This document discusses the future of China's economy. It notes that China's GDP growth has slowed to around 6% annually, half of what it was in the 1990s. China is taking on significant debt to continue driving growth. There is a need for China to boost private consumption and move away from debt-fueled investment and exports. The future of China-Canada economic relations and the potential for a free trade agreement are also discussed.

1. WHAT IS THE FUTURE
FOR CHINA
Paul Young CPA, CGA
May 23, 2020

2. PAUL YOUNG - BIO
• CPA, CGA
• Financial Solutions
• SME – Business Process Changes
• SME – Risk Management
• SME – Close, Consolidate and Reporting
• SME – Public Policy
• SME – Financial Solutions
• SME – Supply Chain Management
• Academia – Advance Accounting, Public
Finance and Advanced Management Systems
Contact information:
Paul_Young_CGA@Hotmail.com

3. SUMMARY
▪ China is important country due to its size
▪ Caution needs to be taken when dealing with China. China has specific business
controls as it relates to business
▪ China growth is ½ what it was in the 1990s. India is now growing faster than China
▪ China is looking at investment outside of China into Africa.
▪ China is pushing forward with the one-belt road to move goods to Europe
▪ China is moving more and more to electrical market for vehicles.
▪ China needs to clean up its labour, health and safety and environmental policies.
▪ The new USMCA agreement has one is refer to the China clause.

4. AGENDA
▪ GDP Growth
▪ Debt
▪ Consumption
▪ Climate Change
▪ Canada and China
▪ USA and China
▪ China and the Caribbean
▪ COVID19 / Virus

5. CHINA AND GDP GROWTH
Scotiabank – http://www.gbm.scotiabank.com
https://www.statista.com/statistics/263616/gross-domestic-
product-gdp-growth-rate-in-china/
• Trudeau has been unable to forge more trade with China - https://www.macleans.ca/politics/canada-drops-charade-
of-progressive-trade-with-china/- or https://www.scmp.com/economy/china-economy/article/3075136/coronavirus-
chinas-premier-shrugs-likely-first-quarter Countries are tired of Trudeau and his lack of coherent strategy for foreign
policy - https://www.slideshare.net/paulyoungcga/policy-foreign-aid-and-affairs-canada

6. CHINA GROWTH WILL ACCELERATE AS IT
GETS LEADERS WHO AREN'T SCARED:
FORMER PBOC ADVISOR
Source - http://www.cnbc.com/2017/06/27/china-growth-will-accelerate-as-it-
gets-leaders-who-arent-scared-former-pboc-adviser.html
CNBC – June 27, 2017

7. CHINA AND EMERGING MARKETS
Source - http://marketrealist.com/2017/04/will-dragon-cause-worry-
global-markets/
China, of course, is a key source of concern in the EM space. A continued
slowdown in China will have a cascading effect on trade, commodity
prices, and investor confidence.
Meanwhile, rising interest rates in the US could make it harder for EM
economies to attract investments and could also lead to the local currency
(HEFA) depreciation.
At the same time, more geopolitical tensions could give rise to a sudden
spurt of risk aversion, which could cause a contagion in the EM space,
driving investors to flock toward safe-havens.
Marketrealist – April 18, 2017

8. CHINA – DEBT TO GDP, PRIVATE CONSUMPTION
Source -
https://tradingeconomics.com/china/government-debt-
to-gdp
Source - https://tradingeconomics.com/china/domestic-
credit-to-private-sector-percent-of-gdp-wb-data.html

9. CHINA AND HOUSEHOLD
DEBT
Source - https://www.caixinglobal.com/2018-11-06/chart-of-the-day-chinas-growing-
household-debt-101343512.html
• China’s household debt has built up rapidly over the
past decade as its gross domestic product (GDP) has
surged. The country’s household-debt-to-GDP ratio
increased from 17.9% in 2008 to 49% at the end of
2017, according to the 2018 financial stability
report published by the People’s Bank of China. In
the report, the central bank said that policymakers
need to keep a close eye on the country’s rapidly
increasing household debt. However, China’s overall
household debt doesn’t stand out when compared
with that of other countries.
• Chinese consumer debt-to-income ratio rose to 92
per cent at the end of last year, up from only 30 per
cent in 2008, according to the Institute of
International Finance The ratio is higher than the 86
per cent in Germany and close to the levels of 97
per cent in the United States and 100 per cent in
Japan - https://www.scmp.com/economy/china-
economy/article/3021816/chinas-household-debt-
has-grown-so-much-trade-war-stimulus

10. CHINA DEBT
• China / Debt holders - https://hbr.org/2020/02/how-much-money-does-the-world-owe-china “In total, the
Chinese state and its subsidiaries have lent about $1.5 trillion in direct loans and trade credits to more than 150
countries around the globe. This has turned China into the world’s largest official creditor — surpassing
traditional, official lenders such as the World Bank, the IMF, or all OECD creditor governments combined.”
• China and Bankruptcies - https://supchina.com/2020/04/09/more-than-240000-chinese-companies-declare-
bankruptcy-in-the-first-two-months-of-2020/
• USA and China - https://www.thebalance.com/u-s-debt-to-china-how-much-does-it-own-3306355 “The U.S.
debt to China was $1.09 trillion through February 2020.1 That's more than 15% of the $7.06 trillion in Treasury
bills, notes, and bonds held by foreign countries. The rest of the $24 trillion national debt is owned either by the
American people or by the U.S. government itself.”
• Chinese Bonds - https://asiatimes.com/2020/04/bond-investors-swarm-to-china-a-safe-harbor/

11. CHINA DEBT AND TRADE
Source - https://www.industryweek.com/economy/china-growth-momentum-stalls-debt-campaign-and-trade-war-bite?NL=IW-07&Issue=IW-07_20180814_IW-
07_208&sfvc4enews=42&cl=article_5&utm_rid=CPG03000001519274&utm_campaign=28515&utm_medium=email&elq2=0f9d987d06354a3b9299297513af16ca
China’s economy hit a mid-year rough patch as efforts to curb risky lending and excessive debt collided
with a deepening trade war, adding to concerns about global growth.
Fixed-asset investment in the world’s largest developing economy rose at the slowest pace in two
decades in the first seven months of this year, while infrastructure spending slumped to a quarter of
the pace of a year earlier. Factory output, retail sales and credit creation in July all trailed estimates.
China’s economy is now losing momentum just as it braces for a protracted trade conflict with the U.S.,
and those pressures show no sign of dissipating. Officials have vowed to boost lending to smaller
companies and support for infrastructure investment, but the pressure is mounting on them to do
more.
"The Chinese economy will get worse before getting better," said Lu Ting, chief China economist at
Nomura International Ltd. in Hong Kong. "It takes several months to turn around. Beijing will step up
credit easing and fiscal measures to deliver a recovery and prevent financial troubles such as a rise of
bond defaults."

12. CHINA GDP AND INCOME GROWTH
▪ Morgan Stanley and Michael Pettis differ on what China’s sustainable economic growth rate is over the
next ten to fifteen years China. Morgan Stanley, however, proposes that China can manage to grow at
an average annual rate above 5 percent for the next ten years, which suggests that they think this
sustainable growth rate today is around 6 percent or a little less. Pettis thinks China is unlikely to
manage growth rates above 3 percent on average, and probably much lower.
▪ Key Metrics for China’s future economic growth
▪ A* China’s Debt to GDP is about 260% now – China can keep pushing GDP growth until debt to GDP
is about 350% of GDP. Then it will be whatever the natural sustainable GDP growth rate level is
▪ * The Sustainable growth rate for the next 10-15 years seems to be between 3 to 5%
▪ * If China can get private consumption up from about $5 trillion now to $12-15 trillion in 2025 then
China will be able to sustain a higher GDP growth rate level
▪ Morgan Stanley thinks that by 2030, household disposable income will reach $8,700; the median
age will rise to 43, and internet penetration will increase to 75%; compared to $5,000, 37 years old,
and 52%, respectively, in 2016.
Next Big Future – April 30, 2017

13. CHINA DEBT
▪ March’s 2.1 trillion renminbi increase in debt was part of a 7.0 trillion renminbi
increase in debt in the first quarter of 2017, an amount equal to an astonishing 39
percent of the country’s first quarter GDP. Part of this increased lending was used
simply to roll over bad debt that is not being recognized. But most of it went to fund
a 13.6 percent increase in public sector investment.
▪ Pettis thinks the increase in debt was needed to add the 3–4 percentage points. He
assumes this is the minimum gap between China’s sustainable growth rate and its
actual growth rate. Morgan Stanley—and anyone else who believes that China can
manage a decade or more of 5 percent growth is saying the large debt boosts
growth by only one percentage point above the rate China can achieve anyway
without relying on debt.
Next Big Future – April 30, 2017

14. SLOW GDP GROWTH
Source -
https://www.canadianmanufacturing.com/manufacturing/chinas-
economic-slowdown-deepens-weighing-on-global-growth-240612/

15. CHINA / DEBT
Source - https://www.bloomberg.com/news/articles/2018-02-13/china-s-debt-laden-dealmakers-eyed-by-restructuring-specialists
Chinese deal makers that racked up debts for overseas deals and are now reversing course to pay down
borrowings have attracted the attention of restructuring specialists.
As President Xi Jinping steps up leverage curbs, borrowing costs in China have jumped.
The nation’s most high-profile deal makers including HNA Group Co. have come under mounting
regulatory scrutiny, and have been selling assets as they try to rein in borrowings. HNA missed
payments to several Chinese banks and its bond yields have in recent months traded at times at levels
that are often considered distressed.
“Chinese companies have been active in overseas acquisitions in recent years and some of their
investments have not panned out,” said Damien Whitehead, partner at law firm Ashurst, without naming
any specific companies. “Some of these companies are in a tight liquidity situation and their debt may
need to be restructured.”

16. CHINA – PRIVATE INVESTMENT
Next big future – April 30, 2017

17. CHINA AND PRIVATE INVESTMENT
▪ More reforms in the energy sector as part of re-focus on energy
▪ More P3 when it comes infrastructure spending
▪ More reforms in other areas as part of accessing more Foreign Direct
Invest (FDI)

18. GLOBAL PROTECTIONISM
▪ http://www.insurancebusinessmag.com/ca/news/breaking-news/rise-in-global-
protectionism-could-adversely-affect-the-global-economy--report-66056.aspx
Zurich Insurance also warned businesses that benefit from global trade that
they may be pushed into restructuring their supply chains in order to address
potential disruptions to their manufacturing and retail operations.
“We are in a period of geopolitical uncertainty, which can create a volatile
business environment for companies connected to global markets, whether it is
as a multinational corporation with overseas manufacturing and retail facilities
or a regional operation with global suppliers,” said Bryan Salvatore, head of
specialty products for Zurich North America.

19. CHINA AND CANADA
Source - http://dawsonstrat.com/2017/06/12/the-canada-china-trade-relationship/
Currently, China is Canada’s third largest trading partner, with two-way bilateral trade between
the countries totaling $85.9 billion in 2015. Prime Minister Justin Trudeau has indicated a desire
to double trade between Canada and China before 2025, and steps have been taken to that end.
In February 2017, an inaugural round of talks on a potential free trade agreement between
Canada and China took place.
The Canada-China FIPA lays the groundwork for an eventual Free Trade Agreement (FTA) between the two
nations. It is suggested that such an FTA would increase Canadian exports to China by almost $7.7 billion, as
well as Canadian GDP by approximately $7.8 billion (or 0.14 percent) by 2030. This would translate to the
creation of 25,000 Canadian jobs across all skill levels.
Though engagement in exploratory talks does not guarantee a Canada-China FTA, it is evident that both
countries are working to strengthen the relationship and recognize the potential advantages of stronger ties
with each other.

20. CANADA AND CHINA - FIPA
Source - https://thetyee.ca/News/2012/10/19/Chinese-Trade-Deal/
Canada signed a FIPA deal with China in 2012. FIPA deals are important as they build in
protection for businesses. No trade deal can be completed unless FIPA is part of the deal
• Not once does Trudeau ever mention FIPA
• China wants access to Canada’s Natural Resources, i.e. Oil, LNG, Metals, Forest Products, lithium, vanadium, etc.
• Canada lacks the capacity to exports. Trudeau government continues to moved forward with C69 (more regulation
when it comes to approving Natural Resources Projects)
• The new USMCA agreement has clauses - https://www.cbc.ca/news/politics/usmca-nafta-china-trade-1.4852269
• China has not embraced WTO as they claim they are still an emerging market -
https://www.scmp.com/news/china/article/2168402/will-china-change-its-trade-behaviour-us-representative-wto-
sceptical
• China and Canola - https://www.cbc.ca/news/politics/wheat-canola-china-canada-trade-1.5263313

21. CANADA AND CHINA MERCHANDISE
Source -
http://www5.statcan.gc.ca/cansim/a26?lang=eng&retrLang=eng&id=2280069&&pattern=&stByVal=1&p1=1&p2=31&t
abMode=dataTable&csid=

22. TRADE WARS / CHINA
Source - https://www.canadianmanufacturing.com/manufacturing/china-tries-to-defuse-trade-pressure-says-world-benefits-215270/
China’s government defended its trade record as a benefit to the world in a new effort Thursday to defuse
U.S. and European pressure over market access and technology policy.
A Cabinet report repeated promises to cut tariffs and open more industries to investment. But it didn’t
address complaints about plans to create Chinese global technology competitors that are at the heart of a
spiraling trade dispute with U.S. President Donald Trump.
China’s growth “has brought great opportunities to trading partners all over the world,” Deputy Commerce
Minister Wang Shouwen said at a news conference.
The report highlights the clash between Beijing’s insistence it has honoured market-opening promises
made when it joined the World Trade Organization in 2001 and arguments by Washington, Europe and
others that Beijing improperly hampers access to emerging industries and steals or pressures foreign
companies to hand over technology.
Trump’s threat of tariff hikes on up to US$450 billion of Chinese products reflects fears Beijing’s plans are
a threat to American technological leadership and prosperity. China has tried to recruit Europe as an ally in
the dispute but faces complaints by Germany and other governments that it bars purchases of Chinese
assets while its own companies are on a global acquisition spree.

23. BLOG – CHINA AND CANADA TRADE
▪ http://business.financialpost.com/opinion/terence-corcoran-trudeau-cant-land-a-trade-deal-because-hes-no-free-trader
▪ Hi Lauren
▪ Trade and FIPA agreements are federal government responsibility. There is a big picture in play with Trudeau and Wynne:
▪ https://www.facebook.com/ShannonLakeland/videos/1766348470050268/
▪ Hint: Rudi is funny as she does not live in reality!
▪ Here are things that Rudi did not get the memo when it comes to PM Selfie’s trip to China:
▪ Trudeau was told shut up about human rights which was all but ignored by MSM - https://youtu.be/03mogIdp-vA
▪ Trump went to China with a plan which resulted in $250B worth of business. Trudeau went with a plan to get social issues dealt with
by China. China told Trudeau that they were not interested in discussion of social policies -
https://www.bloomberg.com/news/articles/2017-11-08/trump-team-said-to-plan-250-billion-in-deals-from-china-visit
▪ McKenna try to force coal banning on China as such was told to bud out! Source - http://www.nsnews.com/cmlink/gmg-glacier-
media-group/2.2062/china-not-able-to-join-canada-u-k-coal-phase-out-alliance-mckenna-1.23113168
▪ You must walk a balance with China - https://www.slideshare.net/paulyoungcga/china-future-november-2017
▪ Liberals are consistent that is mislead people with information as way to muddy the water to what happen with either their policies or
their meetings with business leaders and/or other governments.

24. CHINA AND TRUDEAU
Trudeau admires China basic dictatorship
• China tells Trudeau to stop on human
rights issues
https://globalnews.ca/news/3948597/chi
na-cant-stand-justin-trudeaus-talk-of-
human-rights-diversity-ian-bremmer/
• Trudeau also pissed off India with his
approach to foreign policy
https://www.cbc.ca/news/politics/andrew
-scheer-india-trip-1.4793154
• Trudeau has pissed of two economies that
will see growth 6%. Trudeau does not
seem to care who he pisses off

25. BLOG – CHINA AND CANADA TRADE
▪ Here is a bit more on Trade:
▪ I am for supporting trade as long those deals are fair and equitable to Canada. Here are things to consider when deal with China in terms of investment and Trade:
▪ Canada has a trade deficit of $16-17B with China - http://www.statcan.gc.ca/daily-quotidien/170504/dq170504c-eng.pdf
▪ Trudeau and Protectionism - https://www.spencerfernando.com/2017/12/06/deception-trudeau-purposefully-trying-deceive-canadians-china/
▪ No more admiration - https://globalnews.ca/news/3899392/trudeau-admires-most-not-china/
▪ China wants Canada natural resources - https://www.nrcan.gc.ca/19698/ China has abysmal environmental record - https://www.ft.com/content/e22dd988-3ed9-11e7-9d56-25f963e998b2
▪ Manufacturing sector is already under pressure as such trade agreements with countries like china that have poor labour and environmental regulations only handcuffs Canadian companies in
their ability to compete - http://www.newswire.ca/news-releases/canada-china-trade-deal-would-decimate-canadian-workers-industries-628447033.html
▪ China has no interest with Trudeau’s social agenda - https://www.spencerfernando.com/2017/12/04/fool-naive-trudeau-tricked-china-press-conference-cancelled-last-minute/
▪ McKenna tried to push anti-coal on China and China said no - http://www.ctvnews.ca/politics/china-not-able-to-join-canada-u-k-coal-phase-out-alliance-mckenna-1.3708186
▪ China is moving forward with their own plans in terms of accessing key raw materials like oil - https://www.slideshare.net/paulyoungcga/why-does-government-keep-gold-reserves
▪ China wants Canadian oil - http://www.cbc.ca/news/canada/calgary/china-investment-oilsands-jim-carr-1.4152520. The problem is getting oil to China - https://www.bnn.ca/kinder-morgan-
canada-down-4-after-more-potential-pipe-delays-1.935031 (Kinder Morgan is no further along then it was when approved in late 2016)
▪ Trump went to China as such completed deals - https://www.bloomberg.com/news/articles/2017-11-09/breaking-down-the-250-billion-china-deals-trump-got-for-america as compare to
Trudeau who got nothing done - https://globalnews.ca/news/3894897/justin-trudeau-canada-china-trade-talks/
▪ Australia and China Trade Agreement -“One of the main sticking points was a temporary worker memorandum of understanding in the agreement, which caused a backlash from parts of the
Australian population that feared an influx of cheap Chinese labour” http://news.xinhuanet.com/english/2017-11/15/c_136752488.htm or https://www.asiapacific.ca/canada-asia-
agenda/china-australia-free-trade-agreement-lessons-canada
▪ China is important market, but any further advancement into trade agreements needs to be done in careful manner. https://www.slideshare.net/paulyoungcga/china-future-november-2017

26. CHINA AND CARBON TAX
▪ http://www.industryweek.com/leadership/top-polluter-china-unveils-nationwide-carbon-market?NL=QMN-01&Issue=QMN-
01_20171220_QMN-
01_859&sfvc4enews=42&cl=article_3&utm_rid=CPG03000001519274&utm_campaign=23897&utm_medium=email&elq2=b159
e52f60444cb0b1d06ae130cd0ab6
▪
▪ There has been issue with business corruption in China. http://reneweconomy.com.au/qa-how-will-chinas-new-carbon-trading-
scheme-work-57769/ Carbon trade systems have been fraught with corruption in the past -
http://www.leviathanjournal.org/single-post/2018/01/21/Carbon-Trade-Fraud
▪ China has made changes to help reduce emissions through shutting down of plants, but emissions are still a big issue -
http://www.climatechangenews.com/2018/02/12/china-counts-emissions-growth-shaken-free-carbon/
▪ You cannot talk environment unless you look at the three main pieces: a) Land Management b) Water Management c) Air Quality
-
https://www.google.ca/search?rlz=1C1CHBF_enCA759CA759&biw=1536&bih=759&tbs=qdr%3Am&ei=ugaEWuvwGeupjwTz9Kf4
Cg&q=china+environmental+ranking&oq=china+environmental+ranking&gs_l=psy-
ab.3..0i22i30k1.1655.7520.0.7680.22.16.0.6.6.0.91.1096.16.16.0....0...1c.1.64.psy-
ab..0.22.1126...0j46j0i67k1j0i131k1j0i131i67k1j0i46k1j33i22i29i30k1j33i160k1j33i21k1.0.wx2gx0oi-PE - China is ranked 120th
▪

27. CHINA AND USA
▪ https://www.uschina.org/reports/us-exports/national

28. CHINA AND VIRUSES
1. Bats and Viruses - https://www.scientificamerican.com/article/how-chinas-bat-woman-
hunted-down-viruses-from-sars-to-the-new-coronavirus1/ “The epidemic is one of the
worst to afflict the world in recent decades. Scientists have long warned that the rate of
emergence of new infectious diseases is accelerating—especially in developing countries
where high densities of people and animals increasingly mingle and move about.”
2. China and Government control -
https://www.nytimes.com/2020/03/29/world/asia/coronavirus-china.html

29. CHINA AND WORLD SUPPLY CHAIN
▪ Businesses moved their models to low costing producing countries as part of the
overall supply chain. The problem is too many low-cost producing countries have issues
with their environment, water, land, forest management –
▪ Source - https://www.bostonglobe.com/2020/03/30/opinion/end-global-supply-chain/

30. CHINA AND THE CARRIBBEAN
▪ New highway Jamaica - https://america.cgtn.com/2016/03/23/730m-chinese-built-highway-
opens-in-jamaica
▪ Bauxite Mines - http://www.jamaicaobserver.com/business-observer/pm-wants-improved-
trading-between-jamaica-china_178391?profile=1442
▪ China and Ports / Bahamas - https://www.rollcall.com/2019/03/25/caribbean-islands-
becoming-hot-spots-for-chinese-investment/ or https://www.portandterminal.com/is-china-
setting-up-caribbean-ports-for-economic-blackmail/
▪ China and Cuba - http://www.xinhuanet.com/english/2018-09/20/c_137481986.htm
▪ FDI - https://www.statista.com/statistics/748563/fdi-caribbean/

31. CHINA AND COVID19
▪ Road to a vaccine - https://www.slideshare.net/paulyoungcga/race-for-covid19-vaccine
▪ China is buying up assets - https://nunatsiaq.com/stories/article/chinese-gold-miner-hopes-to-
buy-western-nunavut-gold-mine/ - China always has stipulations that their workers must be
employed at the plants, mines, etc. China is basically import labor as part of managing the
economic impact.
▪ China could buy up undervalue assets due to COVID19 -
https://www.scmp.com/news/world/united-states-canada/article/3085534/us-senators-urge-
safeguards-keep-china-buying
▪ Funding of Universities in USA - https://www.inquirer.com/education/china-funding-us-colleges-
universities-trade-tensions-20200207.html
▪ Australia and China – “Politics driving the two countries apart, but trade is drawing them together
- https://asia.nikkei.com/Opinion/China-and-Australia-s-relationship-is-souring-but-not-
weakening

32. TRAINING AND DEVELOPMENT
▪ If you like to learn more
about trade and/or other
subjects as part of your
professional learning and
development then feel
free to review my
material on
https://www.udemy.com
/ (search Paul Young CPA
CGA)
▪ These subjects address
how to fixed issues with
housing and/or systemic
issues related to
economy including
government policies

33. SUMMARY
▪ China has become more and more isolated from the world due to is internal politics -
https://www.scmp.com/economy/global-economy/article/2168294/attempt-isolate-china-world-trade-
system-will-not-work-says
▪ WTO needs to stop calling China an emerging market as such needs to get tougher when it comes to China’s
labor, environment and other unfair business practices - https://theconversation.com/myth-busted-chinas-
status-as-a-developing-country-gives-it-few-benefits-in-the-world-trade-organisation-124602
▪ China is one of the top consuming countries of raw materials. China leads the world in emissions -
https://www.eia.gov/tools/faqs/faq.php?id=709&t=6 or https://www.pbs.org/newshour/science/only-2-
countries-are-meeting-their-climate-pledges-heres-how-the-10-worst-could-improve (Dirty Coal and other
bad practices when it comes to the environment
▪ China needs to be more open and transparent when it comes to handling of viruses – WHO needs to do
more in terms of audits - https://foreignpolicy.com/2020/03/25/blame-china-and-xi-jinping-for-
coronavirus-pandemic/
▪ More and more countries need to re-look at how they source and produce product within their own border
including their taxation, regulation, skills trades, etc. https://www.industryweek.com/the-
economy/trade/article/21121070/reshoring-at-record-levels-is-it-enough