News & Insights Dong Tao: China will lead the world in this data era
What are your great expectations for China’s technology industry over the next 12 months?
DT: When the Chinese government issued four 5G licenses on June 6, 2019, this marked the beginning of China’s 5G era. While it may be challenging for 5G operators to be profitable in the initial launch phrase, I believe China will lead the world in this data era, as many interesting products, services and ideas emerge. In the medium term, new developments in the technology industry may well affect every industry, every product and everyone’s lives.
"During my 20 years as an economist, I have been talking about a consumption upgrade in China as the size of the middle-income class exploded. That momentum has slowed down over the past two years, and I began talking about a consumption downgrade." Dong Tao, Vice Chairman, Greater China, Credit Suisse Private Banking
What do you see as the most resilient part(s) of the Chinese economy and why?
DT: Consumption is the most resilient part of the Chinese economy, though consumption itself also faces downward pressure. During my 20 years as an economist, I have been talking about a consumption upgrade in China as the size of the middle-income class exploded. That momentum has slowed down over the past two years, and I began talking about a consumption downgrade. Sales of instant noodles boomed again while autos sales tumbled. Nonetheless, this is still a resilient segment of the economy while private investment is slowing sharply and the export sector has been impacted by the trade sentiment.
What sectors will benefit as China moves to boost domestic consumption to stimulate growth?
DT: The infrastructure sector will likely benefit the most if Beijing launches more fiscal stimulus. Debt issuance by the local government seems to have improved, indicating more spending power from the public sector. Still, the impact on the real economy will very much depend on the multiplying effect of the fiscal stimulus. In other words, how the private sector is spurred on by government spending will be crucial in determining how successful the stimulus is.
What surprises you most about the Chinese economy in the past decade and what is your biggest anticipation or prediction for the next decade?
DT: The boom of the cement era (i.e. housing sector, infrastructure) lifted China to become the second largest economic power in the world. The magnitude of this boom surprised me. I anticipate the boom of the data era in China may surprise the world in the coming decade.