China’s Economy in Transformation

China at the Crossroads: Temporary Slump or New Age for Asia's Powerhouse?

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Related Companies

For international companies, this strategy is a double-edged sword. On the one hand, it poses a severe challenge to the established global players who now have to anticipate serious competition from future Chinese high-tech companies. On the other hand, many technologies that are required to implement the plan are not available in China today, opening up huge business opportunities for suppliers from all over the world, especially in the fields of plant equipment, systems integration and automation.

M&A activities such as the takeover of German plastics machinery producer KraussMaffei by ChemChina for € 925 million in January 2016 are part of the Chinese initiative to incorporate the necessary know-how into its industry. Companies who want to take part in the Chinese economic transformation need to manage their activities wisely and have to stay one innovation step ahead in order to succeed.

Strong Focus on Environmental Technologies

Another growth sector is environmental technologies. The alarming levels of pollution have turned the spotlight towards the need for cleaner production and the remediation of air, water and soil. The 13th Five Year Plan for 2016–2020 that will be published in March will have a strong focus on these areas; they were already high on the agenda in the 12th Five Year Plan. According to Chinese officials, the targets laid out for the reduction of four major pollutants — sulfur dioxide and chemical oxygen demand, ammonia nitrogen and nitrogen oxide — have been fully met. Nonetheless, according to Environment Minister Chen Jining, some major pollutants must be cut by another 30 to 50 percent for remarkable improvement of environment.

More ambitious regulations have already taken effect, seeking to reduce pollution at the root especially in the most polluted region that includes Beijing, Tianhin and Hebei. For the European industry that has performed the shift from end-of-pipe technologies to integrated environmental protection already some time ago, the modernization of the Chinese industry creates an attractive market — even more so as concepts for resource management (e.g. in the field of industrial water management) have to be designed individually according to specific regional and industrial requirements, meaning they cannot be bought “off the shelf”.