Dear Members and Friends

After three years of pandemic-related travel restrictions to China, there is now a rush in traveling to China once again. The old Chinese greeting, "Have you eaten?" has been replaced with "Have you been to China since CNY?" At the SCCC office, we are working hard to welcome all the official Chinese delegations, while also being aware of many more corporate and private delegations from China traveling to Europe. The same is true for Swiss companies' delegations undertaking the journey to China. The challenge now is not finding partners to discuss and engage with, but rather the challenge is the travel to China and other places in Asia. Flights are packed, seats are scarce, and prices are substantially higher than in the past.

The takeaway from this flurry of activities is that there will not be a substantial decoupling between China and the rest of the world, despite all the media reporting on supply chain repositioning and politicians requiring such steps. The global economies are simply too intertwined. Instead, supply chains will be refocused on regional needs, such as producing in China for China or Asia. Additionally, new, smarter ways to produce, driven in part by higher salary costs and a shortage of skilled labor forces, will result in more efficient, less energy-consuming processes. Coupled with consumer awareness of CO2 emissions created by transportation of goods, the need for near-shoring of products whenever possible will take place.

China's decades of infrastructure building within its boundaries have provided the platform on which the economy was and continues to be built by myriad entrepreneurs. The ability and capability of the Chinese economy to produce on a massive scale will create a model where China remains one of the few backbones of global manufacturing, producing essential materials and parts that will then be shipped to other ecosystems around the world. Outsourcing to Malaysia or Vietnam does not mean that a major share of the assembled parts is not sourced from a China-based supplier. This is how we at SCCC interpret the statements made by State Secretary of the Treasury, Janet Yellen, that a US-China decoupling is not in the interest of the global economy.

Noting that India has surpassed China as the country with the highest number of citizens demonstrates that demographic pressure is starting to impact the Chinese economy. This pressure manifests itself in many ways, including changing consumer behaviors, needs placed on the service industry, and the availability of skilled labor forces. The Chinese government's recent comment that university graduates should consider taking on product-creating jobs in the economy is not only to lower the historically high youth unemployment rate but also to address labor shortages arising from the demographic changes.

All of the above are the reasons why there are so many activities related to the Chinese economy in the media and in the form of events. Understanding these developments and drivers is key to the Swiss economy and to securing our wealth as a nation and citizens. SCCC will support you in that process and will identify the most important events, trends and issues to participate in, consider, and observe.

We wish you a flowery May with less rain and higher temperatures. The next newsletter will be issued in early June, the month the SCCC AGM will be held.

Kind regards

Tīng jūn yì xí huà, shèng dú shí nián shū.

Listening to a lord's remarks is better than reading books for ten years.