The line on this side of the security checkpoint was long, and we were a little late at Hangzhou train station in China. I was with a mixed group of people. It included a Polish gentleman, a Russian, a Chinese colleague, a Vietnamese, an English person, a German, a Nigerian and an Australian.
The group had all booked train tickets online, which required passport details. Passage into the waiting area required us to move through a facial recognition checkpoint, and the others and I were worried about the time this would take.
Passing through the facial recognition checkpoint at Singapore Changi Airport usually takes a minute if everything goes smoothly — remove glasses, face the correct direction, no hats, and focus on the precise spot. I try not to take it personally, but the Changi Airport gates dislike my face, so it takes two or three failed attempts before I have success. The Australian facial recognition airport gates are even slower and more error-prone.
Given our group’s mix of ethnicities, I braced for a prolonged experience. In the US, the failure rate of facial recognition for black Americans is as high as 80%, and similar high failure rates are experienced for other ethnic groups.
But in Hangzhou, it was a delightfully different experience. Facial recognition was accurate and rapid. It wasn’t quite walking speed for clearances, but it was nearly as fast. There is no need to remove glasses or caps. There are no problems with the eclectic mix of ethnic faces in our group. There is also no need to stand on a strictly defined spot.
Later, I spoke at a large conference with some 1,200 guests. A single security entry point used facial recognition to match the passport photo used during registration.
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This was a global conference with delegates from every continent. Guests were cleared at walking speed, without pausing and with 100% accuracy. They all filed within 15 minutes and were seated on time for the beginning of the conference.
These experiences are just two examples of the advanced digital economy that defines today’s China. It brings an efficiency that drives economic growth by speeding up otherwise time-consuming processes.
The same efficiency applies to payment systems for buying a tub of yoghurt, costing a few RMB for taxi fares and hotel accommodation. Cash is irrelevant in many places; it is either not accepted or accepted with great reluctance. Credit cards are nearly as outdated and burdened with high fees.
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In China’s digital economy, seamless electronic settlements via WePay or Alipay are key. Travellers should ensure these apps are enabled before heading to the country. This frees the merchant from the need to store and safeguard cash. It frees the merchant from taking cash to and collecting cash floats from the bank. Special staff are required to handle these functions.
When business is digitally enabled — like in the Chinese digital payment system — the payments do not contain hidden fees that rob the merchant of the full value of the purchase or add additional transaction costs to the consumer.
A subtle yet impactful difference, digital efficiency permeates all facets of Chinese business. Adapting to the changing landscape is crucial for businesses operating in China, influencing operations and payment methods.
Technical outlook for the Shanghai market
The Shanghai Index has reacted away from the dual resistance features. These were the long-term downtrend and the historical resistance level. This is a bearish reaction and suggests the market will continue to fall.
The rally’s peak at 3,089 provided a new anchor point to set a better placement of the downtrend line. The retreat from this downtrend line confirmed the strength of the downtrend and its potential to continue to depress the market.
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Despite the steady increase in upward pressure in the previous weeks, this was not strong enough to break through the two resistance features.
The Guppy Multiple Moving Average (GMMA) relationship failed to develop a bullish character. The long-term group was moving sideways and starting to show signs of compression. However, these long-term averages have turned down again and expanded. This tells us that investors have resumed their steady selling.
Three strong resistance features blocked the development of a sustained uptrend. The first feature is the value of the lower edge of the long-term group of moving averages. The index moved above this area and was unsuccessful in testing the upper edge of this group. Currently, the index is moving below the lower edge of the long-term GMMA.
The second of these resistance barriers is the value of the historical resistance level near 3,080. The level was tested twice, and on both occasions, the index retreated from this resistance feature.
The final resistance feature is the long-term downtrend line. The horizontal resistance and trend lines intersect around the end of November. Their combined force has proven too strong for the market, so the downtrend has resumed.
Any new rally will now have to overcome the resistance created by the new value of the downtrend, near 3,069, and then later, the value of the historical resistance level near 3,080.
The first downside target for this continued downtrend is near the previous low of 2,935. Investors will watch for the market to consolidate or rebound from this area. There is the potential to develop a double bottom pattern, or “W“ pattern, which would signal the start of a trend rebound.
Daryl Guppy is an international financial technical analysis expert. He has provided weekly Shanghai Index analysis for mainland Chinese media for two decades. Guppy appears regularly on CNBC Asia and is known as “The Chart Man”. He is a former national board member of the Australia-China Business Council. The writer owns China stock and index ETFs
