China’s Warm Message to Private Sector

Insight: Last week, China’s President Xi Jingping held a rare meeting with prominent Chinese tech entrepreneurs, including Alibaba founder Jack Ma, who has been largely out of the spotlight since making critical comments regarding financial regulation in 2020. The meeting comes shortly after the launch of DeepSeek’s R1 reasoning model, which shook up the global AI industry and challenged established leaders like ChatGPT and signals a potential pivot to a more pro-business stance from the government.

Impact: President Xi’s regime has historically been tough on China’s private sector: remember the 2020 tech crackdown, stringent regulations for education platforms in 2021, and gaming restrictions in 2024. This rare meeting, therefore, could indicate a shift in the government’s stance, acknowledging the vital role of a robust private sector – and especially technology -- in driving innovation, consumption, and growth. And it makes sense since China faces growing challenges at home and abroad. However, private sector executives and entrepreneurs, while welcoming the positive signal remain wary and wonder if Beijing’s long-term strategy has really changed. 

$1.9 billion

‘Ne Zha 2” —a Chinese animated blockbuster—has hit $1.9 billion in box office sales, making it the highest-grossing animated film of all time and the eighth-highest grossing film globally. The story reinvents a traditional Chinese mythical “Bildungsroman,” following a boy born with devilish powers as he battles fate and prejudice on his journey to greatness. Beyond showcasing the rapid advancement of China’s animation industry and its consumption strength, ‘Ne Zha 2’ symbolizes the country’s growing influence in global culture, mirroring its quest to find a prominent voice on the global stage.

Insight:  Berkshire Hathaway plans to increase its holdings in Japan’s five largest trading houses – led by Mitsubishi Corp and Mitsui & Co – to more than 10% each. Berkshire boss Warren Buffett first invested in the ‘sogo shosha’, as they are known locally, in 2019. Having seen their share prices triple and his investment swell to over USD23 billion, he now wants to double down. Not someone who does things by halves, the 94-year-old billionaire investor said he is planning to hold these stakes for ‘decades’. 

Impact:  Berkshire’s initial foray was well-timed value investing, since the big shosha were trading well below book value five years ago and yielding 6%. That anomaly has been corrected as Japanese equities have boomed, so future gains are likely to be more modest. Particularly, since the trading houses are currently suffering from soft prices of base metals (a big part of their business) and are seen as particularly vulnerable to US tariffs. But with more than $330 billion of cash in hand, Mr Buffett can afford to increase his exposure to Japan while he thinks of bigger fish to fry. 

Insight:  Hong Kong and Singapore have much in common. The years of rapid expansion are behind them (GDP growth for both is forecast at around 2.5% for 2025), their populations are ageing, and they are no longer cheap to live in, forcing their governments to increase social support. As global trade hubs with giant ports, both are vulnerable to tariffs and geopolitical ructions. Yet the annual budgets just announced by the two cities suggest very different prospects. 

Impact:  Hong Kong is in a tight spot. With tax revenues from land sales heading for a two-decade low amid a property slump, the government is trying to rein in a growing budget deficit with a grab-bag of measures, from cutting civil service jobs to raising train ticket prices for the over 60s. The outlook for spending on strategic industries and infrastructure projects is unclear. Singapore, meanwhile, has managed its public finances well, allowing its government to hand out vouchers to citizens struggling with price inflation. It also has the funds to invest strategically in social care, education, clean power and protecting its coastline against rising sea levels. This suggests the divergence in their fortunes will only grow over time. 

Insight: The CEO of FGS Global has recently launched a monthly newsletter about the art – and increasingly the science – behind successful strategic communications. 

Impact:  The latest edition focuses on what corporate leaders must do to navigate – and even thrive – in an increasingly fractured and polarized political and media landscape.

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