The rapid adoption of digital payment systems continues to transform Chinese economy and society in unprecedented ways. Nowadays, handling cash seems like a thing of the past with nearly everyone in China using one of the two main payment systems: AliPay or WeChat Pay.

When is comes to digital payments, China is, undoubtedly, the technological leader. Once Chinese payment systems have become the primary payment method online, brick-and-mortar stores started to adopt them for offline payments as well.

Today, practically every business in China, big or small, finds it much more convenient to settle bills via AliPay or WeChat Pay compared to traditional cash.

Several factors are responsible for such universal adoption of digital payments in China. The fact that it is backed by ecommerce giants such as Alibaba and the top tech innovator, Tencent, was the most critical component. Also, as it turns out, having digital cash is a much safer way to handle money in China – it is harder to lose, there is no problem with fake bills and there is almost always a recourse to get money back in case of a fraudulent transaction.

Another big reason for wide adoption of digital payments in China is the fact that those platforms integrate seamlessly with a bank accounts using real name authentication. This is another reason why the fraud with those system is rare and much harder for criminals to pull off (although it does happen).

Two if the largest Chinese payment systems are AliPay, backed by Alibaba and WeChat Pay, introduced by WeChat maker Tencent. Although, WeChat Pay was a relative late comer, it quickly catches up with AliPay in terms of market share.

In fact, most Chinese have both AliPay and WeChat Pay wallets and use them interchangeably. Other payment systems platforms have sprung up as well, achieving a fare amount of success, although nothing on the magnitude of AliPay or WeChat Pay.

QQ Wallet is a system used by QQ, an ecosystem of apps and digital products by the same Tencent. Baidu has it’s own system called Baidu Wallet which was launched even earlier then WeChat Pay.

Out of non-Chinese payment systems, only ApplePay has reached some degree of recognition, although it enjoys much less popularity. Since it uses NFC technology, it often cannot be used with more popular Android phones. QR code based Chinese payment systems of AliPay and WeChat Pay are much more flexible as they don’t require any special reading devices besides a simple camera.

AmazonPay, PayPal and others remain relatively unknown and are unlikely to gain any meaningful market share in China. One of the issues with those platforms are high transaction fees when funds are withdrawn back to a bank account. AliPay and WeChat Pay don’t charge anything for the amounts that most people use them for (some fees start to kick off when a certain transaction limit is reached).

Here is the chart put together by Statista showing the market share of various Chinese payment systems:

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Chinese internet ecosystem is, perhaps, the only one in world where names like Google, Facebook, YouTube or Twitter are entirely absent from the vocabulary. Admittedly, one of the main reasons for it is inaccessibility of those platforms from China. However, even when they were allowed to operate, they simply didn’t adapt fast enough to the local market like their local competitors did. The eventual government’s sponsored shutdown was just the last nail in the coffin for those services.

The Chinese equivalents who filled the vacuum have quickly established themselves as not only the viable alternatives but also as the innovation leaders in their own right. They were not a mere copycats (those who just copied didn’t do well), but figured out their own unique place in the market.

Some of the big names like Facebook and Google haven’t given up on the idea of coming back to China in way or the other. Facebook has been busy establishing some local partnership, so there is a hope that, at some point in the future, a “sanitized” version of Facebook will be allowed to rejoin much evolved Chinese internet ecosystem.

Google is now almost certain to reestablish itself in China with the censored version of its search engine that is rumored to be in the works.

Those companies, undoubtedly, will be facing an uphill battle against the local competition. The infographic below gives an overview of the most important players in Chinese internet ecosystem and their key statistics.

Chinese Internet Ecosystem Infographics

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In this post we gathered some up-to-date stats and a translated piece from respectable Caixin site followed by our own analysis.

First, the article from Caixin with our translation and commentary about China coronavirus outbreak:

As of January 31, the cumulative number of severe cases accounted for 15.8% of the confirmed cases, and the mortality rate (accumulated death cases accounted for the cumulative confirmed cases) has remained at the level of 2.2% for 3 consecutive days.

Here is the most recent data of February 4th from DXY.cn (blue line – total cases, yellow line – suspected cases, red line – confirmed infections):

The current situation of the new coronavirus epidemic situation is still serious, the epidemic situation is still spreading throughout the country, and the number of newly diagnosed cases has increased. At the same time, the growth rate of confirmed cases nationwide has also shown signs of decline. The number of newly cured cases on the 30th and 31st days exceeded the number of new deaths.

The declining growth rate proves that the quite extreme quarantine measure China are having an effect.

New test kits for the novel coronavirus have been developed and were approved by the Chinese regulator NMPA (vid). These new kits allow to test new patients in just 30 minutes. The people who have a normal flu can now be early on distinguished from those who have caught the virus.

The graph of new suspected cases per day (yellow) is flattening while the number of newly confirmed cases per day (red) is now linear and starts to show a slight decrease.

As the epidemic progresses, the data is not yet as straightforward as noted in the article, so it is still too early to identify such trends. Here is the data of February 4th from DXY.cn (blue line – total cases, yellow line – suspected cases, red line – confirmed infections):

Unless something unforeseen happens in the next few days, we are now coming near to the peak of the China coronavirus epidemic. The number of new infections per day may soon start to decrease.

All this is good news. The Global Times is already pushing for new economic measures to increase growth when the epidemic is over.

On the negative side, some people use the epidemic for profit.

There have been a number of conspiracy theories which make totally unfounded claims that the virus is a bio weapon and that it escaped from a high security bio lab in Wuhan or was intentionally created or released by Chinese researchers.

The truth is that the novel coronavirus is NOT a bioweapon. No military would invest in developing a weapon that kills only 2% of those affected by it. A real bioweapon would also spread much faster then the current rate of infection with the novel coronavirus.

In conclusion, based on what we know so far, here is our own take on the current situation:

– Mortality rate has remained steady at 2.2% and is not increasing as many have predicted. However, it worth noting that many international observers consider this figure unrealistically low, although it isn’t a government conspiracy as some might suggest. This may have to do with the fact that in China, unlike in most countries, it is customary to put only one cause of death on a death certificate. For example, if a person dies of a preexisting condition and was also treated for coronavirus infection, it would be up to a doctor to choose the cause of death.

– The number deaths and confirmed cases is growing linearly and not exponentially. This would indicate that the China coronavirus is not spreading out of control.

– The number of cured cases has now overtaken the number of deaths and this gap is increasing daily. This was not the case just a few days ago.

– We are approaching an inflection point in the number of new cases which means it’s slowly decreasing although it is still relatively high in absolute numbers.

– The number of infections outside of China is negligible, this means that it hasn’t reached pandemic level. Also, up until this point, there was just one coronavirus related death outside of China (in Philippines). This also suggests that the virus is not as lethal as was initially assumed.

Of course, the situation is still very dynamic and far from certain. Also, our analysis is based on the official statistics from sites like DXY.cn and we should always keep in mind that things still might take turn to the worst.

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Top 5 China emerging cities with fastest growing local economy

No. 1: Guiyang

Guiyang is the capital of Guizhou province of Southwest China. Guizhou has been the poorest of China provinces with economy heavily relying on state owned enterprises. With the population of 2.8 million, it is now becoming a hub of operations for Chinese giant telecom companies. Private companies are also following the lead with Alibaba setting up cloud-computing facilities in the city.

Guiyang also serves as an important transportation hub for South Western China. The Guiyang–Guangzhou High-Speed Railway began operations on December 26, 2014. Three more high-speed rail lines to Chongqing and Kunming, and Changsha will commence operations within the next few years.

Disposable income per person is currently at USD 5,100, almost half of China’s average of USD 9,800. Guiyang has been ranked number 1 fastest growing local economy by the Economist.

No.2: Xiangyang

Xiangyang is a prefecture-level city in northwestern Hubei province. Xiangyang possesses large water energy resources whilst its mineral deposits include rutile, ilmenite, phosphorus, barite, coal, iron, aluminum, gold, manganese, nitre, and rock salt.

Textile production has been the mainstream industry of the area followed by machinery manufacture, chemical processing, electronics, and manufacture of construction materials. However, in the last few years, it has become an attractive destination for industrial transfers, the trend of companies relocating their manufacturing facilities to cheaper locations.

With its population of 1.6 million and disposable income per person stands at USD 4,300 and the city has been ranked at number 2 among China emerging cities.

No.3: Hengyang

Hengyang is the second largest city of Hunan Province after its capital Changsha. The population of the metro area is 1.3 million but if counting the suburbs, it reaches over 7 million people.

As a busy and growing industrial hub and transportation center of Hunan, its economy has traditionally relied on manufacturing of chemicals, agricultural, mining equipment, textiles, paper and processed foods. However, it has also become one of the destination of industrial transfers. Most recently, Taiwanese Foxconn, the main maker of Apple products, has been investing in the city.

Hengyang’s disposable income per person is currently USD 4,900. It has been ranked at number 3 China emerging city.

No.4: Chongqing

Chongqing is a major city in Southwest China and one of the five national central cities in China. Administratively, it is one of China’s four direct-controlled municipalities (the other three are Beijing, Shanghai and Tianjin), and the only such municipality in inland China.

It is an enormous city of 8.9 million people and booming real estate market. It is also one of the fastest urbanizing centers in China with more than 1,300 people moving into the city daily, adding almost 100 million yuan (US$15 million) to the local economy.

Chongqing is China’s third largest center for car manufacturing and the largest for motorcycles. US car giant, Ford Motor Company, has 3 plants in Chongqing. In addition to presence of major financial companies (HSBC Standard Chartered Bank Citibank, Deutsche Bank, ANZ Bank, Scotiabank) and retail brands (Wal-Mart, Metro AG, Carrefour), it is also another major site of Foxconn investment.

Chongqing disposable income per person stands at USD 5,400 and is ranked at number 4 among China emerging cities by the Economist.

No.5: Suqian

Number 5 on the Economist scale is Suqian, is a prefecture-level city in northern Jiangsu Province. Suqian has been benefiting from closer integration with the other economic hubs in Jiangsu, one of the most well developed Chinese provinces, and the city’s proximity to both Shanghai and provincial capital Nanjing.

With the population of about 1 million and relatively low disposable income per person (USD 4,100), Suqian is still one of the cheapest location for manufacturing in the province.

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The trade war between two world’s biggest economies, the U.S. and China, is escalating. Since January 2018, we’ve seen rounds of tariffs, applied on various products, impacting negatively local businesses and their customers.

The automobile, tech and agriculture sectors are already suffering from the dispute. Companies manufacturing in China, like Apple or Tesla, are facing a price increase on raw materials which most possibly will result in higher prices of their products and eventually fewer buyers. American farmers report $11.8 billion loss in their personal incomes. Not to mention those, who went bankrupt after introducing the soybean tariff. What is going to happen next?

With the help of a infographic prepared by Trademachines.com you can get a visual insight into the subject, understand what tariffs are, and why Donald Trump turned into protectionism. This visual summary of the war traces back the initial motives of the trade dispute and gives you a timeline of the most relevant events.

US has now imposed new round tariffs on wide range of Chinese made goods worth USD 200 billion overall. China has retaliated with its own tariffs, albeit for only 60 billion.

Naturally, since the trade between the two countries is unbalanced in favor of China (the official pretext of this trade war) America has more opportunities to impose new tariffs on more good rather than China.

Huawei, China’s top tech giant and the world largest telecom equipment maker, has already become the latest casualty of this trade war. The first shots were fired with the arrest of Huawei CFO and the daughter of the founder, Meng Wangzhou.

US and many of its allies stopped doing business with this firm. This even included Google blocking Huawei’s access to its Andriod system updates and Play Store.

China has promised to retaliate and there is a growing popular sentiment aimed at boycotting US firms such as Apple.

Here is the infographic on US-China trade war

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In the past, Singapore used to be the busiest port but after Shanghai port overtook it in 2010, it remained the world busiest ever since.

In fact, only 3 out 10 busiest container ports are not in China: with Singapore at the second place, Busan (South Korea) at fifth place and UAE’s Jebel Ali the ninth. The busiest ports are determined on the basis of container (TEU) traffic.

No other city in China has been as important as Shanghai in establishing the country as the world trading giant. Having been established in 1842, it is also one of the oldest ports in the world.

Today, over a quarter of China’s annual import and export trade goes though Shanghai port.

According to the World Shipping Council data, Shanghai port handled over 37 million TEUs in 2016, increasing its container turnover by 1.6% compared to the previous year. Second place in the ranking is occupied by the port of Singapore with a turnover of almost 31 million TEUs and in the third position is Shenzhen port with around 24 million TEUs handled annually, according to the most recent data.

Nearly half of all shipping in China goes through Hong Kong and Shenzhen ports which both serve the same Guangdong province, China’s richest and most industrialized area.

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Singles day is an informal shopping festival in China that has originally celebrated people who are still single. It falls on 11/11 which is meant to symbolize people who are not in a relationship. Since it started back in 2009, it has become the largest shopping event in China, akin Black Friday or Cyber Monday in North America, although much bigger.

Originally, the event was started by Alibaba which began offering discounts on its main shopping platforms, Taobao and Tmall, that lasted for 24 hours. The festival was picked up by other Chinese e-commerce sites like JD.com and now, increasingly, by traditional brick-and-mortar stores. Most of the action still goes online via e-commerce sites and mobile apps.

Every year, the festival kept getting bigger but this year, there were concerns that  it might actually slow down a bit. The main worry was that slowing Chinese economy and the trade war with US would dampen shoppers’ enthusiasm.

“It is possible that there will be a slowdown in growth for Singles Day sales, given that they have had exponential growth in the past,” Xiaofeng Wang, an analyst with Forrester, said before the event.

This did not happen. In fact, 2018 Singles Day raked a whopping $30 billion in the first 24 hours, beating the last year record of $24.2 billion.

Here is the latest data compiled by Statista:

Similar North American events are dwarfed by China’s 2018 Singles Day – the sales on Thanksgiving Day combined with Black Friday are about 5 times smaller.

Attempting to capitalize on seemingly insatiable appetite of Chinese shoppers for foreign products, the event was picked up by platforms outside of China. A recent survey from research firm Oliver Wyman found that 57% of China’s online shoppers consumers were planning to buy goods from overseas during 2018 Singles Day. The top countries that were most popular with the consumers are Japan, USA and Australia.

In addition, Alibaba’s South East Asia subsidiary, Lazada, was offering Singles Day discounts in Singapore, Malaysia, Indonesia, Thailand and Vietnam.

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Geographic distribution of China expat population

Most foreigners live in Guangdong, the richest Chinese province and the first one to lead Chinese economic development after the country started to open up in the late 70s.

Shanghai has the next largest expat population in China that stood at over 209,000 few years ago. It has most likely doubled since then. Beijing is the third largest population center for expats.

Top nationalities in China expat population

According to China-Briefing, South Koreans form the largest foreign community in China at 21% of the total. Large Korean conglomerates such as Samsung and LG have been setting up manufacturing facilities in China, bringing large number of employees to fill top management and key technical positions.

From non-Asian countries, Americans are the most numerous. Most of them have been posted by multinationals which are mostly in manufacturing, logistics and export business.

According to the research by InterNations, 18% of expats were sent to China by their employers and 17% came “for an adventure”. Although, China ranks quite low at the ease of settling down (not surprising given significant culture and language barriers), it scores near the top at personal finance criteria, despite steadily rising cost of living.

Overall, 76% of expats indicated general satisfaction about living in China and only 1% were extremely unhappy.

Air quality and health issues were among the most pressing concern of foreigners. Incidentally, healthcare has been the main area of dissatisfaction of local Chinese as well.

Most recent country report by InterNation breaks down China expat population in more details:

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As the robust growth of international tourism continues, 2017 has seen the highest increase in total worldwide travel expenditure over the past eight years  – about 1.34 trillion US dollars. According to the World Tourism Organization of the United Nations, China has maintained its leading position in the global tourism market since 2012, with outbound tourists spending almost 258 billion US dollars last year, about 20 percent of total tourism spending in the world.

The main factors responsible to meteoric rise of Chinese tourism in recent years are:

• The emergence of a new rich Chinese middle class;
• The relaxation of travel restrictions by the Chinese authorities;
• A simplified destination visa policy;
• An increasing number of direct flight connections from China.

Although Chinese tourists are still famous for spending thousands of luxury luxury foreign brands, new trends in buying behavior are on the rise, especially among Chinese travelers. In 2017 Chinese travelers turned more to niche sectors such as whiskey tasting, aurora hunting, outdoor activities and other high-quality and less mass-oriented products and experiences.

Here is the comparison to other countries’ tourism spending compiled by Statista:

Chinese tourists outspent everyone else in 2017

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Last week, the US announced the last round of trade tariffs that will be imposed on Chinese imports, with goods affected estimated at about $ 200 billion per year. The tariffs that took effect on September 24 were met with Chinese retaliation of $ 60 billion in tariffs on US imports. If this threat is implemented, the US would prepare tariffs for an additional $ 267 billion import.

As Statista’s chart shows, the Trump administration has now analyzed data from the US Census Bureau by the BBC, now imposed for about half of all imports from China, and would even exceed the total import figure for 2017 as the $ 267 billion proposed, new rates appear to be needed. The road is also starting to run out for China. If all proposed tariffs are introduced, Xi Jingping would be left with only $20 billion worth of U.S. imports to penalize when comparing to last year’s total trade figure.

How US-China trade war is going to play out

If China growth continues at today’s rate, it will surpass USA as the largest economy in 2031

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