China macro:Micro vs Macro Trends

Isaiah Berlin once said there were two ways of thinking: fox and hedgehog. Thedifference is, “The hedgehog knows one big thing but the fox knows many smallthings.” More often than not, discussions on China’s economy are organizedaround ‘one big thing’, such as when China’s debt load will get into trouble, orwhether China will have a lost decade, like Japan.

This report, on the other hand, is about ‘many small things’. It looks at theChina’s economy from a bottom-up perspective by studying data points fromvarious micro sources, which could shed new light on big macro questions. Weorganize these observations around five emerging trends: (1) rise of services;(2) the digital transformation; (3) consumption upgrades; (4) formation of cityclusters; (5) corporate transformation.