RECORD TRADE SURPLUS AND CONSUMER SOFT SPOTS
Second, China is pragmatic, and the AI arms race offers a good illustration. Whereas the US is seeking the holy grail – or artificial general intelligence, in this case – Xi is pushing the industry to be “strongly oriented toward applications,” locking in any advantages that AI might bring to sharpen the nation’s edge in manufacturing.
Across the country, industrial robots operate in so-called “dark factories”, where automation is so efficient that work happens with the lights dimmed. Companies are also using AI to speed up logistics and product-design cycles.
By now, productivity gains from AI and automation are for all to see: The trade surplus hit a record US$1 trillion this year, beating out rival exporting powerhouses like Germany and Japan, with the fastest growth coming from advanced manufacturing, such as cars, integrated circuits and ships.
Third, deflation cuts both ways. Investors dislike it because companies have no pricing power. On the flip side, it’s pretty much guaranteed that local brands capable of charging premium prices at home have hit consumers’ soft spot, giving them a fighting chance in global trade as well.
The prime example is Guangzhou-based Pop Mart. The company’s gross profit margin of 70 per cent is more than twice what a generic toymaker can make, thanks to the wickedly cute and viral Labubu.
https://www.channelnewsasia.com/commentary/china-economy-trade-surplus-ai-race-labubu-5707986
