Retail

By Tom Miller and Will Freeman

Beijingers call the hot and sticky months of July and August the “sauna” season. On muggy summer evenings, sensible locals sweat it out in the capital’s old lanes with sticks of fatty lamb kebabs and cold bottles of Yanjing beer.

But real men roll up their T-shirts under their armpits, ditch the pansy lager, and instead glug down the local firewater known as baijiu – a potent mash of sorghum, rice, unhusked barley and other grains.

For foreign businessmen forced to drink the stuff at countless banquets, baijiu provides an infamous challenge for the unconditioned palate. But this white spirit – generally 40-60 per cent alcohol by volume, but sometimes 70 per cent plus – is a mainstay of Chinese culture, first popularised during the Xia dynasty 4,000 years ago.

Baijiu, the world’s largest spirits category by volume, traditionally dominated the domestic booze market. But in recent years, sales volumes of China’s national liquor declined as beer, a foreign upstart, gulped up market share.

Now baijiu makers are fighting back with a proliferation of new luxury varieties designed to appeal to the country’s growing band of big spenders. Revenues are shooting up at major distilleries and baijiu is giving beer a run for its money.

By Tom Miller and Will Freeman

“Rebalancing the global economy” is the mantra of the day – and China, we are told, must play its part. That means shifting China’s economy away from an unhealthy reliance on exporting goods to foreign consumers and instead boosting consumption at home.

Last week, we argued that China’s fast pace of urbanisation, which is projected to see the urban population rise from 600m today to more than 1bn by 2030, would keep demand for commodities high. It seems a small leap of logic to conclude that growing urbanisation – and the accompanying rise of an “urban middle class” – will have a similar impact on consumer goods.

Welcome to the Dragonbeat blog. Today, everyone with a serious interest in global issues needs to know about China. This blog expands the analysis of the Chinese economy previously found in the fortnightly column written by the China Economic Quarterly (CEQ) for FT.com. Dragonbeat’s principal writers are Arthur Kroeber, managing director of Dragonomics Research & Advisory, the parent company of CEQ, and CEQ managing editor Tom Miller. By moving to a blog format where you can expect a weekly post from us every Monday, we hope to provide a space where readers everywhere can share their views on China’s economy and its impact on the world. Our first blog post, written by Arthur Kroeber, is below:

The global financial crisis poses two challenges for China: one of domestic economic management and another of international economic diplomacy. How it addresses these two challenges will in large measure determine whether China takes up what it considers to be its rightful place as one of the world’s leaders, or subsides instead into a Japan-like irrelevance despite the size of its economy.

The domestic challenge is straightforward: China must find a new engine of productivity and employment growth to replace a long-running export engine that is likely to be out of commission for several years.

Dragonbeat is no longer updated but it remains open as an archive.

Readers of the Dragonbeat blog can now go to www.ft.com/dragonbeat to read the new Dragonbeat weekly column for insightful commentary and analysis on China.

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