CHINA 中国
Understanding Emerging Markets
Group 1
HISTORY
ANCIENT CHINA:
• Xia Dynasty (c. 2100 – c. 1600 BC)
• Shang Dynasty (c. 1700–1046 BC)
• Zhou Dynasty (1046–256 BC)...
History(Cont)
IMPERIAL CHINA:
• Qin Dynasty (221–206 BC)
• Han Dynasty (202 BC–AD 220)
EARLY MODERN:
• Ming Dynasty (AD 13...
MODERN CHINA:
• Republic of China (1912–1949)
• People's Republic of China (1949–
present)
GEOGRAPHY
GEOLOGY
World’s largest producer of
antimony, graphite, tungsten and zinc.
Largest hydro power potential.
SOCIAL ISSUES
Mass unrest issues have risen from 8,709
in 1993 to 90,000 in 2009.
Reasons:
a)Increase in migration,
b)Un...
The imbalance of wealth
Urbanization
CENSORSHIP:
a)Freedom of speech
b)Freedom press
c)Internet
Hukou system.
DEMOGRAPHICS
AGE STRUCTURE (present):
a)0-14 years: 17.4%
b)15-24 years: 16.1%
c)25-54 years: 46.5%
d)55-64 years: 10.9%
e...
POPULATION GRAPH
0
200
400
600
800
1000
1200
1400
1600
1975 1980 1990 1995 2000 2005 2010 2011 2012
Population(in millions...
LIFE EXPECTANCY
60
62
64
66
68
70
72
74
76
1975 1980 1990 1995 2000 2005 2010 2011
Life expectancy at birth, total (years)...
DEATH RATE
5.8
6
6.2
6.4
6.6
6.8
7
7.2
7.4
1975 1980 1990 1995 2000 2005 2010 2011
Death rate, crude (per 1,000 people)
De...
FERTILITY
0
1
2
3
4
5
6
7
1940 1960 1980 2000 2020
Total Fertility Rate (children born/woman)
Total Fertility Rate
(childr...
SEX RATIO
105
105.5
106
106.5
107
107.5
108
108.5
1940 1960 1980 2000 2020
Sex Ratio In China
Political System
of
China
China is a Communist Country.
Communism is an idea of a free society with no
division or alienation, where the people ar...
Political Structure
Communist Party
82.6 million members
State Council
Second major institution of the Chinese
political structure.
The executive branch.
It is the Central Peop...
National People's Congress
• The legislative branch
• is the highest state body and the
unicameral legislative house
• Fun...
People’s Political Consultative
Conference
Perform as “democratic supervisor” of the
Party
It acts as a platform for the...
The People’s Liberation Army
• Unified military organization responsible
for air, water and land operations.
• Very Crucia...
Environmental
Conditions In
China
Environmental Problems
Water Resources
Deforestation
Desertification
Climate change
Pollution
Government Measures
Adjusting industrial structures and altering
development modes.
Establishment of about 100 specializ...
Technological
Scenario in China
Ancient Era
Pioneer in the field of science and
technology
Greatest Discoveries includes-
– Paper making
– Printing Tech...
Modern Era
Experienced biggest technological
transformation
Over 1.5 billion cell phones & 570 million
Internet users
M...
Culture
Chinese culture is one of the
oldest culture in the world. Many
festivals are celebrated in china
like spring fest...
Economic Inequality
Income inequality
Gini coefficient is 0.74
Regional Income inequality
Rural-Urban income inequality
Causes for Income inequality
Non-Balanced Economic Development
Unreasonable economic system
Imperfect Tax System
Lack ...
Economics in
China
經濟學
-6
-4
-2
0
2
4
6
8
10
12
14
1975 1980 1990 1995 2000 2005 2010 2011 2012
GDP Growth
China
India
Brazil
Main reason for China’s Growth
0
5
10
15
20
25
30
35
40
1980 1985 1990 1995 2000 2005 2010 2011 2012
Export as a % of GDP
...
Raise More
Debt
Increase the
Household
Consumption
0
10
20
30
40
50
60
70
2005 2006 2007 2008 2009 2010 2011 2012 2010 2011 2012
Household Consumption as a %
of GDP
China
In...
China’s economy will not fall
0
10
20
30
40
50
60
2005 2006 2007 2008 2009 2010 2011 2012
Household Saving as a % of GDP
C...
Increasing Debt is the only
option
Before 1990, RMB was pegged at 2.46 per US
dollar
As Chinese economy opened up, RMB w...
Stages of China’s Reforms
1970’s-1980’s – Opening up the country to
the foreign investment.
US China Debt loop
China com...
Fixed Rate of Exchange and Money Supply
0
20
40
60
80
100
120
140
160
180
200
Money and quasi money (M2)
as % of GDP
Money...
Stages of China’s Reforms
• 1980’s-1994’s – Privatization and
Contracting
 Lifting of Price controls, protectionist polic...
Current Economic Conditions
 Fitch has downgraded China from AA- to AA+
 Debt to GDP has accelerated from 148% to 205%
...
History of Banking sector
History of banking sector can be divided
into two main periods
The Mao Era (1949-1978)
The Pos...
Banking Sector Outlook
 Current cash reserve ratio
for China stands at 20.50
which is one of the highest in
the world.
 ...
Banking Sector Outlook(Cont)
 Urbanization is growing at a rate of 1.37%, which will increase the
demand of financial ser...
Stock Markets
 In 1990 and 1991, China sets up stock exchanges in
Shanghai and Shenzhen
 Stock Markets in Chine is regul...
Securities sectors outlook
 Increase in the stake foreigner could hold.
 Number of Brokers increased from 11 to 30
 Inv...
Growth
Infrastructure
Telephones (1989):
– Country X: 107 telephone sets per 1000
persons
– Country Y: 10 telephone sets per 100...
Length of Railways (Electrified Railways)
(1980)
– Country X: 61,240 kms (5,345 kms)
– Country Y: 53,900 kms (1,700 kms)
...
China’s Growth
1 Country – 2 System
Han Dynasty
No Enemies
China’s GDP Growth
0
10
20
30
40
50
60
1975 1980 1990 1995 2000 2005 2010
Agriculture
Services
Industry
GDP Distribution
Agriculture
 China ranks first in worldwide farm output
 No. 1 in Wheat Production
 Contributes 9% to GDP
 Great Leap ...
Industry Sector
 Industry Contributes 46% to China’s GDP
 World’s leading manufacturer of chemical fertilizers,
cement, ...
Service Sector
 Service Sector Contribution - 44 %
 Quantity Quality
 Hospitality
 Aviation
 Banking
 Automation
Trade relations
 World Trade Organization, G20, BRICS
 USA
 Africa
 Russia
Border Problems
Tibet
Taiwan (Kuomintang)
India
Japan
Mongolia
Business Opportunities
• Education
• Healthcare
• Clean-tech/green-tech
• Software
• Food
Labour Issues
Fall Of China
Ageing Population
Yuan Appreciation
Dependence on World
MiddleClass Sector
 A Deaf Pilot cannot fly an ...
Will China Become Super Power ?
Military Power
Economic Power
Transnational Power
Market Outlook China
• Economy Set to take off again
 Increase in spending by state government
 Measures taken by People...
Market Outlook China
• Points of Concerns
 China’s economy is at a moderation point from high
growth to mid high growth
...
Appendix
http://www.worldbank.org/en/country/china
http://www.indexmundi.com/china/
http://en.wikipedia.org/wiki/China
htt...
Presented by:
Anand KJ
Ankit Vora
Malhar Lakdawala
Shubham Jain
Lakshay Nangia
China presentation final section 1
China presentation final section 1
China presentation final section 1
China presentation final section 1
China presentation final section 1
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  • Consumption is only 35% of the GDP. Even if the share goes up to 50 %, it will still have the lowest consumption share as compared to any large economy.
  • Saving Rate is high because rising working age population, increase in the negative perception due to rise in uncertainties due to reforms, inadequate pension health care and education
  • In order to maintain a fixed rate of interest with United States, People’s Bank of China prints more money which is exchanges with US Dollars. The excess of US dollars is used to by Treasury Bonds in United States. Increase in the lending capacity of capacity leads to decrease in the US interest rate of US treasury bonds, which in turn reduces the interest rate for other debt instruments such as corporate bonds.
  • Less Land, Existing Land used for Indsutries, Unequal Distribution of Land, Pesticides -> Land Pollution
  • Power 3.85 GW #1 in WindFarms
  • Middle Class Population Increasing 16 Hours of work – NO Ageing Population
  • China presentation final section 1

    1. 1. CHINA 中国 Understanding Emerging Markets Group 1
    2. 2. HISTORY ANCIENT CHINA: • Xia Dynasty (c. 2100 – c. 1600 BC) • Shang Dynasty (c. 1700–1046 BC) • Zhou Dynasty (1046–256 BC) • Spring and Autumn Period (722–476 BC) • Warring States Period (476–221 BC)
    3. 3. History(Cont) IMPERIAL CHINA: • Qin Dynasty (221–206 BC) • Han Dynasty (202 BC–AD 220) EARLY MODERN: • Ming Dynasty (AD 1368–1644) • Qing Dynasty (AD 1644–1911)
    4. 4. MODERN CHINA: • Republic of China (1912–1949) • People's Republic of China (1949– present)
    5. 5. GEOGRAPHY
    6. 6. GEOLOGY World’s largest producer of antimony, graphite, tungsten and zinc. Largest hydro power potential.
    7. 7. SOCIAL ISSUES Mass unrest issues have risen from 8,709 in 1993 to 90,000 in 2009. Reasons: a)Increase in migration, b)Unemployment, c)Loss of faith in system, d)Corruption.
    8. 8. The imbalance of wealth Urbanization
    9. 9. CENSORSHIP: a)Freedom of speech b)Freedom press c)Internet Hukou system.
    10. 10. DEMOGRAPHICS AGE STRUCTURE (present): a)0-14 years: 17.4% b)15-24 years: 16.1% c)25-54 years: 46.5% d)55-64 years: 10.9% e)65 years and over: 9.1% Median age: 35.9 years.
    11. 11. POPULATION GRAPH 0 200 400 600 800 1000 1200 1400 1600 1975 1980 1990 1995 2000 2005 2010 2011 2012 Population(in millions) Population, total
    12. 12. LIFE EXPECTANCY 60 62 64 66 68 70 72 74 76 1975 1980 1990 1995 2000 2005 2010 2011 Life expectancy at birth, total (years) Life expectancy at birth, total (years)
    13. 13. DEATH RATE 5.8 6 6.2 6.4 6.6 6.8 7 7.2 7.4 1975 1980 1990 1995 2000 2005 2010 2011 Death rate, crude (per 1,000 people) Death rate, crude (per 1,000 people)
    14. 14. FERTILITY 0 1 2 3 4 5 6 7 1940 1960 1980 2000 2020 Total Fertility Rate (children born/woman) Total Fertility Rate (children born/woman)
    15. 15. SEX RATIO 105 105.5 106 106.5 107 107.5 108 108.5 1940 1960 1980 2000 2020 Sex Ratio In China
    16. 16. Political System of China
    17. 17. China is a Communist Country. Communism is an idea of a free society with no division or alienation, where the people are free from oppression and scarcity. Symbol China adopted communism in 1949. China operates with a ONE PARTY STATE POLICY where Communist party of china is the dominating party.
    18. 18. Political Structure
    19. 19. Communist Party 82.6 million members
    20. 20. State Council Second major institution of the Chinese political structure. The executive branch. It is the Central People’s Government & is Chaired by the Premier.
    21. 21. National People's Congress • The legislative branch • is the highest state body and the unicameral legislative house • Functions: -Electing the President of the People's Republic of China - approving the appointment of the Premier of the State Council - approving the work reports & policies.
    22. 22. People’s Political Consultative Conference Perform as “democratic supervisor” of the Party It acts as a platform for the citizens to make suggestions about the policies. PPCC members are often known as “political advisors”.
    23. 23. The People’s Liberation Army • Unified military organization responsible for air, water and land operations. • Very Crucial to the party and the government. • Reports to Party Central Military Commission (CMC)
    24. 24. Environmental Conditions In China
    25. 25. Environmental Problems Water Resources Deforestation Desertification Climate change Pollution
    26. 26. Government Measures Adjusting industrial structures and altering development modes. Establishment of about 100 specialized environmental courts. "Green Wall of China" project Introduction of Environmental education
    27. 27. Technological Scenario in China
    28. 28. Ancient Era Pioneer in the field of science and technology Greatest Discoveries includes- – Paper making – Printing Technology – Compass – Gunpowder Started to loose its stand but rebounced in 19th century.
    29. 29. Modern Era Experienced biggest technological transformation Over 1.5 billion cell phones & 570 million Internet users Major achievements – BaiDu – Sina Weibo – Manufacturing hub of electronics gadgets.
    30. 30. Culture Chinese culture is one of the oldest culture in the world. Many festivals are celebrated in china like spring festival, lantern festival. Spring festival is also known as Chinese New year. Important components of Chinese culture include:  Literature  Music  Martial Arts  Cuisine
    31. 31. Economic Inequality Income inequality Gini coefficient is 0.74 Regional Income inequality Rural-Urban income inequality
    32. 32. Causes for Income inequality Non-Balanced Economic Development Unreasonable economic system Imperfect Tax System Lack of Public Services Low Income transfer Houkou or Chinese household Registration System
    33. 33. Economics in China 經濟學
    34. 34. -6 -4 -2 0 2 4 6 8 10 12 14 1975 1980 1990 1995 2000 2005 2010 2011 2012 GDP Growth China India Brazil
    35. 35. Main reason for China’s Growth 0 5 10 15 20 25 30 35 40 1980 1985 1990 1995 2000 2005 2010 2011 2012 Export as a % of GDP China Brazil India
    36. 36. Raise More Debt Increase the Household Consumption
    37. 37. 0 10 20 30 40 50 60 70 2005 2006 2007 2008 2009 2010 2011 2012 2010 2011 2012 Household Consumption as a % of GDP China India Brazil
    38. 38. China’s economy will not fall 0 10 20 30 40 50 60 2005 2006 2007 2008 2009 2010 2011 2012 Household Saving as a % of GDP China India Brazil
    39. 39. Increasing Debt is the only option Before 1990, RMB was pegged at 2.46 per US dollar As Chinese economy opened up, RMB was devalued to 8.62 yuan per dollar. In 2005, peg was lifted but reinstituted again in 2008 due to financial crises in 2008
    40. 40. Stages of China’s Reforms 1970’s-1980’s – Opening up the country to the foreign investment. US China Debt loop China competitive advantage in the form of cheap labour
    41. 41. Fixed Rate of Exchange and Money Supply 0 20 40 60 80 100 120 140 160 180 200 Money and quasi money (M2) as % of GDP Money and quasi money (M2) as % of GDP 0 20 40 60 80 100 120 140 1990 1995 2000 2005 2010 2011 2012 Consumer price index (2005 = 100) Consumer price index (2005 = 100)
    42. 42. Stages of China’s Reforms • 1980’s-1994’s – Privatization and Contracting  Lifting of Price controls, protectionist policies and regulation  Introduction of tax distribution system that reduced the proportion of tax revenues held by local government.  Government used debt to finance its expenditure which led to increase in the debt to GDP ratio.
    43. 43. Current Economic Conditions  Fitch has downgraded China from AA- to AA+  Debt to GDP has accelerated from 148% to 205%  IMF has warned China for rising Debt levels  GDP has reached to 7.5% in 3rd Quarter of 2013
    44. 44. History of Banking sector History of banking sector can be divided into two main periods The Mao Era (1949-1978) The Post-Mao Era or Deng Era (1978 onwards)
    45. 45. Banking Sector Outlook  Current cash reserve ratio for China stands at 20.50 which is one of the highest in the world.  POP has taken steps to improve the market sentiments  Money Supply and Loans are expected to grow
    46. 46. Banking Sector Outlook(Cont)  Urbanization is growing at a rate of 1.37%, which will increase the demand of financial services  Shadow Banking is increasing at 34%  China’s Development Bank and China’s six largest commercial bank continued to grow internationally.  Reintroduction of asset securitization is expected to be a breakthrough for asset and intermediate business innovation for banks.  It is expected that that the Banking sector Net profit would increase by 3% for 2013
    47. 47. Stock Markets  In 1990 and 1991, China sets up stock exchanges in Shanghai and Shenzhen  Stock Markets in Chine is regulated by China Security Regulatory Commission.  SSE composite Index is the most commonly used indicator to reflect SSE’s market performance.
    48. 48. Securities sectors outlook  Increase in the stake foreigner could hold.  Number of Brokers increased from 11 to 30  Investment Banking to move towards follow on and debt financing.  China stock market could fall because of the property bubble
    49. 49. Growth
    50. 50. Infrastructure Telephones (1989): – Country X: 107 telephone sets per 1000 persons – Country Y: 10 telephone sets per 1000 persons
    51. 51. Length of Railways (Electrified Railways) (1980) – Country X: 61,240 kms (5,345 kms) – Country Y: 53,900 kms (1,700 kms) Infrastructure
    52. 52. China’s Growth 1 Country – 2 System Han Dynasty No Enemies
    53. 53. China’s GDP Growth
    54. 54. 0 10 20 30 40 50 60 1975 1980 1990 1995 2000 2005 2010 Agriculture Services Industry GDP Distribution
    55. 55. Agriculture  China ranks first in worldwide farm output  No. 1 in Wheat Production  Contributes 9% to GDP  Great Leap Forward (1958 – 1961)  Great Chinese Famine(1958 – 1961)  World’s Largest Importer of Soyabeans
    56. 56. Industry Sector  Industry Contributes 46% to China’s GDP  World’s leading manufacturer of chemical fertilizers, cement, and steel  China ranks second worldwide in industrial output  Four Modernizations (1975) o Industry o National Defence o Agriculture o Science and technology  Energy industry  Manufacturing and Automobiles  Steel
    57. 57. Service Sector  Service Sector Contribution - 44 %  Quantity Quality  Hospitality  Aviation  Banking  Automation
    58. 58. Trade relations  World Trade Organization, G20, BRICS  USA  Africa  Russia
    59. 59. Border Problems Tibet Taiwan (Kuomintang) India Japan Mongolia
    60. 60. Business Opportunities • Education • Healthcare • Clean-tech/green-tech • Software • Food
    61. 61. Labour Issues
    62. 62. Fall Of China Ageing Population Yuan Appreciation Dependence on World MiddleClass Sector  A Deaf Pilot cannot fly an airplane effectively, however good he may be
    63. 63. Will China Become Super Power ? Military Power Economic Power Transnational Power
    64. 64. Market Outlook China • Economy Set to take off again  Increase in spending by state government  Measures taken by People’s Bank of China  Increase in Demand and supply perception  New reforms of rational distribution system
    65. 65. Market Outlook China • Points of Concerns  China’s economy is at a moderation point from high growth to mid high growth  China is loosing out on its competitive advantage  Manufacturing Sector is reaching saturation  Shadow Banking is a big concern  Property Bubble in China
    66. 66. Appendix http://www.worldbank.org/en/country/china http://www.indexmundi.com/china/ http://en.wikipedia.org/wiki/China http://www.pbc.gov.cn http://www.fitchratings.com/web/en/dynamic/fitch-home.jsp http://www.deloitte.com/view/en_CN/cn/ind/g http://www.businessweek.com/articles/2013-03-26/chinas-stock- markets-fall-on-fears-of-a-real-estate-crackdown http://www.bloomberg.com/news/china/
    67. 67. Presented by: Anand KJ Ankit Vora Malhar Lakdawala Shubham Jain Lakshay Nangia

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