MNI POLICY: Technology Decoupling May Deepen: China Advisor

Technology decoupling may deepen but economic decoupling from China will not be easy as the country has such strong manufacturing capabilities, said Ba Shusong, the chief China economist of Hong Kong Exchanges and Clearing (HKEX) and the chief economist of the China Banking Association at the Financial Street Forum 2020 on Thursday.

Without naming the U.S., which is engaged in a trade and technology war with China, Ba said China could strengthen its cooperation with Japan and South Korea to replace the supply of high-end electronic products and equipment from the EU and the U.S.

Ba said countries the world over would like to re-shore key industries, from medical to semiconductors and agricultural in future.

Ba also called for a new way to support the financing requirements of emerging industries, such as the medical industry.

Emerging medical companies "set aside "60% to 80% of capital expenditure for R&D, in which period they don't generate any cash flow. They also don't have any business records. They can't meet the requirements of traditional financing tools, including IPOs and loans," Ba said.

Speaking at the same event, Liu Yuanchun, vice president of Renmin University, said the spread of profit rates between the real economy and the financial industry has greatly narrowed in the past 10 years, from 12.4 bps to 4.46 bps.

This means there is less encouragement for capital to flow into the financial sector, and better positions China to deal with external risks and those associated with Covid-19 slump, Liu said.