Hi, this is Evelyn, writing to you from Shanghai. Welcome to the latest edition of The China Connection — a snapshot of what I'm seeing and hearing from local businesses.
While economists and former central bankers discuss tech and monetary policy at the Bund Summit, companies are moving faster to capture new revenue. What risks bear watching?
The big story
China's seen growing "misallocation" of resources, Krishna Srinivasan, the International Monetary Fund's Asia and Pacific Department Director, told me on the sidelines of the Bund Summit on Monday.
That "needs to be corrected," he said, urging policymakers not to "pick and choose sectors" to support, but to allow capital to work according to market forces.
It's a tough ask as China has doubled down on technological development, while struggling to transition away from real estate, which once accounted for more than one-fifth of the economy.
Local businesses have tried to fill the gaps where they can.
In Shenzhen, a local partner for Kickstarter, called INNO100, is making about 5 million yuan ($750,000) a month at its retail store, said Baron Wang, founder of the parent entity Longham Group.
That's thanks to a combination of retail sales, 3D printing service fees and events, he said. The store showcases new tech products, similar to its Beverly Hills-based cousin. Wang plans to open about 10 more stores in China, and five overseas, saying he sees the chance to get customers especially from the U.S.
"It's really hard for us to control the relationship between China and the U.S.," he said. "But I think the technology should not be too politic[al]," he said, especially in consumer electronics.
International investment is always an option.
Yuan Minglun, co-founder and CTO of Kunwei Technology, said the company already supplies major Chinese humanoid robot companies with sensors, and is planning to set up a factory in the U.S. in coming months so that it can more easily sell to American humanoid startups.
It reflects a persistent gap between U.S. and Chinese supply chains.
Cyril Nader, founder and CEO of outer space-focused startup Phenix, has aimed to use a non-China supply chain. But he pointed out that the lead time for non-China-made parts such as gear boxes can be 56 weeks.
"56 weeks from now, I don't know what I will be doing," he said. "We'll be way ahead. We'll be on [the] third phase."
Need to know
Visa gets Beijing's green light for bank card business after 40 years of working with China
The news comes as the U.S. and Chinese presidents plan for their third meeting this year. "For more than 40 years, Visa has been an active contributor to China's dynamic payments landscape," Visa CEO Ryan McInerney said. He became chair of the U.S.-China Business Council in June.
U.S. presses China on Mastercard, Citigroup market access in bilateral Bangkok talks, official says
U.S. officials raised market access issues for Mastercard and Citigroup in China during bilateral meetings in Bangkok last week, according to a U.S. Treasury official.
China's GDP picks up speed, up by 4.5% in Q3
Surging exports helped lift overall economic growth in the third quarter, while retail sales grew by a faster-than-expected 1.1% in September from a year ago. Producer prices last month rose by their fastest since June 2022.
Coming up
Oct. 19 - 22: Financial Street Forum in Beijing; Bund Summit in Shanghai
Oct. 20: Loan prime rate, Alibaba's Singles Day shopping event officially starts
Oct. 20 - 22: Chinese Premier Li Qiang to visit Russia
Oct. 23: Apple releases iPhone Duo
Oct. 26 - 29: China's Communist Party holds fifth plenary meeting