China Research

China is a country with outspoken scientific ambitions, particularly expressed by President Xi Jinping. This is certainly a logical approach in order to achieve the important Chinese goal of “of raising domestic content of core components and materials to 40 percent by 2020 and 70 percent by 2025” which  means that “reducing reliance on foreign technologies involves creating and developing companies that can innovate through research and development, dominate domestically, and produce competitive exports…” (https://isdp.eu/content/uploads/2018/06/Made-in-China-Backgrounder.pdf). To get there, strong technological progress is certainly needed – based on successful scientific research.

“Science” – a key word in today’s China

A few days ago, I saw an article in People’s Daily that made me very curious. The headline was “China surpasses U.S. in publishing most influential academic papers: report” (http://en.people.cn/n3/2023/0921/c90000-20074482.html). According to this report, China counts for almost one third of all academic papers that were published in 2022 in the most influential international journals (i.e. 16348 Chinese contributions out of totally 54 002). Among these publications were 1929 Chinese papers described as “hot” compared to 1592 from the U.S.

Regarding the size and ambitions of academic China, the rise to number one in the publication area may be plausible. However, some questions and uncertainties remain in my mind, particularly since my trust in Chinese statistics has been limited for many years. Some comments should be mentioned according to my understanding of the report (see also more about the publishing institution “Istic” – Institute of Scientific and Technical Information of China, https://www.istic.ac.cn/html/1/529/558/index.html):

• The analysis of giving China the first place in this ranking of global scientific publications is made in China and therefore extremely difficult to go through and check out. At least in my view, transparency still seems insufficient.
• It would be interesting to know which journals that have been selected as high-level international journals and to what extent Chinese journals are included in this ranking process.
• It would be good to be informed about the criteria of a “hot” research paper.

I have been trying during quite a long time to understand more about China’s international research standing. Sure, there should have been interesting progress in the past 10-20 years. But why is access to the details so difficult to find and obtain?

Hubert Fromlet
Affiliate Professor at the School of Business and Economics, Linnaeus University
Editorial board

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Occasionally, I get a feeling that global financial markets get strongly worried about Chinese real estate markets – real estate markets that indeed are not very transparent. Most of the time, however, these worries still seem to be suppressed too much on global financial markets. In my view, the current real estate crisis may be much more serious than usually understood by many/most Western analysts.

So much has gone wrong in the real estate market

The share of real estate amounted in the past decade on average to 7-8 % of GDP. But it should not be forgotten that the total real estate sector runs up to 25 percent of GDP or somewhat more when all services and other activities linked to the real estate sector are included. Different percentage numbers can be found as well since real estate statistics in China most probably have substantial shortcomings.

To clarify further the dimension of the real estate crisis: Apartment prices have come down sharply more recently, up to 100 million apartments are empty and many of their developers and owners have lost a fortune. Personally, I would not apply changes of official apartment prices since price downturns may be much higher in reality than in official statistics.

A brief remark: Already 10-15 years ago, I could see huge empty apartment units in Chinese metropolitan cities without light in dark evenings (which – by the way – shows that human eyes sometimes can give or receive better information than screens).

A major problem for private apartment owners is also that buyers of apartments usually have to borrow money even before the start of their own residential project.

Real estate is by far the biggest single Chinese contributor to GDP and has therefore also importance for global GDP growth. We already know that real estate companies have come increasingly under pressure. This may or will affect negatively both banks/non-banks and the financial situation of municipalities – the latter now losing a lot of tax income from shrinking sales of real estate.

Furthermore, the real estate crisis in China also means increasing social challenges in a country where apartment ownership functions as a kind of necessary private pension, and where the difficult demography outlook indicates that total future need of apartment areas looks quite limited in a macro sense, particularly when youth unemployment – also for academics – will dampen demand at least for some time.

Yes, China is currently sliding more and more into a critical situation – very worrisome for the whole (financial) world!

Hubert Fromlet
Affiliate Professor at the School of Business and Economics, Linnaeus University
Editorial board

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