development. Young people are disillusioned and the “tang ping” (躺平) culture threatens to reduce productivity but my younger colleagues at the Guangzhou office are highly motivated and ambitious.
So it’s not all doom and gloom. There are pockets of counter-narrative – if anecdotal and non-representative – examples that China’s economy is on the mend. China has also set the stage for a fully digital and green economy.
The bottom line: My extended travels in China has given me new perspectives to reflect on.
Disclaimer: This is NOT investment advice. I write on this blog in my personal capacity; my own views and opinions are NOT endorsed by my employer or the actuarial profession.