China has long fascinated me for its rich history and cutting-edge technological ecosystem. On a recent trip to Beijing and Xi’an, I immersed myself in both worlds, conversing with locals from all walks of life to understand the country’s economic transformation and current challenges. In this article, I’ll also explore China’s extraordinary 54% EV penetration rate (source), diving into how this was achieved and the local perceptions of various electric vehicle (EV) brands.
With over 1.4 billion people, many of whom once lived in poverty, overhauling China’s entire economy and infrastructure demanded an extraordinarily low-cost and scalable solution. For example, consider that Singapore’s card-based public transport system, which serves just 5.6 million people, will cost around US$30 million between 2025 and 2030 (source).
Now, imagine trying to implement something similar in a country over 13,000 times the size of Singapore, spanning many cities with different transport systems and needs.
In China, the answer was simple: go mobile.
When I arrived in Beijing, I activated my travel card directly through WeChat or Alipay, scanned a QR code, and that was it—smooth sailing. This seamless, mobile-first approach isn’t just a clever solution; it’s a necessity in a country of such a large scale. It offers an elegant, low-cost, and scalable system that is incredibly user-friendly and available in every city, eliminating the complications associated with traditional transport infrastructure.
In many ways, China’s lack of legacy infrastructure—often seen as a disadvantage—turned out to be a blessing. Without the entrenched banking systems and reliance on Mastercard or Visa that many developed countries face, China was free to reimagine its financial infrastructure from scratch. Where traditional payment systems come with a web of intermediaries and fees, China’s mobile payment platforms—WeChat Pay and Alipay—were built to be faster, cheaper, and more efficient.
However, a super app like WeChat does more than just make payments. It’s a super app, offering a vast range of services, from messaging and social networking to ride-hailing and food delivery. This super-app model emerged out of necessity, as many users in lower-tier cities had limited smartphone storage and data plans. WeChat’s mini-programs solved this problem, providing lightweight apps without requiring additional downloads or installations.
When I arrived in China and was asked to scan a QR code to order food, I instinctively used my phone’s camera, expecting to be taken to a website. It turned out the QR code only worked when scanned with WeChat. This term, 扫码点菜, meaning ‘scan to order,’ became ubiquitous. Every restaurant’s ordering system was on WeChat, with a simple interface and UX enabling lightning-fast responses and immediate payments, all within the same app.
While Uber/Lyft dominates the U.S. and Grab/Gojek dominates Southeast Asia, China has numerous ride-hailing apps. Though Didi is the most well-known to foreigners, locals don’t seem to care which they use—most book rides through 高德地图 (Amap), essentially China’s Google Maps.
Besides navigation, attractions, food, and hotels, Amap consolidates ride-hailing options. Enter your destination, and it shows prices from various platforms. This allows immediate booking and commoditizes the ride-hailing business, applying downward pressure on prices for the consumer’s benefit.
I noticed all my rides were EVs, as were most cars on the road. I barely saw a dozen internal combustion engine (ICE) vehicles and didn’t come across a single petrol station in Beijing or Xi’an.
Curious about China’s rapid EV adoption, I began asking my drivers about the EV scene and learned that while many in Beijing drove 北汽 (BAIC) EVs due to their low price, the brand wasn’t highly regarded, with past models having plenty of problems. Surprisingly, I didn’t see many BYDs on the road in Beijing, but the drivers told me the brand was more prevalent in Shanghai and Hangzhou.
Tesla was perceived as superior but expensive. When I searched Baidu for the most popular EV, Tesla’s Model Y ranked as the most popular car in 2023 (source).
How did China achieve a 54% electric vehicle (EV) penetration while other countries struggled? One key factor in Beijing is the stringent quota on car sales. To bypass the long wait for a vehicle (a local I spoke with has been waiting for over three years), consumers can jump the queue by opting for an EV instead of ICE or by having children.
When the policy of prioritizing EV purchases was first introduced in the mid-2010s, many people were hesitant to adopt EVs due to concerns over charging infrastructure. In those days, if you decided to buy an EV, you could have gotten the permit immediately. Today, those concerns have disappeared, with private companies installing charging points everywhere. A simple search on Amap would show users the nearest charging stations and prices.
The Struggles of China’s Economy
Let’s discuss China’s struggling economy. The property sector, which contributes 24% to the GDP, is weak, affecting the banking sector with sluggish loan growth. What’s not widely known is that many cities now have weak balance sheets because they mainly rely on selling land to fund their development, boosting the GDP.
The property slump stems from government policies aimed at cooling the overheated market, particularly the ‘Three Red Lines’ policy introduced in 2020 to restrict borrowing for developers with high debt levels. A crackdown on property speculation and focusing on “common prosperity”—reducing wealth inequality and promoting affordable housing—further tightened regulations to curb the overheated property market. While the policy was intended to rein in borrowing by heavily indebted developers, it triggered a slowdown in property sales and dampened consumer sentiment.
Evergrande, a high-profile developer with US$300 billion in debt, was forced into liquidation, perfectly illustrating Warren Buffett’s adage: “It’s only when the tide goes out that you learn who’s been swimming naked.”
While the government’s intentions were good, their market intervention resulted in a chain reaction that has left the economy in a rut. Reviving the property market has proven difficult despite efforts to ease restrictions and stimulate growth.
Another factor is the government’s restrictive approach to IPOs. Companies aligned with national development goals, like those in green energy or advanced manufacturing, have an easier time going public. Real estate, education, and businesses with significant overseas operations or handling sensitive data face stricter scrutiny or outright restrictions due to concerns about financial risks, social stability, or data security.
This dampens investment, especially for venture capitalists needing a clear exit strategy.
Consumer Trends: Shifting Sands
During my trip, I visited several top consumer brands and observed foot traffic. Nike stores, to my surprise, were practically empty.
While not as deserted, Starbucks also saw far fewer customers than I expected. Li Ning had moderately more customers, while Lululemon was bustling. Even on busy streets, Starbucks was quiet, with consumers favoring milk tea brands like Chagee or 茶话弄 (Cha Hua Nong). Locals guessed this was due to the weak economy and Starbucks’ high prices.
However, this logic doesn’t fully explain Lululemon’s popularity despite its high prices. My guess is that Starbucks isn’t innovating fast enough for the fickle Chinese consumer. Competitors introduce new flavors at a much faster pace. And if Starbucks’ competitive advantage lies in its mobile app and loyalty program, it holds no advantage in China, where every food and beverage brand has a WeChat presence and can easily implement loyalty programs.
A Traveler’s Perspective: Then vs. Now
Alright, if you’ll indulge me, let me switch gears from investor to traveler. The last time I visited China was in 2009, and air pollution was so bad that I got sick within two days. Haggling was the norm, and things felt chaotic.
Today’s China is entirely different—clean air, easy navigation, and extreme efficiency. I shopped online, having purchases delivered to my hotel with transparent pricing and reliable reviews. Returns and exchanges were hassle-free. I could easily order food or drinks anytime using the Meituan app, with most deliveries arriving in under 30 minutes. It’s an incredibly efficient country.
Finding great food was easy with Dianping, China’s Yelp. Ratings and reviews made it simple to find trustworthy merchants and restaurants. You can even check restaurant crowds and get a queue number in advance, avoiding waits. Did I mention I love their efficiency?
But efficiency is just the backdrop. The real highlight of my trip was immersing myself in China’s rich history. Seeing the Forbidden City in Beijing, the Great Wall at Mutianyu, and the Terracotta Army in Xi’an was nothing short of breathtaking. Reading about these historical landmarks is one thing, but standing before them is a whole different experience.
Lastly, I enjoyed chatting with locals and learning about their lives, how things have changed over the years, and what their dreams are. I’m already looking forward to my next trip, and I plan to visit Shanghai and Hangzhou, the finance and tech hubs.
If you have recommendations or are in the area, please reach out! I’d love to connect.
Best,
Thomas
Thank you for sharing this detailed and insightful travelogue about China. Your observations on China’s technological advancements, economic challenges, and cultural experiences provide a well-rounded view of the country’s current state. The comparisons between your past and recent visits offer valuable perspective on China’s rapid development. Your personal anecdotes about using super apps, experiencing the EV boom, and visiting historical sites make the article both informative and engaging. This comprehensive overview of China’s digital ecosystem, economic situation, and tourist attractions is greatly appreciated and will be very helpful for anyone planning to visit or understand modern China better.
How are domestic Chinese brands performing compared to Western brands, and what factors might be contributing to their relative success in the current Chinese market? Is the economy coming out of recession ?
I’m glad this is helpful Jyoti! I don’t think the economy is going to be better anytime soon. They are strained both internally from the property slump and externally from trade tensions.
They do have the technology and talent to succeed, but I think a lot of the problems is caused by their own policies from 2020. We’ll have to see if the government has the willpower to amend their earlier policies. The next five year masterplan will be coming soon, so we have that to look forward to.
Nice post.
The local government seems to be doing something similar to Singapore on affordable housing/leasing to boost consumption.
It would be great if some input from you, with prolonged exposure to Singapore model, for localized opinion on workable approaches (majority inventory seems to be aged apartments.)
Indeed, I’m starting to see many more housing projects that resemble what I see in Singapore.
The critical difference I observe is that the Singapore government doesn’t drastically change the free market. They do it in much smaller increments, and if it doesn’t work, they’ll turn the heat up slowly because they understand how important it is to avoid a property market that goes into free fall.
Killing off demand is easy, but regaining trust is difficult.
It’s an interesting point on inventory management, because another policy Singapore have is that developers can’t hoard inventory. If they don’t tell the properties within the timeline, they’ll face stiff penalties. Which encourages them in being more prudent when bidding for land, and plays a role in smoothing the cycle.
Great start from what might not work, or issues from Singapore’s experience.
Multiplied by a scale factor, gives one a general trajectory.
Seems you are Good Luck to the Chinese Market , they should keep you there
the stimulus package seems to be correctly targeted at the property market. We’ll see how the market responds now. There’s the affordability issue and there’s also the trust issue, which is harder to repair. Tier 1 properties have never been a problem, it’s the rest of the properties, whether home buyers will have confidence in absorbing the excess supplies.
Interesting discussion. I assume you speak chinese language, so you were able to communicate quite well with everyone you met while traveling. I thought I remember a 60 minutes piece saying that the government encouraged the excessive property development, and now they are trying to discourage development it sounds like? If so, it just goes to show how governments have no place running an economy. The private markets are more than capable of going to excess and then slowing down on their own. Perhaps neither system is ideal. Is this what we are fighting wars over? Interesting article. Probably will never visit there myself, but the history there is awesome. Thanks,
It’s great to hear from you, Eddy. A key factor to note for the property sector is that it is highly cyclical. In China’s earlier phase, one of its key agendas was to provide housing for its large population, and driving growth in the property market was crucial. But in the late 2010s, they noticed that many of the developers were eyeballs deep in debt because they got too greedy and did what they thought was right (although certainly painful). In hindsight, they probably should have done it in smaller steps and avoided a colossal explosion, but probably on a smaller scale than we saw in the U.S. during the subprime financial crisis. The slither of silver lining from all these is that they didn’t let any of the banks go kaput, although I certainly wouldn’t dare invest in any of them.
BYD’s headquarter is in Shenzhen, so it received a lot of orders from the local government for public transportation system like taxi, where you would find more appearances of BYD sub-brand like Qin（秦, sedan type）or Song （宋, SUV type）.
When I paid a business trip to Shenzhen in 2018, China was just at the eruptive point of EV penetration, and Shenzhen government had already required all taxi drivers to substitute EVs for their old ICEs. Within a year, I found BYD labeled Taxi everywhere in Shenzhen.
In 2019, Tesla’s entry into China and its popularity later really changed Chinese people’s mindset about EVs, which bolstered the penetration of EVs from public transportation to private consumption.
And the rest is history.
Most countries want a higher EV adoption rates but is struggling with it. All stars are aligned when the government, infrastructure, and consumer perception tilts in the correct direction. I’ll be visiting China a lot more often and I’m looking forward to learning/experiencing more of these developments!
Hi Thomas
Have you taken the HSR trains? May I humbly suggest you do. Try the Shanghai Hangzhou route and then post your experience.
Yeah I took it from Beijing to Xi’An, very comfortable ride, although the boarding was quite messy. And I didn’t like the booking experience using 12306 app because it kept hanging for foreigners. I used Trip instead. I like how I can even order food delivery inside the train and how punctual it is. I hear from friends that every city’s has quite a different experience, Beijing commuters usually talks loudly while Shanghai is usually deep in work.
Great write up on your recent china trip. My last trip there was in 2006 so I am prepared to be astonished by the changes. I recall taking the early high speed trains and was already impressed. We are planning another trip next year so the observations on their transport infrastructure and payment system are really timely. What is more challenging for china is not the infrastructural and technological challenges which the chinese have successfully navigated but the social issues like reducing the high rate of youth unemployment and managing the growing legions of relatively younger retirees in a demographically ageing society. Hope you can share your insights especially after your next trip to Shanghai and Hangzhou.