Mr. Tanweer; Head of Economics; Oundle School;@MoTanweer; M.T@cantab.net
China’s growth miracle      In 1978, 1/20th of      U.S - now over ½                             2010: 19% of             ...
GDP/c Japan vs China        GNI per capita:            91/184                          HDI: 0.687 –                       ...
1990s China vs the ‘modernChina’…
Cluster agglomeration
The ‘new China’…                          China is now a                                         major exporter of        ...
Shift towards higher-valueadd…                ‘Magic Seven’ industries to               become 15% of GDP by 2020         ...
Designed in China…          No longer purely             importing        sophisticated inputs       and assembling them  ...
SWF…
Broad generalisations…              Complex, but not necessarily                        malign China in Africa is not a ne...
Imported crude oilAfrica’s oil…         dependence                 1999: 19%... 2010: 55%                           1/3 of...
China’s neo-colonialismSource: Mofcom (2011)
China-Africa trade…                                 Two-way                                 process…      This is a little...
China’s motivation  Oil-for-infrastructure                           China’s Exim Bank     Preferential export buyer’s    ...
rica’s exports.    Political vs Commercial    investments                                        Poor CSR          Alterna...
Win-win?       Chad petroleum refinery    DRC Hydropower station    Over 30 schools, anti-malaria              centres    ...
Changing nature ofinvestment…Special Economic Cooperation     Zones – 6 in Africa:Egypt, Ethiopia, Mauritius, Zam        b...
The largest migration inhistory        Extensive vs Intensive growthCatch-up growth
Lewis Turning Point?          China will grow old, before it                   grows rich                          1978: ‘...
Working age population vs activepopulation In recent years, economic growth              has not been driven by working   ...
Human capital 12 million people p.a are newly added to    the job market, outnumbering the           population of Greece ...
It is RULC’s that matter…               Productivity improvements
Urban-rural ratio still low…Re-allocation of labour        Hukuo   Overemployment in  agriculture: 10%:40%
Minimum wages rise…     Target of min.wage                 2011: Migrant minimum      to be 40% of local                  ...
The 2008 stimulus…                And its cost…                          Infrastructure binge:                            ...
China’s Investment bubble…                Chanos – Dubai x 1000             2010: Capital stock per               capita 7...
Local  Hidden debts                         govts          Shadow              RMB                                     ban...
Short term fixes…                1998;2004:              $500bn writeoffDistressed   debt    Free  market vs   China
China’s currencymanipulation                   Appreciated                    25% in 7                     years…
Current account imbalances…                 China’s current acc              surplus fallen to <2.8% of                   ...
It’s all China’s fault…
U.S bluster: Structural problems
Global forex reserves               Internationalisation                  of the yuan…  3x Japan’s                        ...
Myths… Currency                      Type ofmanipulator                   exports…    …                  Labour           ...
Mo Tanweer; Head of Economics; Oundle School;@MoTanweer; M.T@cantab.net
Debunking the myths of china
Debunking the myths of china
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  • Average output per citizen is just 17% of the US average.
  • Inset regional map of China
  • Apple’s growth in China share Sales in greater China accounted for about 20 percent of Apple&apos;s $39.2 billion quarterly revenue, a three-fold increase from a year earlier. The numbers showcased Apple&apos;s sky-rocketing growth in China, which made up just 4.5 percent of its revenue in fiscal 2010.
  • High quality global journalism requires investment. Please share this article with others using the link below, do not cut &amp; paste the article. See our Ts&amp;Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/2/d68614ec-e2be-11e0-897a-00144feabdc0.html#ixzz2CbCobpFmThe 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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  • Oil: imported crude oil dependence: 1999: 19%... 2010: 55%
  • In less than 30 years China will halve the number of people in the 22-25 bracket… entering workforceLabor supply to remain abundant. China will continue to benefit from a low demographic dependency ratio and abundant labor supply through 2020. The deceleration in the growth of the working-age population is unlikely to stall China’s overall economic expansion.
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  • Debunking the myths of china

    1. 1. Mr. Tanweer; Head of Economics; Oundle School;@MoTanweer; M.T@cantab.net
    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; M.T@cantab.net

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