On April 21st, the three major A-shares indices saw a severe drop due to a combination of local and global causes. The Shanghai Composite Index dropped 2.26%, the Shenzhen Component Index dropped 2.7%, the ChiNext Index dropped 2.17%, and the CSI 300 Index dropped 1.84%. More than 4,400 stocks fell in both cities, while industrial categories led by tourism, fertilizer, agriculture, and photovoltaics almost across the board.
As April started, the Shanghai Composite Index has fallen 7.5%, down 10.5% from the beginning of March. The CSI 300 Index has dropped 13.40% from 4,614 in early March to the current 3,995.83, which tumbled 21.31% from 5,078 in mid-December last year. Because incremental funds were not injected into the market anymore, only stock funds were up for grab. Since the middle of March, A-shares stock trading has been declining, indicating a lack of investor trust.
Researchers at ANBOUND believe that this demonstrates the market’s pessimism about the future economic situation. With the downward pressure on the economy increasing, market confidence restoration and expectations stabilization are critical to helping in the healthy development of the capital market, as well as important in maintaining growth and averting risks.
Figure 1: The Shenzhen Component Index plunging more than 4,200 in the past 4 months
Market institutions have generally accepted the several factors that have caused the recent severe falls in the stock market. First, the worldwide geopolitical risk of distorting the supply chain and affecting company earnings is rather high. Second, since the Federal Reserve has escalated monetary tightening, the quick reduction of the interest rate gap between China and the U.S., as well as the inversion of the RMB exchange rate, is driving the RMB exchange rate to alter, raising concerns about capital flows. Next, the resurgence of the domestic pandemic has a substantial negative influence on China’s economy, particularly in consumption and real estate as indicated in the first-quarter economic statistics, which has heightened concerns about the country’s macroeconomy. Finally, the pessimism has been accentuated by a substantial disparity between recent central bank macro policy actions and market policy expectations. As a result, as long as present internal and external concerns persist, the A-shares market is unlikely to improve much in the immediate term.
Figure 2: The Shanghai Composite Index shedding more than 600 in the past 4 months
Historically, the fluctuations and transformation of China’s stock market couldn’t fully reflect China’s overall economic situation. However, in terms of expectations, the shifting trend of the A-share market, by acting as a barometer of the economy, continues to illustrate the genuine expectations of capital market investors on future business and overall economic developments. As observed in the March market trend, changes in external variables have been absorbed, but recent stock market volatility is more likely to be aggravated by changes in internal elements. As a result, changes in China’s economic circumstances and policy expectations are undoubtedly the cause of the stock market’s dramatic volatility. Investors are increasingly concerned about the negative economic impact of the COVID-19 outbreaks, as well as a lack of trust in the stability of present economic strength and the rhythm of macroeconomic measures that sustain the economy. As things stand, despite the continued implementation of measures and policies aimed at stabilizing the capital market, these policies are insufficient to boost market confidence.
The pandemic and policy declarations are not only harming the capital market but are also major variables influencing China’s economic future. Notably, the recurrence of COVID-19 is concentrated in those economically developed regions such as the Yangtze River Delta and the Pearl River Delta. The scope and depth of its economic impact may surpass that of the outbreak in Wuhan in 2020. In such a case, we believe that there is a demand to put dedicated unconventional policies into place. In this regard, it is necessary to implement targeted measures to stabilize economic fundamentals based on strengthening prevention and control. On the other hand, it is also essential to promote systematic easing among macro policies to avoid the catastrophic consequences caused by shrinking demand.
Since the beginning of the year, in the framework of the Chinese central bank’s monetary policy implementation process, it has taken a cautious approach to progressively easing, which is far from the policy expectation. Although the central bank has maintained “reasonably ample liquidity” as a whole, the reality of the domestic economy indicates the private economy and a large number of small and medium-sized enterprises are unable to obtain sufficient credit support from those “accurate liquidity provisions”. Such economic structural difference requires not only targeted structural reforms, but also overall easing to achieve the dredging effect from “loose money” to “loose credit”, which would reverse the passive situation. Zhang Jun of Morgan Stanley Securities also pointed out that the policy-level “fueling tactics” will cause a waste of policy space and may also deepen the risk to diminish the expectations.
Concerning the present external limitations that limit China’s domestic measures, ANBOUND has previously stated that variables such as interest rate spreads produced by economic and policy disparities are only one of the external factors impacting China’s economy, but not the most important one. Further concern should now be given to the fundamental factors that drive economic growth and structural improvement. In terms of policy, it is imperative to enhance the ‘autonomy’ of macro policies. We should occupy this window, fundamentally reverse the economic trend, and assist the capital market to construct stable market expectations and policy expectations before the international situation undergoes further evolution, hence coping with a better response to the changes in external factors.
It would be difficult to reverse the situation after market expectations have shifted. When combined with a self-reinforcing impact, it frequently leads to a downward spiral vicious cycle in the capital market and the actual economy. Hence, it is hard to reverse market expectations without stable policy expectations. Judging from the economic data of the first quarter, the overall economy is still resilient and possesses a stable foundation. However, to achieve the economic growth target of the current year, it is still necessary to strengthen the implementation of macro policies. This is not only conducive to the stability of the capital market but for the overall economy as well.
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A researcher at ANBOUND, graduated from the School of Mathematics at Peking University and has a PhD in economics from the University of Birmingham, UK
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Under auspices of BRICS (Brazil, Russia, India, China and South Africa) and China holding the 14th Summit, it provides the platform to address emerging global and thorny regional problems. The BRICS member countries collectively represent about 26% of the world’s geographic area and are home to 2.88 billion people, about 40% of the world’s population.
What are the issues at stake: During the past two decades, new geopolitical confrontation as between democracy and authoritarianism, and unipolar and multipolar system, have partly appeared between the United States and Europe on one side and Russia and China on the other side. There other ccountries that are followers of the these distinctive groups. The group deeply dissatisfied about unipolar system and global hegemony throttled by the United States.
Despite the individual differences, BRICS members ultimately seek to consolidate its position, with a number of instruments at hand, in the development of the new global order and therefore have the following:
(i) Unified front and expansion of the group, demonstrate its effectiveness in addressing emerging tasks on regional and international stage. For instance in May, China suggested launching discussions of the issue that Argentina and Saudi Arabia had expressed interest in joining BRICS.
According to experts, other potential candidates include Bangladesh, Egypt, the United Arab Emirates and Uruguay who joined the BRICS New Development Bank last year. In addition, analysts point out that events held on the sidelines of the BRICS foreign ministers meeting involved representatives of Indonesia, Kazakhstan, Nigerian and Thailand.
A number of countries are already on the list as potential new members. The final positions is that this geopolitical configuration is in exploratory phases, undoubtedly meant to bring a new axis of Russia-China but inclusion of Mexico , Indonesia and Turkey has its own strategic baggage. The procedures have to be thoroughly examined and reviewed, the dialogue is of importance to further expand BRICS.
(ii) The question of creating an international reserve currency based on a basket of currencies of the BRICS countries is being considered. In addition, the development of reliable alternative mechanisms for international settlements is being drawn up together with BRICS partners.
Russia’s financial messaging system is open for the connection of banks of the five countries. The geography of Russia’s Mir payment system is being expanded. The fact is that there are comprehensive measures directed at reducing the negative impact of sanctions and strengthening trade and investment ties with all interested states.
(iii) On fortifying the economic front is one key area for BRICS. Russia is feverishing cooperating with China and India. Trade among them has witnessed exponential growth, and Russia is set to make new legislations that could facilitate further, especially in the Central Asian region and within the Eurasian Union.
Closely relating to that Russia is advocating for expanding entrepreneurial freedoms, reducing administrative burdens, launching new preferential lending programs, and introducing tax and customs exemptions. While these aim at supporting Russia’s economy against raft of draconian sanctions, it would simultaneous help China, India and many Asia-Pacific countries that are ready to do mutual business with Russia.
Against these backdrop as briefly discussed above, BRICS can serve as an opportunity for the group to convince the world that it can be a viable financial option against Western-led institutions like the World Bank and the International Monetary Fund. Furthermore, combined together they possess a huge resources and only need to present a “clear-cut economic model” that ultimately be attractive and be replicated around the world. BRICS countries constitute 40 percent of the world’s population, and the group needs to engage in more interactive development processes especially the global south to get more clout as a serious global player.
China is holding the BRICS presidency in 2022. While strengthening economic, technological and scientific potential, the BRICS partners are ready to continue working on principles of respect to interests of each other, unconditional supremacy of international law, and equality of countries and peoples of the globalized world.
The 14th BRICS summit held in June, the leaders of Brazil, Russia, India, China and South Africa focused on the state of affairs and prospects of multifaceted cooperation within the group in the political, economic, cultural and humanitarian areas. The summit touched upon pressing international and regional issues and are reflected in the summit’s final declaration.
Since its establishment, the BRICS success could be described as moderate. The group has a combined population of 3.23 billion and their combined GDP is more than US$23 Trillion. Historically, the first meeting of the group began in St Petersburg in 2005. It was called RIC, which stood for Russia, India and China. Then, Brazil and subsequently South Africa joined later in February 2011, which is why now it is referred to as BRICS.
Human needs in this world cannot be separated from 3 basic needs, namely shelter, clothing and food. Clothing is one of the things that humans will always use from birth to the end of their life no matter rich or poor because everyone needs clothes during their life. The industrial sector that produces this clothing is the garment industry, the garment industry is a company engaged in the manufacture of apparel for men and women, for all ages from baby to adults. Product from garment examples such as underwear, shirts, jeans, t-shirts, jackets, blouses, etc. and usually these garment products are mass-produced with the same model. Characteristics of garments produced by garments are the models of clothing that are made usually have the same shape, garment clothing generally uses standard sizes (S, M, L, XL) or numbering (Fitinline, 2019). There are lots of garment factories in each country and usually the factory has chosen the targeted market segment according to the product production. However, there are still many obstacles that can occur in this garment industry. Among other things, the rapid changes in the garment industry so that innovation must be carried out every time because fashion is always evolving, causing this industry have to adapt to the trends that are popular with the community, as well as high competition due to the many existing garment factories so that characteristics and expertise are needed to survive. However, when a garment factory can produce products with brands that have strong characteristics, Models that are trendy and comfortable to wear, the brand can quickly become a favorite of the community and with the right promotion can build branches in several countries.
If the garment industry is an industry that focuses on apparel, then above the garment industry there is an industry that is wider in scope, namely the textile industry is one of the manufacturing industry sectors that produces starting from raw materials to become materials that have a selling value such as yarn, cloth, and finished products made from textiles. The textile industry is very large because it consists of several materials. There are natural materials such as silk, wool, and cotton. And there are also synthetic materials, namely polyester, polypropylene, nylon. As for the process of making yarn into fabric, there are 3 types, namely woven, knitted and nonwoven. Woven itself is a fabric making technique that has the principle of combining threads lengthwise and transversely or making patterns that cross each other, while knitted fabrics are fabrics made with the principle of entangling threads that are intertwined with each other to form a circle or arch so that the threads can relate to each other. Then nonwoven is a fabric that is made without going through the woven and knitting process but with a special nonwoven machine. Fabrics made with different techniques have different purposes and functions depending on the use and purpose of use.
By seeing the importance of textiles in everyday life and because textiles are an industry that will always be needed, it is not surprising that the demand for textiles is always increasing from time to time. So that countries that have large textile production can make textiles one of the economic sources for state income. Here are 3 countries with the largest textile production in the world:
It’s not new anymore if China dominates the global textile market because this country is able to have an output reaching 52.2% of global textile production in 2019. Several factors that support China to become a giant ruling textile industry are due to low production costs, technological advances that as well as, considerable supply of raw materials. These things make China the largest textile producing country in the world. In addition to being the largest textile producer, China is also the country that exports the highest textiles. From Statista data, in 2020 China was the top global textile exporter with a value of around USD 154 billion. This figure of China’s exports is almost 43.5% of the total textile export market worldwide (Inda Susanti, 2022).
India occupies the second position as the largest textile producing country in the world, textile is one of the oldest industries in India and the development of this industry is always increasing from time to time. In India there is a division into 2 sectors. The first sector is an unorganized sector that still uses human labor and simple tools. Then the second sector is an organized sector, namely a sector that is more modern because it uses combined techniques and machines. India’s textile industry is estimated to be worth USD250 billion in 2019. According to the IBEF report, India’s State textile industry accounted for 7% of industrial output in 2018/2019. It contributes 2% to India’s GDP and employs more than 45 million people in 2018/2019 (Inda Susanti, 2022).
United States of America (USA)
America is in the 3rd position with the largest textile production. America managed to account for 5.3% of the output of global textile production in 2019. The biggest strength of textiles from the United States of America comes from the production of nonwoven fabrics, medical textiles and protective clothing. By combining advanced technology and innovation, the United States continues to grow with textile production increasing every year. Citing data from the US National Council of Textile Organizations (NCTO), the total value of shipments of US-made fibers and filaments, textiles and apparel amounted to approximately USD76.8 billion in 2018, up from USD73 billion in output in 2017 (Inda Susanti, 2022).
It is estimated that the demand for textiles in the future will continue to increase with the development of technology, there will be many new innovations that can be useful for human life. Especially in the garment and textile industry sector. As one of the basic human needs, it is estimated that the industry will remain stable and continue to increase, although sometimes there will be a decline but will return to a stable position. So literally the garment industry is part of the textile industry as well. However, the garment industry has a main focus on making apparel. Meanwhile, the textile industry has a wider scope because it processes from raw materials into finished materials that are ready to be reprocessed or can be sold directly without being reprocessed.
There is only one “Big Economy” within each nation; a unique economic development process harnessed around the assembly of small and medium businesses spread across any given nation. Nevertheless, mastery to lead the “Big Economy” requires big minds; so long, the small-minds only see small business as small; failing to recognize that all big businesses of the world only hatched as small babies in the past. Later, after many diaper changes SME grew into giants. This is normal in the life of a business cycle for any entrepreneurially fertile business minded landscapes.
Let there be light: Nevertheless, as a simple fact, like turning an ‘on’ and ‘off’ light switch; economies without digitization are as if without electricity, without upskilled frontline teams on tasks as if without a bulb. The Mindset Hypotheses openly challenges the visible damages to economic developments across the free world equally as monitor to growth the sooner tested across SME regions the faster the turnaround.
Fake entrepreneurialism: Unfortunately, the lack of mastery of the Big Economy is a big issue. Academia is always uncomfortable with SME, job creator entrepreneurial mindsets, for being too much out of the box rule breaker, while nestled in their own Ivey covered moist edifices feel cozy with their own job-seeker mindsets while claiming expertise on some fake entrepreneurialism of sorts. Issuing papers as wall hanging and passing judgments on entrepreneurial journeys, without once creating a single SME. Entrepreneurialism is not a degree; it is a state of mind. A quick live debate will prove all this, hence the deep silence.
Is China showing mastery in harnessing its big economy of SME? Observe across the world how much powers acquired by optimizing their SME sectors, upskilling of exporters, reskilling of manufacturers and quadrupling exportability. Now, compare this to the openly visible abuse and abundance of the SME within the free economies of the world, critically damaging levels of skills and leaving national citizenry behind in the races of global age competitiveness now in post pandemic revival left almost in salvage states.
Five Big Myths of Economic Development Debunked:
The political syndrome: politics is not creating the economical answer, as an overview, observe the art of the politics; reflected in their national leaderships of their free economies and their election wizardry all now almost gone to the dogs. Observe the chaos, nation by nation. Notice the salvage operations and runaway elections, watch the language, the populist narratives and pre-anarchy landscapes. Political power is about creating economic powers or else.
National mobilization of entrepreneurialism will save nations: The current global level rhetoric at global institutions already mandated to foster economic growth, mostly going in circles and lip servicing, geo-econo-socio-politico issues with visible absence of real concrete workable solutions. Such verbiage, followed by thousands of trade groups and chambers all joining the same chorus lines and echoing the same rhetoric visible on social media by the hours but critically lacking any hard core national mobilization programs. Of course, it takes special mindsets for special challenges, like airlines flown by trained pilots and not by frequent flyers. Acquire mastery on mobilization methodologies… why large number mobilization requirements are a mystery and why not just regular class size do?
The economic crisis fabrication: The challenge is “economy” and nothing else but economy. Here observe the assembly of casual, randomly picked expertise at play in managing the most complex and difficult puzzles of survival of humankind, the local grassroots prosperity. Notice, the majority of national crises, from economy, jobs, immigrations, crime, and education, housing or health all related to local grassroots prosperity.
What level of high schooling is required to decipher such puzzles? What we have, nation-by-nation, like some paintings- by-the-number to create masterpieces for the history of the economic museum. So what is wrong? Why is the big economy so neglected, why SME sectors are fragmented and buried under bureaucracies, red-tapes and old mentality trade groups and chambers lingering like left over burden declared some abstract SME with no future, all due to lack of job creator entrepreneurial mindsets. Absence of mastery on economic development now openly visible
Economy is not about numbers rather entrepreneurialism
The number syndrome: A calculator from a ‘dollar store’ is often sufficient as the Economy of the past is in numbers, but the economy of the future is all about entrepreneurialism. Growth is a by-product of job creator entrepreneurial mindset. Psychologist and HR both are allowed to break-up the furniture infinitum on this, but unless the mindset hypotheses is smashed, job seekers will build the organizations and job creators will create that organization in the first place; the visible damage to our economic development widespread across the free economies of the world as failure. Find answers fast
The error of mind: The term “SME” is a grave error, a misnomer created by job seeker mindset, as there is nothing small about a baby elephant. It will become an elephant in time. It is all about creating a big new company, active within a big economy of million small medium large businesses within a nation. However, such tasks must break away from the current economic development models serving selected interests, brutal toward SME treating them as small and of lesser value, unable to decipher the hidden powers of risky new business models. Mandatory study of 1000 earth-shattering entrepreneurs is necessary to avoid mistakes about the large national SME sectors treated as leftovers and spillovers from the undesired job creator mindsets. Close study and testing will prove the lingering harsh realities.
The big loss of a nation: The biggest loss to any nation is the wasteland of the ‘job creator entrepreneurial mindsets’ abandoned across the nation as lingering SME as undecipherable journeys of businesses for the formally attired degree holders as tall towers occupants of the job seekers mindsets. Lack of knowledge on properly structured Digitization, Mobilization, Exportization and global age immersion of new trades of micro exports, micro manufacturing and global competitiveness. Provided such progress led by entrepreneurial mindsets.
Throw away Teleprompters: as lip service on SME all but dried out, the only fact remains, that the SME economy by far the “Big Economy” in search of big minds, ignorance on small business fertility is a harsh lesson of today. Today, the art and science now hidden in balancing both, the job seeker and job creator mindsets to mobilize entrepreneurialism and create economic growth. Seek out authoritative dialogues and create bold open debates
The unpredictability of elections: Tragically, the cryptopia mentality stripped naked the unskilled citizenry of most free economies. Rather than creating internal Skill-Wars to create upskilling and reskilling, the leadership chose to declare Forever-Fake-Wars so their nations learn slowly to dig their own graves as metaverse therapy. Now in need of diaper change the next rounds of elections will sort out the ongoing damages. Prepare for mega change
Check the profiles on LinkedIn: Today, openly visible, across the world, on LinkedIn profiles, the Job seeker mindsets now freely running the economic development progress of the free economies of the world. What is most damaging is the absence of a job creator entrepreneurial mindset creating input and global age narratives on national mobilization of entrepreneurialism.
Absence of such mastery is visibly sinking the experimental economic development in a big way. A quick test will prove such imbalances but this requires entrepreneurial leadership to tackle such timely challenges, otherwise all failed to collect dust as some long undecipherable academic study. For authoritative analysis and special workshops on acquiring mastery on such topics, study more on Google.
Big minds urgently required; Big minds needed to deal with big economies, based on global collaboration, diversity and tolerance, as rest is crypto-tyrannies. Creating real value economic power is the ultimate leadership goal to lead a sovereign nation, as the rest is fakery. Without a big economy, get ready for the big bust; Study the origin and history of business, the art of value creation to allow differentiation to eliminate the value manipulation. The rest is easy.
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