Predictions of how this recession will change China

A number of interesting points at ChinaSolved and what China will look like after the recession:

A redefined top-end.
Fewer big-spending Westerners, tighter MNC expense budgets and a general de-rating of Western standards will change the way China defines luxury and status. High End Asian has existed for a while, but it’s always been in the shadow of European standards. As that shifts, international managers are going to have to make sure that their offering stays competitive.

A more middle-class middle-class China
I recently had lunch with Bill Dodson, publisher of This Is China - and he made the distinction between ‘middle-class Chinese’ and ‘entrepreneurial Chinese’. The folks that westerners call ‘middle-class’, most Chinese call ‘rich’. The real Chinese middle-class is huge, value-oriented and very local. The entrepreneurs and returnees, whom we have all been CALLING the middle class, were very international, status-conscious and tended to have jobs that linked them to China’s ‘external economy’. The real middle is on the rise.

More opaque B2B transactions.
As western capitalism gets de-rated in China, so will the annoying trappings of western commerce — like open bidding for contracts, RFPs and transparent procurement. Look for a re-guanxified buying process – even in MNCs.

Larger, more assertive SOE & State actors
The stimulus package shows the direction of China. Private commerce is going to finally and definitively be given a back seat to the SOE/State actors in China business. As some of us have always suspected – market-oriented commerce was just a phase in China. Now that there are plenty of well trained, commercially sophisticated managers in the system, we’ll see China rapidly back away from ‘market socialism’ and towards ‘Statist capitalism’.

Laxer QC, compliance and regulation.
China will be throwing the baby out with the bathwater, and many hard-won gains in the areas of quality control, consumer protection and anti-graft policies are going to fall by the wayside.

I'm not alone in thinking that China's domestic economy will bear the brunt of the global downturn - but I'm also not sure ChinaSolved's prediction isn't wrong that the US will not have emerged by the end of 2010. If the lessons China learns are the above, this will ultimately handicap their future growth as it will reduce the efficiency of their economy. It will also suggest China's apparatchiks have been successful at reclaiming some of the power they have lost.