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Investing in China: Risks, Leadership, Finance & Environment Overview

Understand risks of investing in China, Fifth Generation leaders, financial landscape outlook, and environmental issues for successful investment strategies in the country. Key judgments on political unrest, leadership ideologies, financial challenges, and environmental policies provided.

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Investing in China: Risks, Leadership, Finance & Environment Overview

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  1. How to Invest in China Kevin Liu

  2. China Risks Overview Key Judgment: The primary risks are political and civil unrest, caused by rising external challenges to the regime. • Full-blown military conflict is unlikely unless Taiwan moves towards independence • The threat of Uyghur separatism has declined due to effective counterterrorism measures • Widening social and economic inequality is at the root of unrest, which is greatest in the central and coastal provinces • The internal struggle for control of the Communist Party is unlikely to undermine its authority before 2012

  3. Fifth Generation of Chinese Leadership Key Judgment: The Fifth Generation of Chinese leaders will be even more pro-business than their predecessors. • The ‘Harmonious Society’ – China’s peaceful rise based on economic growth • Promote growth in the western and north-eastern provinces • Accelerate growth and competitiveness of Chinese multinationals • Ideologically conservative – hard-line policy on Taiwan and Tibet

  4. Chinese Overseas Investment Key Judgment: Chinese multinationals face problems of skills shortages and an unfavourable Western perception. • Overseas expansion of consumer brands is a growth priority • Chinese overseas investment is dominated by state-owned companies • Short of skills in brand marketing and overseas management • Persistent foreign perception of China as producer of cheap goods

  5. China’s Financial Landscape Key Judgment: Moderate resurgence of bad loans & bankruptcies in the 5-yr outlook is unlikely to cause a full-blown financial crisis. • Growing number of experienced professional managers in the financial sector • Consolidation of small and regional commercial banks • Asset management companies absorbing non-performing loans • Strong state support for Big Five banks • BUT • Likely bankruptcies in industries serving the construction & auto sectors; conflict between Beijing & local governments over fiscal policy likely to increase

  6. Power and Environmental Issues Key Judgment: China’s primary energy concerns are promoting energy efficiency and security of supply. • China will become a major market for the carbon emissions credits scheme • Opportunities in clean energy development • Tougher environmental laws will target foreign companies • Security of supply: South Asia and South Pacific

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