China's Latest Issue: Nobody Wants To Go There Anymore

Six months after China lifted Covid-19 restrictions and reopened its borders, visitors are staying away in droves.

The Wall Street Journal reports that Shanghai's and Beijing's airports are nearly deserted. In the first half of 2023 less than a quarter of visitors travelled there compared to 2019. And with foreign investment in China down 80 percent year over year, businesspeople have less reason to travel there.

The problem, of course, is the steady rise in geopolitical tensions. China's mounting economic and social problems, and the "decoupling" of China and the West.

These tensions make travel to China more difficult, and businesspeople have more reasons to be wary. Employees at several US consulting companies have been detained, their offices searched. The business climate is reportedly no longer welcoming. And supply chain snafus have made reliance on China a bigger risk.

As a futurist and innovation speaker, I encourage questions that will enable decision-makers to think ahead of the trend: where is this all leading? What might we do to prepare for various possibilities and eventualities. One principle especially helpful at this juncture is to “look back to look ahead.”

Remembering When China Was Burgeoning

Excitement was in the air during my first trip to China, in 2002. Globalization was all the rage, China seemed unstoppable. My book, "Driving Growth Through Innovation" had just been translated into Chinese. Citibank, IBM and other promotors invited me to address their leaders across Asia. This was at a time when the "China Price" was wiping out America's small and mid-sized manufacturers by the score. Even the among them were encouraged to go to China to find low-cost contract manufacturers to take over production, for the Made in China trend was thought to be inexorable. And everybody who was anybody wanted to go there to check out this economic miracle that was lifting millions out of poverty, and decimating companies far and wide.

When China Began to Change

Fast forward to my most recent trip to China, in 2016. Already, China was beginning to signal a change in attitude. In June of that year, I traveled to Beijing for a three-city lecture tour arranged by business school professor of innovation and strategy Chen Jin, of Tsinghua University's School of Economics and Management. As always, I enjoyed the interaction with super sharp businesspeople, and with his bright and eager graduate students, many of whom spoke almost perfect English. Professor Chen was kind enough to set up interviews with executives at Tencent, Alibaba and Xiaomi, a fast-growing mobile phone and internet company, and I was amazed at the amount of product, service and business model innovation in China.

A visit to Alibaba on a Sunday morning revealed an organization bustling with young people willing to work through weekends, and to live in block after block of dorms adjacent to office buildings.

The Chinese English-language dailies reported on a seemingly endless array of measures designed to fuel the nation's future. Announcements included China was building the world's most powerful supercomputer; service robots to help serve China's aging population; the launch of yet another Chinese rocket called The Long March. And most importantly Belt & Road Initiative, the trillion-dollar Eastern Europe and Asia infrastructure project. On the surface, China seemed to be on a path to pass up the United States in the years ahead.

Yet as I look back, there were storm clouds on the distant horizon. In a report I wrote upon return from China ("Five Windows on Where China is Headed Next") I listed a growing host of issues: among them China's price advantage for manufacturing was disappearing. Also of concern: the slowdown in China's GDP growth (from 10 percent to 6 percent), a ballooning debt burden, polluted ground water and toxic air, it's Ghost Cities (unoccupied, overbuilt apartment buildings), and a recent stock market 30 percent plunge. In the report, I quoted Morgan Stanley's chief global strategist warning that "China is a threat to the United States not because it is strong, but because it is fragile." But truth be told, I just couldn’t see it coming.

The Role of Foreign Travel in Reducing Global Tensions

Fragile or simply transitioning from one business model to the next, the China that is emerging is dramatically different from the China of the recent past. Isolation and distrust grow, as relationships diminish.

"Fewer tourists and businesspeople mean fewer opportunities for foreigners to see China with their own eyes and interact with locals, notes Wall Street Journal reporter Wenxin Fan. "This is an important factor in reducing geopolitical tensions."

One journalist who has gone to China recently is Tom Friedman of the New York Times. "I just returned from visiting China for the first time since Covid struck. Being back in Beijing was a reminder of my first rule of journalism: If you don't go, you don't know. Relations between our two countries have soured so badly, so quickly, and have so reduced our points of contact -- very few American reporters are left in China, and our leaders are barely talking -- that we're now like two giant gorillas looking at each other through a pinhole. Nothing good will come from this."

Based on my travels in China and 54 countries these past three decades, I see the good that can come from "going there" rather than isolation that builds mistrust. I also see the value of idea and best practice exchange, of open dialogue, low or no barriers to trade, and of educational exchange of the kind professor Chen Jen is known for.

Perhaps the worst decision in human history was that of the Chinese Emperor Zhu Zhanji in 1434. In that year he issued the Edict of Haijin that closed China off from the rest of the world for over a century. Let's hope that history does not repeat itself.

We are all better off when borders and markets and minds are open, when businesspeople and adventurers can travel and explore and learn from each other and build relationships, and prosper together.

The post China’s Latest Issue: Nobody Wants To Go There Anymore appeared first on Innovation Resource.

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