The 19th National Congress of the Communist Party of China kicks off today Beijing and promises to be the single biggest event this year. This makes it a true paradigm shift – an important change that happens when the usual way of thinking about or doing something is replaced by a new and different way. That's exactly what this Congress will be and it's the reason why it is of historic significance for each and every one of us and for the global economy.
 
Let's throw some context around this. China already leads world in credit creation growth and now in most technology fields. President Xi focus is placed on quality over quantity that reducing pollution is the number one social issue in China and that the Party is taking more and more control. The net output will be:
  • Lower than expected growth for the next 18 months(while China converts its economy from export engine to one of productivity gains – President Xi wants 2010 GDP per capita doubled (Rule of 72= 72/7% GDP per year = 10 years) which means an objective of 7% growth per year but most of this will be productivity driven which means investment first (hence lower growth) then higher.
  • Reduction of pollution = electrification of cars–  by 2030 100% of cars will be electric vehicles – this will catapult China to leadership in battery technology E-engines and pollution reduction. (Don’t forget that from 1900 to 1910/13 the US went from 100% horse carriages to 100% cars!)
  • High ratio of R&D and innovation to gain leadership. China is already dominant but will be even more so in E-commerce payments and fintech.
Change comes much faster than we human beings like – our brains are simply not designed to accept quick changes and one of the few shortcomings of the brain is that it likes (and uses) the recent past to extrapolate the future. We think in a linear fashion but world the evolves in a super log-normal way. An excellent example is seen in the pictures below from New York in 1900 and 1913. Notice the difference in street traffic in the space of just 13 years. I think the next 13 years will surpass those years in way back then in New York in terms of change dynamics and how we act analyse and live.
 
ve.NYC 1900