China's Economy Remains Steady, According to Roland Berger’s Report

China is redefining its trade and investment strategies, focusing less on exporting products to Europe, the US, and Japan, and instead turning its attention to the rest of Asia, the Middle East, Africa, South America, and Russia. This shift is a response to the growing opportunities in these regions, according to Denis Depoux, the global managing director at Roland Berger.

One notable development in China's expanding trade is the increased import of oil through Myanmar via pipeline. This infrastructure reduces China's dependence on the Strait of Malacca, providing an alternative and more secure route for its energy needs.

Denis Depoux's optimism about the Chinese economy is evident in his assertion that China's growth rate of around 5% is "massive." He compares it to adding one Holland every year or Germany in five years. This rapid growth is expected to continue, driven in part by China's rising status as a source of technological innovation in industries such as automotive and machine tools.

However, China's economy is not without risks. The slowing real estate market and societal aging are factors that could potentially weaken consumption. Yet, China's growth of trade is double-digit with most countries in the Global South, indicating a strong economic presence in these regions.

Denis Depoux also highlights the strategy of Chinese companies offshoring their production. They are doing so either to access new markets or to lower labor costs. This trend is not exclusive to the Global South, as Chinese companies are also expanding into markets in Japan and Western countries.

The potential for a new trade war between the US and China looms large. Such a conflict could result in a 4% hit to the US economy's 2023 GDP and a 10% hit to China's. The relationship between the two superpowers is not expected to improve, regardless of the outcome of the US presidential election.

In light of these risks, companies in Japan and Western countries can derisk in China while still being part of its growth. Strategies such as joint ownership, reusing proceeds of existing operations, and localized decision-making at Chinese affiliates can help mitigate risks and capitalize on opportunities.

As China continues to grow and assert its economic influence, it is clear that its trade and investment strategies will play a crucial role in shaping the global economy. The focus on the Global South is a testament to China's commitment to expanding its economic footprint and securing its position as a key player in the global market.