Demographics: Baby boomers (born after 1980) 50%+ of population by 2015, 45% of workforce by 2020 Aging to quadruple total real wageSource: Morgan Stanley Research (E) estimates.
Urbanization: 47% to 65% in the long-term, adding 300 million urban residentsSource: Morgan Stanley Research (E) estimates.
Super Hubs Emerging Har bin HSR Hubs Changc hun Urum qi Sheny ang Hohh Beiji Yum ot Dali ng Tianj en Shijiazhu an in Yan Yinchu ang Jin Taiyu tai Qingd an an an Xini Lanz ao Lianyung ng houXia ang Zhengz n hou Wuh HefNanjin Shang an ei g Hangzh Chen hai Lha gdu ou sa Chong ChangNancha qing sha ng Fuzh Guiya ou Kunmi ng Xiam Guangz ShantInfrastructure: ng Zhuh hou Hong ouen Shenz Nanni ai Mac hen ng Zhanjia Kong auChina to have the longest + fastest high ngHaik ou speed rail grid in the world by 2015Road capacity to outpace US by 2015 Source: Morgan Stanley Research (E) estimates.
Consumer financing: Credit consumption as % of total: 10% to 40%Source: Morgan Stanley Research (E) estimates.
China college education coverage ratio Education: College degree of workforce: from 10% to 35%Source: Morgan Stanley Research (E) estimates.
USCBC 2010 Survey USCBC 2010 Survey: Top 10 Challenges1. Human resources: Talent recruitment and retention1. Administrative licensing1. Competition with PRC state-owned enterprises4. IPR: Enforcement5. Cost increases6. Market access in services7. Transparency8. Protectionism risks in China9. Government procurement10. Standards and conformity assessment
USCBC 2010 Survey USCBC 2010 Survey: Top 10 Challenges1. Human resources: Recruitment & retention1. Administrative licensing1. Competition with PRC state-owned enterprises4. IPR: Enforcement5. Cost increases Operating Costs
USCBC 2010 Survey Rising Costs of Most Concern Taxes 17%Materials 11% Labor 58% Utilities 5% Land 9%
Human Resources Increased costs….. Increased competition…..2011 Minimum Wage Increases Among ChinaHR’s 2010 survey of top 50 employers in China, only 4 wereBeijing 20% foreign companies, down from 21 inTianjin 16% 2009. SOEs made up 66% of the list.Chongqing 32%Shandong 26%Jiangsu 17%Guangdong 18% ManPower’s 2010 Employee survey, 59% of job seekers prefer Chinese private companies because of better long-term career development opportunities.
USCBC 2010 SurveyImpact of Rising Costs on Reasons Company Considers Moving Long-term Planning operations from China to other Asian/East Asian country Considerable impact 4% No impact Other 24% 21% Better prospects for capital Rising deployment costs in 5% China 57% Some impact 75% Market access restrictions 14%
USCBC 2010 Survey USCBC 2010 Survey: Top 10 Challenges6. Market access in services7. Transparency8. Protectionism risks in China9. Government procurement10. Standards and conformity assessment Policy and Regulatory Costs
Selected Industrial Issues and Advocacy Map Wen Jiabao Premier Li Keqiang Zhang Dejiang Wang Qishan Liu Yandong Vice Premier Vice Premier Vice Premier State Councilor Agencies NDRC, MOHURD, MOF, ML MIIT, MHRSS, MOT, MOR MOFCOM, PBOC, SAIC, Cust MOE, MOST, SARFT, Min R, MOH, MEP, SAT , SASAC, SAWS oms, AQSIQ, SIPO, CSRC, C of Culture, GAPP BRC, CIRC Selected Economic planning Industrial reform Financial sector Science & technology Responsibilities Commodity prices Telecom, IT, transportation Trade & investment Education Public finance/tax Labor, social security Quality inspection Culture Healthcare reform Production safety Business licensing Sports Climate /energy policy State-owned enterprises Competition policy HK & Macao Issues S&ED, JCCT Govt procurement MOF, NDRC MOFCOM MOST Tax/HNTE MOF, SAT MOST Standards MIIT AQSIQ MOST Indig Innovation MOF, NDRC MIIT IPR SIPO, SAIC GAPP Industrial policy NDRC MIIT M&A NDRC SASAC, MIIT MOFCOM, SAIC Energy Efficiency NDRC, MEP, MOF SASAC, MIIT AQSIQ MOST Key Commercial Policies Spread Across Agencies, Not Always Well-Coordinated; Effective Advocacy Targets All Key Stakeholders … And Senior LeadershipAQSIQ = Quality & Inspection Admin MLR = Min of Land & Resources MOHURD = Min of Housing, Urb/Rural Dev NDRC = Nat. Devel & Reform Comm SAT = State Tax AdminCS/B/IRC = Securities, Bank, Insurance regulators MOE = Min of Education MHRSS = Min of Hum Resources & Soc Sec PBOC = People’s Bank of China SAWS = State Admin of Workplace SafetyGAPP = Gen Admin of Press & Pubs MOF = Min of Finance MOR = Min of Railways SAIC = State Admin of Ind & Commerce SIPO = State Intellectual Property OfficeMEP = Min of Envir Protection MOFCOM = Min of Commerce MOST = Min of Science & Technology SARFT = Radio, Film, TV AdministrationMIIT = Min of Industry & Info Tech MOH = Min of Health MOT = Min of Transportation SASAC = State Assets Commission
Policy EnvironmentWhat Keeps Central What Keeps Average Planners Awake? Citizens Awake? • Social security#1 - Social (in)stability • JusticeNext Issues: • Anti-corruption•Inflation, inflation, inflati • Personal incomeon • Housing prices•Resource allocation • Healthcare reform•Control over local • Commodity pricegovernments control•“Imbalances” • Environment•Corruption pollution • Food safety • Education reform
12th FYP Key GoalsEncourage domestic consumptionImprove social safety netIndustrial “upgrading” (Strategic Emerging Industries plan)Regional development – Central & Western ChinaEnergy efficiency and environmental sustainabilityTaxation and financial systems reformUrbanization