the china compass - figures, forecast and analysis - january 2014
DESCRIPTION
The China Compass is a dynamic presentation of the latest macroeconomic data for a wide range of indicators for China, as well as other major world economies. It presents a comprehensive picture of the ever-changing and evolving Chinese landscape and contains up-to-date statistics, topical themes and insights. It is presented in a reader-friendly format as a useful desk reference for executives with a China agenda.TRANSCRIPT
Figures, Forecast and Analysis
January 2014
www.thebeijingaxis.com
The China Compass
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The Beijing Axis 2
Agenda
1. Foreword
2. What‟s New: China‟s Ongoing Transformation
3. China‟s Economic Indicators
4. International Comparison
5. Conclusions and Implications
6. About The Beijing Axis
The Beijing Axis 3
Foreword
In the same manner that a compass highlights the cardinal points of north, south, east, and west, The China Compass is intended to serve as a navigational instrument for determining China‟s position and direction in the context of the world‟s economic landscape. As such, by closely examining China‟s relevance, importance and progressive integration with the world economy, The China Compass is a knowledge tool from The Beijing Axis for executives with a China agenda.
Although developed economies continue to only slowly recover from the after-effects of the financial crisis five years on, the global economic outlook is more optimistic than it was a year ago. Meanwhile, China‟s fifth generation of leaders must convince an immense bureaucracy to implement an ambitious economic blueprint for the next decade that was released by the Chinese Communist Party following the Third Plenum. Led by President Xi Jinping, the government will have to overcome internal resistance from vested interests to carry out economic and social reforms in order to keep China‟s much more complex and globalised economy on the path of sustainable growth. All this is set against the backdrop of an ever evolving social structure that may not be as conducive for growth as in the past.
In this January 2014 edition, we provide the latest macroeconomic data available for a wide range of indicators, for China as well as for other major world economies, and include a new section, „What‟s New: China‟s Ongoing Transformation‟. This section will cover China‟s changing political, economic and social patterns and the impact of these changes on the country and the rest of the world. We trust that this edition will be useful for those that are in the midst of planning, and that it will shed light on past developments and future prospects of a uniquely Chinese story of human development.
As always, we welcome all feedback.
Kobus van der Wath
Founder and Group Managing Director
The Beijing Axis
The Beijing Axis 4
22,426
20,452
25,771
5,136
3,627
2,450
0%
2%
4%
6%
8%
10%
0% 5% 10% 15% 20% 25% 30% 35%
Emerging economies are outperforming developed economies in terms of global economic growth. By 2015, Asia-Pacific is expected to account for one-third of global GDP
Regional GDP Comparison (2012, 2015F)
Average GDP Growth Rate (2012-2015F)
Africa
Asia-Pacific
North America
Europe
Other Asia
South America
Asia-Pacific is
expected to account for
the largest share of the
world‟s GDP by 2015
Rising real incomes and
high commodity prices
will continue to drive
Africa‟s growth
Developed economies
are expected to
continue to lose share
in the world‟s GDP over
the coming years
A bubble this size represents a GDP of USD 1,000 bn
Forecast world average GDP
growth until 2015: 3.9%
BRICS 2015F GDP (USD bn) 2012 Growth Rate (%) 2012 GDP Per Capita (USD)
China 11,020 7.8% 6,091
Brazil 2,800 0.9% 11,340
Russia 2,544 3.4% 14,037
India 2,308 5.0% 1,489
South Africa 411 2.5% 7,508
Share of
World’s GDP
Note: Translucent bubbles refer to 2012 data. Solid color bubbles refer to forecasted 2015 data.
Source: IMF; The Beijing Axis Analysis
The Beijing Axis 5
As Asia‟s largest and one of the fastest-growing economies, China plays a crucial role in the region‟s ongoing transformation
Comparison of GDP Size, GDP per Capita and GDP Growth across Asian Economies
Source: IMF; World Bank; The Beijing Axis Analysis
0
10,000
20,000
30,000
40,000
50,000
60,000
0 2 4 6 8 10 12
Cambodia
Japan
Hong Kong
China Indonesia
Singapore
Brunei
S. Korea
Taiwan
Malaysia
Timor-Leste
Myanmar
Mongolia India
Vietnam
Sri Lanka
PNG
Laos
Bangladesh
Thailand
Pakistan Nepal
Bhutan
Philippines
Australia
GDP per Capita (USD, 2012)
GDP Growth Rate (2001-2012)
Developed Asia World Average: 3.1%
China is the
largest economy
in the region
GDP per capita: USD 67,035 A bubble this size represents a GDP of USD 200 bn
The Beijing Axis 6
With a GDP of USD 8.2 tn, China now accounts for more than one-tenth of the world‟s economy and represents 30% of developing markets‟ share of the global economy
Note (1): Developed Asia includes Japan, South Korea, Taiwan, Singapore and Hong Kong
Source: IMF; National Bureau of Statistics of China; The Beijing Axis Analysis
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
World GDP in 2012 World GDP in 2012 GDP in DevelopingCountries 2012
China GDP2012
China GDP2012
China GDP2012
China GDP2012
Others
Germany
Russia
Japan
U.K.
US
France
Italy
China
Canada
Brazil
Southwest
Northeast
East
South
North
Northwest
Zhejiang
Hebei
Guangdong
Liaoning
Hunan Hubei
Shandong
Jiangsu
Others
Henan
Primary
Industry
Secondary
Industry
Tertiary
Industry
Sichuan
Other
Developed
Countries
Other
Developing
Countries
China
Other
Developing
Countries
Other
Developing Asia
China
USD 72 tn USD 72 tn USD 27 tn USD 8.2 tn USD 8.2 tn USD 8.2 tn USD 8.2 tn
Private
Consumption
Expenditure
Gross
Capital
Formation
Net Exports
India
Indonesia
Africa
Africa
Africa
Govt.
Consumption
Expenditure
Developed
Asia1
The Beijing Axis 7
Snapshot of China‟s key economic indicators from 2012 through to the third quarter of 2013
Selected Economic Indicators - China (Q1 2012 - Q3 2013)
Note*: These figures are YTD data through the first three quarters of 2013.
Source: National Bureau of Statistics of China; The People‟s Bank of China; China Customs; The Beijing Axis Analysis
Economic
Indicator
2012 Y-o-Y Growth (%) 2013 Y-o-Y Growth (%) 2013 Q3
Q1 Q2 Q3 Q4 Q1 Q2 Q3
GDP 12.1 10.1 8.7 9.9 10.1 8.4 9.8 USD 2,252 bn
Exports 7.6 10.5 4.5 9.4 18.4 3.7 3.9 USD 562 bn
Imports 7.2 6.4 1.6 2.7 8.4 5.0 8.4 USD 501 bn
Retail Sales 13.5 14.0 13.8 14.5 12.4 13.1 13.4 USD 942 bn
Monthly Loans 9.0 24.4 23.6 -17.2 11.8 -3.1 17.7 USD 357 bn
Urban Fixed
Asset Investment 21.3 20.9 21.1 20.4 21.4 19.8 20.4 USD 2,076 bn
Real Estate
Investment 23.5 13.1 13.7 18.5 20.2 20.4 18.9 USD 394 bn
Consumer Price
Inflation 3.8 2.9 1.9 2.1 2.4 2.4 2.8 2.5*
Producer Price
Inflation 0.2 -1.4 -3.3 -2.3 -1.7 -2.7 -2.1 -1.7*
The Beijing Axis 8
Various factors identify China as one of the world‟s most significant and unique countries
Source: Various; The Beijing Axis Analysis
700,000 engineers graduate annually from schools in China
30,000 Chinese MBA students graduated in 2012; the number was 0 within China in 1998
12,000 USD is the average cost of a license plate in Shanghai
363 coal-fired power plants were planned to be built in China as of 2012
240 million vehicles are registered in China; more than half are passenger cars
160 cities in China have populations that exceed 1 million; there are 9 in the US and just 2 in the UK
90 percent of PCs in the global market in 2012 were produced in China
80 percent of the world‟s zippers are produced in the factories of Qiaotou city in Zhejiang Province
79 Chinese companies are among the Fortune Global 500 in 2012; the number was only 13 in 2002
75 percent of the world‟s toys are made in more than 10,000 toy factories across China
70 percent of the world‟s pirated goods come from China
55 new airports will be built over the next five years in China, helping to bring the total number to 244 by 2020
50 percent of the world‟s pork is eaten in China
38 children are born every minute in China; 54,720 are born every day and 19,986,480 are born every year
30 percent of young Chinese adults depend on their parents financially
21 nuclear plants were scheduled for construction as of the end of 2012; 9 are currently under construction
6.8 million students graduated from Chinese universities in 2012; the number in 1977 was 270,000
2 percent of China‟s population consumed 1/3 of global luxury goods in 2012
1.1 bn mobile phones were in circulation in China in 2012
The Beijing Axis 9
Setting the scene
Source: The Beijing Axis Analysis
• Despite a „slowing‟ economy, China remains Asia‟s largest and one of its fastest-growing economies. As the country seeks to maintain stable growth in the long-term, there are ongoing transformations taking place on the political, social and economic horizons that will affect the direction, speed and ultimately the realisation of China‟s long-term ambitions
• On the political front, much is expected of the new leadership led by President Xi Jinping, including the implementation of greater pro-market reforms outlined in an ambitious 60-point reform blueprint released by the Chinese Communist Party following the Third Plenum. The overarching goal is to shift away from an investment-led model of growth to a more stable model driven by domestic consumption, advanced technology and environmental efficiency
• On the economic front, the „old‟ China of low-cost labour, low-value, energy-intensive industries and a coastal-based export economy is fading away
• With the era of double-digit growth over, the Chinese government has been targeting more moderate growth of 7.5% for 2013, with Q3 2013 growth at 7.8%. We expect this sustainable level of growth to continue into the first half of 2014
• On the social front, China is coming to terms with past policies that may impede its continued growth such as the impact of the One Child Policy in the context of an ageing population. Moreover, a rapidly developing middle class with new wealth, social norms, and consumption patterns is making „selling to China‟ a key growth strategy for many multinational companies
• China continues to have a solid long-term growth trajectory ahead of it – the fundamentals are conducive for strong growth over a long period. The only question is whether the ongoing political, social and economic transformations taking place in China will allow it to realise what the new leadership has termed, „The Chinese Dream‟
The Beijing Axis 10
Agenda
1. Foreword
2. What’s New: China’s Ongoing Transformation
- Political Transformation
- Economic Transformation
- Social Transformation
3. China‟s Economic Indicators
4. International Comparison
5. Conclusions and Implications
6. About The Beijing Axis
The Beijing Axis 12
Current Composition of the Chinese Government (2013)
Source: PRC government website; US-China Business Council; People‟s Daily Online; The Beijing Axis Analysis
After the once-in-a-decade leadership change, China‟s new government is being led by President Xi Jinping and Premier Li Keqiang
Liu Yandong
Vice Premier
Zhao Gaoli
Vice Premier
Wang Yang
Vice Premier
Ma Kai
Vice Premier
Li Keqiang
Premier
National People’s Congress
Standing Committee
Chairman: Zhang Dejiang
Communist Party of China Central Committee
General Secretary: Xi Jinping
Political Bureau of CPC Central Committee
Members of Standing Committee
Xi Jinping Liu Yunshan
Li Keqiang Wang Qishan
Yu Zhengsheng Zhang Dejiang
Zhang Gaoli
Chinese People’s Political Consultative
Conference (CPPCC)
Chairman: Yu Zhengsheng
President: Xi Jinping
Vice President: Li Yuanchao
Central Military Commission
Chairman: Xi Jinping Supreme
People’s Court
Zhou Qiang
The State
Council
Supreme People’s
Procuratorate
Cao Jianming
State Councillors
25 Ministries and Commissions Under the State Council
Chang Wanquan Yang Jiechi Wang Yong Guo Shengkun Yang Jing*
* Holds the concurrent position of Secretary-General of the State Council
The highest
political body
in China
Vice Premiers
Details on next page
The State Council
is the chief
administrative
authority
The main political
advisory body for
the government
The command
and control of
the Chinese
armed forces
The NPC is the de facto
legislative body, but it also
interprets the law
The Beijing Axis 13
Liu Yunshan
Member of the Standing
Committee of the Political
Bureau of the CPC Central
Committee; First Secretary of
the Secretariat of the CPC
Central Committee
Wang Qishan
Member of the Standing
Committee of the Political
Bureau of the CPC Central
Committee; Secretary of
Central Commission for
Discipline Inspection
Note*: CPC - Communist Party of China; NPC - National People's Congress; CPPCC - Chinese People's Political Consultative Conference; CCCPC - Central Committee of the Communist Party of China
Source: Various; The Beijing Axis Analysis
China‟s highest political body, the Standing Committee of the Politburo, has been reduced from 9 members to 7 in order to streamline decision making
Xi Jinping General Secretary of the CPC Central
Committee; Chairman of the CPC
Central Military Commission; President
of the People‟s Republic of China
Zhang Dejiang
Member of the Standing
Committee of the Political
Bureau of the CPC Central
Committee; Chairman of the
NPC Standing Committee
Yu Zhengsheng
Member of the Standing
Committee of the Political
Bureau of the CPC Central
Committee; Chairman of the
CPPCC National Committee
Li Keqiang
Member of the Standing Committee
of the Political Bureau of the CPC
Central Committee; Premier of the
State Council and Secretary of its
Leading Party Members‟ Group
Zhang Gaoli
Member of the Standing
Committee of the Political
Bureau of the CPC Central
Committee; Vice Premier of
the State Council
President Premier
NPC Chairman
Secretary of
CCCPC Secretariat Discipline Chief
Executive
Vice Premier CPPCC Chairman
The Beijing Axis 14
At the highest level, China‟s new leadership will continue to implement the 12th Five-Year Plan
Major Pillars of 12th Five-Year Plan (2011-2015F)
Source: The Beijing Axis Analysis
Encourage domestic
consumption
Balance social equity/ improve social safety net
Industrial consolidation/
upgrading
Sustainable development and energy efficiency
Sustainable urbanisation/
modernisation of rural
infrastructure and agriculture
Balance regional development
1 2 3 4 5 6
• Change mode of
economic growth from
investment- and export-
driven to consumption-
driven
• Automobiles, household
appliances, consumer
electronics, fast food
sectors will develop
rapidly
• Encourage private
investment
• Increase household
income and reduce
wage inequality
• Improve medical security,
social insurance,
education and housing
security
• Adjust income distribution
• Improve structure of key
industries (equipment
manufacturing, shipping
manufacturing,
automobiles, metallurgy,
building materials, petro-
chemical products)
• Develop emerging
industries (next-generation
IT, high-end
manufacturing, pharma &
biotech, energy efficiency
& environmental
protection, new energy,
new materials, new energy
automotive)
• Develop services
• Promote the marine sector
• Develop a circular
economy
• Control environmental
pollution
• Improve the ecological
environment
• Improve water
conservancy and
disaster prevention
• Shut down lower-end
polluting producers
• Supportive policies for
alternative energy
• Emphasis on work-
related safety
• Promote small cities‟
development
• Transfer the rural
population to urban
areas
• Strengthen infrastructure
construction
(transportation,
communication, power,
heating power, gas,
water supply and
drainage)
• Re-balance regional
development and
support economic
growth
• Revitalise northeast
regions
• Cultivate central region
• Develop western regions
by expanding
infrastructure
construction and
promoting the Chengdu-
Chongqing Economic
Zone as the region‟s key
economic centre
The Beijing Axis 15
• More amenable to slowdown, with GDP
growth of about 7%
• Investment still an important tool of
growth, but desire to reduce reliance
Pursuing a more market-oriented
economy
More emphasis on sustainable
development
• More attention to income disparity
• Attempts to control high property prices
• Shift from double-digit growth
Avoid hard-landing, baseline of
acceptable GDP growth was set at 8%
Investment regarded as the main
approach to stimulate the economy
There are high expectations of the new government as several leaders have hinted at greater economic liberalisation and pro-market policy reforms
Overview of the Changing Policy Agenda Under China’s New Leadership
Source: Various; The Beijing Axis Analysis
Maintaining Growth Structural Reforms
Key Focus of Leadership
New
Leadership
(2013-Present)
Previous
Leadership
(2002-2012)
The new leadership is
expected to be more
liberal than the last in
this area
The Beijing Axis 16
The new leadership has already put into place policies aimed at reducing government intervention in the market and reducing bureaucracy
Source: The Beijing Axis Analysis
Selected Policy Outputs
from Previous Leadership
Increasing consolidation of
departments and reduction
of regulatory overlaps
Limited consolidation of
gov‟t departments
• Reduction in the number of members in the Standing Committee
• Merger of Ministry of Railways & Ministry of Communications; the State
Electricity Regulatory Commission & National Energy Administration
• China‟s Administration of Press, Broadcasting Stations and Radio was
set up as a merger of two previous ministries
vs.
Long, centralised and
cumbersome approval
processes
Reduction of approval times
and decentralised decision-
making
• Ongoing streamlining and localisation of various administrative
procedures
• By September 2013, 242 administrative approval authorities had been
abolished or decentralised to local authorities
vs.
Increasing role of private
companies in various
sectors
Intensive government
involvement in the
economy
• Banks will be allowed to price loans according to the market
• Various structural tax reforms have been launched
• A pilot Free Trade Zone in Shanghai has been approved with
expectations of greater convertibility of the RMB, liberalised interest
rates etc. inside the zone
• Liberalisation of some previously closed sectors under discussion e.g.
private companies such as Suning and Tencent may be allowed to set
up their own private banks
vs.
Despite greater liberalisation, some
industries such as aviation have
seen a retreat by the private sector
and increased dominance by SOEs
Policy Shift by New Leadership
to Reduce Gov’t Intervention Selected Examples Elements
Gov’t
Departments
Approval
Process
Level of Gov’t
Market
Intervention
1
2
3
The Beijing Axis 17
The new leadership is placing a greater emphasis on China‟s sustainable economic development in the long-term, including a reduced focus on rapid GDP growth and a reduction of overcapacity in some sectors
Source: The Beijing Axis Analysis
Selected Policy Outputs
from Previous Leadership
Increase expenditure on
curbing environmental
pollution
Focus on penalties and
restrictions to curb
pollution
• The government is planning to invest USD 275 bn across all levels of
government to reduce atmospheric pollution
• Nearly USD 1 bn incentive scheme announced to fight air pollution in
six of the worst-polluting provinces and municipalities in northern China
• By the end of 2013, China will have launched four carbon emissions
trading platforms covering 1,500 companies
vs.
Focus on penalties
including shutdowns of
companies with
overcapacity
More market-oriented
approach
• Instead of shutting down companies, consolidation is encouraged
• Regional/partial overcapacity will be treated differently by focusing on
removing local protection and encouraging shifts to other provinces
vs.
Less reliant on large capital
investments to spur growth
Focus on investment to
stimulate economy
• No stimulus policy was released after leadership transition
• More focus on policies that increase income distribution and social
welfare, including those aimed at migrant workers in urban areas
vs.
Policy Shift by New Leadership
to Increase Sustainability Selected Examples Elements
Environmental
Protection
Overcapacity
Growth
Stimulation
1
2
3
Local Gov’t
Debt
4 Investigations were
undertaken but limited
action taken
Hints of stricter investigation
procedures and specific
actions are outlined
vs.
• Both the National Audit Office and China Banking Regulatory
Commission are strictly investigating local government debts
• The central government is setting up a warning system to prevent local
government debts from defaulting and causing collateral damage
• Anti-corruption measures are also being implemented to reduce
government waste
The Beijing Axis 18
China‟s blueprint for the next decade includes a 60-point reform agenda outlined in the policy document „Decision on the Comprehensive Deepening of Reform‟ released following the Third Plenum
Overview of the ‘Decision on Certain Major Issues Concerning the Comprehensive Deepening of Reform’ (I)
Source: Xinhua; U.S.-China Economic and Security Review Commission; The Beijing Axis Analysis
Guiding thoughts for reform Reaffirm President‟s Xi Jinping‟s “Chinese Dream” theme
Basic economic system Develop a "mixed ownership" economy by reducing and marketising the public sector; encourage the development of the private sector by ensuring better property rights, reducing market entry barriers and letting private investors take larger stakes in SOEs
Modern market system Unify the urban and rural construction markets; reduce red tape for businesses; carry out price and land reform; further open up the financial system and capital account
Government functions Improve coordination of China's fiscal, monetary, and industrial policy to avoid wasteful investment and guard against cyclical volatility; delegate more power to lower levels of government; minimise government management of business by removing unnecessary administrative approvals; better define the roles of different party, government, and mass organisations; reduce the number of personnel in government agencies; work toward direct provincial administration of counties to simplify local administration procedures
Fiscal and taxation system Improve budget transparency; clarify which types of spending are central and which fall are under local authority; restrict transfer payments to the poorest regions only; increase personal income, real estate, and resource taxes; provide tax incentives to ensure an equitable tax burden
Urban-rural integration Retain collective land ownership system but provide farmers with broader land-use rights beyond farming, including property-style income; let farmers become shareholders in industrial operations; allow more private investment into rural areas; narrow the gap between urban and rural basic public services
Opening up Relax investment access for foreign enterprises, using the Shanghai Free Trade Zone as a pilot; speed up the establishment of free trade zones; expand the opening up of inland regions by expanding trade, investment and shipping routes
Political system Modernise the People's Congress as a supervisory body for examining/supervising fiscal budgets and state-owned assets, and as a ratifying body for any major government decision; encourage more interaction with grassroots organisations
The Beijing Axis 19
China‟s blueprint for the next decade includes a 60-point reform agenda outlined in the policy document „Decision on the Comprehensive Deepening of Reform‟ released following the Third Plenum
Overview of the ‘Decision on Certain Major Issues Concerning the Comprehensive Deepening of Reform’ (II)
Source: Xinhua; U.S.-China Economic and Security Review Commission; The Beijing Axis Analysis
Rule of law Offer more legal advisory services to inform people of their rights; set up judicial courts that are separate from local administrative zones; toughen enforcement of food, drug, and product safety standards, environmental protection measures, and labor and social security laws; reduce the number of crimes for which the death penalty is applicable; prohibit the abuse of torture and corporal punishment
Restraining the use of power
Tackle corruption by reporting cases to higher-level discipline inspection commissions and stationing the Central Discipline Inspection Commission at all central organisations
Cultural system Build up a modern public cultural service system; reform SOEs in the cultural sector
Social services Reform the education system to narrow opportunity gaps through vocational schools and more diverse aptitude testing methods; support business startups, especially ones started by college graduates; loosen the One Child Policy
Social management Encourage the development of more social organisations; separate trade associations from administrative organisations; reform the letters and calls system; improve public safety, especially product safety
Environmental regulation Strengthen natural resource property right systems; make GDP assessment irrelevant for regions with weak ecosystems; implement paid-for resource use systems; develop environmental protection markets
Defense and military Increase integration among military units; promote military-civilian integration, especially with regards to allowing private enterprises to participate in research and innovation programs
Party leadership over reform Establish a Leading Small Group for Comprehensive Deepening of Reform; get Party members in line with the new reform agenda
The Beijing Axis 20
Agenda
1. Foreword
2. What’s New: China’s Ongoing Transformation
- Political Transformation
- Economic Transformation
- Social Transformation
3. China‟s Economic Indicators
4. International Comparison
5. Conclusions and Implications
6. About The Beijing Axis
The Beijing Axis 21
The Beijing Axis 22
China‟s economic landscape remains one of the most dynamic in the world. Some of the major economic drivers of the past are becoming less prominent while new drivers are beginning to emerge
Overview of the Ongoing Economic Transformation Under China’s New Leadership
Source: The Beijing Axis Analysis
Stable
Drivers
• Ongoing urbanisation / infrastructure development
• Global exports
• Regulatory reform
Fading
Drivers
• Reliance on capital investment for growth
• Low-cost labour
• Prominence of low-value added, energy-intensive industries
• Strong manufacturing in coastal regions
Emerging
Drivers
• Growth via increasing private consumption
• Growing service sector
• Value-added manufacturing and innovation
• Growth in China‟s inland provinces
Stable Drivers
• Elements that are key drivers in China‟s economy in the
past and will retain a prominent role with the new
leadership going forward
Fading Drivers
• Drivers that were key to China‟s economic growth in the
past but due to economic transformation and government
policy, are now less pronounced in the new economy
Emerging Drivers
• Drivers that are increasingly prominent in China‟s current
economy and will become even more important to the
country‟s economy going forward
Details on next slides
The Beijing Axis 23
Current regulatory reforms stem from Deng Xiaoping‟s reforms and the „opening up‟ era. These reforms have been expanded under his successors and will continue to be expanded under the new leadership
Note: SAR - Special Administrative Region; SEZ - Special Economic Zone; FTA - Free Trade Area
Source: The Beijing Axis Analysis
1978: Reform
and opening up
initiated by
Deng Xiaoping
Selected Economic and Political Reforms in China (1978-2013)
1986: Started state-
owned enterprise reform
1979: Established
SEZs in Shenzhen,
Zhuhai, Xiamen
and Shantou
1982: China implemented
economic reform in rural
areas
1984: Proposed
planned economy
1992: Deng Xiaoping's
southern tour speech.
Established goals on
socialist market
economic system reform
1987: Raised „one central task,
two basic points‟. Economic
development as the central
task supported by reform and
opening up
1993: Tax-sharing
reform. Raised
goals on financial
reform
1994: Unification of
exchange rates. Started
commercialisation of urban
housing
1996: Achieved
significant
progress in
foreign exchange
management
system reform
1999: Raised western
development strategy
2002: Established the
goal of building a
moderately prosperous
society at 16th Party
Congress
2001:
China joins
the WTO
2004: Abolition
of agricultural
tax regulations
2007: Promulgated
Property Law
2008: China‟s
four trillion
bailout plan
during US
financial crisis
2005: Adoption of a
flexible RMB exchange
rate
2012: Hu Jintao raised points
on deepening economic
reform to accelerate the
transformation of development
mode
2010: „New Ten Terms‟ was
published by State Council -
notice about resolutely
curbing housing prices in
some cities
2013: The State
Council approved the
establishment of the
China (Shanghai) Pilot
Free Trade Zone
2013: Blueprint for
social and
economic change
over the next
decade released
1978 2008 2013 2003 1998 1993 1988 1983
Stable Driver
The Beijing Axis 24
53
60
0
10
20
30
40
50
60
02 03 04 05 06 07 08 09 10 11 12 20F
China’s Urbanisation Rate (%, 2002-2020F)
Source: National Bureau of Statistics of China; The Beijing Axis Analysis
One of Premier Li Keqiang‟s central goals is moving more of China‟s population into cities in order to streamline productivity gains and ultimately raise private consumption
China‟s urbanisation rate
exceeded 50% for the first
time in 2011
Stable Driver
2012 world average urbanisation
rate was estimated at 55%
A 7% increase in urbanisation is expected
to see more than 70 million rural residents
absorbed into cities and boost private
consumption by USD 15.9 bn
The Beijing Axis 25
(500)
0
500
1,000
1,500
2,000
2,500
0 10 20 30 40 50 60 70 80 90
China‟s global importance is illustrated by its position as the world‟s largest exporter. While China will retain this position for the foreseeable future, its dependence on export growth as a main economic driver will continue to diminish
World’s Major Exporters (2012)
Exports (USD bn)
Russia
Malaysia
Netherlands
France
China
South Korea
Bubble Size: GDP = USD 1,000 bn
US Germany
Japan
UK Mexico
Brazil
India
Australia Spain Thailand Switzerland
Export/GDP (%)
China overtook
Germany to become
the world‟s largest
exporter in 2010
A large economy, large exports
and high exports to GDP ratio –
however, the future growth
model will not depend on exports
Canada
Rank 2002 2007 2012 Total Exports
(2012, USD bn)
1 United States Germany China 2,049
2 Germany China United States 1,546
3 Japan United States Germany 1,416
4 China Japan Japan 799
5 France France France 557
6 UK Italy Netherlands 555
7 Italy Netherlands South Korea 548
8 Canada UK Russia 525
9 Netherlands Belgium UK 481
10 Belgium Canada Canada 453 China in 2002
Source: World Bank; IMF; UN Comtrade; The Beijing Axis Analysis
Stable Driver
China in 2007
The Beijing Axis 26
Breakdown of China’s GDP Growth (%, 2002-2012)
Source: National Bureau of Statistics of China; The Beijing Axis Analysis
Consumption has replaced capital formation as the largest contributor to GDP growth while the growth of net exports has remained low
-4
0
4
8
12
16
02 03 04 05 06 07 08 09 10 11 12
Final Consumption Expenditure Gross Capital Formaton Net Exports of Goods and Services GDP Growth
In 2011, consumption surpassed
investment for the first time in 10 years,
once again becoming the largest
contributor to China's GDP growth
Fading Driver
The Beijing Axis 27
Labour Cost in China (2000 vs. 2012)
Province Hourly Cost
(USD, 2000)
Hourly Cost
(USD, 2012)
Annual Cost* for 1,000
Workers (USD mn, 2000)
Annual Cost* for 1,000
Workers (USD mn, 2012)
Shanghai 1.03 4.74 2.1 9.5
Guangdong 0.75 2.76 1.5 5.5
Henan 0.37 2.32 0.74 4.6
Average Annual Wage of Urban Workers in China (USD, 2002-2012)
Note*: Annual cost is based on a workload of 2,000 hours per year for each worker.
Source: National Bureau of Statistics of China; The Beijing Axis Analysis
Average Annual Growth Rate of Hourly Manufacturing Wage Across China (2000-2012)
While China is becoming less competitive in terms of labour cost, other competitive advantages such as integrated supplier bases, high product integration capabilities and robust infrastructure remain intact
1,499
7,424
0
2,000
4,000
6,000
8,000
02 03 04 05 06 07 08 09 10 11 12
Fading Driver
10-15% per annum
>17% per annum
15-17% per annum Guangdong
(14%)
Shanghai (18%)
Henan (18%)
The overall impact
on suppliers‟
manufacturing
cost is substantial
X% Represents CAGR for the period 2002-2012
17.4%
The Beijing Axis 28
In the past decade, growth in fixed asset investment outstripped private consumption. The story has now changed with the growth rate of private consumption surpassing investment in 2011
Growth of Private Consumption Expenditure and Gross Fixed Capital Formation (y-o-y %, 2002-2012)
0
5
10
15
20
25
30
02 03 04 05 06 07 08 09 10 11 12
Private Consumption Expenditure Gross Fixed Capital Formation
Capital formation is no longer the largest driver of China‟s economic growth
Note: Data is calculated at current prices.
Source: National Bureau of Statistics of China; The Beijing Axis Analysis
Fading Driver
The Beijing Axis 29
As wage inflation continues to rise in coastal regions, manufacturers are shifting production to emerging inland industrial clusters
Note: The dots on the map represent key industrial cities in each cluster. The arrows represent the shift towards inland industrial clusters.
Source: The Economist; National Bureau of Statistics of China; The Beijing Axis Analysis
Fading Driver
China’s Manufacturing Clusters (2012)
Bohai Bay Economic Rim Industry Clusters: Automobiles, Aeronautics,
Consumer Electronics, Textiles, Industrial Machinery,
Electrical Equipment, Chemicals
Important Cities: Beijing, Tianjin, Dalian, Shenyang
Total Exports (2012): USD 164 bn South-West Industry Clusters: Automotive, Industrial
Machinery, Pharmaceuticals, Medical Products,
Chemicals
Important Cities: Chongqing, Chengdu
Total Exports (2012): USD 22 bn
Pearl River Delta Industry Clusters: Textiles, Automobiles, Apparel,
Foodstuff, Consumer Electronics, Petrochemicals,
Industrial Equipment, Electrical Equipment
Important Cities: Shenzhen, Zhuhai, Jiangmen, Foshan,
Dongguan, Guangzhou
Total Exports (2012): USD 438 bn
Yangtze River Delta Industry Clusters: Automobiles, Shipping, Aeronautics,
Consumer Electronics, Textiles, Pharmaceuticals,
Chemicals, Industrial Machinery, Electrical Equipment
Important Cities: Shanghai, Nanjing, Yangzhou, Suzhou,
Hangzhou, Ningbo, Shaoxing, Wenzhou
Total Exports (2012): USD 590 bn
Central Industry Clusters: Automotive, Industrial
Machinery, Textiles, Electronics, Chemicals
Important Cities: Changsha, Wuhan,
Zhengzhou
Total Exports (2012): USD 37 bn
The Beijing Axis 30
0
2
4
6
8
10
1982 1987 1992 1997 2002 2007 2012
Coastal and Developed Eastern Provinces
Inland Provinces
Nominal GDP Per Capita (USD ’000, 1982-2012)
0
5
10
15
20
25
30
1982 1987 1992 1997 2002 2007 2012
Coastal and Developed Eastern Provinces
Inland Provinces
Note: Coastal and developed eastern provinces include Beijing, Tianjin, Hebei, Shandong, Jiangsu, Shanghai, Zhejiang, Fujian, Guangdong and Hainan. All other provinces are grouped under inland provinces.
Source: National Bureau of Statistics of China; The Beijing Axis Analysis
Annual Nominal GDP Growth (%, 1982-2012)
China‟s inland provinces have been growing faster than coastal areas and will continue to be important engines of China‟s growth
Coastal outgrew inland
Inland now outgrowing coastal
40%
gap
Inland provinces are about five
years behind coastal provinces,
meaning there is still plenty of
room to grow
Emerging Driver
The Beijing Axis 31
China’s GDP by Sector (%, 2000-2013E)
Source: National Bureau of Statistics of China; China Statistical Yearbook; The Beijing Axis Analysis
Service sector companies now employ more people in China than manufacturers as the country evolves from a manufacturing to a service-based economy
0%
20%
40%
60%
80%
100%
00 01 02 03 04 05 06 07 08 09 10 11 12 13E
Service sector Industrial sector Agricultural sector
Ten year
CAGR:
1.2%
Emerging Driver
0%
10%
20%
30%
40%
50%
60%
00 01 02 03 04 05 06 07 08 09 10 11 12
Primary Secondary Tertiary
China’s Employment by Sector (%, 2000-2012)
Service sector companies now
employ more people in China than
manufacturers
The Beijing Axis 32
Total Number of Patents Awarded to Selected Economies (’000, 2002 vs. 2012)
Source: World Intellectual Property Organisation; China State Intellectual Property Office; SIPO; MH&M; The Beijing Axis Analysis
Share of Patents Held Globally by China for Selected Items (%, 2012)
The number of patents granted to Chinese firms and inventors has grown exponentially over the last decade, propelling China‟s move towards innovation and high-value sectors
0 50 100 150 200 250
India
Brazil
UK
Germany
Japan
US
China
2002 2012
35
22
CAGR (%)
2
6
1
2
19
0 5 10 15 20
Optics
Pharmaceuticals
Environmental Technology
Computer Technology
Electrical Machinery
Telecom
Digital Communication
% of China’s Total Patents
Chinese government has
set a goal of achieving
200,000 patents per year
by 2015
Chinese inventors filed
18,627 applications
internationally in 2012, just
228 applications fewer than
third-placed Germany, and
behind the US and Japan
Majority of patents
owned by domestic
Chinese parties are
utility model patents and
industrial design patents
26
11
5
5
1
5
2
Emerging Driver
The Beijing Axis 33
Consequently, China‟s manufacturing export structure has shifted from labour-intensive goods to high-value manufactured goods
Composition of China’s Exports* (USD bn, 2001 vs. 2012)
Note*: SITC Classification System
Source: UN Comtrade; EIU; ITC; The Beijing Axis Analysis
China’s Share of Global Exports for Select Products (%, 2002 vs. 2011)
0 10 20 30 40 50
Centrifuges
TransmissionShafts/Cranks
Construction andMining Parts
Silicon Wafers
Optical Fibres
Refrigerators,Freezers
Cruise/CargoShips, Barges
Derricks andCranes
Motorcycles
2002 2011
CAGR (%)
China‟s global exports presence in
mid- and high-value products is
considerably larger today than it
was a decade ago
Emerging Driver
15
22
12
13
15
14
13
22
22
0
500
1,000
1,500
2,000
2001 2012
Machinery and Electrical Equipment
Foodstuffs
Miscellaneous Manufactured Articles
Products Classified by Material
Mineral Items
Chemical Products
Others
Increasing
exports share
23.5%
13.6%
21.0%
20.3%
12.6%
21.5%
9.9%
36%
47%
X% Represents CAGR for the period 2001-2012
CAGR
33%
26%
Textiles and garments exports
grew from 46.1 bn to 246 bn,
representing a CAGR of 16.4%
20.4%
The Beijing Axis 34
Indeed, current government policies are moving China towards becoming a high-tech economy. As a result, more R&D centres and high-tech industrial zones are being established throughout China
Relocation Trends of Regional Economic Structures
Source: BrainNet EAC; The Beijing Axis Analysis
West / Central China
• In the past, five of the seven fastest
growing regions were located in
western/central China
• Shift of governmental investment
from coastal areas to inland regions
• Over 1995-2010, the number of
economic zones in western/central
China increased from 6 to 776
• Industrial focus (only central China)
– Automotive
– Motorcycle production
– Construction
– Furniture industry
– Metal processing / fabrication
North China
Industrial focus:
• Steel
• Automotive
• Ship building
• Chemicals
• Machine building
• Aerospace
East China
Industrial focus:
• Automotive
• Machine building
• Chemicals
• Plastic processing
No. of Econ. Zones:
West China
No. of high-tech industrial zones
R&D/innovation center
No. of Econ. Zones:
Central China
No. of Econ. Zones:
Coastal area
6
9
11
13
15
South China
Industrial focus
• Automotive
• Plastic processing
• Machine building
• Electrical industry
1
158
West China
1995 2010
5
618
Central China
1995 2010 27
808
Coastal Area
1995 2010
By Aug 2013, the number of
Economic Zones at the national
level increased to 192; top 3
provinces are Jiangsu (23),
Zhejiang (17) and Shandong (13)
Emerging Driver
The Beijing Axis 35
Agenda
1. Foreword
2. What’s New: China’s Ongoing Transformation
- Political Transformation
- Economic Transformation
- Social Transformation
3. China‟s Economic Indicators
4. International Comparison
5. Conclusions and Implications
6. About The Beijing Axis
WIP
The Beijing Axis 37
China‟s changing demographics present a challenge to the economy due to a changing age structure and declining work force. At the same time, they present a large opportunity to shift to a consumption-based economy
Source: The Beijing Axis Analysis
Changing Family Structure 1
Declining Working Age Population 2
Urbanisation 3
Other Social Changes 4
Demographic
Dividend
Low Birth Rate and
Low Death Rate
Past
Future
Selected Components Highlighting China’s Social Transformation
Decline in workforce
Large Rural and
Agricultural Population
Increased Urban and
Non-farm Population
Past
Future
Consumption Tertiary Education Internet Usage/
Online Shopping
• The One Child Policy has led to
the „1-2-4‟ phenomenon, with 1
child having to support 2
parents and 4 grandparents
• Cultural preference for sons
will result in a pool of 24 million
unmarried men by 2020
The Beijing Axis 38
0-4
5-9
10-14
15-19
20-24
25-29
30-34
35-39
40-44
45-49
50-54
55-59
60-64
65-69
70-74
75-79
80+
Faced with declining birth and death rates, China‟s population is rapidly ageing. China recently amended its One Child Policy to help prevent the country from „growing old before getting rich‟
Breakdown of China’s Population by Age (mn, 2013 vs. 2050)
Source: UN Population Division; The Beijing Axis Analysis
Age Age Male Female Male Female
2013 2050
0-4
5-9
10-14
15-19
20-24
25-29
30-34
35-39
40-44
45-49
50-54
55-59
60-64
65-69
70-74
75-79
80+
60m 50m 40m 30m 20m 10m 0 10m 20m 30m 40m 50m 60m 60m 50m 40m 30m 20m 10m 0 10m 20m 30m 40m 50m 60m
The largest part of
the population will
be between 60 –
64 years old
The number of
youth will drop
significantly by
2050
The Beijing Axis 39
450
550
650
750
850
950
1,050
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015F2020F2025F2030F
Chi
na‟s
Wor
king
-age
Pop
ulat
ion
(mn)
Current Working Population (15-59)
Proposed Working Population (15-62)
The retirement age in China
currently is 60 for men and 55
for female - expected to be
pushed up by at least 3 years
Such a demographic dividend
has kept wage rates low and
saving rates high
China’s Projected Working-age Population (mn, 1970-2030F)
Note*: Data from 2012 onwards is projected. Dependency Ratio is the ratio of people younger than 15 or older than 64 to the working-age population (ages 15-64)
Source: UN; McKinsey Quarterly; The Beijing Axis Analysis
China‟s population is ageing rapidly and the working-age population is expected to peak by 2016 – this will have profound economic and social consequences
29.0 24.4
10.5 7.7 5.9
2.7
-8.7
-16.6 -20.1 -21.0
36
-30
-20
-10
0
10
20
30
40
50
60
70
Indi
a
Mex
ico
Bra
zil
US
Can
ada
UK
Chi
na
Rus
sia
Japa
n
Ger
man
y
Dependency Ratio(2012)*
Projected Working-age Population Growth Across Selected Countries (%, 2013F-2038F)
Dependency ratio is currently
low for China due to a large
working-age population. This
will increase rapidly as the
population ages
Projected decline due to China‟s
One Child Policy – can potentially
be reversed with recent easing of
the One Child Policy
The Beijing Axis 40
39 41 42 43 44 46 47 48 50 51 53
61
68
80
0
20
40
60
80
100
02 03 04 05 06 07 08 09 10* 11 12 20F30F50F
China’s Proportion of Urban Residents at Year-end (%, 2002-2050F)
Note*: In 2010, proportion of urban population was 49.95%.
Source: National Bureau of Statistics of China; Institute for Urban and Environmental Studies Chinese Academy of Social Sciences; The Beijing Axis Analysis
China’s Annual Retail Sales (USD bn, 2000-2012)
China‟s growing urban population will be the fundamental pillar of a consumption-driven economy. A higher proportion of urban residents will also result in a greater concentration of buying power
Ranked 1st with
17% of world‟s
urban population
Urban population was
greater than rural for the
first time
0
500
1,000
1,500
2,000
2,500
3,000
3,500
00 01 02 03 04 05 06 07 08 09 10 11 12
Retail Sales (Urban) Retail Sales (Rural)
China‟s urban population
will exceed 1 bn residents In 2012, urban retail sales
accounted for 87% of
China‟s total
In 2003, urban retail
sales accounted for
74% of China‟s total
The Beijing Axis 41
Breakdown of China’s Urban Households by Economic Class* (%, 2002-2022F)
Note*: Classes are defined by annual disposable income per urban household, in 2010 real terms. For affluent urban households, annual disposable income is > USD 34,000; upper middle class, USD
16,000 to USD 34,000; mass middle class, USD 9,000 to USD 16,000; poor, < USD 9,000.
Source: UN; McKinsey Quarterly; The Beijing Axis Analysis
In urban areas, the middle class has rapidly expanded in the last decade. The upper middle class is now growing faster than the mass middle class - a trend expected to continue for the next decade
Total Households: 165 mn 256 mn 357 mn
90
29
16
7
54
22
2 14
53
1 3 9
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2002 2012 2022F
Poor Mass Middle Class Upper Middle Class Affluent
The Beijing Axis 42
Share of Middle Class by Geographical Location (%, 2002 vs. 2022F)
Note*: Cities in China are grouped into 4 tiers based on their economic development and political importance. Tier-1 cities, nominal urban GDP is > USD 138 billion; for Tier-2 cities, USD 18 billion –USD
138 billion; for Tier-3 cities, USD 3 billion – USD 18 billion; for Tier-4 cities, < USD 3 billion.
Source: UN; McKinsey Quarterly; The Beijing Axis Analysis
Share of Middle Class by Type of City* (%, 2002 vs. 2022F)
The expanding middle class will not be limited to big cities. Lower tier cities and cities in inland China will witness the fastest increases
13
39
87
61
0%
20%
40%
60%
80%
100%
2002 2022F
Inland China Coastal China
40
16
42
45
15
31
3 8
0%
20%
40%
60%
80%
100%
2002 2022F
Tier 1 Tier 2 Tier 3 Tier 4
Middle-class growth
rates will be far higher
in China‟s smaller Tier
3 and Tier 4 cities
While the majority of
China‟s middle class
will reside along the
coast, inland areas
will witness the
fastest growth rates
The Beijing Axis 43
2
7
1
6
0
1
2
3
4
5
6
7
8
00 01 02 03 04 05 06 07 08 09 10 11 12
Newly Enrolled Successfully Graduated
Number of Newly Enrolled and Successfully Graduated Students of Higher Education (mn persons, 2000-2012)
128
590
59
486
0
100
200
300
400
500
600
700
00 01 02 03 04 05 06 07 08 09 10 11 12
Newly Enrolled Successfully Graduated
Source: National Bureau of Statistics of China; The Beijing Axis Analysis
Number of Newly Enrolled and Successfully Graduated Postgraduate Students (’000 persons, 2000-2012)
The large number of university graduates in China is a double-edged sword – new skills add to an increasing high-value added economy, but a shortage of jobs for new graduates also threatens social stability
The Beijing Axis 44
0
100
200
300
400
500
600
02 03 04 05 06 07 08 09 10 11 12
Internet Users Online Shopers
Number of Internet Users and Online Shopers1 (mn persons, 2002-2012)
0 20 40 60 80 100
Online Stock
Group Buying
Travel Reservation
Forum/BBS
Online Banking
Online Payment
Online Literature
Online Shopping
Social Networking Sites
Online Game
Online Video
Blog/Personal Space
Online Music
Online News
Search Engines
Instant Messaging
2012 2007
Note: (1) Data for online shopping users before 2007 is not available in reports of CNNIC
(2) Some items are new in 2012 statistics compared to 2007
Source: CNNIC; The Beijing Axis Analysis
Utilisation Rates of China’s Internet Users towards Different Network Applications2 (%, 2007 vs. 2012)
China‟s middle class is increasingly using the Internet not only for leisure, but also for shopping. The ability to spend online is also allowing Chinese consumers to spend more on a greater range of products
The Beijing Axis 45
Agenda
1. Foreword
2. What‟s New: China‟s Ongoing Transformation
3. China’s Economic Indicators
- Selected Macroeconomic Indicators
- Domestic Consumption and Foreign Trade
- Domestic and Foreign Investment
- Financial Indicators
- Social Indicators
4. International Comparison
5. Conclusions and Implications
6. About The Beijing Axis
The Beijing Axis 47
0
5
10
15
Q1 Q1 Q1 Q1 Q1
China’s Quarterly Y-o-Y GDP Growth Rate (%, 2009-Q4 2013F)
Source: National Bureau of Statistics of China; The Beijing Axis Analysis
Contribution to China’s GDP (%, 1998-2012)
China will rely on market-based reforms to unleash fresh growth drivers to support the economy. Long-term trends suggest more moderate and sustainable growth
-40
-20
0
20
40
60
80
100
120
140
98 00 02 04 06 08 10 12
Net Exports of Goods and Services
Gross Capital Formation
Final Consumption Expenditure
2009 2010 2011
3-year (2009-2011)
average: 9.4%
Government stimulus
package (USD 586 bn)
2011 y-o-y GDP:
9.3%
2012
Falling net exports
contribution
Effect from stimulus
package in 2009
Gross capital formation remains
the largest contributor
2013
2012 y-o-y GDP:
7.8%
Policy easing to
provide room for
growth moderation
2013 y-o-y GDP
growth forecast:
7.6%
The Beijing Axis 48
Latest forecasts from the IMF suggest that China‟s annual GDP growth rate in 2013 will be 7.6%, in line with the expectations of China‟s Communist Party
China Real GDP Growth Rate (% y-o-y, 1978-2013F)
Source: IMF; The Beijing Axis Analysis
0
4
8
12
16
78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13F
7-10% GDP
growth band
Past periods of
overheating
Soft landing amid
global uncertainty
Overheating
concerns
7-8% GDP
growth band
The Beijing Axis 49
0 250 500 750 1,000
GuangdongJiangsu
ShandongZhejiang
HenanHebei
LiaoningSichuan
HubeiHunan
ShanghaiFujian
BeijingAnhui
Inner MongoliaShaanxi
HeilongjiangGuangxi
JiangxiTianjinShanxi
JilinChongqing
YunnanXinjiangGuizhou
GansuHainanNingxiaQinghai
Tibet
GDP by Province (USD bn, 2012)
Note: Also includes the centrally-administered municipalities of Beijing, Tianjin, Chongqing and Shanghai
Source: National Bureau of Statistics of China; The Beijing Axis Analysis
Geographical Distribution of China’s GDP (2012)
China‟s GDP is highly concentrated in five coastal provinces, which together account for about 40% of the country‟s total GDP. However, this figure has dropped over the years as other provinces have increased output
1 2 3 4 5 6 7 8 9
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
3
4
2
5
1
Henan
Zhejiang
Shandong
Guangdong
Jiangsu 31
30 29
28
27
Qinghai
Tibet
Gansu
Hainan
Ningxia
Top 5 provinces‟
GDP equate to 39%
of total GDP
Top 5 Provinces by GDP
Bottom 5 Provinces by GDP Highlighted on the map on right
The Beijing Axis 50
0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000
TianjinBeijing
ShanghaiJiangsu
Inner MongoliaZhejiangLiaoning
GuangdongFujian
ShandongJilin
ChongqingHubei
ShaanxiHebei
NingxiaHeilongjiang
XinjiangShanxiHunan
QinghaiHainanHenan
SichuanJiangxi
AnhuiGuangxi
TibetYunnanGansu
Guizhou
GDP Per Capita by Province (USD, 2012)
Note: Also includes the centrally-administered municipalities of Beijing, Tianjin, Chongqing and Shanghai
Source: Various; The Beijing Axis Analysis
Tianjin, Beijing and Shanghai, three of the centrally-administered municipalities, each have a per capita income greater than USD 12,000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
4
5
1 2
Shanghai 3
Inner Mongolia
Jiangsu
27
30
29
28
31
Beijing
Tianjin
Tibet
Gansu
Yunnan Guangxi
Provinces With Highest and Lowest GDP Per Capita in China (2012)
Top 5 Provinces by GDP per capita
Bottom 5 Provinces by GDP per capita Highlighted on the map on right
Guizhou
China‟s GDP per capita
reached USD 6,091 in
2012
The Beijing Axis 51 Note: Also includes the centrally-administered municipalities of Beijing, Tianjin, Chongqing and Shanghai
Source: National Bureau of Statistics of China; Beijing Axis Analysis
However, apart from Tianjin, the coastal regions are no longer the fastest growing regions in China. The government has placed a greater emphasis on developing inland provinces, including the establishment of special economic zones
0 5 10 15
TianjinChongqing
GuizhouYunnanShaanxiSichuan
GansuQinghai
AnhuiJilin
XinjiangTibet
Inner MongoliaNingxia
FujianHubei
HunanGuangxi
JiangxiShanxiHenan
JiangsuHeilongjiang
ShandongHebei
LiaoningHainan
GuangdongZhejiang
BeijingShanghai
GDP Growth Rate by Province (%, 2012) China’s Fastest and Slowest Growing Provinces (2012)
1 2 3 4 5 6 7 8 9
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
26 27 28 29 30 31
4
3
5
1 Tianjin
Shaanxi
Guangdong
Yunnan
30
31
29
28
27 Hainan
Shanghai
Zhejiang
Beijing
2
Chongqing
Guizhou
Top 5 Provinces by GDP growth
Bottom 5 Provinces by GDP growth Highlighted on the map on right
The Beijing Axis 52
4.3
4.3
0.9
0
1
2
3
4
5
6
7
8
9
10
11
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013F
China‟s secondary sector remains the largest contributor to the country‟s GDP. However, the tertiary sector has been the fastest growing in recent years and its development is a centerpiece of China‟s 12th Five-Year Plan
Composition of GDP by Sector* (USD tn, 1997-2013F)
Note*: The primary sector includes industries involved in the extraction and collection of natural resources. The secondary sector of an economy is dominated by the manufacturing of finished products.
The tertiary industry is made up of companies that primarily earn revenue by providing intangible products and services.
Source: National Bureau of Statistics of China; The Beijing Axis Analysis
Primary Sector
CAGR (1997-2013F) - 11.0%
Secondary Sector
CAGR (1997-2013F) - 15.1%
Tertiary Sector
CAGR (1997-2013F) - 17.5%
The Beijing Axis 53
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
Industrial Sector Construction Sector
Source: National Bureau of Statistics of China; The Beijing Axis Analysis
While China‟s secondary sector has traditionally played a larger role in China‟s economy, the tertiary sector is expected to take the lead in the near future
Value-added Breakdown of Secondary Sector (USD bn, 1997-2012)
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
Transport, Storage and Post
Wholesale and Retail Trades
Hostels and Catering Services
Financial Intermediation
Real Estate Others
Value-added Breakdown of Tertiary Sector (USD bn, 1997-2012)
The Beijing Axis 54
Contribution to the Growth of GDP* (percentage points, 1997-H1 2013)
Although capital formation and government consumption are the largest contributors to GDP, household consumption growth has increased substantially while the growth of net exports has remained low
-4
-2
0
2
4
6
8
10
97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 H1 13
Net Exports of Goods and Services Gross Capital Formation Final Consumption Expenditure (household + gov't)
Note: The three components of GDP by expenditure approach are final consumption expenditure (composed of household and government consumption), gross capital formation and net exports of
goods and services. For 2009, the 92% gross capital formation, 52% final consumption expenditure and the -44% net exports of goods and services were reduced proportionately to form the bar
representing 100%
Source: China Statistical Yearbook; The Beijing Axis Analysis
The Beijing Axis 55
20
40
60
80
100
0 50 100 150 200 250 300 350 400 450
Capital formation remains a large contributor to China‟s economy, far surpassing the East Asia & Pacific average. Capital formation remains concentrated in the larger coastal provinces
China’s Gross Capital Formation (2012)
Ningxia
Total Capital Formation (USD bn)
% of Provincial GDP
Shandong
Jiangsu
Guangdong
Henan
Zhejiang
Liaoning
Hebei
Sichuan
Hunan Fujian
Guangxi
Tianjin
Yunnan
Shaanxi Shanxi
Beijing Anhui
Heilongjiang
Jiangxi
Chongqing
Xinjiang
Guizhou
Gansu
Hainan
Qinghai
A bubble this size represents 1% of total
Provinces in central and western China
are very dependent on capital formation
Hubei
Inner Mongolia
Shanghai
Tibet
Source: World Bank; China Statistical Yearbook; The Beijing Axis Analysis
Jilin
East Asia & Pacific
(all income levels)
28.1% 2011
Northern
Northeastern
Eastern
Central & Southern
Southwestern
Northwestern
The Beijing Axis 56
20
30
40
50
60
70
80
0 50 100 150 200 250 300 350 400 450 500
Final consumption is slightly more concentrated, with 38% of China‟s total centered in just four coastal provinces led by Guangdong province
China’s Final Consumption* (2012)
Note*: Final consumption includes both household consumption expenditure and government consumption expenditure
Source: China Statistical Yearbook; The Beijing Axis Analysis
Total Final Consumption (USD bn)
38% of China‟s total final
consumption is centered in
just four coastal provinces
% of Provincial GDP
Qinghai Guangdong
Jiangsu Shandong
Zhejiang
Henan
Shanghai
Hebei
Liaoning
Sichuan
Beijing
Hunan
Hubei
Anhui
Fujian Inner Mongolia
Tianjin
Shaanxi Shanxi
Jilin
Heilongjiang Guangxi
Yunnan
Jiangxi
Chongqing
Guizhou
Gansu
Tibet
Xinjiang
Hainan
Ningxia
A bubble this size represents 1% of total
Northern
Northeastern
Eastern
Central & Southern
Southwestern
Northwestern
The Beijing Axis 57
China‟s industrial value output has grown by over 20% in the last decade. However, growth has slowed since 2008 due to weak overseas demand
Industrial Value Added Output (2000-2012)
Source: National Bureau of Statistics of China; The Beijing Axis Analysis
0
9
18
27
36
45
0
700
1,400
2,100
2,800
3,500
00 02 04 06 08 10 12
Industrial Value Added Output Growth Rate (rhs)
WTO accession on
11 December 2001
USD bn %
The Beijing Axis 58
In recent years, Chinese consumer confidence has remained high and quite stable reflecting the overall future positive outlook shared by consumers
China’s Consumer Confidence Index (2010-August 2013)
Note: The consumer confidence index measures the level of optimism that consumers have about the performance of the economy
Source: National Bureau of Statistics of China; The Beijing Axis Analysis
104.7
104.2
107.9
106.6
108.0
108.9
107.8
107.3 104.4
103.8
102.9
100.4
99.9
99.6
107.6
106.6
105.8 108.1
105.6
105
103.4
100.5 97
100.5
103.9 105
100
103
104.2
99.3
98.2
99.4
100.8
106.1 105.1
103.7 104.5
108.2
102.6 103.7
99 97
97.2
97.8
80
85
90
95
100
105
110
115
120
Jan-
10
Feb
-10
Mar
-10
Apr
-10
May
-10
Jun-
10
Jul-1
0
Aug
-10
Sep
-10
Oct
-10
Nov
-10
Dec
-10
Jan-
11
Feb
-11
Mar
-11
Apr
-11
May
-11
Jun-
11
Jul-1
1
Aug
-11
Sep
-11
Oct
-11
Nov
-11
Dec
-11
Jan-
12
Feb
-12
Mar
-12
Apr
-12
May
-12
Jun-
12
Jul-1
2
Aug
-12
Sep
-12
Oct
-12
Nov
-12
Dec
-12
Jan-
13
Feb
-13
Mar
-13
Apr
-13
May
-13
Jun-
13
Jul-1
3
Aug
-13
CCI over 100 indicates that consumers
are optimistic
The CCI tends to decrease during the
2nd half of the year and pick up right
before the Chinese New Year holiday
The calculation of CCI is combined by
the level of optimism that consumers
have about their consumption intention,
and satisfaction on their economic life
quality
The Beijing Axis 59
China‟s annual inflation rate stood at 2.5% through the first three quarters of 2013, comfortably below the official target of 3.5%. Policymakers are likely to continue their current neutral monetary policy approach to keep the economy stable
Consumer Price Inflation (%, 2011-September 2013)
Source: National Bureau of Statistics of China; The Beijing Axis Analysis
0
1
2
3
4
5
6
7
8
J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S
General Rural Urban
2012 2013
3.5% is the designated inflation
target set by the Chinese
government for 2013
China‟s inflation
averaged 2.6%
in 2012 Room for
policy easing
2011
The Beijing Axis 60
Despite a recent increase in food prices, which constitute roughly a third of CPI*, China‟s inflation has been largely stable in 2013
Consumer Price Inflation Breakdown (%, 2011- September 2013)
Note*: China‟s rate of inflation based on the consumer price index (CPI), which shows the change in prices of a standard package of goods and services which Chinese households purchase for consumption.
Source: National Bureau of Statistics of China; The Beijing Axis Analysis
-5
0
5
10
15
20
J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S
General Food
Tobacco, Liquor and Articles Clothing
Household Facilities, Articles and Services Health Cares & Personal Articles
Transportation & Communication Recreation, Education, Culture Articles and Services
Residence Seasonal peaks due to Chinese New Year holiday
2011 2012
There has been a recent
increase in food prices
2013
Food is an important driver,
with a weight of over 30% of
the total CPI
The Beijing Axis 61
-2
-1
0
1
2
3
4
5
6
7
97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
Annual Consumer Price Inflation (%, 1997-H1 2013)
Note*: First half year of 2013
Source: National Bureau of Statistics of China; The Beijing Axis Analysis
Provinces with Highest and Lowest Consumer Inflation (%, August 2013)
Stymying inflation is no longer a key concern for policymakers as it was in the aftermath of the global financial crisis. Inflation has since steadily fallen
Commodity and food
price pressure
Overheating and
overinvestment
Deflation and
overcapacity
Doubling of M2
money supply
Provinces with Lowest Inflation
Provinces with Highest Inflation
5
Xinjiang
4.2
Qinghai
4.7
30
4
1 Tibet
3.1
31
2
29
Ningxia
3.6
3
27
28 Jiangsu
2.1 Hunan
2.0
*
Beijing
3.4
Guangxi
1.7 Fujian
2.1
Zhejiang
2.0
The Beijing Axis 62
Producer prices in China been in deflationary territory for 19 consecutive months although the pace of the decrease has been easing for four straight months
Producer Price Inflation (%, 2011-September 2013)
Source: China Monthly Economic Indicators; The Beijing Axis Analysis
-5
0
5
10
J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S
Details on next slide
2011 2013
Inflation for
2011 was 106
Deflation due to depressed
overseas market demand
and sluggish domestic
manufacturing activity
2012
The Beijing Axis 63
The main drivers of declining producer prices are in the mining, raw materials and manufacturing sectors. Industrial overcapacity, rising costs and sluggish overseas demand have also contributed to falling prices
Producer Price Inflation Breakdown by Industries (%, 2011-September 2013)
Source: China Monthly Economic Indicators; The Beijing Axis Analysis
-10
-5
0
5
10
15
20
J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S
Mining & Quarrying Industry Raw Materials Industry Manufacturing IndustryFood Clothing Articles for Daily UseDurable Consumer Goods
2011 2013 2012
The Beijing Axis 64
-8
-6
-4
-2
0
2
4
6
8
97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
Annual Producer Price Inflation (%, 1997- H1 2013)
Note*: First half year of 2013
Source: National Bureau of Statistics of China; China Monthly Economic Indicators; The Beijing Axis Analysis
Provinces with Highest and Lowest Producer Inflation (%, August 2013)
Depressed overseas market demand and sluggish domestic manufacturing activity have lowered producer prices in 2013, although there are signs of a bottoming out
Provinces with Lowest Producer Inflation
Provinces with Highest Producer Inflation
31
4
28
27
Shanxi
-9.7
1
Heilongjiang
-0.7
Hainan
0.2
2
29
Jiangxi
-0.5
5
3
Liaoning
-0.7
*
Ningxia
-3.5
Jilin
0.0 Qinghai
-3.7
30 Tianjin
-2.8
Inner Mongolia
-2.8
The Beijing Axis 65
China‟s manufacturing sector has largely remained in expansionary territory in 2013. There have been renewed calls for a more liberal credit policy in the face of low inflation in order to boost production
China’s Purchasing Managers’ Index of the Manufacturing Industry (2010-September 2013)
Source: National Bureau of Statistics of China; The Beijing Axis Analysis
30
40
50
60
Jan-
10
Mar
-10
May
-10
Jul-1
0
Sep
-10
Nov
-10
Jan-
11
Mar
-11
May
-11
Jul-1
1
Sep
-11
Nov
-11
Jan-
12
Mar
-12
May
-12
Jul-1
2
Sep
-12
Nov
-12
Jan-
13
Mar
-13
May
-13
Jul-1
3
Sep
-13
PMI 2 Month Moving Average
A reading above 50 reflects expansion;
below 50 reflects contraction
The Beijing Axis 66
J M M J S N J M M J S N J M M J S N J M M J
95
100
105
110
115
120Beijing Shanghai Guangzhou
Tianjin Chongqing Shenzhen
Sales Price Index of Residential Buildings in Selected Cities (Y-o-Y, 2010-July 2013)
95
97
99
101
103
105
J M M J S N J M M J S N J M M J S N J M M J
Beijing Shanghai Guangzhou
Tianjin Chongqing Shenzhen
Source: National Bureau of Statistics of China; The Beijing Axis Analysis
Sales Price Index of Residential Buildings in Selected Cities (M-o-M, 2010-July 2013)
Housing prices in China‟s major cities have been recovering since mid-2012. With real estate being a key contributor to demand, policymakers have eased purchase restrictions amidst slower growth
2010 2011 2012 2010 2011 2012 2013 2013
The Beijing Axis 67
Agenda
1. Foreword
2. What‟s New: China‟s Ongoing Transformation
3. China’s Economic Indicators
- Selected Macroeconomic Indicators
- Domestic Consumption and Foreign Trade
- Domestic and Foreign Investment
- Financial Indicators
- Social Indicators
4. International Comparison
5. Conclusions and Implications
6. About The Beijing Axis
The Beijing Axis 68
China‟s booming retail sector demonstrates consumers‟ confidence in the economy. Urban areas still make up an overwhelmingly large part of retail sales, despite a narrowing growth rate between urban and rural areas
China’s Annual Retail Sales and Growth Rate by Administrative Level (1978-2012)
-10
0
10
20
30
40
0
500
1,000
1,500
2,000
2,500
3,000
3,500
78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
Retail Sales (Urban) Retail Sales (Suburban)Retail Sales (Rural) Urban Growth (rhs)Suburban Growth (rhs) Rural Growth (rhs)
USD bn¹ %
Note: (1) Figures converted from RMB to USD using the average exchange rate for the respective years. The growth rate, however, does not factor in exchange rate fluctuations
(2) Chinese Statistics Bureau has changed the structure of these figures since 2010. In the new category breakdown, urban includes suburban.
Source: China Statistical Yearbook; China Monthly Economic Indicators; The Beijing Axis Analysis
The Beijing Axis 69
0
600
1,200
1,800
2,400
3,000
3,600
80 84 88 92 96 00 04 08 12
China’s Annual Retail Sales (USD bn, 1980-2012)
0
50
100
150
200
250
300
350
Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
Source: National Bureau of Statistics of China; The Beijing Axis Analysis
China’s Monthly Retail Sales (USD bn, 2006-August 2013)
Increased domestic consumption remains in line with the 12th Five-Year Plan. The dramatic increase in retail sales over the past decade still falls short of making domestic consumption a key pillar of the Chinese economy
Seasonal peaks
due to Chinese
New Year holiday
Annual retail sales
reached USD 3288.37
bn in 2012 323
The Beijing Axis 70
China’s Annual Retail Sales of Consumer Goods by Sub-sector (1978 vs. 2012)
87%
4% 9%
Wholesale and Retail Trade
Hotels and Catering Services
Others
2,532
370
Source: China Monthly Economic Indicators; The Beijing Axis Analysis
While wholesale and retail trade continue to dominate retail sales, hotels and catering services have seen considerable growth, made evident by the massive rise of five-star hotels in China's first- and second-tier cities
1978
Total: USD120.3 bn
2012
Total: USD 3.3 tn
89%
11%
CAGR = 10%
The Beijing Axis 71
0 50 100 150 200 250 300 350 400
GuangdongShandong
JiangsuZhejiang
HenanHubei
LiaoningSichuan
HebeiHunanBeijing
ShanghaiFujianAnhui
HeilongjiangJilin
Inner MongoliaGuangxi
ShanxiShaanxi
ChongqingJiangxiTianjin
YunnanGuizhou
GansuXinjiangHainanNingxiaQinghai
Tibet
Total Retail Sales of Consumer Goods by Province (USD bn, 2012)
Source: China Statistical Yearbook; The Beijing Axis Analysis
Provinces with large populations, high employment and high disposable income also have the highest retail sales. Guangdong, Shandong and Jiangsu have the highest retail sales
1 2 3 4 5 6 7 8 9
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
Guangdong
Jiangsu
Shandong
Zhejiang
1
5
4
3
2
28
29
30
31
Hainan
Ningxia
Qinghai
Tibet Henan
Top 5 Provinces by Retail Sales
Bottom 5 Provinces by Retail Sales
Provinces With Highest and Lowest Retail Sales (2012)
27 Xinjiang
Highlighted on the map on right
The Beijing Axis 72
250
200
150
100
50
0
50
100
150
200
250
J M M J S N J M M J S N J M M J S
Exports Imports
China’s Monthly Exports & Imports (USD bn, 2011-September 2013)
40
30
20
10
0
10
20
30
40
J M M J S N J M M J S N J M M J S
Source: China Customs; The Beijing Axis Analysis
China’s Monthly Trade Balance (USD bn, 2011-September 2013)
Declining exports due to weakened overseas demand, coupled with increasing imports buoyed by an appreciating RMB, are putting pressure on China to expedite its move away from an export-oriented growth model
2011 2012 2013 2011 2012 2013
Import surge gives
China decade-deep
trade deficit
The Beijing Axis 73
-50
-30
-10
10
30
50
0
500
1,000
1,500
2,000
2,500
97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
Exports Exports' Growth Rate (rhs)
China’s Annual Exports (1997-2012)
-70
-40
-10
20
50
80
0
50
100
150
200
250
J M M J S N J M M J S N J M M J S
ExportsExports' Monthly Growth Rate (rhs)
Source: China Customs; China Monthly Economic Indicators; The Beijing Axis Analysis
China’s Monthly Exports (2011-September 2013)
After experiencing a prolonged slump during the global downturn, Chinese exports have now rebounded to pre-crisis levels
China‟s
entry into
the WTO
2011 2012 2013
USD bn % USD bn %
Seasonal drop due to Chinese New
Year holiday
The Beijing Axis 74
Half of China‟s total exports are destined for the US, Hong Kong, Japan, South Korea and Germany. Exports growth to the EU, US, and especially Japan, has been sluggish amidst weak external demand
China’s Top Export Destinations (USD bn, 2012)
Note: Hong Kong is admittedly used as a gateway to the rest of the world
Source: China Customs; The Beijing Axis Analysis
Total Exports = USD 2,049 bn
Top exported commodities
• Electrical machinery, equipment and parts
• Telecommunication, sound recording equipment
and reproducing apparatus
• Automatic data processing machines and parts
India
2.3%
Hong Kong
15.8%
Japan
7.4%
Germany
3.4%
US
17.2%
South Korea
4.3%
Netherlands
2.9%
UK
2.3% Russia
2.2%
Singapore
2.0%
352
324
152
88
69
59
48
46
44
41
US
Hong Kong
Japan
South Korea
Germany
Netherlands
India
UK
Russia
Singapore
1
2
3
4 5
6 8
7
9
10
The Beijing Axis 75
Machinery and equipment not only make up almost half of China‟s export revenue, but also represent the fastest growing component of China‟s export profile. This reflects China‟s continuing shift to value-added exports
Composition of China’s Exports (USD bn, 2001-2012)
Note: Composition is according to the SITC Classification System
Source: China Customs; The Beijing Axis Analysis
964
536
333
0
400
800
1,200
1,600
2,000
2,400
01 02 03 04 05 06 07 08 09 10 11 12
Others
Mineral Items
Foodstuffs
Chemicals and Related Products
Products Classified by Material
Miscellaneous Manufactured Articles
Machinery and Equipment
CAGR
10%
14%
14%
22%
20%
18%
24%
20% Total
The Beijing Axis 76
-30
-10
10
30
50
0
50
100
150
200
J M M J S N J M M J S N J M M J S
Imports Imports' Monthly Growth Rate (rhs)
-40
-20
0
20
40
0
500
1,000
1,500
2,000
02 03 04 05 06 07 08 09 10 11 12
Imports Imports' Growth Rate (rhs)
China’s Annual Imports (2002-2012)
Source: China Customs; China Monthly Economic Indicators; The Beijing Axis Analysis
China’s Monthly Imports (2011-September 2013)
Imports reached an all-time high of USD 183 bn in March 2013. In general, imports are expected to increase as domestic consumption becomes a central part of the economy
China‟s entry
into the WTO
2011 2012 2013
USD bn % USD bn %
The Beijing Axis 77
In 2012, Japan, South Korea, the US, Taiwan and Germany were China‟s top import sources, accounting for about 40% of China‟s total imports
Top Countries of Origin for China’s Imports (USD bn, 2012)
Source: China Customs; The Beijing Axis Analysis
Machinery, vehicles,
electronics
Top imported commodities
• Electrical machinery, equipment and parts
• Mineral fuels, mineral oils and products of their distillation
• Metalliferrous ores and metal scrap
Total Imports = USD 1,818 bn
178
169
133
132
92
85
58
55
52
45
Japan
South Korea
US
Taiwan
Germany
Australia
Malaysia
Saudi Arabia
Brazil
South Africa
Taiwan
7.3%
South Korea
9.3%
Germany
5.1% US
7.3%
Japan
9.8%
Australia
4.7%
Malaysia
3.2% South Africa
2.5%
Saudi Arabia
3.0% Brazil
2.9%
2 1
4
3
5
6
7
9
8
10
Machinery, technology,
consumer goods
Vehicles,
Machinery
Iron ore, soybean,
petroleum
Petroleum
Minerals,
metals
Petroleum, soft
commodities Iron ore,
coal
Machinery,
electronics
The Beijing Axis 78
As a manufacturing powerhouse, China relies on a variety of imported products namely machinery, chemicals and increasingly minerals for the purpose of export and domestic consumption
Composition of China’s Imports (USD bn, 2001-2012)
Note: SITC Classification System; Crude material: inedible, except fuels
Source: China Customs; The Beijing Axis Analysis
179
146
137 35 86
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Others
Foodstuffs
Miscellaneous Manufactured Articles
Products Classified by Material
Chemicals and Related Products
Mineral Items
Crude Materials
Machinery and Equipment
CAGR
36%
20%
22%
12%
17%
27%
28%
18%
20% Total
313
270
653
2001-2012
107
The Beijing Axis 79
Over 40% of China‟s total trade is with the US, Hong Kong, Japan, South Korea and Taiwan. The US, China‟s largest trading partner, accounted for USD 485 bn in 2012
China’s Largest Trading Partners (USD bn, 2012)
Source: China Customs; The Beijing Axis Analysis
China‟s total trade with the world = USD 3,867 bn
Total exports = USD 2,049 bn
Total imports = USD 1,818 bn
Hong Kong
8.8%
Japan
8.5%
Germany
4.2% US
12.5%
South Korea
6.6%
485
341
329
256
169
161
122
95
88
86
US
Hong Kong
Japan
South Korea
Taiwan
Germany
Australia
Malaysia
Russia
Brazil
Taiwan
4.4%
Australia
3.2%
Brazil
2.2%
Russia
2.3%
Malaysia
2.5%
1 3
2
4 6
5
7
8
10
9
Trade Surplus
Trade Deficit
The Beijing Axis 80
China has a large trade surplus with both Hong Kong and the US. Meanwhile, its trade deficit is largely centered in the Asia-Pacific economies of Taiwan, South Korea and Australia China’s Trade Balance with its Five Largest Surplus and Deficit Regions (USD bn, 2012)
Source: China Customs; The Beijing Axis Analysis
US
Hong Kong
South Korea
UK
Australia
Netherlands
Saudi Arabia
Hong Kong
US
Netherlands
UK
India
Angola
Saudi Arabia
Australia
South Korea
Taiwan
252
202
50
29
29
-29
-36
-47
-81 -95
China‟s world trade surplus = USD 231 bn India
Taiwan
Angola
The Beijing Axis 81
-60
-40
-20
0
20
40
60
80
30
20
10
0
10
20
30
40
J M M J S N J M M J S N J M M J S N J M M J S N J M M J S N J M M J S N J M M J S N J M M J S
Trade balance Exports, % change y-o-y (rhs) Imports, % change y-o-y (rhs)
China‟s foreign trade is becoming more balanced. Import growth has consistently outpaced export growth since H2 2009, narrowing China‟s surplus with the rest of the world
China’s Monthly Trade Balance (2006-September 2013)
Source: General Administration of Customs of PRC; The Beijing Axis Analysis
2011 2012 2013 2008 2009 2010 2006 2007
% USD bn
The Beijing Axis 82
0
2
4
6
8
10
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
Source: National Bureau of Statistics of China; General Administration of Customs of PRC; The Beijing Axis Analysis
Share of Net Exports in Quarterly GDP (%, 2008-Q2 2013)
Net exports‟ share of GDP is declining, with fixed asset investment and total consumption now the primary drivers of GDP growth. This is in line with the government‟s policy of boosting domestic consumption
Share of Net Exports in Annual GDP (%, 1998-2012)
0
2
4
6
8
10
Q1-08 Q1-09 Q1-10 Q1-11 Q1-12 Q1-13
The Beijing Axis 83
80% of China‟s total international trade value is concentrated in just seven provinces, largely as a result of their access to world class port facilities along the coast
Trade by Province as A Percentage of China’s Total (2012)
Source: China Customs; The Beijing Axis Analysis
Percentage of China‟s total trade value:
Top 60 %
Next 20 % Next 20 %
Imports: USD 1,818 bn
Exports: USD 2,049 bn
Total Trade: USD 3,867 bn
Shandong 6.3%
Shaanxi Henan
Hunan
Fujian 4.0% Taiwan
Guangdong 25.4%
Guangxi
Guizhou
Yunnan
Heilongjiang
Jilin
Liaoning
Hebei
Jiangsu 14.1%
Shanghai 11.3%
Anhui
Zhejiang 8.1% Jiangxi
Tibet
Hubei
Inner Mongolia
Ningxia
Sichuan
Qinghai
Xinjiang
Gansu
Shanxi
Tianjin
Chongqing
Beijing 10.5%
Hainan
The Beijing Axis 84
Agenda
1. Foreword
2. What‟s New: China‟s Ongoing Transformation
3. China’s Economic Indicators
- Selected Macroeconomic Indicators
- Domestic Consumption and Foreign Trade
- Domestic and Foreign Investment
- Financial Indicators
- Social Indicators
4. International Comparison
5. Conclusions and Implications
6. About The Beijing Axis
The Beijing Axis 85
In 2012, China‟s total fixed asset investment stood at almost USD 6 tn¹. Concern over the economic slowdown prompted the government to accelerate new project approvals in the power, water and railway industries
Total Fixed Asset Investment in Urban and Rural Areas (1997-2012)
Note: (1) Fixed asset investment figures are often overstated by local governments, with figures even exceeding GDP in some provinces. In June 2013, NBS announced a pilot reform of data collection
relating to fixed asset investment in order to make local economic statistics more reliable,
(2) FAI = Fixed Asset Investment
Source: National Bureau of Statistics of China; The Beijing Axis Analysis
0
8
16
24
32
40
0
1,200
2,400
3,600
4,800
6,000
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Urban Areas Rural Areas Growth of Total FAI² (rhs)
156
5,791
USD bn %
The Beijing Axis 86
Stressing quality and efficiency to keep local debt levels in check, the central government is promoting reasonable investment growth in urban infrastructure projects such as airports, railways and affordable housing
Monthly Urban Fixed Asset Investment* (USD bn, 2011-August 2013)
Note*: In 2011, the National Bureau of Statistics of China extended the statistical scale of monthly fixed assets investment to cover both urban areas and rural enterprises, and defined it as „Investment in
Fixed Assets (Excluding Rural Households)‟
Source: China Monthly Economic Indicators; The Beijing Axis Analysis
0
100
200
300
400
500
600
700
800
900
J-F M A M J J A S O N D J-F M A M J J A S O N D J-F M A M J J A
Urban Fixed Asset Investment 2 Month Moving Average
2011 2012 2013
Investments gaining strength
from favourable policies
The Beijing Axis 87
0 100 200 300 400 500 600
ShandongJiangsu
LiaoningHenanHebei
GuangdongZhejiangSichuan
HubeiAnhui
HunanFujian
ShaanxiInner Mongolia
JiangxiGuangxi
HeilongjiangJilin
ShanxiChongqing
TianjinYunnanXinjiangBeijing
GuizhouGansu
ShanghaiHainanNingxiaQinghai
Tibet
Fixed Asset Investment by Province (USD bn, 2012)
Source: China Statistical Yearbook; The Beijing Axis Analysis
China‟s fixed asset investment (FAI) continues to be primarily focused in the more developed coastal provinces. The top five provinces account for over 30% of total FAI
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
Top five provinces
account for 34% of
total FAI
1
4
3
2
5
Jiangsu Henan
Shandong
Liaoning
Hebei
Top 5 Provinces by Investment in Fixed Assets (2012)
31 Tibet
Top 5 Provinces by FAI
Bottom 5 Provinces by FAI
Qinghai 30
Ningxia
29
28
Hainan
27 Shanghai
Highlighted on the map on right
The Beijing Axis 88
China‟s manufacturing and real estate sectors attract the most fixed asset investment due to the country‟s ongoing industrialisation and urbanisation
Source: China Statistical Yearbook; The Beijing Axis Analysis
1,977
1,574
499
470 265 211
952
0
1,000
2,000
3,000
4,000
5,000
6,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Others
Mining
Utilities
Environmental Protection and Public Facilities
Transport, Storage and Post
Real Estate
Manufacturing
CAGR
24%
29%
21%
28%
23%
29%
31%
27% Total
Fixed Asset Investment by Sector (USD bn, 2003-2012)
Real estate and
manufacturing account
for 60% of the total FAI
The Beijing Axis 89
China's low cost production base has been a key driver of FDI flows in the past. However, with rising domestic costs, the country's large market size and liberalisation of various sectors will be a key driver of FDI going forward
FDI Inflow (USD bn, 1997-2012)
Note: FDI = Foreign Direct Investment
Source: MOFCOM; The Beijing Axis Analysis
-15
-10
-5
0
5
10
15
20
25
0
20
40
60
80
100
120
140
160
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
FDI Inflow FDI Growth (rhs)% USD bn
The Beijing Axis 90
In 2012, 95% of China‟s FDI came from just five regions led by Hong Kong. Hong Kong remains a crucial gateway for other countries‟ FDI into China as well as FDI from Chinese firms headquartered in the SAR¹
China’s FDI Inflow by Source Region² (USD bn, 2012)
Note: (1) SAR stands for Special Administrative Region
(2) 2012 data on China‟s FDI Inflow includes these countries‟ investing through Virgin Is., Cayman Is., Samoa, Mauritius and Barbados.
Source: MOFCOM; The Beijing Axis Analysis
Hong Kong
Japan
Singapore
Taiwan
US
South Korea
Germany
Netherlands
UK
Switzerland
1
9
3
4
7
6
5 10 2 8
US 2.8%
Hong Kong 63.7%
Japan 6.6%
South Korea
2.7%
Taiwan 5.5%
Switzerland 0.8% Netherlands 1.0%
UK 0.9%
Germany 1.3%
Singapore
5.8%
USD bn
China‟s total FDI inflow for 2012 amounted to USD 112 bn
71
7
7
6
3
3
1
1
1
1
The Beijing Axis 91
0 10 20 30 40 50
JiangsuLiaoning
GuangdongTianjin
ShanghaiZhejiang
HenanShandongChongqing
AnhuiBeijingJiangxi
SichuanHunanFujianHebei
NeimengguHubei
HeilongjiangShaanxi
ShanxiYunnan
JilinHainan
GuangxiXinjiangGuizhouNingxiaQinghai
TibetGansu
FDI Inflow by Province (USD bn, 2012)
Source: China Statistical Yearbook; ACMR ,The Beijing Axis Analysis
China‟s coastal regions still attract the majority of FDI inflows, but new FDI guidelines utilise incentivisation schemes to encourage foreign companies to invest in less-developed central and western regions
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
4
5
3
1
2
Shanghai
Liaoning
Jiangsu
Guangdong
Tianjin
Top 5 provinces
account for 47% of
total FDI inflows
Top 5 Provinces by FDI Inflow (2012)
Top 5 Provinces by FDI Inflow
Bottom 5 Provinces by FDI Inflow
30
Tibet
Qinghai 29
Gansu 31
28
Ningxia
27
Guizhou
Highlighted on the map on right
The Beijing Axis 92
China‟s manufacturing sector receives the bulk of China‟s FDI inflow. New FDI guidelines provide incentives for foreign companies to invest in China‟s high-end manufacturing, high-tech and service sectors
China’s FDI Inflow by Sector (USD bn, 2003-2012)
Source: China Statistical Yearbook; The Beijing Axis Analysis
49
24
8
10 3
18
0
20
40
60
80
100
120
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Others
Transport, Storage and Post
Wholesale and Retail Trades
Leasing and Business Services
Real Estate
Manufacturing
CAGR
12%
17%
27%
11%
19%
3%
8% Total
2003-2012
The Beijing Axis 93
China‟s OFDI flow is expected to grow steadily, largely driven by Chinese companies‟ increasing need to access new markets, technology and resources. In 2012, China‟s OFDI reached USD 88 bn
China’s OFDI Flow (2003-2012)
Note*: SAFE - State Administration of Foreign Exchange
Source: MOFCOM; The Beijing Axis Analysis
0
50
100
150
0
25
50
75
100
03 04 05 06 07 08 09 10 11 12
OFDI Flow OFDI Growth Rate (rhs)
In 2005, SAFE* eased restrictions
on overseas investments made by
Chinese companies
Chinese companies increased
acquisition of overseas
depressed assets
USD bn %
The Beijing Axis 94
While China‟s OFDI extends to all continents, international financial centres and tax havens such as Hong Kong and BVI receive the bulk of OFDI stock
China’s OFDI Flow by Destination (2012)
Source: MOFCOM; The Beijing Axis Analysis
Hong Kong
US
Kazakhstan
UK
Virgin Islands
Australia
Venezuela
Singapore
Indonesia
Luxemburg
USD bn
Hong Kong 58.2% 1
3
2
British Virgin Islands
2.5.% 5
US 4.6%
Australia 2.5%
4
8
Singapore 1.7%
Kazakhstan 3.4%
9
UK 3.2%
7
10
6
Indonesia 1.5%
China‟s total cumulative OFDI flow for 2012 amounted to USD 88 bn
Venezuela 1.8%
51.2
4.0
3.0
2.8
2.2
2.2
1.5
1.5
1.4
1.1
Luxemburg 1.3%
The Beijing Axis 95
0 1,000 2,000 3,000 4,000 5,000 6,000
GuangdongShandongShanghai
JiangsuLiaoningZhejiang
BeijingGansu
YunnanHunanFujian
HeilongjiangAnhui
TianjinShaanxiSichuan
HebeiChongqing
Inner MongoliaHubei
XinjiangJiangxiHenanHainanShanxi
JilinGuangxiNingxia
GuizhouQinghai
Tibet
China’s OFDI by Province (USD mn, 2012)
Note: OFDI figures include non-financial OFDI and exclude investments made by central enterprises
Source: MOFCOM; The Beijing Axis Analysis
In 2012, over half of China‟s non-financial OFDI came from just six provinces, all located along the east coast. Guangdong province, one of the forerunners of China‟s „going out‟ policy, registered the highest OFDI
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
2
3
Guangdong
Shandong
1
5
Liaoning
Jiangsu 4
Shanghai
Top 6 provinces‟
OFDI accounts for
59% of the total
China’s OFDI by Province (2012)
Top 5 Provinces by OFDI
Bottom 5 Provinces by OFDI
31 Tibet
Highlighted on the map on right
30
29
28
27
Qinghai Ningxia
Guizhou
Guangxi
The Beijing Axis 96
China‟s outward investments in finance, wholesale and retail trade grew substantially in 2012
China’s OFDI Flow by Sector (USD bn, 2004-2012)
Note*: Business services includes investment in holding companies, regional headquarters and SPVs often established in offshore financial centers from where investments are made in other countries
and sectors; Finance includes investments in the banking industry such bank branch offices, bank affiliated institutions, bank rep. offices and insurance institutions; Wholesale and retailing as well as
transportation, warehousing and postal services are closely linked with China‟s export and import activities
Source: MOFCOM; The Beijing Axis Analysis
27
10
13
14
3
9
13
0
10
20
30
40
50
60
70
80
90
2004 2005 2006 2007 2008 2009 2010 2011 2012
Others
Manufacturing
Transport, Storage and Post
Mining
Wholesale and Retail Trades
Finance
Leasing and Business Services
CAGR
47%
35%
18%
29%
42%
19%
58%
41% Total
The Beijing Axis 97
Agenda
1. Foreword
2. What‟s New: China‟s Ongoing Transformation
3. China’s Economic Indicators
- Selected Macroeconomic Indicators
- Domestic Consumption and Foreign Trade
- Domestic and Foreign Investment
- Financial Indicators
- Social Indicators
4. International Comparison
5. Conclusions and Implications
6. About The Beijing Axis
The Beijing Axis 98
The PBOC* has set an M2 growth target of 13% for 2013, with policymakers aiming to achieve steady credit growth
Money Supply (USD tn, 2011- Sep 2013)
Note*: PBOC - The People‟s Bank of China
Source: The People‟s Bank of China; The Beijing Axis Analysis
0
2
4
6
8
10
12
14
16
18
20
J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S
M2 M1 M0
2011 2012 2013
The Beijing Axis 99
Benchmark Lending Rates (%, 1997-2013)
Note*: PBOC - The People‟s Bank of China
Source: Hexun; The Beijing Axis Analysis
4.00
6.00
8.00
10.00
12.00
Oct
-97
Mar
-98
Aug
-98
Jan-
99
Jun-
99
Nov
-99
Apr
-00
Sep
-00
Feb
-01
Jul-0
1
Dec
-01
May
-02
Oct
-02
Mar
-03
Aug
-03
Jan-
04
Jun-
04
Nov
-04
Apr
-05
Sep
-05
Feb
-06
Jul-0
6
Dec
-06
May
-07
Oct
-07
Mar
-08
Aug
-08
Dec
-08
May
-09
Oct
-09
Mar
-10
Aug
-10
Jan-
11
Jun-
11
Nov
-11
Apr
-12
Sep
-12
Feb
-13
Jul-1
3
6 months to 1 year (including 1 year) 1 year to 3 years (including 3 years)
3 years to 5 years (including 5 years) Longer than 5 years
First loan interest rate
decrease in six years
First loan interest rate
decrease since the
global financial crisis
In Q2 of 2012, the PBOC* cut rates to spur economic growth, however, the rates have since been left constant with no indication of further cuts
The Beijing Axis 100
16.5%
20%
0
5
10
15
20
25
21-M
ar-9
821
-Nov
-99
21-S
ep-0
325
-Apr
-04
05-J
ul-0
615
-Aug
-06
15-N
ov-0
615
-Jan
-07
25-F
eb-0
716
-Apr
-07
15-M
ay-0
705
-Jun
-07
15-A
ug-0
725
-Sep
-07
25-O
ct-0
726
-Nov
-07
25-D
ec-0
725
-Jan
-08
25-M
ar-0
825
-Apr
-08
20-M
ay-0
825
-Jun
-08
15-S
ep-0
815
-Oct
-08
05-D
ec-0
825
-Dec
-08
18-J
an-1
025
-Feb
-10
10-M
ay-1
016
-Nov
-10
29-N
ov-1
020
-Dec
-10
20-J
an-1
124
-Feb
-11
25-M
ar-1
121
-Apr
-11
18-M
ay-1
120
-Jun
-11
05-D
ec-1
124
-Feb
-12
18-M
ay-1
218
-Oct
-13
Bank Deposit-Reserve Ratio (Medium & Small Financial Institutes)
Bank Deposit-Reserve Ratio (Large Financial Institutes)
Bank Deposit-Reserve Ratio (%, March 1998-October 20132)
Note: (1) The Bank Deposit-Reserve Ratio is a standard determined by a central bank. It governs the relationship between the amount of money that banks must keep on hand and the amount that they
can lend. By raising and lowering the ratio, the central bank can decrease or increase money supply
(2) The date is effective date
Source: The People‟s Bank of China; The Beijing Axis Analysis
After initial concerns about a slowing economy that twice led to reductions in the bank reserve requirement ratio in 2013, the ratio has remained constant throughout 2013 as the economy has picked up
Economic
overheating
Economic
slowdown
First cut in
two years Inflationary
pressures
Implement
different RRR
1
1
The Beijing Axis 101
The PBOC has warned of credit expansion pressure and vowed to maintain a prudent monetary policy
Deposit Interest Rates (% p.a., March 1998-November 2013)
Source: China Statistical Yearbook; The Beijing Axis Analysis
0
2
4
6
8
25-M
ar-9
8
1-Ju
l-98
7-D
ec-9
8
10-J
un-9
9
21-F
eb-0
2
29-O
ct-0
4
19-A
ug-0
6
19-A
ug-0
6
18-M
ar-0
7
19-M
ay-0
7
21-J
ul-0
7
22-A
ug-0
7
15-S
ep-0
7
21-D
ec-0
7
9-O
ct-0
8
30-O
ct-0
8
27-N
ov-0
8
23-D
ec-0
8
20-O
ct-1
0
26-D
ec-1
0
9-F
eb-1
1
6-A
pr-1
1
7-Ju
l-11
7-Ju
n-12
5-Ju
l-12
29-N
ov-1
3
5 years 1 year 6 months 3 monthsFirst cut since
global financial
crisis
Recent adjustments in 2012 to widen the range at
which banks can set deposit rates mark an
important step towards interest rate liberalisation
The Beijing Axis 102
0
4,000
8,000
12,000
16,000
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Loans Deposits
Chinese banks have funded themselves mainly from deposits at a loan-to-deposit (LTD) ratio of about 70%. Total deposits reached USD 15 tn by the end of 2012, while loans amounted to USD 10.7 tn
Total Loans and Deposits¹ (USD bn, 1997-2012)
Note (1): Total Loans and Deposits in RMB and Foreign Currency
Note (2): CBRC – China Banking Regulatory Commission
Source: The People‟s Bank of China; The Beijing Axis Analysis
Loans to Deposit
Ratio (%) 91 71 90 86 80 78 77 76 74 68 67 67 65 70 69 70
In 2007, the CBRC²
implemented a 75% LTD ratio
limit for all banks in China
The Beijing Axis 103
14,564 7,283
6,524
388 26 4 340
0
4,000
8,000
12,000
16,000
TotalDeposits
CorporateDeposits
PersonalDeposits
FiscalDeposits
TemporaryDeposits
Designated Deposits
OtherDeposits
Sources of Deposits* (USD bn, 2003-2012)
Note*: Since 2011, classification in Sources & Uses of Credit Funds of Financial institutions has been adjusted. Some data are not comparable with that before 2010. In 2011, Deposits by Enterprises
changed to Corporate Deposits; Savings Deposits changed to Personal Deposits
Source: China Statistical Yearbook; The Beijing Axis Analysis
Sources of Deposits (USD bn, 2012)
China‟s high savings rate remains a main source of funds for Chinese banks. In 2012, household banking deposits accounted for 44% of total deposits, while company deposits accounted for 51%
50%
45%
6,524
7,283
11 12
Other Deposits
Designated Deposits
Temporary Deposits
Fiscal Deposits
Corporate Deposits
Personal Deposits
0
5,000
10,000
15,000
03 04 05 06 07 08 09 10
Other DepositsTrust DepositsAgricultural DepositsFiscal DepositsDeposits of Gov. Dept. & Org.Company DepositsHousehold Savings Deposits
The Beijing Axis 104
After bottoming out in December 2012, lending rates in China have steadily increased. In 2013, the government enacted a policy to liberalise interest rates to boost competitiveness in the economy
Monthly Bank Loans (USD bn, 2010-September 2013)
Source: The People Banks of China; The Beijing Axis Analysis
-80
-60
-40
-20
0
20
40
60
80
100
0
50
100
150
200
250
J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S
Monthly Loan Size Y-o-Y Growth Rate (rhs)
2010 2011 2012
USD bn %
Fall in lending as
demand for credit
eased in a slowing
economy
2013
The Beijing Axis 105
9,999 5,602
3,941
94 324
9 29 0
4,000
8,000
12,000
TotalDeposits
Medium &Long-term
Loans
Short-termLoans
FinancialLease
BillFinancing
Advances OverseasLoans
Composition of New Loans* (USD bn, 2003-2012)
Note*: Since 2011, classification in Sources & Uses of Credit Funds of Financial Institutions has been adjusted. Some data are not comparable with that before 2010.
Source: China Statistical Yearbook; The Beijing Axis Analysis
Composition of New Loans (USD bn, 2012)
In 2012, medium and long term loans, a key measure of appetite for investment, made up 56% of total loans. However, recent banks‟ reticence to lend may result in a slower pick up in domestic investment
56%
39%
0
4,000
8,000
12,000
03 04 05 06 07 08 09 10
Other Loans
Trust Loans
Short-term Loans
Medium & Long-term Loans
5,602
3,941
11 12
Overseas LoansAdvancesBill FinancingFinancial LeaseShort-term LoansMedium & Long-term Loans
The Beijing Axis 106
715 780 837 834 842 860 864 864 894 931 954
509 507 540 547 592 690 740 830 1,169
1,411 1,540
0
500
1,000
1,500
2,000
2,500
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Number of companies listed on the Shenzhen StockExchange
Number of companies listed on the Shanghai StockExchange
By the end of 2012, the Shanghai and Shenzhen Stock Exchanges were the world‟s seventh- and sixteenth-largest stock markets respectively, by market capitalisation
Number of Listed Companies and Total Market Value of China’s Stock Exchanges (2002-2012)
Source: China Monthly Economic Indicators; The Beijing Axis Analysis
463 513 448 396 1,122 4,302 1,747 3,655 3,926 3,330 3,655 Total Market Value
(USD bn)
2007 global financial
crisis created stock
market bubble
The Beijing Axis 107
0
500
1,000
1,500
2,000
2,500
3,000
3,500
J A J O J A J O J A J O J A J
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Market Value of Tradable SharesComposite Index (rhs)
Shanghai Stock Exchange Composite Index (2010-August 2013)
0
3,000
6,000
9,000
12,000
15,000
0
200
400
600
800
1,000
J A J O J A J O J A J O J A J
Market Value of Tradable Shares
Component Index (rhs)
Source: China Monthly Economic Indicators; The Beijing Axis Analysis
Shenzhen Stock Exchange Component Index (2010-August 2013)
While China‟s stock exchange indices have remained highly volatile and followed a downward trend since the beginning of 2011, the market value of tradable shares has been on an upswing
USD bn USD bn
2011 2012 2013 2011 2012 2013 2010 2010
The Beijing Axis 108
Shenzhen Stock Exchange Trading Volume and Composite Index (2002-2012)
Source: China Monthly Economic Indicators; Sina Finance; The Beijing Axis Analysis
Shanghai Stock Exchange Trading Volume and Composite Index (2002-2012)
Since recovering from the global financial crisis in 2009, China‟s stock markets have since declined as both domestic and overseas investors have become weary of lax corporate governance and dampened profit outlooks
0
5,000
10,000
15,000
20,000
0
500
1,000
1,500
2,000
02 03 04 05 06 07 08 09 10 11 12
0
2,000
4,000
6,000
0
2,000
4,000
6,000
02 03 04 05 06 07 08 09 10 11 12
bn shares
Average
P/E Ratio 34.4 36.5 24.2 16.3 33.3 59.2 14.9 28.7 21.6 13.4 12.3
Total
Turnover
USD bn 205 252 320 235 725 4,017 2,597 6,469 5,893 3,682 2,609
Average
P/E Ratio 39.8 37.0 36.2 24.6 16.4 32.7 69.7 16.7 46.0 44.7 23.1 22.0
Total
Turnover
USD bn 188 133 136 192 152 410 2,040 1,248 2,909 3,360 2,095 2,382
bn shares SH Composite Index (rhs)
Volume
SZSE Component Index (rhs)
Volume
The Beijing Axis 109
0
12
24
36
48
60
0
800
1,600
2,400
3,200
4,000
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 H12013
Foreign Exchange Reserves Growth Rate (rhs)
Foreign Exchange Reserves (USD bn, 1997-Jun 2013)
Note*: FX stands for foreign exchange
Source: The People‟s Bank of China; The Beijing Axis Analysis
China holds the world‟s largest FX* reserves. Despite a slower rate of accumulation since 2008, China‟s foreign reserves stood at USD 3.5 tn by the end of H1 2013, fuelled by huge inflows into China‟s financial system
Slowest growth since 2001, caused
by slowing of „hot money‟ inflows
USD bn %
The Beijing Axis 110
-5
0
5
10
15
20
25
30
35
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J
Foreign Exchange Reserves Y-o-Y Growth Rate (rhs)
China‟s FX* reserves reached an all-time high of USD 3.5 tn in June 2013. However, reserves are expected to drop in the future as the country transforms itself from a major exporter of goods into a major exporter of capital
Foreign Exchange Reserves (2010-June 2013)
Note*: FX stands for foreign exchange
Source: The People‟s Bank of China; The Beijing Axis Analysis
2010 2011 2013
USD bn %
2012
China‟s foreign exchange reserves
experienced its first quarterly drop in
more than a decade in Q4-2011
The Beijing Axis 111
Although there is a broad consensus that the Renminbi (RMB) is undervalued, the exact degree of undervaluation is often a subject of debate. The IMF estimates this undervaluation to be between 5% and 27%
Annual RMB Exchange Rate (2001-H1 2013)
Note: Index 2001 = 100
Source: OANDA; The Beijing Axis Analysis
60
80
100
120
140
160
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 H1 2013
EUR AUD ZAR USD RUB JPY KRW
AUD EUR
USD
ZAR KRW JPY
RUB
RMB appreciated against the world‟s
major currencies in 2012
The Beijing Axis 112
Since China resumed the semi (controlled) floating exchange rate mechanism in 2010, the RMB has appreciated by around 10% in real terms against the US dollar and more than 30% since the initiation of exchange rate reform in 2005
RMB to USD Exchange Rate (100 USD, 2010-June 2013)
Source: The People‟s Bank of China; The Beijing Axis Analysis
600
610
620
630
640
650
660
670
680
690
J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J
2010 2011 2012
In June 2010, China announced
that it will target the RMB against
a basket of currencies rather
than solely on the USD
2013
In April 2012, China announced that
it will widen RMB‟s daily trade limit
band against the USD from 0.5% to
1%
The Beijing Axis 113
Agenda
1. Foreword
2. What‟s New: China‟s Ongoing Transformation
3. China’s Economic Indicators
- Selected Macroeconomic Indicators
- Domestic Consumption and Foreign Trade
- Domestic and Foreign Investment
- Financial Indicators
- Social Indicators
4. International Comparison
5. Conclusions and Implications
6. About The Beijing Axis
The Beijing Axis 114
China has a population of over 1.3 bn, but its population growth has slowed continually to the current 0.5%
China’s Population Indicators (1978-2012)
Source: IMF; National Bureau of Statistics of China; The Beijing Axis Analysis
0%
6%
12%
18%
0
500
1,000
1,500
78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
Population Natural Growth Ratemn %
18
12
6
0
The Beijing Axis 115
China’s Annual Births (1980-2012)
Note*: The recently amended One Child Policy now allows families to have a second child if either the father or the mother are an only child.
Source: National Bureau of Statistics of China; The Beijing Axis Analysis
0.0
0.4
0.8
1.2
1.6
2.0
0
6
12
18
24
30
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
Birth Rate Population Natural Growth Rate
Children born during the boom of the mid-
1980s are entering childbearing age
Chinese citizens born during the boom in the mid-1980s are now reaching childbearing age, but China‟s birth rate has since declined significantly – rising costs of living are discouraging young families from having more than one child*
Rising costs of living are discouraging
young urban families from having
more than one child
0
2
mn %
The Beijing Axis 116
China Provincial Population Breakdown by Urban and Rural Residences (mn, 2012)
Source: China Statistical Yearbook; The Beijing Axis Analysis
As more migrants move to coastal areas in search of better economic opportunities, the already populous regions are facing new socioeconomic problems such as how to accommodate the incoming population
0 20 40 60 80 100 120
GuangdongShandong
HenanSichuanJiangsu
HebeiHunanAnhuiHubei
ZhejiangGuangxiYunnanJiangxi
LiaoningHeilongjiang
ShaanxiFujian
ShanxiGuizhou
ChongqingJilin
GansuInner Mongolia
ShanghaiXinjiangBeijingTianjinHainanNingxiaQinghai
Tibet
Urban Population
Rural Population
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
2
4
3 5
1
Henan
Hainan
Shandong
Guangdong
Jiangsu Sichuan
31
Tibet
30
Qinghai 29
Ningxia
28
27 Tianjin
Top 5
Bottom 5
Highlighted on the
map on right
Most and Least Populated Provinces (2012)
Higher wages in more developed
areas attract migrant workers from
surrounding provinces
The Beijing Axis 117
Primary industry, 258
mn, 34%
Secondary industry, 232
mn, 30%
Tertiary industry, 277
mn, 36%
In 2011, employment in China‟s tertiary industry overtook the primary industry for the first time. As China‟s economy continues to develop, the tertiary industry will play an even more important role
Total Employed Persons by Sector (mn, 1978-2012)
Note: The sizeable gap between the 1989 and 1990 figures is due to the adjustment of urban and rural employed persons‟ subtotals in accordance with the data obtained from
the 5th National Population Census
Source: MOHRSS; The Beijing Axis Analysis
0
100
200
300
400
500
600
700
800
78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12
Primary industry
Secondary industry
Tertiary industry
Although the primary sector makes the smallest
contribution to GDP, it employs a relatively large
proportion of people
The Beijing Axis 118
Despite a slow narrowing of rural-urban disparity, income levels in urban households are still three times those of rural households
Annual Income of Urban and Rural Households Per Capita (1997-2012)
Note: (1) Annual disposable income of urban households and net income of rural households per capita
(2) Growth rates are calculated at current prices
Source: National Bureau of Statistics of China; The Beijing Axis Analysis
622
3,899
252
1,257
0
6
12
18
24
30
0
800
1,600
2,400
3,200
4,000
97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
Urban Rural Urban Growth (rhs) Rural Growth (rhs)USD %
The Beijing Axis 119
2,000 0 2,000 4,000 6,000 8,000
ShanghaiBeijing
ZhejiangGuangdong
JiangsuTianjinFujian
ShandongLiaoning
Inner MongoliaChongqing
HunanGuangxiYunnan
AnhuiHainanHubei
ShaanxiHebei
HenanShanxi
SichuanJilin
JiangxiNingxia
GuizhouTibet
XinjiangHeilongjiang
QinghaiGansu
Urban
Rural
1 2 3 4 5 6 7 8 9
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
Beijing and Shanghai, China‟s political and financial capitals, continue to lead the country in terms of wealth accumulation. Overall, income levels are skewed towards the more developed eastern coastal provinces
Income of Urban and Rural Households Per Capita by Province* (USD, 2012)
Note*: Represents disposable income of urban households and net income of rural households
Source: China Statistical Yearbook; The Beijing Axis Analysis
Zhejiang
Guangdong
Jiangsu
Beijing
4
1
3
5
2
29 28
30
31
27
Gansu
Qinghai
Xinjiang
Top 5
Bottom 5 Highlighted on
the map on right
Provinces with Highest and Lowest Urban Household Incomes (2012)
Shanghai Tibet
Heilongjiang
The Beijing Axis 120
While the downward trend of Engel‟s coefficient* reflects a progressively higher standard of living, temporary increases in 2007, 2008 and 2011 underscore concerns over food price spikes China’s Urban and Rural Engel’s Coefficients (%, 1978-2012)
Note*: Engel's Law states that household expenditure on food, on aggregate, declines as income rises; in other words, the income elasticity of demand for food on aggregate is less than one and declines towards
zero with income growth. A common application of this statistic is to regard it as a reflection of the living standards of a country. Engel‟s coefficient has an inverse correlation with the standard of living of a country
Source: National Bureau of Statistics of China; Hexun database; The Beijing Axis Analysis
25
35
45
55
65
75
1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Urban Areas Rural Areas
39.3
36.2
57.5
67.7
Temporary increases from high
levels of food inflation
Failed price reforms fueled
inflation, especially in urban
areas
The Beijing Axis 121
Income inequality in China is growing, as measured by the Gini Coefficient*. Growing income equality, if left unchecked, can undermine social stability and future economic growth China’s Gini Coefficient (1978-2012)
Note*: The Gini Coefficient is a measure of statistical dispersion. It is most prominently used as a measure of inequality of income distribution or inequality of wealth distribution. It is defined as a ratio with
values between 0 and 1. A low Gini Coefficient indicates more equal income or wealth distribution, while a high Gini Coefficient indicates more unequal distribution
Source: National Bureau of Statistics of China; The Beijing Axis Analysis
0.3
0.47
0.0
0.1
0.2
0.3
0.4
0.5
0.6
78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
China crossed the 0.40
recognised warning
level in 2000
Official data shows China‟s Gini Coefficient
peaked in 2008 at 0.491, while non-official data
shows it has already exceeded 0.5 for a
significant time, which signals severe inequality
0
The Beijing Axis 122
China‟s urban population outnumbered its rural population for the first time in 2011, marking an important milestone in China‟s ongoing socio-economic transformation
China’s Urbanisation Rate (%, 1978-2012)
Source: China Statistical Yearbook; Annual Report on Urban Development of China;The Beijing Axis Analysis
0
10
20
30
40
50
60
78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
China‟s urbanisation rate
exceeded 50% for the first time
in 2011
The Beijing Axis 123
Agenda
1. Foreword
2. What‟s New: China Moves Towards Growth Moderation and Sustainability
3. China Economic Indicators
4. International Comparison
- Selected Macroeconomic Indicators
- Domestic Consumption and Foreign Trade
- Domestic and Foreign Investment
- Financial Indicators
- Social Indicators
5. Conclusions and Implications
6. About The Beijing Axis
The Beijing Axis 125
China‟s rapid economic growth has positioned it as the world‟s second-largest economy and it is likely to overtake the US around 2025 to become the world‟s largest economy
GDP of Top Economies, excl. US (USD bn, 1990-2015F)
Note: Forecast GDP growth based on IMF Economic Outlook
Source: IMF; The Beijing Axis Analysis
China Rank 10 10 9 7 9 8 7 7 7 7 6 6 6 6 6 5 4 3 3 3 2 2 2 2 2 …1?
0
2,000
4,000
6,000
8,000
10,000
12,000
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13F 14F 15F
China
Japan
Germany
France
UK
Brazil
Russia
Italy
India
Indonesia
South Africa
2005: China
Surpassed
France
2007: China
surpassed
Germany
2006: China
surpassed UK
2010: China
surpassed
Japan
2000: China
surpassed
Italy
1996: China
surpassed
Brazil
1995: China
surpassed
Canada
At current growth
rates, China is likely
to overtake the US
around 2025
2012
2
3
4
5
6
7
9
10
16
29
2015F*
2
3
4
6
8
7
11
10
17
31
Rank
8 9
The Beijing Axis 126
The magnitude of China‟s economy can be highlighted by the fact that its provinces have GDP figures comparable to those of various countries worldwide
China GDP by Province Compared with Similar World Economies (USD bn, 2012)
906 858
794 549
473 422
394 379
353 352
319 313
283 273
254 229
217 207 206 205
192 189 182
164 119 108
90 45 37 30
11
1,156 878
794 549
485 475
384 382 366 366 359
314 277 269 250 232 213 210 208 199 196 183 176 169
119 98 92
46 36 31 11
1,200 1,000 800 600 400 200 0 200 400 600 800 1,000 1,200
GuangdongJiangsuShandongZhejiangHenanHebeiLiaoningSichuanHubeiHunanShanghaiFujianBeijingAnhuiInner MongoliaShaanxiHeilongjiangGuangxiJiangxiTianjinShanxiJilinChongqingYunnanXinjiangGuizhouGansuHainanNingxiaQinghaiTibet
Korea Indonesia Turkey Iran Belgium Argentina South Africa Venezuela Colombia Thailand UAE Denmark Singapore Nigeria Philippines Pakistan Portugal Ireland Algeria Peru Czech Qatar Ukraine Romania Angola Morocco Slovak Slovenia Panama Jordan Chad
Source: National Bureau of Statistics of China; IMF; The Beijing Axis Analysis
The Beijing Axis 127
Since 1980, China‟s annual GDP growth rate has consistently exceeded the world average. China‟s average growth rate of 9.6% during this period is unprecedented by any major economy
China vs. US, Annual GDP Growth (% y-o-y, 1980-2013F)
Source: IMF; The Beijing Axis Analysis
-4
0
4
8
12
16
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13F
China US World Average
The Beijing Axis 128
China‟s economy has shown greater resilience than most other major economies, with an average growth rate of 9.3% between 2008 and 2012. The economy is now stabilising at a growth rate of about 7.5%
GDP Growth Comparison (%, 2001-2013F)
Source: IMF; The Beijing Axis Analysis
-10
-5
0
5
10
15
20
01 02 03 04 05 06 07 08 09 10 11 12 13F
Australia Brazil China India Japan Russia South Africa US EU
Over the past decade,
China‟s growth has outpaced
those of large nations
China still experienced strong
economic growth despite the
global recession in 2009 Economy stabilising at
sub-8% growth
The Beijing Axis 129
Although China's economic growth „slowed‟ to 7.8% in 2012, it still outpaced the rest of Asia and other major economies
Annual GDP Growth for Asia and Major Economies (% y-o-y, 2012)
Source: IMF; The Beijing Axis Analysis
7.8
6.6 6.4 6.2 5.6
5.0
4.0
2.2 2.0 2.0 1.4 1.3 1.3
0.2
-0.6 -2
0
2
4
6
8
10
Chi
na
Phi
lippi
nes
Tha
iland
Indo
nesi
a
Mal
aysi
a
Vie
tnam
Indi
a
US
Sou
th K
orea
Japa
n
Hon
g K
ong
Sin
gapo
re
Tai
wan UK
Eur
o A
rea
The Beijing Axis 130
Despite the size of its economy, China‟s GDP per capita remains low compared to other developed and developing countries. In 2012, China‟s GDP per capita was just above USD 6,000
Nominal GDP Per Capita (USD, 2012)
Source: IMF; The Beijing Axis Analysis
USD 25,000 or more
USD 10,000-USD 25,000
USD 2,500-USD 10,000
Less than USD 2,500 or no data
The Beijing Axis 131
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
01 02 03 04 05 06 07 08 09 10 11 12
Australia Brazil China
India Japan Russia
South Africa US EU
GDP Per Capita Comparison of Selected Economies (USD, 2001-2012)
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
01 02 03 04 05 06 07 08 09 10 11 12
Brazil China India
Russia South Africa
Source: World Bank; The Beijing Axis Analysis
China‟s GDP per capita also lags behind those of all other BRICS nations except India
In 2012, China‟s
GDP per capita
reached USD 6,091
The Beijing Axis 132
0%
20%
40%
60%
80%
100%
US
Chi
na
Japa
n
Ger
man
y
Fra
nce
UK
Bra
zil
Rus
sia
Italy
Indi
a
Can
ada
Aus
tral
ia
Spa
in
Mex
ico
Sou
th K
orea
Indo
nesi
a
Tur
key
Net
herla
nds
Sw
itzer
land
Sau
di A
rabi
a
Sw
eden
Iran
Nor
way
Pol
and
Bel
gium
Arg
entin
a
Aus
tria
Sou
th A
fric
a
Ven
ezue
la
Col
ombi
a
Agriculture Industry Services
Unlike other large economies, China‟s economy is still dominated by its secondary industry. This means that there is plenty of room for the already growing tertiary sector to expand as the economy transitions
Share of GDP by Industry (2012)
Note: 2012 figures are estimates
Source: CIA World Factbook; The Beijing Axis Analysis
GDP Rank 2012
Advancing the services
industry is an integral part of
the current 12th Five-Year Plan
The Beijing Axis 133
-20
0
20
40
60
80
100
120
US
*
Chi
na
Japa
n*
Ger
man
y
Fra
nce
UK
Bra
zil
Rus
sia
Italy
Indi
a
Can
ada*
Aus
tral
ia
Spa
in
Mex
ico
S. K
orea
Indo
nesi
a
Tur
key
Net
herla
nds
Sau
di A
rabi
a
Sw
itzer
land
*
Sw
eden
Nor
way
Pol
and
Bel
gium
Arg
entin
a
Aus
tria
Sou
th A
fric
a
UA
E
Ven
ezue
la
Col
ombi
a*
Net Exports Final consumption expenditure Gross capital formation
The contribution of consumption to China‟s GDP is much lower than other countries. This highlights the massive potential for an economic transformation if China is able to increase the share of consumption in the economy
Composition of GDP - Expenditure Approach (%, 2012)
Note*: Data sources are as of 2011
Note: For the reason of decimal point rounding, sums of 3 figures for some countries are higher or lower than 100%
Source: World Bank; The Beijing Axis Analysis
The Beijing Axis 134
Agenda
1. Foreword
2. What‟s New: China Moves Towards Growth Moderation and Sustainability
3. China Economic Indicators
4. International Comparison
- Selected Macroeconomic Indicators
- Domestic Consumption and Foreign Trade
- Domestic and Foreign Investment
- Financial Indicators
- Social Indicators
5. Conclusions and Implications
6. About The Beijing Axis
The Beijing Axis 135
(500)
0
500
1,000
1,500
2,000
2,500
0 10 20 30 40 50 60 70 80 90
In 2012, China was the world‟s largest exporter with exports totaling USD 2 tn - about 25% of its GDP
World’s Major Exporters (2012)
Source: World Bank; IMF; UN Comtrade; The Beijing Axis Analysis
Exports (USD bn)
Russia
Malaysia
Netherlands
France
China
S. Korea
Bubble Size: GDP = USD 1,000 bn
US Germany
Japan
UK Mexico
Brazil
India
Australia Spain Thailand Switzerland
Export/GDP (%)
China overtook
Germany to become
the world‟s largest
exporter in 2010
China’s Exports (USD bn)
2002 326
2007 1,220
2012 2,048
CAGR (2002-2012) 20%
A large economy, large exports
and high exports to GDP ratio –
however, its future growth model
will not depend on exports
Canada
China in 2007
China Developing Asia Developed Asia Others
The Beijing Axis 136
China’s Top 10 Export Commodities 2012 (HS Code) Top 20 Exporters of Electrical Machinery (USD bn, 2012)
China has widened its lead as the world‟s largest exporter of electrical machinery. In 2012, China exported a total of USD 487 bn, or 25% of the world‟s total electrical machinery
0 100 200 300 400 500
ChinaHong Kong
USGermany
JapanS. Korea
SingaporeMexico
MalaysiaNetherlands
FranceUK
ThailandCzech
HungaryPhilippines
PolandSwedenSlovakia
Spain
Total: USD 2,049 bn
Electrical machinery and equipment
Nuclear reactors, machinery and mechanical appliances
Articles of apparel and clothing accessories (knitted)
Furniture, lighting, signs, prefabricated buildings
Optical, photo, technical, medical, etc. apparatus
Articles of apparel and clothing accessories (not knitted)
Iron and steel
Vehicles other than railway, tramway
Plastics and articles
Footwear, gaiters and the like, parts of such art 33%
2% 3% 3% 3% 3% 4% 4% 4%
18%
24%
85
84
61
94
90
62
73
39
87
64
Other
Source: UN Comtrade; The Beijing Axis Analysis
China 2002 2012
Export of Electrical
Machinery (USD bn) 65.1 487.3
% of World Total 7.6 24.7
The Beijing Axis 137
China’s Top 10 Export Commodities 2012 (HS Code)
Source: UN Comtrade; The Beijing Axis Analysis
Top 20 Exporters of Power Generation Equipment (USD bn, 2012)
China is the world‟s largest exporter of power generation equipment. In 2012, China exported a total of USD 376 bn, or 20% of the world‟s power generation equipment
0 100 200 300 400
ChinaGermany
USJapan
NetherlandsHong Kong
UKFrance
S. KoreaSingapore
MexicoThailandBelgiumCanada
Czech Rep.Austria
SwedenMalaysia
SwitzerlandPoland
Total: USD 2,049 bn
Electrical machinery and equipment
Nuclear reactors, machinery and mechanical appliances
Articles of apparel and clothing accessories (knitted)
Furniture, lighting, signs, prefabricated buildings
Optical, photo, technical, medical, etc. apparatus
Articles of apparel and clothing accessories (not knitted)
Iron and steel
Vehicles other than railway, tramway
Plastics and articles
Footwear, gaiters and the like, parts of such art 33%
2% 3% 3% 3% 3% 4% 4% 4%
18%
24%
85
84
61
94
90
62
73
39
87
64
Other
China 2002 2012
Export of Power Generation
Equipment (USD bn) 50.8 375.9
% of World Total 5.8 19.7
The Beijing Axis 138
China’s Top 10 Export Commodities 2012 (HS Code)
Source: UN Comtrade; The Beijing Axis Analysis
Top 20 Exporters of Knitted Articles of Apparel (USD bn, 2012)
China is by far the world‟s largest exporter of knitted articles of apparel and clothing accessories. In 2012, China exported a total of USD 87 bn, or 48% of the world‟s knitted apparel and clothing accessories
0 5 10 15 20
ChinaHong Kong
GermanyTurkey
IndiaCambodia
BelgiumFranceSpain
NetherlandsIndonesia
UKUS
PortugalPakistan
Sri LankaThailandDenmark
El SalvadorMexico
87 Total: USD 2,049 bn
Electrical machinery and equipment
Nuclear reactors, machinery and mechanical appliances
Articles of apparel and clothing accessories (knitted)
Furniture, lighting, signs, prefabricated buildings
Optical, photo, technical, medical, etc. apparatus
Articles of apparel and clothing accessories (not knitted)
Iron and steel
Vehicles other than railway, tramway
Plastics and articles
Footwear, gaiters and the like, parts of such art 33%
2% 3% 3% 3% 3% 4% 4% 4%
18%
24%
85
84
61
94
90
62
73
39
87
64
Other
China 2002 2012
Export of Knitted Articles of
Apparel (USD bn) 16.0 87.1
% of World Total 19.1 48.0
The Beijing Axis 139
China’s Top 10 Export Commodities 2012 (HS Code)
Source: UN Comtrade; The Beijing Axis Analysis
Top 20 Exporters of Furniture and Lightings (USD bn, 2012)
China is the world‟s largest exporter of furniture and lighting. In 2012, China exported a total of USD 78 bn, or 41% of the world‟s furniture and lighting
0 10 20 30 40 50 60 70
ChinaGermany
USPolandMexico
CanadaFrance
NetherlandsCzech Rep.
MalaysiaSweden
UKBelgium
DenmarkSpain
AustriaTurkey
South KoreaRomania
Indonesia
78 Total: USD 2,049 bn
Electrical machinery and equipment
Nuclear reactors, machinery and mechanical appliances
Articles of apparel and clothing accessories (knitted)
Furniture, lighting, signs, prefabricated buildings
Optical, photo, technical, medical, etc. apparatus
Articles of apparel and clothing accessories (not knitted)
Iron and steel
Vehicles other than railway, tramway
Plastics and articles
Footwear, gaiters and the like, parts of such art 33%
2% 3% 3% 3% 3% 4% 4% 4%
18%
24%
85
84
61
94
90
62
73
39
87
64
Other
China 2002 2012
Export of Furniture &
Lightings (USD bn) 9.9 77.9
% of World Total 12.1 41.1
The Beijing Axis 140
China’s Top 10 Export Commodities 2012 (HS Code)
Source: UN Comtrade; The Beijing Axis Analysis
Top 20 Exporters of Optical and Photographic Equipment (USD bn, 2012)
China is the second-largest exporter of optical and photographic equipment. In 2012, China exported 14% of the world‟s products in this category, indicating that the country is moving up the value chain
0 30 60 90
USChina
GermanyJapan
S. KoreaNetherlands
FranceUK
Hong KongSwitzerland
SingaporeMexico
BelgiumIreland
MalaysiaCanadaSweden
DenmarkAustria
Thailand
Total: USD 2,049 bn
Electrical machinery and equipment
Nuclear reactors, machinery and mechanical appliances
Articles of apparel and clothing accessories (knitted)
Furniture, lighting, signs, prefabricated buildings
Optical, photo, technical, medical, etc. apparatus
Articles of apparel and clothing accessories (not knitted)
Iron and steel
Vehicles other than railway, tramway
Plastics and articles
Footwear, gaiters and the like, parts of such art 33%
2% 3% 3% 3% 3% 4% 4% 4%
18%
24%
85
84
61
94
90
62
73
39
87
64
Other
China 2002 2012
Export of Optical & Photographic
Equipment (USD bn) 7.4 72.6
% of World Total 3.9 14.2
The Beijing Axis 141
In 2012, China was the second-largest importer after the US, importing a total of USD 1,818 bn worth of goods, equivalent to about 22% of its GDP
World’s Major Importers (2012)
Source: World Bank; IMF; UN Comtrade; The Beijing Axis Analysis
0
400
800
1,200
1,600
2,000
2,400
2,800
0 10 20 30 40 50 60 70 80
Japan
Imports (USD bn)
Imports/GDP (%)
S. Korea
Malaysia
US
Brazil
Bubble Size: GDP = USD 1,000 bn
UK
Canada
Thailand
Germany
Turkey
Mexico
Australia
Russia
Spain
France
India Netherlands
In 2000, the
US‟ imports
were six times
China‟s imports
Imports of raw materials to be re-
exported as finished products and
increasing domestic consumption
are the key drivers of imports
2002 295
2007 956
2012 1,818
CAGR (2002-2012) 20%
China’s Imports (USD bn)
China in 2002
China
China Developing Asia Developed Asia Others
The Beijing Axis 142
China’s Top 10 Import Commodities 2012 (HS Code)
Source: UN Comtrade; The Beijing Axis Analysis
Top 20 Importers of Electrical Machinery (USD bn, 2012)
China is the world‟s largest importer of electrical machinery and equipment. In 2012, China imported a total of USD 382 bn, or 18% of the world‟s electrical machinery and equipment
21%
3% 3% 4% 4% 4%
6%
7%
10%
17%
21%
85
27
84
26
90
87
39
99
29
74
Other
Total: USD 1,818 bn
Electrical machinery and equipment
Mineral fuels, mineral oils and products of their distillation
Nuclear reactors, machinery and mechanical appliances
Ores, slag and ash
Optical, photographic and cinematographic, equipment
Vehicles other than railway, tramway
Plastics and articles
Commodities not elsewhere specified
Organic chemicals
Copper and articles
21%
0 80 160 240 320 400
ChinaUS
Hong KongGermany
JapanSingapore
MexicoS. Korea
UKFrance
MalaysiaNetherlands
CanadaThailand
RussiaIndia
BrazilAustralia
Czech Rep.Hungary
China 2002 2012
Import of Electrical
Machinery (USD bn) 73.2 381.5
% of World Total 8.3 17.8
The Beijing Axis 143
China’s Top 10 Import Commodities 2012 (HS Code)
Source: UN Comtrade; The Beijing Axis Analysis
Top 20 Importers of Mineral Fuels (USD bn, 2012)
China is the world‟s second-largest importer of mineral fuels. In 2012, China imported a total of USD 313 bn, or 10% of the world‟s mineral fuels
21%
3% 3% 4% 4% 4%
6%
7%
10%
17%
21%
85
27
84
26
90
87
39
99
29
74
Other
Electrical machinery and equipment
Mineral fuels, mineral oils and products of their distillation
Nuclear reactors, machinery and mechanical appliances
Ores, slag and ash
Optical, photographic and cinematographic, equipment
Vehicles other than railway, tramway
Plastics and articles
Commodities not elsewhere specified
Organic chemicals
Copper and articles
21%
Total: USD 1,818 bn
0 90 180 270 360 450
USChinaJapan
S. KoreaIndia
GermanySingapore
NetherlandsFrance
UKSpain
BelgiumTurkey
CanadaThailand
IndonesiaAustralia
BrazilMexico
Malaysia
China 2002 2012
Import of Mineral
Fuels (USD bn) 19.3 313.1
% of World Total 3.2 10.1
The Beijing Axis 144
China’s Top 10 Import Commodities 2012 (HS Code)
Source: UN Comtrade; The Beijing Axis Analysis
Top 20 Importers of Power Generation Equipment (USD bn, 2012)
China is the world‟s second-largest importer of power generation equipment. In 2012, China imported a total of USD 182 bn, or 10% of the world‟s power generation equipment
21%
3% 3% 4% 4% 4%
6%
7%
10%
17%
21%
85
27
84
26
90
87
39
99
29
74
Other
Electrical machinery and equipment
Mineral fuels, mineral oils and products of their distillation
Nuclear reactors, machinery and mechanical appliances
Ores, slag and ash
Optical, photographic and cinematographic, equipment
Vehicles other than railway, tramway
Plastics and articles
Commodities not elsewhere specified
Organic chemicals
Copper and articles
21%
Total: USD 1,818 bn
0 70 140 210 280 350
USChina
GermanyUK
FranceHong Kong
CanadaJapan
NetherlandsMexicoRussia
SingaporeS. KoreaAustralia
IndiaThailand
BrazilBelgium
IndonesiaTurkey
China 2002 2012
Import of Power Generation
Equipment (USD bn) 52.1 182
% of World Total 5.8 9.6
The Beijing Axis 145
China’s Top 10 Import Commodities 2012 (HS Code)
Source: UN Comtrade; The Beijing Axis Analysis
Top 20 Importers of Ores, Slag and Ash (USD bn, 2012)
China is the world‟s largest importer of ores, slag and ash. In 2012, China imported a total of USD 134 bn, or 52% of the world‟s ores, slag and ash
21%
3% 3% 4% 4% 4%
6%
7%
10%
17%
21%
85
27
84
26
90
87
39
99
29
74
Other
Electrical machinery and equipment
Mineral fuels, mineral oils and products of their distillation
Nuclear reactors, machinery and mechanical appliances
Ores, slag and ash
Optical, photographic and cinematographic, equipment
Vehicles other than railway, tramway
Plastics and articles
Commodities not elsewhere specified
Organic chemicals
Copper and articles
21%
Total: USD 1,818 bn
0 10 20 30 40 50
ChinaJapan
S. KoreaGermany
IndiaSpain
USCanadaBelgium
UKFranceFinland
NetherlandsAustria
BulgariaTurkeyOman
MalaysiaSwedenMexico
134
China 2002 2012
Import of Ores, Slag
and Ash (USD bn) 4.3 133.7
% of World Total 14.3 52.2
The Beijing Axis 146
China’s Top 10 Import Commodities 2012 (HS Code)
Source: UN Comtrade; The Beijing Axis Analysis
Top 20 Importers of Optical and Photographic Equipment (USD bn, 2012)
China is the world‟s largest importer of optical and photographic equipment. In 2012, China imported a total of USD 106 bn, or 21% of the world‟s optical and photographic equipment
21%
3% 3% 4% 4% 4%
6%
7%
10%
17%
21%
85
27
84
26
90
87
39
99
29
74
Other
Electrical machinery and equipment
Mineral fuels, mineral oils and products of their distillation
Nuclear reactors, machinery and mechanical appliances
Ores, slag and ash
Optical, photographic and cinematographic, equipment
Vehicles other than railway, tramway
Plastics and articles
Commodities not elsewhere specified
Organic chemicals
Copper and articles
21%
Total: USD 1,818 bn
0 30 60 90 120
ChinaUS
GermanyJapan
NetherlandsFrance
S. KoreaHong Kong
UKCanadaMexico
BelgiumRussia
SingaporeAustralia
SwitzerlandIndia
BrazilThailand
Spain
China 2002 2012
Import of Optical & Photographic
Equipment (USD bn) 13.5 106.2
% of World Total 7.0 21.4
The Beijing Axis 147
-788
231
-87
243
-107
-169
19 14
-199
-9
209
-40
6 0 28
54
-84
-2
28 9
-12
10
233
15
74
-11
12
-15 -18
12
-250
-200
-150
-100
-50
0
50
100
150
200
250
US
Chi
na
Japa
n
Ger
man
y
Fra
nce
UK
Bra
zil
Italy
Indi
a
Can
ada
Rus
sia
Spa
in
Aus
tral
ia
Mex
ico
S. K
orea
Net
herla
nds
Tur
key
Indo
nesi
a
Sw
itzer
land
Bel
gium
Pol
and
Sw
eden
Sau
di A
rabi
a
Iran
Nor
way
Aus
tria
Arg
entin
a
Sou
th A
fric
a
Tha
iland
Den
mar
k
Trade Balance of the World’s Major Economies (USD bn, 2012)
Source: UN Comtrade; The Beijing Axis Analysis
China‟s 2012 trade surplus narrowed to USD 231 bn - significantly lower than the peak of USD 290 bn in 2008. However, China still runs one of the world‟s largest surpluses despite efforts to balance trade
The Beijing Axis 148
Agenda
1. Foreword
2. What‟s New: China Moves Towards Growth Moderation and Sustainability
3. China Economic Indicators
4. International Comparison
- Selected Macroeconomic Indicators
- Domestic Consumption and Foreign Trade
- Domestic and Foreign Investment
- Financial Indicators
- Social Indicators
5. Conclusions and Implications
6. About The Beijing Axis
The Beijing Axis 149
397
65
0 50 100 150 200
US
Japan
UK
France
Hong Kong
Belgium
Switzerland
Russia
China
Virgin Is.
Germany
Canada
Italy
Spain
Netherlands
Austria
Sweden
Singapore
Denmark
S. Korea
329
68
0 50 100 150 200
US
Germany
France
Hong Kong
China
Switzerland
Japan
Russia
Canada
Belgium
Netherlands
Sweden
Australia
Spain
Italy
Virgin Is.
Singapore
S. Korea
Luxembourg
Ireland
In 2012, China ranked third overall and first among all developing economies for OFDI, with total outbound investment reaching USD 84 bn
In 2011, China‟s ranking
slipped to 9th overall, as
the Euro debt crisis
discouraged overseas
investments
In 2010, China
ranked 5th
Top 20 World FDI Outflows (USD bn, 2010-2012)
329
84
0 50 100 150 200
US
Japan
China
Hong Kong
UK
Germany
Canada
Russia
Switzerland
Vigin Is.
Canada
France
Sweden
Korea
Italy
Mexico
Singapore
Chile
Ireland
Luxembourg
In 2012, China
ranked 3rd
Note: To make international comparisons, this section utilises China‟s FDI and OFDI figures from the WIR 2012 instead of figures from MOFCOM
Source: WIR 2013; The Beijing Axis Analysis
2010 2011 2012
The Beijing Axis 150
168 121
0 50 100 150 200
USChina
Hong KongBrazil
Virgin Is.UK
AustraliaSingapore
RussiaCanada
ChileIreland
LuxembourgSpainIndia
FranceIndonesiaColumbia
KazakhstanSweden
Top 20 World FDI Inflows (USD bn, 2012)
Source: WIR 2013; The Beijing Axis Analysis
Top 20 World FDI Outflows (USD bn, 2012)
China remains a key destination for FDI inflows, which are still larger than FDI outflows. In 2012, China was the second-largest recipient of FDI, behind only the US
China ranked 2nd
329
84
0 50 100 150 200
US
Japan
China
Hong Kong
UK
Germany
Canada
Russia
Switzerland
Vigin Is.
Canada
France
Sweden
Korea
Italy
Mexico
Singapore
Chile
Ireland
Luxembourg
In 2012, China
ranked 3rd
The Beijing Axis 151
Top 20 World FDI Inward Stock (USD bn, 2012)
Source: WIR 2013; The Beijing Axis Analysis
Top 20 World FDI Outward Stock (USD bn, 2012)
China ranked sixth overall and second in Asia for FDI inward stock with USD 833 bn in 2012. For OFDI, it ranked 13th with USD 509 bn
5,191
509
0 1,000 2,000 3,000 4,000
US
UK
Germany
France
Hong Kong
Switzerland
Japan
Belgium
Netherlands
Canada
Spain
Italy
China
Virgin Is.
Australia
Russia
Sweden
Singapore
Ireland
Denmark
3,932
833
0 1,000 2,000 3,000 4,000
US
Hong Kong
UK
France
Belgium
China
Germany
Brazil
Singapore
Switzerland
Canada
Spain
Australia
Netherlands
Russia
Sweden
Virgin Is
Italy
Mexico
Ireland
China ranked sixth
China ranked 13th
The Beijing Axis 152
40
30
20
10
0
10
20
30
Aus
tral
ia
Bra
zil
Can
ada
Chi
na
Fra
nce
Ger
man
y
Indi
a
Indo
nesi
a
Italy
Japa
n
Mex
ico
Net
herla
nds
Rus
sia
S. K
orea
Sau
di A
rabi
a
Spa
in
Sw
itzer
land
Tur
key
UK
US
FDI Inflows as a Percentage of GFCF FDI Outflows as a Percentage of GFCF
China‟s inflows as a percentage of GFCF* remain relatively small, mainly due to restrictions on foreign investment. The low ratio for outflows reflects the low amount of Chinese investment in capital formation projects
Top 20 GDP Countries’ FDI Inflow/Outflow as a Percentage of Gross Fixed Capital Formation (%, 2012)
Note: GFCF = Gross fixed capital formation
Source: UNCTAD; The Beijing Axis Analysis
-13% -2% 10% -2% -35% -87% -29% 3% -72% -199% -41% -101% -7% -3% -25% 3% -69% -23% 22% -26%
13% 174% 8% 13% -38% 28% -31% -30% -43% 14% 111% -109% -24% 14% 28% -113% -6% 73% -33% -17%
FDI Inflow Growth 2011-2012
FDI Outflow Growth 2011-2012
The Beijing Axis 153
Sovereign wealth funds are playing an even greater role in overseas investment. China is home to three of the world‟s largest sovereign wealth funds (four, if Hong Kong is included)
Note*: As of October 2013
Source: Sovereign Wealth Fund Institute; The Beijing Axis Analysis
Locations of World’s Top 20 Sovereign Wealth Funds (USD bn, 2013*)
Norway
785
UAE
627
China
575
Saudi Arabia
676
China
568
Kuwait
386
China
161
Hong Kong
327
Singapore
285
Singapore
173
Qatar
115
Australia
89
UAE
70
UAE
65
Libya
65
Kazakhstan
76
China
1. China Investment Corporation
2. SAFE Investment Company
3. Hong Kong Monetary Authority
Investment Portfolio
4. National Social Security Fund
Algeria
77
Russia
88
Russia
86
Oil
Non-Commodity
Oil & Gas
The Beijing Axis 154
Rank Economy Fund Type Assets under management
(USD bn)
1 Norway Government Pension Fund – Global Oil 785.2
2 Saudi Arabia SAMA Foreign Holdings Oil 675.9
3 UAE – Abu Dhabi Abu Dhabi Investment Authority Oil 627
4 China China Investment Corporation Non-Commodity 575.2
5 China SAFE Investment Company Non-Commodity 567.9
6 Kuwait Kuwait Investment Authority Oil 386
7 China – Hong Kong Hong Kong Monetary Authority Investment Portfolio Non-Commodity 326.7
8 Singapore Government of Singapore Investment Corporation Non-Commodity 285
9 Singapore Temasek Holdings Non-Commodity 173.3
10 China National Social Security Fund Non-Commodity 160.6
11 Qatar Qatar Investment Authority Oil 115
12 Australia Australian Future Fund Non-Commodity 88.7
13 Russia National Welfare Fund Oil 88
14 Russia Reserve Fund Oil 86.4
15 Kazakhstan Samruk-Kazyna JSC Non-Commodity 77.5
16 Algeria Revenue Regulation Fund Oil & Gas 77.2
17 UAE – Dubai Investment Corporation of Dubai Oil 70
18 Kazakhstan Kazakhstan National Fund Oil 68.9
19 UAE – Abu Dhabi International Petroleum Investment Company Oil 65.3
20 Libya Libyan Investment Authority Oil 65
China‟s sovereign wealth funds are some of the largest in the world. The ranking continues to be dominated by Middle and East Asian countries
Note*: As of October 2013
Source: SWF Institute; The Beijing Axis Analysis
Ranking of World’s Top 20 Sovereign Wealth Funds (USD bn, 2013*)
The Beijing Axis 155
Agenda
1. Foreword
2. What‟s New: China Moves Towards Growth Moderation and Sustainability
3. China Economic Indicators
4. International Comparison
- Selected Macroeconomic Indicators
- Domestic Consumption and Foreign Trade
- Domestic and Foreign Investment
- Financial Indicators
- Social Indicators
5. Conclusions and Implications
6. About The Beijing Axis
The Beijing Axis 156
In 2012, Germany had the world‟s largest current account balance at USD 238 bn, followed by China (USD 214 bn) and Saudi Arabia (USD 177 bn)
Current Account Balance for Select Countries (USD bn, 2012)
Note*: IMF Estimates
Source: IMF; The Beijing Axis Analysis
Top 5 current account surpluses
Top 5 current account deficits
US*
-475 bn
Russia
81 bn
Japan
59 bn
China
214 bn Turkey
-47 bn
Italy
-10.7 bn
Germany
238 bn
UK
-86 bn
Saudi Arabia*
177 bn
France
-63 bn
The Beijing Axis 157
China, the world‟s largest holder of foreign exchange reserves, possesses more than triple the FX reserves of the next largest holder, Japan. Asian countries dominate the top 15 Top 30 Largest Holders of Foreign Exchange and Gold Reserves (USD bn, 2012E)
Note: Estimates are as of 31 December 2012
Source: CIA World Factbook; The Beijing Axis Analysis
0
400
800
1,200
1,600
2,000
Chi
na
Japa
n
Sau
di A
rabi
a
Rus
sia
Sw
itzer
land
Tai
wan
Bra
zil
S.K
orea
Hon
g K
ong
Indi
a
Sin
gapo
re
Ger
man
y
Alg
eria
Fra
nce
Italy
Tha
iland
Mex
ico
US
Mal
aysi
a
Tur
key
Liby
a
Indo
nesi
a
Pol
and
UK
Den
mar
k
Isra
el
Phi
lippi
nes
Iran
Can
ada
UA
E
3,341
Asia
The Beijing Axis 158
In 2012, China‟s external debt of around USD 770 bn accounted for less than 1% of the world‟s total external debt
Top 30 Economies with Largest External Debt (USD bn, 2012)
Note*: CIA World Factbook Estimates
Source: CIA World Factbook; The Beijing Axis Analysis
0
4,000
8,000
12,000
16,000
20,000
EU
US
UK
Ger
man
y
Fra
nce
Japa
n
Luxe
mbo
urg
*Ita
ly
Net
herla
nds
Spa
in
Irel
and
Sw
itzer
land
*Aus
tral
ia
Bel
gium
Can
ada
*Sin
gapo
re
*Hon
g K
ong
Sw
eden
Aus
tria
*Chi
na
Nor
way
*Rus
sia
Fin
land
Den
mar
k
Gre
ece
Por
tuga
l
*Bra
zil
*Ind
ia
*Pol
and
*Mex
ico
At the end of Q3 2012,
China‟s external debt
amounted to USD 771 bn
The external debt of the EU
was USD 15 tn
15,500
The Beijing Axis 159
China‟s discount rate is relatively low at 2.25%, which is lower than that of other large developing economies
Note1: The interest rate charged by a central bank on loans to its member banks. A change in the discount rate is usually followed by similar changes in the interest rates charged by banks and in money markets.
Note2: The central bank discount rate is updated to the latest available month in 2013.
Note*: CIA World Factbook latest Estimates
Source: CIA World Factbook; The Beijing Axis Analysis
Central Bank Discount Rate1 of Select Economies (%, 2013)2
0
2
4
6
8
10
Vie
tnam
*Rus
sia
*Bra
zil
*Ken
ya
Indo
nesi
a
*Ind
ia
Tur
key
Sou
th A
fric
a
Col
ombi
a
*Mex
ico
*Chi
le
*Aus
tral
ia
*Chi
na EU
S. K
orea
*Can
ada
*UK
US
Japa
n
2.25%
High rate countries
Medium rate countries
Low rate countries
The Beijing Axis 160
0
20
40
60
Mad
agas
car
Bra
zil
Kyr
gyzs
tan
Par
agua
y
Gam
bia
Mon
golia
Tan
zani
a
Bur
undi
Arg
entin
a
Bul
garia
Cro
atia
Hun
gary
Sou
th A
fric
a
Rus
sia
Nam
ibia
Alg
eria
Aus
tral
ia
Chi
na
New
Zea
land
Cze
ch R
epub
lic
Bru
nei
Sin
gapo
re
Italy
Isra
el
Bah
amas
Sw
itzer
land
Net
herla
nds
Japa
n
UK
As of November 2013, China‟s prime lending rate was 6%, which is comparable to that of its Asia-Pacific neighbours Australia and New Zealand
Note: (1) Prime lending rate is a short-term interest rate quoted by a commercial bank to its best commercial customers. Even though banks frequently charge more and sometimes less than the quoted prime
rate, it is a benchmark against which other rates are measured. For various reasons, a rising prime rate is generally considered detrimental to security prices.
(2) All lending rates are updated to the latest available monthly data in 2013. For February: Madagascar, Namibia; for March: Burundi, Brunei, Israel, Switzerland; for May: South Africa, Algeria, Australia,
Bahamas, Singapore, UK, Mongolia; all other countries are updated as of April.
Source: Various; The Beijing Axis Analysis
… …
High rate countries
Medium rate countries
Low rate countries 6
Commercial Bank Prime Lending Rate1 of Select Economies (%, 20132)
The Beijing Axis 161
Agenda
1. Foreword
2. What‟s New: China Moves Towards Growth Moderation and Sustainability
3. China Economic Indicators
4. International Comparison
- Selected Macroeconomic Indicators
- Domestic Consumption and Foreign Trade
- Domestic and Foreign Investment
- Financial Indicators
- Social Indicators
5. Conclusions and Implications
6. About The Beijing Axis
The Beijing Axis 162
China is the most populous country in the world with 1.3 billion people. A cultural preference for male heirs has left China with one of the highest male-to-female ratios in the world, alongside UAE, Saudi Arabia and India Population of Top 30 Economies by GDP (mn, 2013F)
Source: CIA World Factbook; World Bank; The Beijing Axis Analysis
USChinaJapan
GermanyFrance
United KingdomBrazil
RussiaItaly
IndiaCanada
AustraliaSpain
MexicoS.Korea
IndonesiaTurkey
NetherlandsSwitzerland
Saudi ArabiaSweden
IranNorwayPoland
BelgiumArgentina
AustriaSouth Africa
VenezuelaColombia
GDP rank 2012 Total
97 106
95 97 96 99 98 86 93
108 99
101 97 96
100 100 102
98 97
121 98
103 98 94 96 97 95 99 98 98
655 695
587 634
Ratio
Male/female
317 1,350
127 81 66 63
201 143
61 1,221
35 22 47
116 49
251 81 17
8 27
9 80
5 38 10 43
8 49 28 46
Female Male
The Beijing Axis 163
-5
0
5
10
15
20
25
30
35
0 5 10 15 20 25 30
While China currently has a demographic makeup that is highly favourable, its working-age population (15-64) is forecasted to shrink from 2015 due to a rapidly ageing population
Child and Elderly Population for Selected Countries (2013F)
Source: CIA World Factbook; The Beijing Axis Analysis
Population under 15 (%)
Population aged 65+ (%)
India
Saudi Arabia
Poland
S. Korea
US
Canada
Norway
Belgium
Argentina
France
Russia
Austria
China Sweden United Arab Emirates
Iran
Taiwan
Indonesia
Switzerland
A bubble this size represents a
population of 10,000
Japan
Germany Italy Spain
UK Netherland
Australia
Turkey
Brazil
Mexico
South Africa
The Beijing Axis 164
98
52
32
2
48
68
Bel
gium
Arg
entin
a
Japa
n
Aus
tral
ia
Den
mar
k
Fra
nce
Bra
zil
Sw
eden
Net
herla
nds
US
S. K
orea
S. A
rabi
a
Can
ada
UK
Nor
way
Spa
in
Mex
ico
Ger
man
y
Rus
sia
Pol
and
Sw
itzer
land
Tur
key
Italy
Iran
Aus
tria
Gre
ece
S. A
fric
a
Chi
na
Indo
nesi
a
Indi
a
Urban Rural
China‟s level of urbanisation is still much lower than most large economies. However, along with India and Indonesia (both at 2.5%), it has one of the fastest growing urbanisation rates at 2.9%
Urban and Rural Population of Selected Economies (%, 2012)
Source: CIA World Factbook; World Bank; The Beijing Axis Analysis
Annual rate of urbanisation change (%, 2010-2015F)
0
100
Urban 0.4 1.1 0.6 1.2 0.5 1.0 1.1 0.6 0.8 1.2 0.7 2.4 1.1 0.7 1.2 1.0 1.2 0.0 0.1 -0.0 0.5 2.4 0.5 1.3 0.6 0.6 1.2 2.9 2.5 2.5
The Beijing Axis 165
10080604020020406080100
USChinaJapan
GermanyFrance
United KingdomBrazil
RussiaItaly
IndiaCanada
AustraliaSpain
MexicoS. Korea
IndonesiaTurkey
NetherlandsSwitzerland
S. ArabiaSweden
IranNorwayPoland
BelgiumArgentina
TaiwanAustria
VenezuelaColombia
Male Female
While the average life expectancy for both men and women in China is higher than in other large developing economies, it still lags behind more developed economies
Life Expectancy of Top 30 Economies by GDP (years, 2012)
Source: CIA World Factbook; World Bank; The Beijing Axis Analysis
GDP Rank 2012
The Beijing Axis 166
China‟s economic activity rate is comparatively larger than those of major developed economies. China has the second-highest female economic activity rate among the world‟s top economies
Adult (15 and older) Economic Activity Rate (%, 2012)
Source: UN Statistics Division; World Bank; The Beijing Axis Analysis
10080604020020406080100
USChinaJapan
GermanyFrance
United KingdomBrazil
RussiaItaly
IndiaCanada
AustraliaSpain
MexicoS. Korea
IndonesiaTurkey
NetherlandsSwitzerland
S. ArabiaSweden
IranNorwayPoland
BelgiumArgentina
AustriaS. Africa
VenezuelaColombia
Male FemaleTotal
63.6 74.1 60.1 59.6 56.3 61.9 69.9 63.0 48.4 55.6 66.6 65.5 59.3 61.9 77.5 67.5 49.5 64.7 67.6 49.9 63.7 44.8 65.9 55.9 54.0 60.7 60.5 52.3 66.1 67.4
GDP Rank 2012
The Beijing Axis 167
Agenda
1. Foreword
2. What‟s New: China‟s Ongoing Transformation
3. China Economic Indicators
4. International Comparison
5. Conclusions and Implications
6. About The Beijing Axis
The Beijing Axis 169
A number of factors in China‟s political, economic and social environments are driving China‟s ongoing transformation
Source: The Beijing Axis Analysis
Political
Economic Social
China’s
Transformation
Political, Economic and Social Factors Driving China’s Transformation
Conclusions
• New Push for More Gov‟t Efficiency
• Renewed Focus on Sustainable Growth
• Continued Implementation of 12th Five-Year Plan
• Gradual Market Liberalisation
• Anti-Corruption Drive
• SOEs Strong Influence in Key Sectors
• Environmental Protection
• International Diplomacy
• Increasing Inequality
• Changing Age Structure
• Challenges of One Child Policy
• Increasing Education Levels
• Increasing Importance of the Internet
• Moderating GDP Growth
• Continued Urbanisation
• Increasing High-value Exports
• Rise of Inland Provinces
• Rising Labour Costs
• Increasing Domestic Consumption
• Growing Service Sector
• Increasing Spending on R&D
• RMB Appreciation
• Continued Rise of 2nd, 3rd and 4th Tier Cities
• Stable Inflation
• Manufacturing‟s Continued Importance
• High Consumer Confidence
• Continued Rise in Both FDI & OFDI
• More Balanced Trade
• Large & Growing FX Reserves
Political
Social
Economic
The Beijing Axis 170
China‟s new leadership will continue to implement the main components of the 12th Five-Year Plan and deepen economic structural reform
Concluding Views on China’s Policy Landscape
Source: Various; The Beijing Axis Analysis
New Push for More
Gov‟t Efficiency
Continued
Implementation of
12th Five-Year Plan
Renewed Focus on
Sustainable Growth
2
3
1
Gradual Market
Liberalisation
Anti-Corruption
Drive
5
4
Theme: Political Theme: Political Overview/Examples Overview/Examples
• End of „growth-at-all-costs‟ model
• Reduction of overcapacity and gov‟t waste
e.g. through reining in SOE waste
• Banks to price loans according to the
market
• Pilot Free Trade Zone in Shanghai
• Liberalisation of previously restricted
sectors to foreign participation
• Tightening of gov‟t costs, especially among
SOEs
• New central gov‟t drive to reign in local
gov‟t spending
• Smaller Standing Committee will streamline
national decision making
• Approval processes will be also streamlined
SOEs Strong
Influence in Key
Sectors
6 • Although the government has been opening
up some sectors, SOEs continue to dominate
sectors that are deemed to be strategic such
as aviation, telecommunications etc.
• Policies to encourage domestic consumption
• Balance social equity/improve social safety
net
• Industrial consolidation/upgrading
Conclusions
Environmental
Protection
7 • Renewed emphasis on the environment
• Increased investment in clean
technologies
International
Diplomacy
8 • China‟s economic rise will continue to
enhance its diplomatic aspiration and
clout, especially in the eastern hemisphere
i.e. ASEAN
The Beijing Axis 171
China‟s economy will continue to undergo structural changes as it transitions from being investment and export-led to one based on domestic consumption
Concluding Views on China’s Economic Landscape
Source: Various; The Beijing Axis Analysis
Increasing High-
Value Exports
Continued
Urbanisation
2
3
Rising Labour Costs
Increasing Domestic
Consumption
6
5
Overview/Examples Overview/Examples
• Government will continue to encourage
migration to cities to increase consumption
• Changing structure of exports in response to
increasing wages, more investment in R&D
and increasing competitiveness
• Although labour wages have risen sharply
in recent years, productivity gains continue
to outstrip increases in labour costs
• Domestic consumption has increased on
the back of favourable gov‟t policies and
an expanding middle class
Growing Service
Sector
7 • The service sector has been expanding as
the role of agriculture in the economy
shrinks and industry sees slower growth
Rise of Inland
Provinces
4 • Due to gov‟t incentives and rising costs in
inland areas, businesses are moving to
China‟s inner provinces
Increasing
Spending on R&D
8 • China is increasing spending on R&D and
the large number of patents emerging from
the country is one small sign of this
investment
Theme: Economic Theme: Economic
Conclusions
• „Quality over quantity growth‟ is now
emphasised, which will lead to more
moderate and sustainable growth
Moderating GDP
Growth
1
The Beijing Axis 172
The structural changes to the economy will not occur simultaneously and rebalancing will have to occur in various parts of the economy in order to achieve the overarching economic reform goals
Concluding Views on China’s Economic Landscape
Source: Various; The Beijing Axis Analysis
Stable Inflation
Continued Rise of
2nd, 3rd and 4th Tier
Cities
10
11
High Consumer
Confidence
Continued Rise in
Both FDI & OFDI
14
13
Theme: Economic Theme: Economic Overview/Examples Overview/Examples
• Middle class rising faster in lower-tier cities
but still larger in China‟s megacities
• With the exception of food costs, CPI has
remained relatively low during the past two
years, leaving some room to loosen
monetary policy if needed
• With a steadily rising middle class and a
stabilising economy, Chinese consumer
confidence has remained high and quite
stable in recent years
• China‟s FDI has experienced nearly
double-digit growth in the last decade
• OFDI flows catching up with FDI flows
More Balanced
Trade
15
Manufacturing‟s
Continued
Importance
12 • China‟s manufacturing sector has largely
remained in expansionary territory in 2013,
despite depressed demand from overseas
Large & Growing
FX Reserves
16 • With one of the world‟s largest foreign
exchange reserves, China seeks to
diversify its holdings away from T-bills into
stable yet higher-yielding assets
• Although China is still a net exporter,
import growth now more evenly matches
export growth due to rising imports of
finished goods
Conclusions
RMB Appreciation
9 • RMB will continue to steadily appreciate
against major currencies due to strong
underlying economic fundamentals
The Beijing Axis 173
Ongoing social changes such as an ageing population will not only impact the economy, but also influence how the society transforms
Concluding Views on China’s Socio-Economic Landscape
Source: Various; The Beijing Axis Analysis
Increasing
Inequality
Challenges of One
Child Policy
Changing Age
Structure
2
3
1
Increasing
Education Levels
Increasing
Importance of the
Internet
5
4
Theme: Social Theme: Social Overview/Examples Overview/Examples
• With declining birth and death rates, China‟s
population is rapidly ageing
• China‟s working-age population is expected
to peak by 2016
• With a very slow population growth rate,
China faces the danger of„ „growing old
before getting rich‟
• The number of graduates and new
students in China‟s tertiary education has
continued to rapidly increase during the
last decade
• The Internet‟s role as a marketplace and
source of information will continue to grow
• Despite a narrowing of rural-urban disparity,
income levels in urban households are still
three times those of rural households
Conclusions
The Beijing Axis 174
China‟s transformation holds innumerable implications and opportunities for foreign companies seeking to do business with and in China
Source: The Beijing Axis Analysis
Producer
Consumer Source of Capital
Implications &
Opportunities for
Foreign
Companies
High-level Views on China as a…
Implications
As a consumer, China will continue to be an important source of growth for foreign companies seeking to meet the demands of an increasingly urbanised population seeking a higher standard of living than their predecessors. As the government continues to encourage Chinese citizens to buy more of the cars, clothes, appliances and electronics that China currently exports, multinationals will find it increasingly lucrative to tweak their manufacturing facilities to serve China‟s domestic market rather than traditional export markets
As a producer, foreign companies need to be aware of China‟s changing manufacturing competitiveness. As structural economic reform advances and some cost advantages fade away, investment-driven growth must give way to higher productivity, which entails more than simply purchasing better machinery. China often lacks the soft skills required for economic transformation and will need new management techniques to reduce wastage, improve quality and simplify procedures, to move up the value chain
As a source of capital, Chinese investors are seeking a wider variety of assets that better position them to capture‟s China‟s move towards a consumption-driven economy. Chinese companies‟ increasing need to access new markets, technology and resources provide ample opportunities for foreign companies looking to attract investment from Chinese investors across a range of sectors
The Beijing Axis 175
Implications of Government Policy on China as a Producer, Consumer and Source of Capital*
Implications of China‟s changing economy for foreign companies (1/4)
Note: Producer - From the perspective of a foreign manufacturer already in China or looking to enter China; Consumer - From the perspective of a foreign company already selling to China or looking to
sell to China; Source of Capital - From the perspective of a foreign company or country looking to raise capital by accessing China sources
Source: The Beijing Axis Analysis
Element Producer Consumer Source of Capital
Push for Gov‟t
Efficiency
• Allow faster registration, approvals for firms
• Increases transparency
• May reduce final cost of goods
• Allow bigger role for markets • Allows for more efficient transfer of capital
Renewed Focus on
Sustainable Growth
• Costs likely to increase
• Government incentives provided to
industries favoured in new policy
• Companies must understand new regulatory
regime before investment
• Companies marketing environmentally-
friendly products are likely to experience
improved consumer perception
• FDI, OFDI and domestic investment will be
directed towards those sectors that are the
focus of current government policies, both
for domestic and overseas investment
More Pro-Market
Policies
• Creates a more level playing field for foreign
firms to compete against domestic firms
• Gain access to previously restricted
industries
• Creates a more level playing field for foreign
firms to compete against domestic firms (i.e.
reducing import tariffs, reducing export
rebates, etc.)
• Enhance the role of the private sector in
providing capital financing
• Increase availability of bank loans as
government allows banks to set interest
rates based on market-based benchmarks
Anti-Corruption Drive
• Reduces the cost of doing business
• Need to understand the new rules of the
game
• Governance elevated in importance
• Reduced discretionary spending from public
sector/officials
• Greater transparency in the awarding of
public contracts
• More governance in tender processes
• More transparency in project financing
SOEs Strong Influence
in Key Sectors
• Uneven playing field; difficult to compete in
sectors where SOEs dominate
• Industry consolidation to create SOE
champions
• SOEs in certain areas are suitable targets
for sales/engagement
• Need to understand the proper channels to
market to SOEs
• Easier access to public funding makes SOEs
a viable source of capital funding, especially
for overseas projects
• Gradually more sophisticated investment
management by SOEs
Implications
1
2
3
4
5
The Beijing Axis 176
Implications of Economic Factors on China as a Producer, Consumer and Source of Capital*
Implications of China‟s changing economy for foreign companies (2/4)
Note: Producer - From the perspective of a foreign manufacturer already in China or looking to enter China; Consumer - From the perspective of a foreign company already selling to China or looking to
sell to China; Source of Capital - From the perspective of a foreign company or country looking to raise capital by accessing China sources
Source: The Beijing Axis Analysis
Element Producer Consumer Source of Capital
RMB Appreciation • Higher cost of doing business in China
• More expensive to import from China
• Increase in the purchasing power of Chinese
consumers, especially towards imports
• Likely to increase OFDI, as the cost of acquiring
overseas assets is now relatively cheaper
Increasing Urbanisation • Likely to lead to an increase in labour costs
• Consumption market continually expanding
• Larger potential market for goods
• Greater concentration of buying power
Increasing High-value
Exports
• Favourable policy towards firms entering in high-
end industries
• Potential to partner with local firms seeking to
gain access to foreign expertise/technology
• Compete better against US, EU, Japan etc
• Face more competition from India, Indonesia,
Vietnam, etc
• Technology/quality advantage likely to decrease
as domestic companies catch up
Rise of Inland Provinces
• Improving infrastructure, education and
urbanisation are making inland areas more
attractive for establishing production facilities
• Larger market for goods and services as
purchasing power of consumers in inland
provinces increases
Rising Labour Costs
• Higher cost of doing business in China
• Companies in labour-intensive industries are
moving production inland or overseas
• Foreign goods and services will become more
price competitive as prices of domestically
produced goods and services increase
• Likely to increase OFDI as Chinese firms move
overseas to lower labour costs
Increasing Domestic
Consumption
• More companies are entering China, not so much
as to reduce costs, but rather to tap into the
domestic market
• Companies have a growing target consumer
base that has a rising purchasing power
• Less government-directed OFDI as savings rates
decrease due to increased domestic spending
Growing Service Sector • China increasingly open to FDI in service sectors • Higher living standards will drive demand for a
wider array of services
• As China‟s financial system opens up, the
number of cross-border M&As and OFDI will
increase
Increasing Spending on
R&D
• Opportunities for higher-end companies to enter
the market or establish local partnerships
• Technology/quality advantage likely to decrease
as domestic companies catch up
• Increased opportunity for foreign firms to partner
with Chinese R&D firms who will bring capital
Implications
1
2
3
4
5
6
7
8
The Beijing Axis 177
Implications of Economic Factors on China as a Producer, Consumer and Source of Capital*
Implications of China‟s changing economy for foreign companies (3/4)
Note: Producer - From the perspective of a foreign manufacturer already in China or looking to enter China; Consumer - From the perspective of a foreign company already selling to China or looking to
sell to China; Source of Capital - From the perspective of a foreign company or country looking to raise capital by accessing China sources
Source: The Beijing Axis Analysis
Element Producer Consumer Source of Capital
Moderating GDP
Growth
• May result in overcapacity of existing
production facilities
• May need to reduce scale and or improve
efficiency of current production facilities
• Growth in per capita income likely to slow
• Despite this, consumer spending is unlikely to
slow down as the new GDP growth model
focuses on increasing domestic consumption
• Government-directed OFDI will likely be
more prudent, seeking long-term growth
rather than immediate high ROIs
Stable Inflation • Domestic costs will be more stable and
less likely to fluctuate
• Domestic purchasing power is likely to remain
strong and will not be eroded by inflation
• Stable inflation helps contribute to higher
savings rates, which is a main source of
available capital
Manufacturing Still
Important to Economy
• Still plenty of opportunities for foreign
manufacturers to enter China, especially
those that can bring new technology
and/or create many jobs
• Sales of input machinery and raw materials will
continue to be in high demand
High Consumer
Confidence
• Local market becomes an alternative to
exports esp. with greater spending power
• Confident consumers typically spend more and
save less – likely to lead to an increase in
domestic consumption
• Confident consumers typically spend more
and save less – potentially less capital
available for government-directed OFDI
Continued Rise in Both
FDI and OFDI
• Incentives for high-value technology/
services companies to invest in China
• China‟s upper class is investing in real
estate overseas, especially high-end
properties
Large and Growing FX
Reserves
• More opportunities for government-directed
OFDI
• China likely to buy more non-US bonds as it
seeks to diversify its foreign reserves
Implications
9
10
11
12
13
14
The Beijing Axis 178
Implications of Socio-economic Factors on China as a Producer, Consumer and Source of Capital*
Implications of China‟s changing economy for foreign companies (4/4)
Note: Producer - From the perspective of a foreign manufacturer already in China or looking to enter China; Consumer - From the perspective of a foreign company already selling to China or looking to
sell to China; Source of Capital - From the perspective of a foreign company or country looking to raise capital by accessing China sources
Source: The Beijing Axis Analysis
Element Producer Consumer Source of Capital
Changing Age
Structure
• Labour costs likely to further increase as
labour force shrinks
• Other developing countries will challenge
China‟s labour competitiveness
• Ageing population will boost demand for
elderly-care services/products
• Shrinking domestic demand as the elderly
generally spend less
• Increased cost of health and social care
needed to take care of the elderly will
reduce available sources of capital,
particularly government-directed OFDI
Easing of One Child
Policy
• Will attempt to offset the negative impact
of shrinking labour availability in the
coming years
• Possible baby boom, and long-term
implications of emerging new consumer
Increasing Education
Levels
• Larger pool of talent with better language
and technical skills
• More Chinese can now speak English
• Opportunity for providers of skills in global
demand (English)
• Likely to lead to higher labour costs
• Creates more sophisticated consumers who
will demand more in terms of quality and
selection
• Higher education backgrounds lead to higher
incomes, hence more disposable spending
Increasing Internet Use
• Platforms such as Alibaba and other B2B
sites have made it easier to sell and buy
directly from China without the need to
establish a physical presence
• Growing e-commerce in China makes it easier
for foreign companies to sell to China without
the need to establish a physical presence
• Any serious consumer-oriented product cannot
neglect the Internet as means of promotion i.e.
via social media or sales via online shopping
• Launch of Internet platforms for investment
and venture capital along with credit checks
will facilitate the movement of capital
Implications
1
2
3
4
The Beijing Axis 179
Final word
Source: The Beijing Axis Analysis
• China‟s rise has been unique in terms of both speed and the country‟s sheer scale – China will continue to map its own blueprint as
the new leadership simultaneously continues with past reforms and introduces new reforms
• China has become an important engine of global production, growth, capital, trade and consumption
• China will not relinquish its position as the world‟s top exporter and world‟s second-largest importer anytime soon
• China is shifting from being a net inbound investment destination to a net outbound investor as China Inc. goes global
• Although China has the economic hardware, it still suffers from shortages in software – services will become an increasingly
important component of China‟s GDP
• After three decades of relying on a „growth at all costs‟ model, China is putting a sharper focus on low carbon and sustainable
innovation to reverse the effects of years of environmental degradation
• As structural economic reform advances, and cost advantages fade away, investment-driven growth must give way to higher
productivity in order to sustain rapid growth
• China will compete with global leaders of high-value manufacturing in the medium to long-term
• China will continue to promote private-sector development and allow greater international access to the domestic market
• Despite a booming middle class, there are still those that have been left behind in the economy making rising inequality a top social
concern facing China today
• Should current reforms continue to take place unhindered, China is poised to become the world‟s largest economy in about a
decade
The Beijing Axis 180
Agenda
1. Foreword
2. What‟s New: China‟s Ongoing Transformation
3. China Economic Indicators
4. International Comparison
5. Conclusions and Implications
6. About The Beijing Axis
The Beijing Axis 181
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The Beijing Axis 183
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The Beijing Axis 184
The Beijing Axis Publications
DOING BUSINESS IN
CHINA:
The System and The
Strategies
Written by Kobus van der
Wath & Commissioned by
China Ministry of Foreign
Affairs
INVEST IN SOUTH
AFRICA
Written by The Beijing
Axis & Commissioned by
China Ministry of
Commerce
THE CHINA COMPASS
By The Beijing Axis
THE CHINA ANALYST
By The Beijing Axis
A comprehensive guide to
conducting business in China
A knowledge tool by TBA for
executives with a China agenda
A detailed manual for Chinese
companies entering and investing
in South Africa
A dynamic presentation of the latest
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as the other major world economies
The Beijing Axis 185
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The Beijing Axis 186
Disclaimer
This document is issued by The Beijing Axis. While all reasonable care has been taken in the preparation of this
document, no responsibility or liability is accepted for errors or omissions of fact or for any opinions expressed herein. Opinions, projections and estimates are subject to change without notice. This document is for information purposes only, and solely for private circulation. The information contained here has been compiled from sources believed to be reliable. While every effort has been made to ensure that the information is correct and that the views are accurate, The Beijing Axis cannot be held responsible for any loss, irrespective of how it may arise. In addition, this document does not
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