Understanding Chinese economy. Professor JIANWEI WU TONGJI University 2014. Map of P.R. China. Chinese economic features. Fastest growing economy in the world, GDP much larger than GNP, thanks for FDI Save more, invest more and consumer less
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Understanding Chinese economy
Professor JIANWEI WU
Map of P.R. China
Fastest growing economy in the world, GDP much larger than GNP, thanks for FDI
Save more, invest more and consumer less
Hundreds million people swing between the East and West regions, or on the way
A poor developing country with huge amount USD reserves, GDP per capita ranks the poorest 30%, while foreign currency reserve reached 3.82 trillion USD on 31, 2013
No luxury brand is designed by Chinese, most of them made in China and half of them shipped back to China
One of the most polluted countries managed to produce solar and wind generators
A socialist country trapped in monopoly industries, struggling to build market system
GDP per capita is $6920 in 2013
Four wheels of the economy: cheap labor, open door policy, reform, urbanization;
energy driven: from high saving rate to high rate of investment
Earliest market regime in the world
Property heritage system formed an inward looking society
Emperors Wen and Jing only taxed 1/15 to 1/30 of people’s income
Leading roles of Chinese Communism party can be found in the various administration levels, real decision makers
State and regional governments regulate economic affairs and share tax revenue – 49.4% to 50.6% in year 2012.
Major sources of tax revenue China, Bn yuan
Extra 30% from selling land!
Governments get 30% extra revenue from selling land
Up to 53.7% of residents are categorized as city and town citizens and 46.3% as farmers, respectively in 2012. Hundred million youth migrates from inland China, particularly countryside to cities and coast areas, looking for jobs.
More than 60% of the Chinese will be settled in urban area by year 2020. Therefore, there have to be enough jobs, shelters and infrastructure to accommodate new immigrates.
Number of cities with one million or more population are 150 in China in 2010.
1980 64.4%; 2009 72.4%; 2030 67.4%; 2050 63%
The total turnover of cargos in harbors is 3.42 billion tons in 2006 and 9.47 billion tons in 2012.
The national highway project “7918” will be constructed based on the planning of Ministry of Transportation, namely 7 routes radiating centered in Beijing, 9 North-South and 18 East-West rotes cross mainland China, making total mileage of 85000 km. All 319 cities which have population more than 200,000 will be connected in year 2020.
Distribution of Chinese population
GDP = C + I + G + (X – M)=49.1(C+G)+48.3(I)+2.6X
High level of saving in banks, liquidation mismatch problem, SME is hunger for loan, loan for the poor (Shanghai miracle in the 1920s and Bangladesh country banks)
Insufficient development of financial market, bond and other security markets
Less enthusiasm of consumption
Overheating of regional government investment and expenditure
Surging in foreign currency reserve, over export and flowing in speculative money
Price index and interest rate
R&D as % of GDP
Value composition of Boeing, where exists real value?
Cars manufactures have been growing dramatically
Housing price and income ratio in Shanghai
Price per SQ meter: Inner circle 55518; middle 29281; out circle 16541
Chinese FX reserves and the end of year in 100 million US$ and growth rate
Sources of FDI in China, %
FDI in China by sectors, %
Definition: family annual income RMB80k+ (E$10k) in year 2012; population is 220m, and expected to 800m and 58% by 2020
Standard of middle class varied significantly between different tiers of cities and regions
Up middle class: ages from 25 to 44; family annual income 120k to 200k (in year 2011), total population reached 13 million in 2011, and 76 million by 2015
Affluent class: family assets for investment annual income is more than 6 million, total population is 2.7 million in year 2012. Their average assets is 50 million, spend 1.5 million in consumption, and average age is 39.
Their demand for banking services are tour, health services and children education.
Population of family assets more than 100 million is estimated 63500.
Lower middle class – ignorable consumers: family annual income 30k to 60k, total population is over 300 million in 2010 and 500 million by 2020
Very fragile to social security, less covered by social welfare, then hesitate to spend money
China is the third largest consumer market, 9% of the world market share; will be the second largest market and 14% in 2015 and 22% in 2020
Residents are willing to consume more in small and medium size cities than in large cities
Chinese household per 100
Chinese 102（72.6 in 2011），
German 83.8（85.9 in 2011），
The World Tourism Organization (UNWTO/OMT)
The maximum terms for granting of land use right:
For residential purpose70 years
For industrial purpose50 years
For the purpose of education, scientific research,
culture, public health and sport50 years
For commercial, tourism and recreational purpose40 years
For comprehensive purpose or other use50 years