What does China’s future look like post-COVID-19?

More than 2,000 people tuned in to the first virtual China Business Forum to find out how the country is recovering


The financial and economic impact of COVID-19 has hit China hard. The first quarter GDP figures, out in April, showed that the world’s second largest economy had contracted sharply – by 6.8% in the January-to-March period, a decline not seen since the 1990s.

“This is an unprecedented contraction, which most of our audience today will not have seen in their lifetime,” said Hongbin Qu, Managing Director, Co-head of Asian Economics Research, Chief Economist for Greater China, HSBC, opening China Business Forum’s first 100% virtual event in May.

‘Bigger fiscal response needed’

In conversation with Linda Yueh, Adjunct Professor of Economics at London Business School, Qu said average household income had fallen by 4% year-on-year for urban and rural households, a huge shock and not seen for some 40 years. And, so far, the recovery has been slow.

Speaking from Beijing, he urged the Chinese Government to take a “whatever-it-takes” approach and “mobilise fiscal resource” to help households and SMEs directly impacted by the pandemic – not just pump money into infrastructure projects.

“A lot of people who work in the private sector will have experienced a year-on-year drop in income that’s much lower than 4%. So, it’s time for our government to mobilise fiscal resource to help them. Many other governments are already doing that, but so far, in China, fiscal stimulus has been very modest,” said Qu.

“They need to do a bit of catch-up on that front. If they don’t compensate people’s incomes, there is no way they can spend more and then even if they lift the restrictions, and the shopping malls open, we will not see a recovery in the economy.”

To return to the trend growth rate, Qu believes China must double or even triple the stimulus package provided to revive the economy after the 2008 financial crisis. But why haven’t they done so yet?

“In recent years, there has been a lot of criticism of China’s response to the financial crisis, and there’s caution about not wanting to repeat what were perceived to be policy mistakes. There’s also a worry about the trade-off between stimulus and debt accumulation. But, right now, the focus must be on saving people’s lives, and addressing the debt challenge later.”

“For investors, the best vintages have been 1998-2001, 2003 and 2009. Now is a major turning point for China – and the opportunity is technology”

Qu’s comments came on the first day of the CBF, an event that featured keynote talks and panel discussions with industry, faculty and alumni speakers from three continents over a three-day period.

This year, the event was entitled ‘From stumbling blocks to stepping stones: China in the 2020s’ and was introduced by Dean François Ortalo-Magné, who praised the “tremendous leadership and commitment” of the student-led event committee for leveraging the technology available to bring together “the best of what LBS has to offer” in difficult circumstances.

Daniel Widdicombe, former European Head of Investment Banking at China Construction Bank, agreed with Qu’s comments about the scale of the financial, business and economic challenge ahead. He suggested that the outlook could only be described as a “rollercoaster”. He cautioned against the potential for false rallies in equity markets, before a real rebound, as was the case after the Great Depression in 1929 and in 2008.

2020: the ‘mother of all opportunities’ for China

Reflecting on the political tension between the US and China, and the future of China as the centre of the world’s supply chain, Qu said he believes that with the right reforms to the business environment, China could maintain a “high-value added supply chain” and create the right “pull factors” to keep attracting foreign investment and so mitigate the supply chain migration that faces.

“We have seven or eight million university graduates a year, which creates a massive advantage in human capital resources in China,” he added.

Weimin Chen (MBA 1996-1998), Managing Director, Hong Kong office, Head of China Office at Houlihan Lokey, spoke about new developments – as well as ongoing themes – in the Chinese financial markets.

“We’ve been busy in three areas of transactions,” Mr Chen said. “US-listed Chinese, mainly tech and internet companies, reassessing their market situation, especially given China-US trade relations, coming back to Hong Kong, Shanghai and Shenzhen; Chinese companies, state and private, buying – and now selling – European and US assets, and Chinese-owned companies looking to review their capital structure given the current volatility. We expect deals in these areas to continue.”

“This is an unprecedented contraction, which most of our audience today will not have seen in their lifetime”

Aman Wang EMBALS2018 and Partner and Head of UK-China Business at KPMG, said several of the cross-border transactions he’d recently been involved in had been put on hold. He cited buyers reviewing credit lines, banks reviewing the risk profiles of their clients, and sellers concerned about execution risk and valuation erosion given market volatility.

But he predicted an “arbitrage opportunity” in the next six to 18 months for Chinese outbound investors as China begins to exit the pandemic curve.

Meanwhile, Benson Tam, Chair and Founding Partner of investment firm Venturous Group, claimed that 2020 was “the mother of all opportunities” for China, with the country on track to become the world’s first digital economy.

“I’d like to remind people that Taobao (owned by Alibaba) was built right after the SARS period,” he said. “For us as investors, the best vintages have been 1998-2001, 2003 and 2009. Now is a major turning point for China – and the opportunity is technology.”

Tam highlighted the investment opportunities generated by Beijing’s multi-trillion dollar investment in high-speed rail in 2009, and said a similar growth opportunity would arise from the government-backed rollout of digital infrastructure across the country. “I haven’t taken my wallet out of my pocket for nine months,” he said, as he pointed out that almost 100% of transactions in China are made through Alipay or Tencent Pay on smartphones.

“Take 5G, AI, Big Data, Cloud, e-commerce, e-logistics – and then compress the whole thing. You think this will take five years? I think it will take five months. I’m certain that in 10 years’ time, we will look back and see – this will be the moment.”

The China Business Forum 2020 was organised by the CBF Committee, led by Gaby Wu MBA2021 and Yan Hou MBA 2021. Founded in 2012, the China Business Forum is one of the largest China-focused business forums in Europe.

This year, due to the COVID-19 pandemic, the event moved online for the first time in its nine-year history. With a line-up comprising Dean François Ortalo-Magné, four LBS faculty, five LBS alumni, and more than 15 world-class speakers, it attracted over 2,000 registrants and over 1,400 unique viewers. For more information, please visit