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UNDERSTANDING CHINA
(INTERNATIONAL TRADE-CHINESE MODEL
OF DEVELOPMENT-EXPORT LED GROWTH)
Dr. Arifa Saeed
CHINA IN PROFILE
 Name: the People's Republic of China(PRC)
 Land: 9.6 million square kilometers. Third largest country in
the world, next to Russia and Canada; is as large as Europe,
or 1/3 of Africa.
 has 14 neighbors(more than any other country), and 8
maritime nighbors
 2014 Population: 1.368 billion, accounting for close to 20% of
global total; natural population growth rate 0.52%, lower than
average level of developiing countries.
 Most populous and largest developing country in the world
 Largest energy consuming country, taking up 23 % of global
energy consumption; largest manufacturing country; largest
material consuming country
CHINA IN PROFILE
 second largest economy and largest trading
nation in world
 2014 GDP: 10.4 trillion dollars; next only to
US(16 trillion dollars,five times that of Africa),
18% of global total.
 2014 per capita GDP: 7380 dollars
 largest foreign investment destination(2014)
CHINA IN PROFILE
 2015-GDP growth:6.9%, contributing to
30% of global growth(average global
GDP growth:2.5%),adding more to
global output than any other country
 Annual GDP increase the same as total
GDP of Turkey(17th largest economy)
 Scientists & engineers: 3.2 million, largest
in world
CHINA IN PROFILE
 Total import and export of 2015: 3.96 trillion dollars, with foreign
trade accounting for 45% of GDP and contributing to 10.5% of
economic growth.
Foreign exchange reserves in August, 2015: 3.4 trillion dollars,
30% of global total.
 2,850 universities and colleges and 24 million university and
college students, 7.5 million university graduates in 2015 (more
than Finland's total population)
 People below poverty line(1.25 dollars/day): 77 million(6.5 % of
total population,2rd largest group in world: India has largest
group)
CHINA IN PROFILE
 Average life expectancy: 76 years old (India 65,world
average:69.6);
 Urban unemployment rate: 4.09%(2014)
 inflation rate: 1.4%;
 Service's share of GDP: 50.5%; manufacturing: 40.5%;
agriculture: 9%(2015)
 Investment's share of GDP: 54.4%; consumption:50; (
US:70%)
 Savings as share of GDP: 53%, highest in world( 8 times of
US);
 Basic self-sufficiency in food:90%; energy: 85%
 Private sector's share of GDP: over 60%. 16 million private
businesses
 New jobs created in 2015: 13 million, largest in history
 Foreign aid in 2012: over two billion dollars
TOPOGRAPHY AND ITS IMPACT ON
EVUTION OF CHINESE CIVILIZATION
 China is situated in East Asia and faces West Pacific.
 It is surrounded by mountain ranges in the southwest and
Gobi Deserts in the west and north, which serve as
natural shields.
 Despite a coastline of over 10,000 kilometers, China has
been a continental power, not maritime power.
 Independent growth of Chinese culture and language.
 Interaction with other cultures began only after Chinese
culture took shape.
TOPOGRAPHY AND ITS IMPACT ON
EVOLUTION OF CHINESE CIVILIZATION
 A recorded uninterrupted history of over 4,000
years, only surviving ancient civilization in the
world.
 China invented gunpower, the compass,
printing and paper making, which exerted a
profound impact on the evolution of human
civilization.
UNIFICATION OF CHINA
(FIRST LANDMARK EVENT IN CHINA'S HISTORY)
 In 221 B.C., Emperor Qin Shihuang
unified China after defeating warring
states (same time of Roman Empire).
 A landmark event in Chinese history: A
centralized governance structure with
the emperor being the supreme ruler was
established.
 County became the basic administrative
unit, with no kingdoms or dukedoms
between it and national government. All
local officials owed allegiance to the
emperor. No federalism.
UNIFICATION OF CHINA
 This model of governance lasted for over 2,000
years, during which China was ruled by 400
emperors in 16 dynasties. Longest functioning
political structure in the world.
 China has remained a unified country under the
leadership of a centralized government.
 China was the dominant country in East Asia,
whose culture exerted great impact on its
neighbors, particularly Korea, Japan and Viet Nam.
Collectively, this is known as the Chinese cultural
zone.
CONFUCIUS
AND SHAPING OF CHINESE MIND
 Confucius(551 B.C.-479 B.C.),
a great Chinese thinker,
philosopher and educator.
CONFUCIUS
AND SHAPING OF CHINESE MIND
 He advocated justice, peace, rites, order,
kindness and education for all without
discrimination.
 He developed a code of conduct and ethics
which have been observed for generations in
China.
 Confucius is to Chinese civilization what Jesus
Christ is to Western civilization. But Confucius
was not a religious figure, as he did not believe
in existence of god.
 China has opened 300 Confucius Institutes
overseas to promote understanding of Chinese
culture.
1. Belief in unified nation state and a high
degree of cohesion: common Chinese
identity (caused by China's geographical
location)
2.Great power of assimilation (fully
understanding information or ideas)
TWO DEFINING FEATURES OF
CHINESE CULTURE
RELIGIONS IN CHINA
There are over 100 million believers of various
faiths in China.
 Buddhism, introduced into China from India in the
first century A.D., is the most influential one.
 Taoism (way or path meaning in chinese), a home
grown religion with limited influence.
 Islam, introduced into China in 7th century
A.D.(23 million believers)
 Catholicism, introduced into China in early 19th
century(6.5 million believers)
 Protestantism, introduced into China in early 19th
century(23 million believers)
RELIGIONS IN CHINA
 China has always been a secular country (neutral
regarding religion).
 Unlike many Western countries, it has no state
religion.
 The power of the state has always been much
greater than that of religion.
 Religion's role in shaping the Chinese mind is far
less important than Confucianism.
 Religion's impact on evolution of Chinese culture is
limited.
 China does not have a messianic culture of
converting others.
COMPOSITION OF THE CHINESE NATION
 There are 56 ethnic groups in China.
 The Han people, the largest group, accounts for
92% of China's total population.
 So the Chinese culture generally refers to the
culture of the Hans.
 The remaining 55 minority groups are mostly in
southwest, northwest and northeast China.
DECLINE OF IMPERIAL CHINA
 The Chinese empire reached golden age in
the Tang and Song Dynasties(618-1279) —
largest economy in the world.
 The Silk Road linked China with the West.
 China accounted for 30% of global GDP,
higher than that of Europe and similar to that
of US in 2000.
DECLINE OF IMPERIAL CHINA
 it saw fast decline in the
Qing Dynasty in the 18th
century.
 Chinese rulers blindly
believed in superiority of
imperial China and refused
to open the country to the
rest of the world.
 Thanks to the Industrial
Revolution, the West
closed gap with China and
surpassed it.
DECLINE OF IMPERIAL CHINA
 The 19th century was a century of
humiliation for China.
 Western powers forced open
China's door, occupied parts of the
country and imposed unequal
treaties upon it.
 Hong Kong and Macao
respectively came under British
rule and Portuguese rule, and
Taiwan was occupied by Japan.
 This is why till today, the Chinese
are still sensitive about foreign
interference in China's internal
affairs.
OVERTHROW OF IMPERIAL CHINA
(SECOND LANDMARK EVENT IN CHINA'S HISTORY)
 The corrupt Qing government was
overthrown by a popular revolution led by Dr.
Sun Yat-sen in 1911 which ended the 2,000-
year-old imperial rule in China.
 The birth of the 1911 Revolution was marked
in China in 2011.
BIRTH OF THE COMMUNIST PARTY OF
CHINA(CPC)
(THIRD LANDMARK EVENT IN CHINA'S HISTORY)
 The Republic of China was founded in 1911; the
Nationalist Party headed by Dr. Sun Yat-sen
gained power.
 The Communist Party of China was formed in
1921.
 After Dr. Sen Yat-sen's death, the Nationalist
Party tried to suppress the CPC, triggering a
prolonged civil war.
FOUNDING OF NEW CHINA
(FOURTH LANDMARK EVENT IN CHINA'S HISTORY)
 After the victory in the War against
Japanese Aggression, the
Nationalist Party provoked a civil
war against the CPC.
 But it was defeated and fled to
Taiwan.
 On October 1, 1949, Mao Zedong,
leader of the CPC, proclaimed the
founding of the People's Republic
of China.
 a new historical stage in
contemporary China.
 The CPC is now old.
POLITICAL SYSTEM OF CHINA
 China is a socialist country under the
leadership of the CPC.
 The CPC is the governing party of China.
 With over 87 million fee-paying
members(more than population of
Germany), it is the largest political party in
the world.
 Eight non-communist parties are engaged in
China's governance in cooperation with the
CPC.
TRANSITION TO NEW PARTY AND
GOVERNMENT LEADERSHIP
 A group of new leaders were
elected.
 Xi Jinping, a key CPC leader
and former Chinese Vice
President, was elected new
party general secretary at
Party Congress in 2012.
 He became Chinese president
in March 2013. Having taken
various government posts, Xi is
a capable leader and his
governance agenda has won
solid public support.
WHAT HAS LED TO
CHINA'S PROFOUND TRANSFORMATION
(FIFTH LANDMARK EVENT IN CHINA'S HISTORY)
 China is undergoing profound social
 and economic transformation which started
over 30 years ago.
 Until then, China had been an agrarian
society since ancient times with over 90% of
its population being rural. In modern times, it
lagged far behind the West, and poverty, civil
strife and starvation were common.
WHAT HAS LED TO
CHINA'S PROFOUND TRANSFORMATION
 Things began to improve
significantly after the founding
of New China under the
leadership of Mao Zedong
 But Mao later believed that
China was on the wrong track
of development and started the
so-called Cultural Revolution in
1966.
 It lasted ten years and proved
a disastrous exercise that not
only closed China but also
brought its economy to the
brink of bankruptcy.
WHAT HAS LED TO
CHINA'S PROFOUND TRANSFORMATION
 The private sector was wiped out. China's gap with
the West again widened. China’s GDP was a pitiful
1.8% of global total in the late 1970s.
WHAT HAS LED TO
CHINA'S PROFOUND TRANSFORMATION
 Mao Zedong died in 1976, and two
years later, Deng Xiaoping,also a
founding father of New China, became
China's top leader.
 Deng Xiaoping had a great sense of
rationality.
 He believed that China had to change
course and lost no time in starting a
daring reform and opening-up program.
 He is therefore referred to as the
architect of China's reform and
opening-up program by Western media.
RURAL REFORM
 China's reform started in the rural areas.
Deng Xiaoping impowered Chinese farmers
by introducing a household contract
responsibility system to give farmers more
incentives in farming. Private economy in
rural areas was restored.
 Government purchasing prices of grain
were raised. Grain output soared as a
result. Thanks to rural reform, hunger and
starvation for the first time in China's history
became a thing of the past.
RURAL REFORM
 Rural reform started the process of
agricultural mechanization, a process
that is ongoing.
 As farming became mechanized,
surplus rural labor force increased.
 China encouraged its farmers to set up
small factories which absorbed millions
of surplus rural labor force.
 These small factories were later to
become a dynamic private sector.
 Rural income rose; surplus rural labor
force provided needed labor for
industrialization/ urbanization.
URBAN REFORM
 Sweeping urban reform was introduced in
the early 1980s with the goal of replacing
the Soviet-style command economy with a
socialist market economy (mixture of public,
cooprative and private).
URBAN REFORM
 Price control over most products
was lifted; capital market
developed; stock exchanges set
up and hundreds of companies
are listed; business acquisition
and merger encouraged. Share-
holding companies set up.
 Almost all small and medium-
sized state-owned
enterprises(SOES) were
privatized.
 There were close to 300,000
SOES in early 1990s
 government now only controls
100 plus large groups of SOES.
URBAN REFORM
 Private businesses now
account for over 70% of
national total and
contribute to over 60%
of China's GDP, and
create over 90% of new
jobs in China.
URBAN REFORM
 Development of housing market in late
1990s was a most significant
development in urban reform, creating
huge demand for private housing.
 The housing sector: engine driving
China’s economic growth.
 In past 15 years, China has built
enough apartment buildings to house
combined population of Germany,
France,UK.
 Its housing sector & infrastructure
account for one fourth of global steel
demand.
 Market now plays a major role in
resources allocation.
OPEN CHINA’S ECONOMY TO WORLD
 China's opening started in
eastern coastal region.
 Four special economic zones
were set up in the eastern
coastal region to attract foreign
capital.
 Shenzhen is one of them. A
sleepy fishing village close to
Hong Kong in the early 1980s,
Shenzhen has grown into a
major metropolis with a
population of 13 million. Its
total export and import rank
first in China.
OPEN CHINA’S ECONOMY TO WORLD
 China has been the second largest (next
only to the U.S.) foreign investment
destination, with average daily inflow of
foreign investment exceeding 100 million
dollars in the past two decades.
 Between 1979- 2013, over 1.3 trillion dollars
of foreign investment was made in China.
 The figure was 126.7 billion dollars in 2015,a
6.4% increase.
OPEN CHINA’S ECONOMY TO WORLD
 Among the global
500 companies, 490
have invested in
China.
 Almost all Apple
products are made in
China. Over 1 million
Chinese workers
asembled Apple
products in China.
SPECIAL ROLE OF HONG KONG
IN CHINA’S OPENING UP
 Hong Kong was occupied by Britain in the 19th century.
 China resumed exercise of sovereignty over Hong
Kong in 1997.
 A system of "One Country, Two Systems" is practiced in
HK, and its former social and economic systems have
remained basically unchanged.
 An international trading and financial center, HK serves
as an indispensable platform for attracting foreign
investment and expertise to China.
 More Chinese companies are listed in HK than in New
York.
CHINA’S ACCESSION TO THE WTO
– A LANDMARK EVENT IN CHINA’S OPENING-
UP
 China joined the WTO
in 2001, marking a
new turning point in
China’s opening-up.
 Tariffs were cut from
15.3% to 9.8%,
below the average
level of developing
countries.
CHINA’S ACCESSION TO THE WTO
– A LANDMARK EVENT IN CHINA’S OPENING-
UP
 China has opened most of its economic
sectors, particularly the services sector, to
foreign investment. It is now more open
than the average developing country. In
some sectors, it is more open than Japan.
 Significance: China’s full integration into
the global economy.
CHINA’S REFORM AND OPENING-UP: AN
UNPARALLELED SUCCESS IN HUMAN HISTORY
 since started in 1978, reform and opening up
have accomplished China’s transition from a
rigid centralized command economy to a vibrant
socialist market economy.
 Annual growth rate has been close to 10% for
34 years for over one billion people, unseen in
world history.
 China led the world in growth during this period,
with growth rate being 2-4 times of world
average.
CHINA’S REFORM AND OPENING UP: AN
UNPARALLELED SUCCESS IN HUMAN HISTORY
 In 1978, China’s GDP stood at 268 billion
dollars, ranking 15th place in the world.
 In 2014, it reached 10.4 trillion dollars and
was next only to the United States.
 China's GDP has doubled every eight
years.
 China’s share of global GDP rose from
1.8% in 1978 to 18% in 2014.
CHINA’S REFORM AND OPENING UP: AN
UNPARALLELED SUCCESS IN HUMAN HISTORY
 China’s foreign exchange reserves rose
from just 167 million dollars in 1978 to 3.4
trillion dollars in first half of 2014
 accounting for 27.5%% of global total and
more than any other country.
CHINA’S REFORM AND OPENING UP: AN
UNPARALLELED SUCCESS IN HUMAN HISTORY
 676 million people in
China, close to Africa's
population, were lifted
out of poverty between
1981-2008, taking up
70% of people lifted out
of poverty in same period
worldwide. It is an
achievement unseen in
world history
CHINA’S REFORM AND OPENING UP: AN
UNPARALLELED SUCCESS IN HUMAN HISTORY
 China’s economy registered
explosive growth, particularly
in the auto and housing
sectors in the first decade of
this century.
 China produced 2.33 million
vehicles in 2001.
 The number jumped to 23
million in 2014, 25% of total
global output.
 China has overtaken the US
to become the largest vehicle
producer in the world for 6
years.
 China will be the largest auto
market in the world in next 20
years.
CHINA IN INDUSTRIALIZATION
 The reform and opening-up program has
accelerated a massive process of
industrialization in China.
 China is the leading global producer and
consumer of steel, cement, coal, electricity,
machinery, electronics, footwear, garment
and household appliances.
 It is the world’s largest producer and
exporter of over 200 industrial products.
 In 2014, it produced 60% of global output of
power generating equipment, 70% of
mobile phones and computers,41% of ships,
and 25% of cars.
 2014 steel output: 823 million tons, over
50% of world total(EU:10%)
 2014 coal output:3.9 billion tons, over 40%
of global total
CHINA IN INDUSTRIALIZATION
 In 1995, only two Chinese companies were
among global top 500 companies.
 The number jumped to 95 + last year,
making Chinese companies the second
largest group among top 500.
 China has surpassed U.S. to become the
largest global manufacturers, accounting
for over 30% of global manufacturing
output. Rapid industrialization has become
a key factor driving China’s growth.
URBANIZATION: MOST IMPORTANT
DEVELOPMENT TREND IN CHINA TODAY
 This process started in the early 1980s,
caused by migration of surplus rural
labor force to cities.
 500 million rural people, more than the
combined population of US, UK, France
and Italy, have moved into cities.
 By 2030, another 300 million rural
people will move to cities.
URBANIZATION: MOST IMPORTANT
DEVELOPMENT TREND IN CHINA TODAY
 In 2015, 56% of Chinese,
numbering 770 million,
live in cities, reaching the
world average level.
 There are 100 cities in
China each having a
population of over one
million, and the number of
towns and small cities is
growing.
 29 of 75 most dynamic
cities in the world are in
China.
URBANIZATION: MOST IMPORTANT
DEVELOPMENT TREND IN CHINA TODAY
 Urbanization marks China’s transition from a rural
society to an urban society.
 Urbanization in China is expected to last for 20 years,
which means much room for growth.
 Urbanization will create tremendous housing demand
and demand for better urban infrastructure and
services. This will be the most important force driving
China’s development in the coming decades.
 Two billion square meters of buildings are constructed
in China annually, accounting for 42% of buildings
constructucted globally.
 Two thirds of new aiports under construction in the
world are in China.
GLOBAL SIGNIFICANCE OF
CHINA’S DEVELOPMENT
 China has become the largest trading nation.
 Its trade has grown at an annual rate of 21.7% in
past decade(world average:10%).
 Its export in 2014 accounted for 12% of global total.
 Massive import over the years has created 14 million
jobs for countries exporting to China.
 Total import in next five years will reach ten trillion
dollars. China is largest trade partner of 127
countries(US: 70 countries)
 In the past decade, foreign companies in China have
made 260 billion dollars of net profit, growing 30%
annually.
GLOBAL SIGNIFICANCE OF
CHINA’S DEVELOPMENT
 China has been 3rd largest
foreign investor in the world for 3
years, with over one trillion
dollars of non-financial
investment in 177 countries
(80% in developing countries) at
end of 2015.
 In 2015, China's outbound
investment reached 118 billion
dollars, growing by 18% and a
40 times increase in 13years.
The rate was far higher than that
of foreign investment in
China(6.4%).
GLOBAL SIGNIFICANCE OF
CHINA’S DEVELOPMENT
 China has provided 50
billion dollars of aid to
161 countries and trained
120,000 professionals for
developing countries.
 China's foreign aid has
increased at an annual
rate of 30% in recent
years, reaching 15 billion
dollars between 2010-
2012.
CHINA STILL FACES DAUNTING DEVELOPMENT
CHALLENGES
 Low Per Capita Share of Resources
China’s per capita share of major resources
is well below world average.
 Farmland: 43% of average global share.
China produces 25% of global food with
9% of global land feeds 20% of global
population.
 Fresh water: 28% of world average and
6.5% of world total, leading to shortage of
water in 70% of Chinese cities. Beijing's per
capita share of water is only 1/80 of world
average, less than that of Middle East.
Northern China faces a water crisis.
 Forest resources: 25% of average global
share
 Iron ore and copper: 17% Oil and gas: 7.7%
CHINA STILL FACES DAUNTING DEVELOPMENT
CHALLENGES
Unbalanced Energy Structure
China meets 85% of its
energy needs but depends
excessively on coal and
import accounts for 60% of its
oil needs.
Largest coal producer and 4th
largest oil producer, 6th
largest natual gas producer
in the world.
Total energy consumption in
2014: 4.26 billion tons of
standard coal
CHINA STILL FACES DAUNTING
DEVELOPMENT CHALLENGES
 Unbalanced Energy Structure
 Mix of energy consumption : Coal: 66%;
oil & natural gas17.1 %; hydro, nuclear,
wind and solar power: 16.9%.
 Coal is a dirty energy, creating acid rain
affecting 1/3 of China’s land area.
 A major source of carbon emission and
pollution. 2013 Coal consumption: 3.7
billion tons, 47% of global total.
CHINA STILL FACES DAUNTING DEVELOPMENT
CHALLENGES
 Unbalanced Energy
Structure
 In 2014, China
imported 308 million
tons of oil, accounting
for 60% of its oil
consumption. China
has overtaken U. S
to become world’s
largest oil importer.
 China imports 30% of
natural gas used.
CHINA STILL FACES DAUNTING
DEVELOPMENT CHALLENGES
 Low Economic Efficiency
 China accounts for 18% of global economic output , butt
consumes 20% of total global energy, more than the US.
But its GDP is 56.5% of US. Productivity 1/12 of US.
 It consumes 53% of global output of cement, 47% of iron
ore, 47% of coal, 45% of steel, 11% of oil, 44% of lead,
and 38% of copper. China's economy is a typical
resources and energy intensive economy.
 China’s per unit GDP energy consumption is 7 times that
of Japan and 2.2 times of world average. It accounted for
71% of increase in global energy consumption in 2014.
CHINA STILL FACES DAUNTING DEVELOPMENT
CHALLENGES
 Lack of competitive core
technologies
 85% of computer chips are imported,
reaching192 billion dollars in 2014,
accounting for 52% of global output. It is
more than China's oil import.
 Although largest auto maker in world, only
40% of cars are produced by local Chinese
companies. No Chinese brand car can
compete globally.
CHINA STILL FACES DAUNTING DEVELOPMENT
CHALLENGES
 Excess production capacity
in almost all sectors,
particularly in steel, cement
making, coal mining,
manufacturing, solar energy
products making,
shipbuilding; half of
shipbuilding capacity lies
idle.
 Annual steel making
capacity: 900 million tons,
actual output in 2014: 820
million tons, over 50% of
world total.
CHINA STILL FACES DAUNTING
DEVELOPMENT CHALLENGES
 Environmental Degradation
Trend towards environmental degradation has not been
reversed.
 Air pollution affects 50% of China's population. Soil
erosion, pollution and carbon emission remain serious.
 Of 160 major Chinese cities, only 10% meet air quality
standard
 China has become top global carbon emitter, contributing
to 27% of global carbon emission, although its per capita
share of carbon emission is far below that of developed
countries.
 Pollution costs 10% of China's GDP.
CHINA STILL FACES DAUNTING DEVELOPMENT
CHALLENGES
 Environmental
Degradation
70% of surface water in China is
polluted; one in four Chinese
drinks substandard tap water.
 East China was shrouded by
heavy smog in January, last year,
worst in half a century. The
country now faces an
environmental crisis.
 Beijing and surrounding areas
account for 1/77 of global land
area but consume 10% of global
coal output.
CHINA STILL FACES DAUNTING DEVELOPMENT
CHALLENGES
 Gap in Development between East
and West China
 East China accounts for 40% of
China’s land area but 77% of its
population and over 70% of GDP.
 West China lags far behind East China
in development.
 Beijing and Shanghai in East China
approach developed countries,
whereas several dozen million people
in rural West China live on 1.25 dollars
a day.
 Excessive dependence on investment:
54.4% of GDP(US: 19%)
CHINA STILL FACES DAUNTING
DEVELOPMENT CHALLENGES
 Aging Population
 China faces more severe population
challenge than any other country in the
world.
 16 million newborns last year, more than
combined population of Sweden and
Denmark.
 Population explosion is no longer an issue
confronting China, as is the case in many
other developing countries.
CHINA STILL FACES DAUNTING
DEVELOPMENT CHALLENGES
 Aging Population
 China has entered a period of low
fertility and low population increase
thanks to one child policy pursued for
over 30 years. This policy has
reduced population growth by 400
million. Global population reached 7
billion July, 2012, five years later
thanks to China's family planning
policy.
CHINA STILL FACES DAUNTING DEVELOPMENT
CHALLENGES
 Aging Population
 Fertility rate is less than
1.5 children per couple,
on a par with or lower
than developed countries.
 Population growth rate is
expected to drop sharply
in coming years. China's
population will stop
growing and start to
shrink around 2030.
CHINA STILL FACES DAUNTING
DEVELOPMENT CHALLENGES
 Aging Population
 People reaching 60 and above are
approaching 200 million, 14.9% of total
population and largest such group in world.
The number will exceed the whole
population of U.S. by 2030. Aging population
could become a huge burden to government.
China could become old before becoming
rich.
 There are 85 million people with disabilities,
also largest in world.
CHINA STILL FACES DAUNTING
DEVELOPMENT CHALLENGES
 Currently, 25 million people enter labor
market every year, more than Australia's
population. This has created huge pressure
for employment. But growth of labor force
peaked and began to decline in 2012.
Working population in 2013:0.92
billion,67.6% of total population,a drop of
2.44 million over 2012. This means growth
needs to be driven more by gains in
productivity, not just more labor.
CHINA STILL FACES DAUNTING
DEVELOPMENT CHALLENGES
 Trap in middle income transition?
 When a country's average GDP reaches
between 4,000-10,000 dollars, its growth
tends to stall due to wage rises, drop in
R&D benefits and investment in
infrastructure, aging population and
increasing environmental costs.
 Can China avoid this trap?
PRESSING NEED FOR CHANGING
GROWTH MODEL
 China’s current growth model is one of high
energy and resources consumption, low output
and high carbon emission.
 Infrastructural investment is the main driver of
growth, while consumption is insufficient.
 It is unbalanced and unsustainable.
 The need to rebalance the economy: moving
from investment and credit driven development
to consumption and innovation driven
development
 China must change this growth model if it is to
maintain sound economic development.
PURSUIT OF SUSTAINABLE DEVELOPMENT
 The government is keenly aware of this
daunting development challenge and has
adopted the strategy of pursuing balanced
and sustainable development.
 Reduce dependence on investment in
infrastructure and increase consumption and
services
PROGRESS IN PURSUIT OF
SUSTAINABLE DEVELOPMENT
Energy conservation and reducing carbon emissions:
 In past five years, energy consumption has grown at 4.7%,
lower than 7.5% economic growth. Share of coal in energy
consumption has been cut by 2%. Energy consumption per
GDP unit in 2015 dropped by 5.6%, its growth lowest since
1998.
 China is pursuing the world’s largest clean energy
development program and is the top world producer of solar
and wind power equipment.
 Goal: Stop Carbon emission growth in 2030; clean energy
reaches 20% of total energy consumption.
CHINA'S ECONOMY ENTERS A NEW NORMAL
 Growth shifts from high rate growth to
medium-high rate growth; dropping from
9.5% annual growth for over 25 years to
around 6.9% in 2015, slowest in 25 years.
 Goal: annual growth of around 7% for
coming years, which is necessary to create
employment.
 Still be one of the highest in the world.
 To be achieved by innovation, development
of services and consumption.
PROGRESS IN PURSUIT OF
SUSTAINABLE DEVELOPMENT
Energy conservation and reducing
carbon emissions:
 China has 20 nuclear power
generators, and 28 are under planning
or construction, which is the largest
nuclear development progrqam in the
world. China will become second
largest nuclear power producer in
2020. China is world's No. 1 wind
power producer, growing 96%
annually. Also world's largest hydro
and solar power producer. Hydro
power: 27% of global total,;5 of 10
largest hydro power stations in world
are in China.
PROGRESS IN PURSUIT OF
SUSTAINABLE DEVELOPMENT
Energy conservation and carbon emission
reduction:
Investment in clean energy in 2014: 90 billion
dollars, up 32%, accounting for 29% of global total.
(Europe: up 1%)
 Renewable power generation reached 32% of
total power generation in 2014.
 Investment in energy saving and environental
protection wil reach 315 billion dollars in next 5
years.
PROGRESS IN PURSUIT OF
SCIENTIFIC DEVELOPMENT
 Support development
of West China to
narrow gap in
regional development
by providing financial
assistance and
building expressways,
railways and airports
Result: West China
grows faster than
East China
PROGRESS IN PURSUIT OF
SCIENTIFIC DEVELOPMENT
 Increase government input in R&D to raise
production efficiency and upgrade industries.
Such investment has grown 20% annually in
past six years.
 Increase spending on education to train
competent professionals
CHINA PURSUES PEACEFUL DEVELOPMENT
 China will not pursue development at
expense of others
 Development through peace and share
development interests
 China has entered into free trade
agreements with 20 countries in Asia Pacific,
Europe and Latin America, opened its huge
domestic market so that other countries can
benefit from China's development.
CHINA’S AID TO AFRICA
 Africa is a major recipient of
Chinese aid.
 Total Chinese aid to Africa has
exceeded 40 billion dollars.
China is committed to providing
long-term aid to Africa.
 China has sent medical teams to
almost all African countries and
treated millions of African patients.
 The latest example is fighting
Ebola epidemic in West Africa
and Crona virus.
CHINA’S FOREIGN POLICY GOALS
 Making friends with all and making enemies
with none
 Mutual respect for sovereignty and non-
interference - cornerstone of China’s
diplomacy
CHINA’S FOREIGN POLICY GOALS
 Meeting international
responsibility in
upholding global
peace and security.
 China has sent
14,000 peacekeepers
on 24 missions, more
than US, Russia.
CHINA’S FOREIGN POLICY GOALS
 Maintaining good ties
with neighbors, major
powers like US,
Russia, EU and all
others
WHAT LIES AHEAD FOR
CHINA’S DEVELOPMENT
 China’s reform and opening-up will continue.
A high degree of consensus between the
public and policy makers about the need to
continue the program.
 Robust domestic demand created by
industrialization and urbanization will drive
China’s economic development for several
decades to come. Urbanization in next 20
years will create 8 trillion dollars in demand.
WHAT LIES AHEAD FOR
CHINA’S DEVELOPMENT
 Growing at the current rate, China
could surpass the United States in
15 years to become the world’s
largest economy.
 The goal set at the 18th CPC
National Congress lin 2012 is for
China’s 2010 GDP and per capita
income to double by 2020 and
reach current level of medium-
level of developed countries by
mid-21st century. This goal is
obtainable.
REALIZE THE CHINESE DREAM
 The goal, which is to achieve national
renewal, was put forward by Chinese
President Xi Jinping when he took over Party
leadership in November, 2012.
THE CHINESE EXPERIENCE:
WHAT IS THE RELEVANCE?
As conditions vary from country to country, the Chinese
growth model may not be generally applicable, but it can
serve as useful reference for other developing countries in
pursuing development.
1. Commitment of political leadership is of paramount
importance.
2. Promoting growth should top government agenda.
3. Forging public-government consensus on pursuing
this goal
4. Be firm in carrying out reform and discarding
unworkable practices.
5. Pursuing government guided market operation
THE CHINESE EXPERIENCE:
WHAT IS THE RELEVANCE?
6. Embracing globalization and promoting an open
economy
7. country’s comparative advantages
8. Enhancing education and creating a huge pool
of competent professionals
9. Increasing input in R&D to move up the value
chain
10.Pursing sound and sustainable development
Thank you for your interest!

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Understanding China(International Trade-Chinese Model of development-Export led growth)

  • 1. UNDERSTANDING CHINA (INTERNATIONAL TRADE-CHINESE MODEL OF DEVELOPMENT-EXPORT LED GROWTH) Dr. Arifa Saeed
  • 2. CHINA IN PROFILE  Name: the People's Republic of China(PRC)  Land: 9.6 million square kilometers. Third largest country in the world, next to Russia and Canada; is as large as Europe, or 1/3 of Africa.  has 14 neighbors(more than any other country), and 8 maritime nighbors  2014 Population: 1.368 billion, accounting for close to 20% of global total; natural population growth rate 0.52%, lower than average level of developiing countries.  Most populous and largest developing country in the world  Largest energy consuming country, taking up 23 % of global energy consumption; largest manufacturing country; largest material consuming country
  • 3.
  • 4. CHINA IN PROFILE  second largest economy and largest trading nation in world  2014 GDP: 10.4 trillion dollars; next only to US(16 trillion dollars,five times that of Africa), 18% of global total.  2014 per capita GDP: 7380 dollars  largest foreign investment destination(2014)
  • 5. CHINA IN PROFILE  2015-GDP growth:6.9%, contributing to 30% of global growth(average global GDP growth:2.5%),adding more to global output than any other country  Annual GDP increase the same as total GDP of Turkey(17th largest economy)  Scientists & engineers: 3.2 million, largest in world
  • 6. CHINA IN PROFILE  Total import and export of 2015: 3.96 trillion dollars, with foreign trade accounting for 45% of GDP and contributing to 10.5% of economic growth. Foreign exchange reserves in August, 2015: 3.4 trillion dollars, 30% of global total.  2,850 universities and colleges and 24 million university and college students, 7.5 million university graduates in 2015 (more than Finland's total population)  People below poverty line(1.25 dollars/day): 77 million(6.5 % of total population,2rd largest group in world: India has largest group)
  • 7. CHINA IN PROFILE  Average life expectancy: 76 years old (India 65,world average:69.6);  Urban unemployment rate: 4.09%(2014)  inflation rate: 1.4%;  Service's share of GDP: 50.5%; manufacturing: 40.5%; agriculture: 9%(2015)  Investment's share of GDP: 54.4%; consumption:50; ( US:70%)  Savings as share of GDP: 53%, highest in world( 8 times of US);  Basic self-sufficiency in food:90%; energy: 85%  Private sector's share of GDP: over 60%. 16 million private businesses  New jobs created in 2015: 13 million, largest in history  Foreign aid in 2012: over two billion dollars
  • 8. TOPOGRAPHY AND ITS IMPACT ON EVUTION OF CHINESE CIVILIZATION  China is situated in East Asia and faces West Pacific.  It is surrounded by mountain ranges in the southwest and Gobi Deserts in the west and north, which serve as natural shields.  Despite a coastline of over 10,000 kilometers, China has been a continental power, not maritime power.  Independent growth of Chinese culture and language.  Interaction with other cultures began only after Chinese culture took shape.
  • 9. TOPOGRAPHY AND ITS IMPACT ON EVOLUTION OF CHINESE CIVILIZATION  A recorded uninterrupted history of over 4,000 years, only surviving ancient civilization in the world.  China invented gunpower, the compass, printing and paper making, which exerted a profound impact on the evolution of human civilization.
  • 10. UNIFICATION OF CHINA (FIRST LANDMARK EVENT IN CHINA'S HISTORY)  In 221 B.C., Emperor Qin Shihuang unified China after defeating warring states (same time of Roman Empire).  A landmark event in Chinese history: A centralized governance structure with the emperor being the supreme ruler was established.  County became the basic administrative unit, with no kingdoms or dukedoms between it and national government. All local officials owed allegiance to the emperor. No federalism.
  • 11. UNIFICATION OF CHINA  This model of governance lasted for over 2,000 years, during which China was ruled by 400 emperors in 16 dynasties. Longest functioning political structure in the world.  China has remained a unified country under the leadership of a centralized government.  China was the dominant country in East Asia, whose culture exerted great impact on its neighbors, particularly Korea, Japan and Viet Nam. Collectively, this is known as the Chinese cultural zone.
  • 12. CONFUCIUS AND SHAPING OF CHINESE MIND  Confucius(551 B.C.-479 B.C.), a great Chinese thinker, philosopher and educator.
  • 13. CONFUCIUS AND SHAPING OF CHINESE MIND  He advocated justice, peace, rites, order, kindness and education for all without discrimination.  He developed a code of conduct and ethics which have been observed for generations in China.  Confucius is to Chinese civilization what Jesus Christ is to Western civilization. But Confucius was not a religious figure, as he did not believe in existence of god.  China has opened 300 Confucius Institutes overseas to promote understanding of Chinese culture.
  • 14. 1. Belief in unified nation state and a high degree of cohesion: common Chinese identity (caused by China's geographical location) 2.Great power of assimilation (fully understanding information or ideas) TWO DEFINING FEATURES OF CHINESE CULTURE
  • 15. RELIGIONS IN CHINA There are over 100 million believers of various faiths in China.  Buddhism, introduced into China from India in the first century A.D., is the most influential one.  Taoism (way or path meaning in chinese), a home grown religion with limited influence.  Islam, introduced into China in 7th century A.D.(23 million believers)  Catholicism, introduced into China in early 19th century(6.5 million believers)  Protestantism, introduced into China in early 19th century(23 million believers)
  • 16. RELIGIONS IN CHINA  China has always been a secular country (neutral regarding religion).  Unlike many Western countries, it has no state religion.  The power of the state has always been much greater than that of religion.  Religion's role in shaping the Chinese mind is far less important than Confucianism.  Religion's impact on evolution of Chinese culture is limited.  China does not have a messianic culture of converting others.
  • 17. COMPOSITION OF THE CHINESE NATION  There are 56 ethnic groups in China.  The Han people, the largest group, accounts for 92% of China's total population.  So the Chinese culture generally refers to the culture of the Hans.  The remaining 55 minority groups are mostly in southwest, northwest and northeast China.
  • 18. DECLINE OF IMPERIAL CHINA  The Chinese empire reached golden age in the Tang and Song Dynasties(618-1279) — largest economy in the world.  The Silk Road linked China with the West.  China accounted for 30% of global GDP, higher than that of Europe and similar to that of US in 2000.
  • 19. DECLINE OF IMPERIAL CHINA  it saw fast decline in the Qing Dynasty in the 18th century.  Chinese rulers blindly believed in superiority of imperial China and refused to open the country to the rest of the world.  Thanks to the Industrial Revolution, the West closed gap with China and surpassed it.
  • 20. DECLINE OF IMPERIAL CHINA  The 19th century was a century of humiliation for China.  Western powers forced open China's door, occupied parts of the country and imposed unequal treaties upon it.  Hong Kong and Macao respectively came under British rule and Portuguese rule, and Taiwan was occupied by Japan.  This is why till today, the Chinese are still sensitive about foreign interference in China's internal affairs.
  • 21. OVERTHROW OF IMPERIAL CHINA (SECOND LANDMARK EVENT IN CHINA'S HISTORY)  The corrupt Qing government was overthrown by a popular revolution led by Dr. Sun Yat-sen in 1911 which ended the 2,000- year-old imperial rule in China.  The birth of the 1911 Revolution was marked in China in 2011.
  • 22. BIRTH OF THE COMMUNIST PARTY OF CHINA(CPC) (THIRD LANDMARK EVENT IN CHINA'S HISTORY)  The Republic of China was founded in 1911; the Nationalist Party headed by Dr. Sun Yat-sen gained power.  The Communist Party of China was formed in 1921.  After Dr. Sen Yat-sen's death, the Nationalist Party tried to suppress the CPC, triggering a prolonged civil war.
  • 23. FOUNDING OF NEW CHINA (FOURTH LANDMARK EVENT IN CHINA'S HISTORY)  After the victory in the War against Japanese Aggression, the Nationalist Party provoked a civil war against the CPC.  But it was defeated and fled to Taiwan.  On October 1, 1949, Mao Zedong, leader of the CPC, proclaimed the founding of the People's Republic of China.  a new historical stage in contemporary China.  The CPC is now old.
  • 24. POLITICAL SYSTEM OF CHINA  China is a socialist country under the leadership of the CPC.  The CPC is the governing party of China.  With over 87 million fee-paying members(more than population of Germany), it is the largest political party in the world.  Eight non-communist parties are engaged in China's governance in cooperation with the CPC.
  • 25. TRANSITION TO NEW PARTY AND GOVERNMENT LEADERSHIP  A group of new leaders were elected.  Xi Jinping, a key CPC leader and former Chinese Vice President, was elected new party general secretary at Party Congress in 2012.  He became Chinese president in March 2013. Having taken various government posts, Xi is a capable leader and his governance agenda has won solid public support.
  • 26. WHAT HAS LED TO CHINA'S PROFOUND TRANSFORMATION (FIFTH LANDMARK EVENT IN CHINA'S HISTORY)  China is undergoing profound social  and economic transformation which started over 30 years ago.  Until then, China had been an agrarian society since ancient times with over 90% of its population being rural. In modern times, it lagged far behind the West, and poverty, civil strife and starvation were common.
  • 27. WHAT HAS LED TO CHINA'S PROFOUND TRANSFORMATION  Things began to improve significantly after the founding of New China under the leadership of Mao Zedong  But Mao later believed that China was on the wrong track of development and started the so-called Cultural Revolution in 1966.  It lasted ten years and proved a disastrous exercise that not only closed China but also brought its economy to the brink of bankruptcy.
  • 28. WHAT HAS LED TO CHINA'S PROFOUND TRANSFORMATION  The private sector was wiped out. China's gap with the West again widened. China’s GDP was a pitiful 1.8% of global total in the late 1970s.
  • 29. WHAT HAS LED TO CHINA'S PROFOUND TRANSFORMATION  Mao Zedong died in 1976, and two years later, Deng Xiaoping,also a founding father of New China, became China's top leader.  Deng Xiaoping had a great sense of rationality.  He believed that China had to change course and lost no time in starting a daring reform and opening-up program.  He is therefore referred to as the architect of China's reform and opening-up program by Western media.
  • 30. RURAL REFORM  China's reform started in the rural areas. Deng Xiaoping impowered Chinese farmers by introducing a household contract responsibility system to give farmers more incentives in farming. Private economy in rural areas was restored.  Government purchasing prices of grain were raised. Grain output soared as a result. Thanks to rural reform, hunger and starvation for the first time in China's history became a thing of the past.
  • 31. RURAL REFORM  Rural reform started the process of agricultural mechanization, a process that is ongoing.  As farming became mechanized, surplus rural labor force increased.  China encouraged its farmers to set up small factories which absorbed millions of surplus rural labor force.  These small factories were later to become a dynamic private sector.  Rural income rose; surplus rural labor force provided needed labor for industrialization/ urbanization.
  • 32. URBAN REFORM  Sweeping urban reform was introduced in the early 1980s with the goal of replacing the Soviet-style command economy with a socialist market economy (mixture of public, cooprative and private).
  • 33. URBAN REFORM  Price control over most products was lifted; capital market developed; stock exchanges set up and hundreds of companies are listed; business acquisition and merger encouraged. Share- holding companies set up.  Almost all small and medium- sized state-owned enterprises(SOES) were privatized.  There were close to 300,000 SOES in early 1990s  government now only controls 100 plus large groups of SOES.
  • 34. URBAN REFORM  Private businesses now account for over 70% of national total and contribute to over 60% of China's GDP, and create over 90% of new jobs in China.
  • 35. URBAN REFORM  Development of housing market in late 1990s was a most significant development in urban reform, creating huge demand for private housing.  The housing sector: engine driving China’s economic growth.  In past 15 years, China has built enough apartment buildings to house combined population of Germany, France,UK.  Its housing sector & infrastructure account for one fourth of global steel demand.  Market now plays a major role in resources allocation.
  • 36. OPEN CHINA’S ECONOMY TO WORLD  China's opening started in eastern coastal region.  Four special economic zones were set up in the eastern coastal region to attract foreign capital.  Shenzhen is one of them. A sleepy fishing village close to Hong Kong in the early 1980s, Shenzhen has grown into a major metropolis with a population of 13 million. Its total export and import rank first in China.
  • 37. OPEN CHINA’S ECONOMY TO WORLD  China has been the second largest (next only to the U.S.) foreign investment destination, with average daily inflow of foreign investment exceeding 100 million dollars in the past two decades.  Between 1979- 2013, over 1.3 trillion dollars of foreign investment was made in China.  The figure was 126.7 billion dollars in 2015,a 6.4% increase.
  • 38. OPEN CHINA’S ECONOMY TO WORLD  Among the global 500 companies, 490 have invested in China.  Almost all Apple products are made in China. Over 1 million Chinese workers asembled Apple products in China.
  • 39. SPECIAL ROLE OF HONG KONG IN CHINA’S OPENING UP  Hong Kong was occupied by Britain in the 19th century.  China resumed exercise of sovereignty over Hong Kong in 1997.  A system of "One Country, Two Systems" is practiced in HK, and its former social and economic systems have remained basically unchanged.  An international trading and financial center, HK serves as an indispensable platform for attracting foreign investment and expertise to China.  More Chinese companies are listed in HK than in New York.
  • 40. CHINA’S ACCESSION TO THE WTO – A LANDMARK EVENT IN CHINA’S OPENING- UP  China joined the WTO in 2001, marking a new turning point in China’s opening-up.  Tariffs were cut from 15.3% to 9.8%, below the average level of developing countries.
  • 41. CHINA’S ACCESSION TO THE WTO – A LANDMARK EVENT IN CHINA’S OPENING- UP  China has opened most of its economic sectors, particularly the services sector, to foreign investment. It is now more open than the average developing country. In some sectors, it is more open than Japan.  Significance: China’s full integration into the global economy.
  • 42. CHINA’S REFORM AND OPENING-UP: AN UNPARALLELED SUCCESS IN HUMAN HISTORY  since started in 1978, reform and opening up have accomplished China’s transition from a rigid centralized command economy to a vibrant socialist market economy.  Annual growth rate has been close to 10% for 34 years for over one billion people, unseen in world history.  China led the world in growth during this period, with growth rate being 2-4 times of world average.
  • 43. CHINA’S REFORM AND OPENING UP: AN UNPARALLELED SUCCESS IN HUMAN HISTORY  In 1978, China’s GDP stood at 268 billion dollars, ranking 15th place in the world.  In 2014, it reached 10.4 trillion dollars and was next only to the United States.  China's GDP has doubled every eight years.  China’s share of global GDP rose from 1.8% in 1978 to 18% in 2014.
  • 44. CHINA’S REFORM AND OPENING UP: AN UNPARALLELED SUCCESS IN HUMAN HISTORY  China’s foreign exchange reserves rose from just 167 million dollars in 1978 to 3.4 trillion dollars in first half of 2014  accounting for 27.5%% of global total and more than any other country.
  • 45. CHINA’S REFORM AND OPENING UP: AN UNPARALLELED SUCCESS IN HUMAN HISTORY  676 million people in China, close to Africa's population, were lifted out of poverty between 1981-2008, taking up 70% of people lifted out of poverty in same period worldwide. It is an achievement unseen in world history
  • 46. CHINA’S REFORM AND OPENING UP: AN UNPARALLELED SUCCESS IN HUMAN HISTORY  China’s economy registered explosive growth, particularly in the auto and housing sectors in the first decade of this century.  China produced 2.33 million vehicles in 2001.  The number jumped to 23 million in 2014, 25% of total global output.  China has overtaken the US to become the largest vehicle producer in the world for 6 years.  China will be the largest auto market in the world in next 20 years.
  • 47. CHINA IN INDUSTRIALIZATION  The reform and opening-up program has accelerated a massive process of industrialization in China.  China is the leading global producer and consumer of steel, cement, coal, electricity, machinery, electronics, footwear, garment and household appliances.  It is the world’s largest producer and exporter of over 200 industrial products.  In 2014, it produced 60% of global output of power generating equipment, 70% of mobile phones and computers,41% of ships, and 25% of cars.  2014 steel output: 823 million tons, over 50% of world total(EU:10%)  2014 coal output:3.9 billion tons, over 40% of global total
  • 48. CHINA IN INDUSTRIALIZATION  In 1995, only two Chinese companies were among global top 500 companies.  The number jumped to 95 + last year, making Chinese companies the second largest group among top 500.  China has surpassed U.S. to become the largest global manufacturers, accounting for over 30% of global manufacturing output. Rapid industrialization has become a key factor driving China’s growth.
  • 49. URBANIZATION: MOST IMPORTANT DEVELOPMENT TREND IN CHINA TODAY  This process started in the early 1980s, caused by migration of surplus rural labor force to cities.  500 million rural people, more than the combined population of US, UK, France and Italy, have moved into cities.  By 2030, another 300 million rural people will move to cities.
  • 50. URBANIZATION: MOST IMPORTANT DEVELOPMENT TREND IN CHINA TODAY  In 2015, 56% of Chinese, numbering 770 million, live in cities, reaching the world average level.  There are 100 cities in China each having a population of over one million, and the number of towns and small cities is growing.  29 of 75 most dynamic cities in the world are in China.
  • 51. URBANIZATION: MOST IMPORTANT DEVELOPMENT TREND IN CHINA TODAY  Urbanization marks China’s transition from a rural society to an urban society.  Urbanization in China is expected to last for 20 years, which means much room for growth.  Urbanization will create tremendous housing demand and demand for better urban infrastructure and services. This will be the most important force driving China’s development in the coming decades.  Two billion square meters of buildings are constructed in China annually, accounting for 42% of buildings constructucted globally.  Two thirds of new aiports under construction in the world are in China.
  • 52. GLOBAL SIGNIFICANCE OF CHINA’S DEVELOPMENT  China has become the largest trading nation.  Its trade has grown at an annual rate of 21.7% in past decade(world average:10%).  Its export in 2014 accounted for 12% of global total.  Massive import over the years has created 14 million jobs for countries exporting to China.  Total import in next five years will reach ten trillion dollars. China is largest trade partner of 127 countries(US: 70 countries)  In the past decade, foreign companies in China have made 260 billion dollars of net profit, growing 30% annually.
  • 53. GLOBAL SIGNIFICANCE OF CHINA’S DEVELOPMENT  China has been 3rd largest foreign investor in the world for 3 years, with over one trillion dollars of non-financial investment in 177 countries (80% in developing countries) at end of 2015.  In 2015, China's outbound investment reached 118 billion dollars, growing by 18% and a 40 times increase in 13years. The rate was far higher than that of foreign investment in China(6.4%).
  • 54. GLOBAL SIGNIFICANCE OF CHINA’S DEVELOPMENT  China has provided 50 billion dollars of aid to 161 countries and trained 120,000 professionals for developing countries.  China's foreign aid has increased at an annual rate of 30% in recent years, reaching 15 billion dollars between 2010- 2012.
  • 55. CHINA STILL FACES DAUNTING DEVELOPMENT CHALLENGES  Low Per Capita Share of Resources China’s per capita share of major resources is well below world average.  Farmland: 43% of average global share. China produces 25% of global food with 9% of global land feeds 20% of global population.  Fresh water: 28% of world average and 6.5% of world total, leading to shortage of water in 70% of Chinese cities. Beijing's per capita share of water is only 1/80 of world average, less than that of Middle East. Northern China faces a water crisis.  Forest resources: 25% of average global share  Iron ore and copper: 17% Oil and gas: 7.7%
  • 56. CHINA STILL FACES DAUNTING DEVELOPMENT CHALLENGES Unbalanced Energy Structure China meets 85% of its energy needs but depends excessively on coal and import accounts for 60% of its oil needs. Largest coal producer and 4th largest oil producer, 6th largest natual gas producer in the world. Total energy consumption in 2014: 4.26 billion tons of standard coal
  • 57. CHINA STILL FACES DAUNTING DEVELOPMENT CHALLENGES  Unbalanced Energy Structure  Mix of energy consumption : Coal: 66%; oil & natural gas17.1 %; hydro, nuclear, wind and solar power: 16.9%.  Coal is a dirty energy, creating acid rain affecting 1/3 of China’s land area.  A major source of carbon emission and pollution. 2013 Coal consumption: 3.7 billion tons, 47% of global total.
  • 58. CHINA STILL FACES DAUNTING DEVELOPMENT CHALLENGES  Unbalanced Energy Structure  In 2014, China imported 308 million tons of oil, accounting for 60% of its oil consumption. China has overtaken U. S to become world’s largest oil importer.  China imports 30% of natural gas used.
  • 59. CHINA STILL FACES DAUNTING DEVELOPMENT CHALLENGES  Low Economic Efficiency  China accounts for 18% of global economic output , butt consumes 20% of total global energy, more than the US. But its GDP is 56.5% of US. Productivity 1/12 of US.  It consumes 53% of global output of cement, 47% of iron ore, 47% of coal, 45% of steel, 11% of oil, 44% of lead, and 38% of copper. China's economy is a typical resources and energy intensive economy.  China’s per unit GDP energy consumption is 7 times that of Japan and 2.2 times of world average. It accounted for 71% of increase in global energy consumption in 2014.
  • 60. CHINA STILL FACES DAUNTING DEVELOPMENT CHALLENGES  Lack of competitive core technologies  85% of computer chips are imported, reaching192 billion dollars in 2014, accounting for 52% of global output. It is more than China's oil import.  Although largest auto maker in world, only 40% of cars are produced by local Chinese companies. No Chinese brand car can compete globally.
  • 61. CHINA STILL FACES DAUNTING DEVELOPMENT CHALLENGES  Excess production capacity in almost all sectors, particularly in steel, cement making, coal mining, manufacturing, solar energy products making, shipbuilding; half of shipbuilding capacity lies idle.  Annual steel making capacity: 900 million tons, actual output in 2014: 820 million tons, over 50% of world total.
  • 62. CHINA STILL FACES DAUNTING DEVELOPMENT CHALLENGES  Environmental Degradation Trend towards environmental degradation has not been reversed.  Air pollution affects 50% of China's population. Soil erosion, pollution and carbon emission remain serious.  Of 160 major Chinese cities, only 10% meet air quality standard  China has become top global carbon emitter, contributing to 27% of global carbon emission, although its per capita share of carbon emission is far below that of developed countries.  Pollution costs 10% of China's GDP.
  • 63. CHINA STILL FACES DAUNTING DEVELOPMENT CHALLENGES  Environmental Degradation 70% of surface water in China is polluted; one in four Chinese drinks substandard tap water.  East China was shrouded by heavy smog in January, last year, worst in half a century. The country now faces an environmental crisis.  Beijing and surrounding areas account for 1/77 of global land area but consume 10% of global coal output.
  • 64. CHINA STILL FACES DAUNTING DEVELOPMENT CHALLENGES  Gap in Development between East and West China  East China accounts for 40% of China’s land area but 77% of its population and over 70% of GDP.  West China lags far behind East China in development.  Beijing and Shanghai in East China approach developed countries, whereas several dozen million people in rural West China live on 1.25 dollars a day.  Excessive dependence on investment: 54.4% of GDP(US: 19%)
  • 65. CHINA STILL FACES DAUNTING DEVELOPMENT CHALLENGES  Aging Population  China faces more severe population challenge than any other country in the world.  16 million newborns last year, more than combined population of Sweden and Denmark.  Population explosion is no longer an issue confronting China, as is the case in many other developing countries.
  • 66. CHINA STILL FACES DAUNTING DEVELOPMENT CHALLENGES  Aging Population  China has entered a period of low fertility and low population increase thanks to one child policy pursued for over 30 years. This policy has reduced population growth by 400 million. Global population reached 7 billion July, 2012, five years later thanks to China's family planning policy.
  • 67. CHINA STILL FACES DAUNTING DEVELOPMENT CHALLENGES  Aging Population  Fertility rate is less than 1.5 children per couple, on a par with or lower than developed countries.  Population growth rate is expected to drop sharply in coming years. China's population will stop growing and start to shrink around 2030.
  • 68. CHINA STILL FACES DAUNTING DEVELOPMENT CHALLENGES  Aging Population  People reaching 60 and above are approaching 200 million, 14.9% of total population and largest such group in world. The number will exceed the whole population of U.S. by 2030. Aging population could become a huge burden to government. China could become old before becoming rich.  There are 85 million people with disabilities, also largest in world.
  • 69. CHINA STILL FACES DAUNTING DEVELOPMENT CHALLENGES  Currently, 25 million people enter labor market every year, more than Australia's population. This has created huge pressure for employment. But growth of labor force peaked and began to decline in 2012. Working population in 2013:0.92 billion,67.6% of total population,a drop of 2.44 million over 2012. This means growth needs to be driven more by gains in productivity, not just more labor.
  • 70. CHINA STILL FACES DAUNTING DEVELOPMENT CHALLENGES  Trap in middle income transition?  When a country's average GDP reaches between 4,000-10,000 dollars, its growth tends to stall due to wage rises, drop in R&D benefits and investment in infrastructure, aging population and increasing environmental costs.  Can China avoid this trap?
  • 71. PRESSING NEED FOR CHANGING GROWTH MODEL  China’s current growth model is one of high energy and resources consumption, low output and high carbon emission.  Infrastructural investment is the main driver of growth, while consumption is insufficient.  It is unbalanced and unsustainable.  The need to rebalance the economy: moving from investment and credit driven development to consumption and innovation driven development  China must change this growth model if it is to maintain sound economic development.
  • 72. PURSUIT OF SUSTAINABLE DEVELOPMENT  The government is keenly aware of this daunting development challenge and has adopted the strategy of pursuing balanced and sustainable development.  Reduce dependence on investment in infrastructure and increase consumption and services
  • 73. PROGRESS IN PURSUIT OF SUSTAINABLE DEVELOPMENT Energy conservation and reducing carbon emissions:  In past five years, energy consumption has grown at 4.7%, lower than 7.5% economic growth. Share of coal in energy consumption has been cut by 2%. Energy consumption per GDP unit in 2015 dropped by 5.6%, its growth lowest since 1998.  China is pursuing the world’s largest clean energy development program and is the top world producer of solar and wind power equipment.  Goal: Stop Carbon emission growth in 2030; clean energy reaches 20% of total energy consumption.
  • 74. CHINA'S ECONOMY ENTERS A NEW NORMAL  Growth shifts from high rate growth to medium-high rate growth; dropping from 9.5% annual growth for over 25 years to around 6.9% in 2015, slowest in 25 years.  Goal: annual growth of around 7% for coming years, which is necessary to create employment.  Still be one of the highest in the world.  To be achieved by innovation, development of services and consumption.
  • 75. PROGRESS IN PURSUIT OF SUSTAINABLE DEVELOPMENT Energy conservation and reducing carbon emissions:  China has 20 nuclear power generators, and 28 are under planning or construction, which is the largest nuclear development progrqam in the world. China will become second largest nuclear power producer in 2020. China is world's No. 1 wind power producer, growing 96% annually. Also world's largest hydro and solar power producer. Hydro power: 27% of global total,;5 of 10 largest hydro power stations in world are in China.
  • 76. PROGRESS IN PURSUIT OF SUSTAINABLE DEVELOPMENT Energy conservation and carbon emission reduction: Investment in clean energy in 2014: 90 billion dollars, up 32%, accounting for 29% of global total. (Europe: up 1%)  Renewable power generation reached 32% of total power generation in 2014.  Investment in energy saving and environental protection wil reach 315 billion dollars in next 5 years.
  • 77. PROGRESS IN PURSUIT OF SCIENTIFIC DEVELOPMENT  Support development of West China to narrow gap in regional development by providing financial assistance and building expressways, railways and airports Result: West China grows faster than East China
  • 78. PROGRESS IN PURSUIT OF SCIENTIFIC DEVELOPMENT  Increase government input in R&D to raise production efficiency and upgrade industries. Such investment has grown 20% annually in past six years.  Increase spending on education to train competent professionals
  • 79. CHINA PURSUES PEACEFUL DEVELOPMENT  China will not pursue development at expense of others  Development through peace and share development interests  China has entered into free trade agreements with 20 countries in Asia Pacific, Europe and Latin America, opened its huge domestic market so that other countries can benefit from China's development.
  • 80. CHINA’S AID TO AFRICA  Africa is a major recipient of Chinese aid.  Total Chinese aid to Africa has exceeded 40 billion dollars. China is committed to providing long-term aid to Africa.  China has sent medical teams to almost all African countries and treated millions of African patients.  The latest example is fighting Ebola epidemic in West Africa and Crona virus.
  • 81. CHINA’S FOREIGN POLICY GOALS  Making friends with all and making enemies with none  Mutual respect for sovereignty and non- interference - cornerstone of China’s diplomacy
  • 82. CHINA’S FOREIGN POLICY GOALS  Meeting international responsibility in upholding global peace and security.  China has sent 14,000 peacekeepers on 24 missions, more than US, Russia.
  • 83. CHINA’S FOREIGN POLICY GOALS  Maintaining good ties with neighbors, major powers like US, Russia, EU and all others
  • 84. WHAT LIES AHEAD FOR CHINA’S DEVELOPMENT  China’s reform and opening-up will continue. A high degree of consensus between the public and policy makers about the need to continue the program.  Robust domestic demand created by industrialization and urbanization will drive China’s economic development for several decades to come. Urbanization in next 20 years will create 8 trillion dollars in demand.
  • 85. WHAT LIES AHEAD FOR CHINA’S DEVELOPMENT  Growing at the current rate, China could surpass the United States in 15 years to become the world’s largest economy.  The goal set at the 18th CPC National Congress lin 2012 is for China’s 2010 GDP and per capita income to double by 2020 and reach current level of medium- level of developed countries by mid-21st century. This goal is obtainable.
  • 86. REALIZE THE CHINESE DREAM  The goal, which is to achieve national renewal, was put forward by Chinese President Xi Jinping when he took over Party leadership in November, 2012.
  • 87. THE CHINESE EXPERIENCE: WHAT IS THE RELEVANCE? As conditions vary from country to country, the Chinese growth model may not be generally applicable, but it can serve as useful reference for other developing countries in pursuing development. 1. Commitment of political leadership is of paramount importance. 2. Promoting growth should top government agenda. 3. Forging public-government consensus on pursuing this goal 4. Be firm in carrying out reform and discarding unworkable practices. 5. Pursuing government guided market operation
  • 88. THE CHINESE EXPERIENCE: WHAT IS THE RELEVANCE? 6. Embracing globalization and promoting an open economy 7. country’s comparative advantages 8. Enhancing education and creating a huge pool of competent professionals 9. Increasing input in R&D to move up the value chain 10.Pursing sound and sustainable development
  • 89. Thank you for your interest!

Editor's Notes

  1. Confucius was a Chinese philosopher, teacher, and politician who lived from 551 to 479 B.C.E.. He is the founder of Confucianism, a philosophy that emphasizes ethical, moral, and social standards for living a peaceful life. His teachings were recorded by his disciples in several books, the most important being the Lunyu3. He is considered the first teacher in China who wanted to make education broadly availab