Debunking the myths of china v11


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  • Average output per citizen is just 17% of the US average.
  • Inset regional map of China
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  • High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email to buy additional rights. ultimate intention of Beijing Design Week is to reposition China, and particularly Beijing, as a place where ideas are created rather than appropriated. “As the well-worn saying goes, we want to replace the words ‘Made in China’ with ‘Designed in China’
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  • Debunking the myths of china v11

    1. 1. Mr. Tanweer; Head of Economics; Oundle School;@MoTanweer;
    2. 2. China’s growth miracle In 1978, 1/20th of U.S - now over ½ 2010: 19% of US world GDP The World’s Workshop growth Socialism with Chinese characteristics 2007-2011 – grown by more Xiaoping’s market than 40pc… oriented economic reforms WTO Great Leap Forward 2012: 7.5% target
    3. 3. GDP/c Japan vs China GNI per capita: 91/184 HDI: 0.687 – 101/187 GBR: INSERT GRAPH OFAt PPP levels:below Ecuador Below Libya and CHINA’S GDP per capitaand just above Albania Iran levels… vs USA/UK/Japan/Brazil
    4. 4. 1990s China vs the ‘modernChina’…
    5. 5. Cluster agglomeration
    6. 6. The ‘new China’… China is now a major exporter of higher-value added productsSource: US Comtrade, The Beijing Axis Analysis
    7. 7. Shift towards higher-valueadd… ‘Magic Seven’ industries to become 15% of GDP by 2020 R&D expenditure to rise to 2.5% of GDP by 2015
    8. 8. Designed in China… No longer purely importing sophisticated inputs and assembling them into consumer goods for the West Huawei 2008
    9. 9. SWF…
    10. 10. Broad generalisations… Complex, but not necessarily malign China in Africa is not a new phenomenon…
    11. 11. Imported crude oilAfrica’s oil… dependence 1999: 19%... 2010: 55% 1/3 of Angola’s oil More than 2/3 of goes to China Africa’s exports to China consist of crude oil China relies on Angola for c.12% of its oil M But… 40% of Nigeria’s oil goes to USA
    12. 12. China’s neo-colonialismSource: Mofcom (2011)
    13. 13. China-Africa trade… Two-way process… This is a little over 5% of China’s global trade. U.S net importerfrom Africa of $60bn EU and US bilateral trade value -
    14. 14. China’s motivation Oil-for-infrastructure China’s Exim Bank Preferential export buyer’s credits Export-secured finance Addis-Djibouti road forlandlocked Ethiopia access to
    15. 15. rica’s exports. Political vs Commercial investments Poor CSR Alternatives 3% of Chinese outward 2007: Exim ? FDI Bank: Project 5% of Africa’s inward FDI environmental The US gives more official China and social finance to Africa than China complement impact s US/EU aid assessments of Agency restraint China’s land grab… Commercial agreements
    16. 16. Win-win? Chad petroleum refinery DRC Hydropower station Over 30 schools, anti-malaria centres Agricultural demonstration centres
    17. 17. Changing nature ofinvestment…Special Economic Cooperation Zones – 6 in Africa:Egypt, Ethiopia, Mauritius, Zam bia and Nigeria Chinalco + Rio Tinto – iron ore project Private investments: $300m syndicated loan – CCB, Citi, HSBC, Mizuho Sinopec+Technip – Ghana gas pipeline
    18. 18. The largest migration inhistory Extensive vs Intensive growthCatch-up growth
    19. 19. Lewis Turning Point? China will grow old, before it grows rich 1978: ‘One Child Policy’ TFR 1.5 vs 2.08; (Shanghai 0.6) Population set to peak in 2026 Shanghai 2020: >1/3 over 60
    20. 20. Working age population vs activepopulation In recent years, economic growth has not been driven by working age population growth Productivity growth
    21. 21. Human capital 12 million people p.a are newly added to the job market, outnumbering the population of Greece 6.3 mln college grads p.a Structural adjustment issue; not a labour constraint issue
    22. 22. It is RULC’s that matter… Productivity improvements
    23. 23. Urban-rural ratio still low…Re-allocation of labour Hukuo Overemployment in agriculture: 10%:40%
    24. 24. Minimum wages rise… Target of min.wage 2011: Migrant minimum to be 40% of local wages rose 21% salaries by 2015 But: Wage growth is key to execute the blueprint of the 12th Five Year Plan rebalancing and sustainabilitySource: Roubini Group Economics 2006-10: Average minimum wage increase: 12.5% p.a
    25. 25. The 2008 stimulus… And its cost… Infrastructure binge: High speed rail, roads, bridges, h Credit fuelled binge ousing, universities, towns Credit surged to 171% of $8 trillion since 2008 GDP by 2010
    26. 26. China’s Investment bubble… Chanos – Dubai x 1000 2010: Capital stock per capita 7% of USA’s
    27. 27. Local Hidden debts govts Shadow RMB banking 10.7trn China’s Govt Debt Breakdown Debt Item Amount (RMB) % of GDPPBC issued govt 3.8 trillion 10 bills China 5.0 trillion 13 Development Bank debt MoR network 1.5 trillion 4 financeLocal Govt Debt 10.7 trillion 27Bank system debt 3.4 trillion 9 Total 24.4 trillion 63Source: Dragonomics NPL’s: 1.14% LGFV’
    28. 28. Short term fixes… 1998;2004: $500bn writeoffDistressed debt Free market vs China
    29. 29. China’s currencymanipulation Appreciated 25% in 7 years…
    30. 30. Current account imbalances… China’s current acc surplus fallen to <2.8% of GDP 2011 ‘Fair value’ currency
    31. 31. It’s all China’s fault…
    32. 32. U.S bluster: Structural problems
    33. 33. Global forex reserves Internationalisation of the yuan… 3x Japan’s Cross-border trade in RMB RMB denominated Jan 2012: bonds x3 in Yuan/Yen 2012 has direct trading Overall, the country trimmed 5 percent of itsholdings over the entire year of 2011.
    34. 34. Myths… Currency Type ofmanipulator exports… … Labour constraint… China in Africa… Hidden debts…
    35. 35. Mo Tanweer; Head of Economics; Oundle School;@MoTanweer;
    36. 36. Chinese steel consumption is greaterthan US+EU+Japan+India combined 1980 – 5%; 2008 – 40%Mln tonnes
    37. 37. Already a large commodityconsumer Consumes half of the world’s cement production World’s largest consumer of cotton World’s second largest consumer of sugar World’s second largest consumer of wheat