19
jun

The future of China

Escrito el 19 junio 2011 por Miguel Aguirre en Economía Global

Some impressive figures about the Asian giant:

In 2009 China overcome the US as the bigger car producer: 10.600.000 units versus 10.400.000.

The biggest bank of the world is the Industrial and Commercial Bank of China

160 airports have constructed in the last decade

40% of its GDP comes out of international commerce

The Credit fault spread of the country is better than G10 countries as Italy

The Market capitalization of China Mobile was in 2009 bigger than ATT´s.

They have corporate investors growing worldwide: Huawei, China Mobile, Lenovo, ICBC, Chinalco, Sinopec, CNPC or BYD.

Although all this big important issues COFACE has just published its eight edition of the payment behavior of the Chinese companies.  The outcomes are that Chinese companies are expecting the payment situation inside of the country to worsen in the short term:

China growth remains dynamic , 8,8 , expected in 2011 , but slowing form the 10,3 of last year of the 9,1 of 2009.

There is a desire in the authorities to move up market salary increases, as it happened to Foxconn and Honda and a little appreciation of the Yuan.

There is an increase of the overdue payments mainly caused by clients financial situation, regarding competition, the lack of access to external resources and the increasingly cost of raw materials.

“2010 has been a very favourable year for Chinese companies due to growth and economic policy support. But in 2011, companies are undergoing series of negative impacts: the withdrawal of the budgetary stimulus, scarcer and more expensive credit, acceleration in the Yan’s appreciation, inflation and the increase in supply costs and above all the intense pressure to increase salaries. If in the medium-term, these impacts are welcome as they are favourable to Chinese growth in favour of consumption, in the short-term the most fragile companies could be in difficulty”, observes Constance Boublil, Coface economist, specialist in the Asia region.  

Lies ahead a great path of increase having in mind that last year China, just produced a quarter of the US total GDP; although in the WTO China has not signed some agreements regarding the construction of Public Works what can inflict a lot of uncertainties in public tenders; it is for sure a complex society where a civil code is nonexistent and being Brazil biggest commercial partner there is big link between the development of both economies. 

May Chinese population enjoy an increase of income of future years or remaining as the world factory would cause many internal tensions?  May the economy has a strong outcome ahead or in the future years will be under the same pressure burden by European economies?

Comentarios

Aurelio 19 junio 2011 - 14:33

Se puede mejorar bastante la gramática y ortografía del artículo

Anónimo 24 junio 2011 - 21:12

China is hitting the economic news with superlatives nearly everyday. This is not so surprising when one considers China’s history and its still long way it has and wants to go to create wealth for its society. To call it a leviathan is a little mischievous and exposes jealousy of growth rates that make European politicans and economists surely pop their eyes out.

As Ivan rightly stated, the demographic situation, in specific, the ageing population will pose a major challenge with regards to how should a smaller pool of young people sustain a drastically outweighing older generation that furthermore demands a decent economic standard of living. As we know China is not the only country facing that problem and could easily tie up with Japan to handle that issue. As far as I know, Japan already sends a wealthy majority of its older people to homes for the aged in Croatia.

Expanding Hub’s point, I think it is possible to raise soon to be 1,4 Billion people into middle-class and actually the government must try to do so if it wants to keep justifying its political monopoly. Today, one of the government’s greatest concern is to keep inflation “under control” or within a bandwidth that does not strike a rebellion amongst the people in rural China, who still comprise the largest proportion. This however will be difficult in light of the rapid urbanization that takes place, while eating up arable land that would actually be needed to achieve food self-sufficiency. To give you an idea, by 2025 another 350 million people will be added to China’s urban population – that is more than today’s population of the US (McKinsey&Company; “Preparing for China’s urban billion”)

Regarding income, there are already senior managers who are being paid the same amounts as their Western counterparts, or even more. The problem is income inequality, which some argue to be as much as 0,5 measured in terms of the Gini coefficient (http://www.chinadaily.com.cn/china/2010-05/12/content_9837073.htm), and the social instability that comes with it. If the country cannot sustain the current growth levels and hence the prospects of economic advancement it is only a matter of time until social unrest is likely. Since 40% of China’s GDP depends on international commerce this stresses its interest in having stable global trade and economic growth. Accordingly, fostering its relations with the US and Europe is of mutual benefit, and could also lead to a more deregulated Chinese market.

China’s economic way ahead is everything but easy and strongly depends on the opportunities that give people employment. As of now, China is surely one of the major players in driving world GDP and providing liquidity to struggling EU countries but the increasing hunger for resources will require a more balanced distribution of its wealth. A large part of its population’s major concerns today is how to feed its family or get access to electricity and clean water. You don’t joke with hungry men.

Philipp Mierka 24 junio 2011 - 21:13

China is hitting the economic news with superlatives nearly everyday. This is not so surprising when one considers China’s history and its still long way it has and wants to go to create wealth for its society. To call it a leviathan is a little mischievous and exposes jealousy of growth rates that make European politicans and economists surely their eyes pop out.

As Ivan rightly stated, the demographic situation, in specific, the ageing population will pose a major challenge with regards to how should a smaller pool of young people sustain a drastically outweighing older generation that furthermore demands a decent economic standard of living. As we know China is not the only country facing that problem and could easily tie up with Japan to handle that issue. As far as I know, Japan already sends a wealthy majority of its older people to homes for the aged in Croatia.

Expanding Hub’s point, I think it is possible to raise soon to be 1,4 Billion people into middle-class and actually the government must try to do so if it wants to keep justifying its political monopoly. Today, one of the government’s greatest concern is to keep inflation “under control” or within a bandwidth that does not strike a rebellion amongst the people in rural China, who still comprise the largest proportion. This however will be difficult in light of the rapid urbanization that takes place, while eating up arable land that would actually be needed to achieve food self-sufficiency. To give you an idea, by 2025 another 350 million people will be added to China’s urban population – that is more than today’s population of the US (McKinsey&Company; “Preparing for China’s urban billion”)

Regarding income, there are already senior managers who are being paid the same amounts as their Western counterparts, or even more. The problem is income inequality, which some argue to be as much as 0,5 measured in terms of the Gini coefficient (http://www.chinadaily.com.cn/china/2010-05/12/content_9837073.htm), and the social instability that comes with it. If the country cannot sustain the current growth levels and hence the prospects of economic advancement it is only a matter of time until social unrest is likely. Since 40% of China’s GDP depends on international commerce this stresses its interest in having stable global trade and economic growth. Accordingly, fostering its relations with the US and Europe is of mutual benefit, and could also lead to a more deregulated Chinese market.

China’s economic way ahead is everything but easy and strongly depends on the opportunities that give people employment. As of now, China is surely one of the major players in driving world GDP and providing liquidity to struggling EU countries but the increasing hunger for resources will require a more balanced distribution of its wealth. A large part of its population’s major concerns today is how to feed its family or get access to electricity and clean water. You don’t joke with hungry men.

onpage 10 junio 2012 - 04:33

onpage…

The future of China | Economy Weblog…

Dejar un Comentario

*

Utilizamos cookies propias y de terceros para mejorar nuestros servicios y mostrarle contenido relacionado con sus preferencias mediante el análisis de sus hábitos de navegación. Si continua navegando, consideramos que acepta su uso. Puede cambiar la configuración u obtener más información aquí. Aceptar