Gordon Orr, a director in the Shanghai office of McKinsey, a firm of management consultants, has made 12 predictions for China in 2012:
- Government policies will spur consumption and investment.
- Dominant models will emerge for reforming rural land ownership.
- Real estate will stagnate.
- The fundamentals will cause further inflation in food prices.
- Chinese investment in green tech will spike upward.
- Accounting scandals will continue.
- Private-equity and venture capital funds may go ‘walkabout.’
- Chinese acquirers will be bolder.
- The automobile segment will be slow.
- Hospital reform will accelerate.
This Bystander likes (in the sense of agrees with) 6, 7, 8 and 9 and is intrigued by 10. 2 is a bold call. Necessary as land reform is, it will be difficult to push through in a year of political leadership transition. That will also blunt the impact of any efforts towards 1. 5 is this year’s bit-of-a-cheat, given what is outlined in the new five-year plan. 3 and 4 are the least convincing, not because Orr’s logic is wrong, but because the social disharmony they imply won’t likely be tolerated in what is looking to be a bumpy year. What do you think?
By the way, how did Orr do with his six predictions for China in 2011?
- Inflation in food prices will take longer than expected to control.
- Middle-class bankruptcies will expand dramatically.
- Minimum wages will rise, but productivity gains will outstrip labor costs.
- China’s economic growth will be lower than expected.
- China will step up its “invest out” program in the new five-year plan.
- The state will again try to reduce its ownership role in business.
1 and 3 came good. 2 and 4 not so much, though ‘dramatically’ and ‘lower than expected’ give him a lot of wiggle room to claim vindication. 5 was a bit of a cheat in the first place. 6 was wide of the mark, at least in the sense that SEOs increased their dominance in the economy.