2017 is set to see big changes in Asia with Brand China on the rise, more trade deals opening up and e-payments gaining traction
From new technologies to potential paradigm shifts in the global system of trade, 2017 is certain to be marked by a number of significant evolutions.
Robotics, drones and virtual reality are set to redefine retail. The yuan will continue to operate in a type of new normal, as a recognized part of the global monetary system, while the strength of the US dollar is likely to shape the performance of other currencies and entire markets.
Oil, which over the past few years hit record highs followed by record lows, may slightly strengthen but the age of $100 per barrel may well be over. Electronic payments could take over in Asia and e-commerce will no longer be a curiosity.
As 2017 starts, we examine trends in some key areas likely to play an important role this year in business and economics in Asia and the world.
Advances in technology
Last month, US e-commerce company Amazon made its first commercial delivery by drone in the United Kingdom. And in the weeks beforehand, Alibaba's groundbreaking use of virtual reality shopping during its Singles Day festival gathered global attention. Both examples are only the tip of the iceberg of what is happening in the broad space of robotics, drones and virtual reality.
"This is the year that many Asian countries - China in particular, given its still-dominant position in global manufacturing supply chains - will finally come to terms with the need for process automation in manufacturing," said Ross O'Brien, lead economist at Intercedent, an Asia-focused consultancy.
"This will mean that China, which has fully embraced robotics, will begin to claw back manufacturing capacity from Southeast Asia, which historically and currently harbors systemic resistance to automation."
Mario Artaza, chief representative at Banco Security, a Latin American bank that is expanding across Asia, said: "Exciting times are just around the corner in the specific areas of science, innovation and the development of technologies aimed at supporting human entrepreneurship."
These technologies could help boost agricultural output, improve marine harvests and drive sustainable fishing and logging.
"Some countries have already taken important steps to develop once-barren lands into areas where products aimed for export are now an important part of their overall agro-industrial equation," said Artaza, who is also Chile's former consul general to Hong Kong.
Through 2017, the changes and developments are likely to come fast and steadily with more use of robots, drones and virtual reality. China should prove to be a big driver of this evolution.
"China will continue to move up in global value chains as it keeps scaling up innovation," said Zhuang Juzhong, deputy chief economist at the Asian Development Bank.
The rise of e-commerce
The enormous success of China's Singles Day, which takes place every year on Nov 11, may have marked something of a coming of age for e-commerce in Asia. Sales hit around $18 billion in 2016.
"China will continue to be the most exciting e-commerce market in the world," said O'Brien from Intercedent.
E-commerce now accounts for about 14 percent of all retail sales in China, according to China Internet Watch. Total online retail sales rose 23.6 percent year-on-year in the third quarter of 2016 to 1.15 trillion yuan ($165 billion). The rise is much higher than the increase in retail sales.
While China is the largest e-commerce market in the world and will likely continue to grow, other Asian markets are following in its wake.
Despite this, the penetration of e-commerce in some markets remains shallow. The average across Asia Pacific is around 3 percent, according to a survey by Google and consulting firm Bain & Company of consumers in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.
This suggests plenty of room for growth. And, given the ubiquitous nature of digital adoption in the region, growth is certain.
"We wouldn't talk about e-commerce as a topic because it is already part of everyone's daily life. It is not a separate category anymore," said Joe Ngai, a director and managing partner in Hong Kong for consultancy McKinsey & Company.
Sharing economy to soar
Asia is playing an increasingly important role in the global economy. It "will remain the fastest-growing region in the world and will contribute about 60 percent to global growth", said Zhuang of the ADB.
It now accounts for more than a third of global economic output, with China and India alone responsible for about two-thirds of the world's GDP growth. A rising percentage of all that activity is likely to come from the growing sharing economy.
From car-sharing and taxi-hailing apps in China and elsewhere in Asia, to the growing popularity of Airbnb, crowdfunding and more, the sharing economy is expanding across Asia.
Sharing is already visible throughout the tourism industry, which is growing faster in Asia Pacific than in any other region.
According to a survey by the Pacific Asia Travel Association and tourism research agency TCI Research, more than one in five of the 279 million international travelers from Asia Pacific stayed in sharing accommodation in 2015.
And yet, 90 percent of all sharing companies are in North America and Europe, which leaves plenty of room for such services to grow in Asia. Service platforms like Singapore's Travelmob or Indonesia's Seekmi are growing rapidly, and more are likely to emerge in 2017.
The yuan's ongoing march
There are various estimates of how the yuan will fare by the end of 2017, but most analysts expect the currency to be lower than it is now, at least against the US dollar.
Now trading at a little below 7 yuan to the dollar, the Chinese currency could end the year at 7.10 yuan. Chua Han Teng, a senior Asia country risk and financial markets analyst at BMI Research, said the firm believes that the Chinese yuan will remain in a bear market against the US dollar.
The ADB's Zhuang expects the volatility in the value of the yuan to continue.
"Given that China's fundamentals remain strong, there's no basis for significant depreciation of the RMB," Zhuang told China Daily. It is difficult to "clearly predict" where the People's Bank of China will take the yuan in the coming months, he added.
The yuan is likely to continue cementing its position as one of the most used currencies of trade and finance but the growth is slowing somewhat, particularly as the dollar gains strength.
In its November RMB Tracker, SWIFT, a provider of payment services, said the use of the yuan in global payments and trade finance has been declining.
"The general slowdown of the Chinese and world economies over the past few years has impacted global trade growth across all currencies, not just the RMB," said Michael Moon, SWIFT's head of payments markets in Asia Pacific.
On the other hand, "the inclusion of the RMB in the special drawing rights basket should generate further trust and confidence in the RMB currency and support further RMB internationalization".
Strong dollar, interest rates
The US Federal Reserve ended 2016 with a hike of 0.25 percent to its federal funds rate and pointed out that it could repeat the move three times this year.
"Policymakers displayed a more hawkish path to monetary policy in 2017, increasing the median expectation to three 25 (basis point) hikes from two in September," said Leonidas Mourelatos, US sub-national analyst at BMI Research, in a note.
The ultimate goal of the Fed appears to be an interest rate of 3 percent, but that may take some more years. As a result of the increase at the end of 2016, bond yields surged and the value of the dollar rose, not always with great effect on equity markets.