China announced a 6.5 percent economic growth rate in the September quarter of 2018, the lowest rate since 2016. However, the decreased economic growth rate didn’t cool down the consumption enthusiasm on e-commerce platforms. Instead, the Chinese e-commerce companies made e-commerce history in November.

China GDP Growth Rate

The most representative e-commerce company would be the giant—Alibaba. This year, Alibaba reported that customers spent $30.8 billion online in 24 hours, a significant increase from $25.3 billion in gross merchandise volume in 2017. The number is almost five times than the total online sales on 2017 Cyber Monday reached $6.59 billion, the largest online sales day in the U.S. history, according to Adobe’s analysis.

Singles Day (Nov.11) was originally created by Chinese university students to celebrate their single status. In 2019, Alibaba created its first shopping day on Singles Day with about $7.1 million in gross merchandise volume and turned it into a nationwide shopping festival. And now it’s the world’s largest online-shopping festival, according to Bloomberg.

Source: Statista

When the creative marketing strategy created by accident has become a profitable business model, Alibaba is not the only company who participates in the festival. While Alibaba calls its shopping festival as “Double 11”, JD.com, the most competitive rivalry of Alibaba, names its shopping festival as “11.11” and extends its sales time from Nov.1 – Nov.11. During the period, JD.com saw about $22.8 billion in transactions, a 25.7 percent increase compared to the gross merchandise volume of the same period in 2017. JD.com also has its own shoppers’ holiday in mid-June (6.18). This year, JD.com has sold $24.7 billion worth of goods on that day.

Plus, other popular local platforms performed well in this Singles Day, for example, Suning, VIP.com, Vmall.com and Kaola.com, all of which are popular e-commerce companies in China.

Based on the whopping numbers, China’s media show their confidence in Chinese customers’ purchasing power. According to people.cn, an authoritative media in China say that the development of shopping festivals over the ten years has shown the increase in China’s economic growth and witnessed the consumption power of domestic economic growth. In the past ten years, the items customer buy online have changed from everyday necessities to high-quality commodities, such as big-screen televisions, smartphones and imported products. Also, an increased number of rural residents are taking part in the shopping festival, for example, the number has reached 241 million in western rural areas, which can show huge potential possibilities for the e-commerce industry. China is welcoming “consumption upgrading”, China’s media say.

However, the opposite points came out that the numbers “ suggest China’s economy is cooling down”, according to Business Insider. Although the gross merchandise volume has been increasing over the past ten years, the GMV annual growth rate is not the case. This year, the GMV annual growth rate of Alibaba has dropped from 39% to 27%. Also, the upstart e-commerce company Pinduoduo, featuring to sell unknown-brand, cheap, low-quality products but low-price products, has won many shoppers in China this year. The phenomenon was heatedly discussed that Chinese people are facing “consumption degrading”.

The 2018 shopping festival in China has come to a close. What is the status quo behind the hilarious shopping carnival? Maybe the consumers can tell.  

In the final days of October, news came out that President Trump wanted to use executive order to end birthright citizenship in the U.S. In an interview with Axios, President Trump said the United States is “the only country in the world where a person comes in and has a baby, and the baby is essentially a citizen of the United States for 85 years with all of those benefits”. Sticking to “America First”, he has been pushing hardline immigration policies to immigration issues.  

Although the news has aroused controversy in the U.S. and critics say President Trump has no rights to end birthright citizenship supported by the 14th Amendment, the news has still brought an anxiety to a group of people related to “birth tourism”.

Birth tourism gives pregnant women an opportunity traveling to and giving birth in another country for the purpose of obtaining citizenship for the child in a country with birthright citizenship. The United States is a popular destination for birth tourists. As long as pregnant women don’t lie on immigration or insurance paperwork, this practice is legal and protected by the 14th Amendment, which says anyone born on American soil is automatically a citizen. According to the Migration Policy Institute, more than 4 million children have the citizenship of the U.S. at birth.

Chinese pregnant women account for the majority of birth tourism group. According to Asian Americans and Pacific Islander Data, the total number of birth tourists from around the world to be about 36,000 per year, while other sources indicate the annual number of Chinese birth tourists to be around 20,000. Estimates by All America Mother Services Management Center in 2013 projected 60,000 Chinese births in 2016, more than 14 times as many as 2008, the first year Chinese people could apply for a U.S. Visitor Visa for tourism. the number of pregnant women coming to the U.S. has reached over 80,000, according to a Chinese research institution.

The reason that Chinese pregnant women choose to give birth in the U.S. has in common. The U.S. citizenship can allow their babies to enjoy advanced medical technology, good environment with clean air and water, advanced education resources and less-pressured course pressure. However, without the birthright citizenship supported by the U.S. Constitution, they would lose a way to give their babies a better life. There is no doubt that Trump’s opposition to birthright citizenship has brought them much anxiety.

Other than chinses pregnant women who want to give birth in the U.S., Trump’s proposition will also affect maternity hotel owners, who have been living in the U.S.

Maternity hotels sprang up over 30 years ago when Taiwanese chose to give birth in America to protect their children from mandatory military service. At first, these pregnant women lived with their relatives or friends waiting to give birth. However, as increasing numbers of pregnant Taiwanese women followed, the experienced in housing pregnant women sensed a fortune could be made. To accommodate the increasing number of pregnant women flocking to the U.S., maternity hotels offering comprehensive services for pregnant women sprang up. Los Angeles is the most popular destination for them. And when the U.S. Visitor Visa for tourism opened to Chinese citizens in 2008, the industry began an unprecedented boom.

Maternity hotels’ services include housing, cooking meals, appointing obstetricians, personal care by matrons, and driving. A large number of maternity hotels can produce many job opportunities and positions, for example, housekeepers, drivers, matrons, babysitters and obstetricians. According to a report of All America Mother Services Management Center, the maternity hotel industry chain in Los Angeles can support almost 10,000 people to make a living. However, if Trump succeeds in ending birthright citizenship, the whole industry will be affected.

While no one can predict the policy in immigration policies, the birth tourism and maternity hotel industry have an unsure future. The settled part is that Trump’s hardline attitudes toward immigration issues may have cracked down the industry.

        Image Source: The Wall Street Journal

On Sep. 24, the United States will begin imposing tariffs of 10 percent on another $200 billion worth of Chinese goods. That tariff rate will rise to 25 percent beginning Jan.1. Subsequently, China retaliated as promised on Tuesday that it would enact tariffs on $60 billion in U.S. goods from aircraft to liquified natural gas.

From July this year, the trade battle between the United States and China started that the U.S. imposed 25 percent tariffs on $34 billion worth of Chinese goods as part of President Trump’s tariffs policy. As the trade war escalates over time, an unavoidable question occurs to me: what’s the meaning of the continuously escalating trade war with retaliation?

When searching “trade war” on the internet, the headlines like “Will tariffs hit American more than China?”, “What’s at stake for the U.S.?”, or “China once looked tough on trade. Now its options are dwindling.” popped up on the screen. Now that the negative effects of the trade war with retaliated tariffs can be realized by both sides, why not negotiate a peace treaty? A free trade is better than retaliated tariffs.

Early in 18^th century, an economist Adam Smith wrote in his book The Wealth of Nations: “It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy.” This is the core of free trade: businesses concentrate on services or goods where they have a distinct competitive advantage so that they could swap something with lower cost and all profit by doing so. However, a free market is being devalued and tariff is becoming a weapon for the state’s rivalry.

Generally, tariffs opposing free trade can be used for five reasons: protecting domestic employment, protecting consumers, protecting infant industries, national security, and retaliation. As President Trump claimed that US jobs got “stolen” by China and increased tariff on imported goods can boost American business interests, he enacted tariffs for protecting domestic employment, businesses, and consumers.

In terms of employment and businesses, it is true that jobs have been lost in America due to cheaper foreign imports under free trade. However, protectionism will destroy more jobs than it can create. The economist Milton Friedman famous for his support for free market wrote in his book Free to Choose: A Personal Statement (1980, p41): “our real objective is not just jobs but productive jobs—jobs that mean more goods and services to consume.” Increased tariffs do retrieve some labor-intensive manufacturing industries, but jobs provided by them will lead to increased producer costs, increased producer costs will lead to increased products costs, increased products costs will lead to fewer sales and fewer tax recipients, fewer sales will result in fewer jobs and fewer profits.

As for consumers, increased imported tariffs will limit consumers’ freedom to choose products and force consumers to pay more for products while free trade can increase the number of goods that domestic consumers can choose from and decrease the cost of those goods through increased competition. In the long run, the living standard and quality of consumers will be negatively affected by trade barriers. Also, the government has to spend more subsidies on an increased demand for public services because of increased living costs.

In addition to the US, China will also be negatively affected by the trade war in the same way although Chinese policymakers think they have a prudent financial and monetary policy to face the pressure from Washington. China’s economy is always much more vulnerable to exports than America’s economy and China is still trying to shift its growth model to one relying more on consumption and less on investment and exports. Thus, it could take a bigger hit from the escalating trade war.

The free market with free trade is not perfect but it can correct itself better than state, because sometimes government regulations will be used for political rivalry regardless of long-run losses, for example, the current trade war.

Recently, two academics from China’s universities proposed to tax all working adults under 40 to build a “reproduction fund”. The proposal aims at alleviating the costs of childbirth and raising fertility. When families give birth to the second child, they could withdraw money from the fund. However, those couples who don’t have the second child cannot withdraw any money until they are retired.

For decades, China has restrictively controlled the number of babies women could have. The one-child policy has been requiring families to have only a child. Those women who violate the policy will be forced to stop pregnancy and undergo sterilization operations by the country’s “family planning” offices. But decades later, the one-child policy has caused a looming demographic crisis that officials begin to realize that it could imperil economic growth and to be anxious for a baby boom.

The one-child policy was eased three years ago. But the damage to China’s population growth had been done and the fertility willingness could not be rebounded anymore. Now the country is dealing with a demographic time bomb, which features an increase in the number of elderly people and a falling birth rate.

As of 2017, people aged 60 and above accounted for about 16.2 percent of China’s population, compared to 7.4 percent in 1950, according to the UN Population Division. The global percentage of people over 60 sits at 12.7 percent. Also, according to the State Council, the population is graying quickly. about a quarter of China’s population will be 60 or older by 2030, up from 13.3 percent in the 2010 census.

The increasing number of aging population means more retirement pension should be provided for the increasing number of retirees. However, China faces a widening shortfall of the financial support. In 2017, China’s pension funds collected 3.3 trillion yuan ($515 billion) and handed out 2.9 trillion yuan in payments. According to Reuters, thirteen pension funds in regions and administrative units around China can only cover less than one year’s worth of pensions.

Moreover, ending China’s decades-old one-child policy has not raised birth rates as high living costs deter larger families. As Bloomberg notes, “High living costs, long work hours and surging child-care expenses mean that many couples feel that they can only afford to have one child — or none.” Although the number of births in China did welcome a rise of nearly 8 percent in 2016 after the government eased one-child policy and allowed a two-child policy in 2015, the rise did not last long and the number of births then fell 3.5 percent in 2017, from 18.5 million in 2016 to 17.2 million.

This does not bode well for China’s economic growth. During the past four decades, China has enjoyed its demographic dividend to boost the economy. With one-child policy, China artificially adjusted its demographic structure to a good one with the ratio of those too old or too young to work to the working-age population dropping below 50 percent. But these days are over. Now, China is still finding a way to regain demographic dividend with its population anxiety.