Transcript Characteristics of Chinese Economy

Chinese Macroeconomic
Survey and Globalization
Relations between politics and
economy
The great ideological cycle
Integration into global economy
Challenge from global economy
Adapting to new circumstances
in domestic market
Politics and Economy
Adapting economic development to
political needs
 Competing groups in the leadership
cause changes in economic policy
 Political influence on economy
results in economic cycles
 The trend of ideologization drifts
economy away from realistic frames
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The Great Ideological Cycle
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Postwar development starts on a very solid
economic ground
Under the pressure of ideology the
development follows political cycles
Economic system moves into ever more
unrealistic spheres
Ideological cycle comes to culmination in
Pi Lin pi Kong campaign in 1974
Reforms cause the decline of ideological
cycle
The End of Ideological Cycle
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With reforms political cycles started to
follow the dynamics of economy
After ideological pressure reached the
limit of tolerance both started to decline
The ideological influence disappeared in
mid 90-ties when Chinese economy
became normal
Ideological cycle ended with economy
back in realistic frames
Integration into global economy
 Member
of World Bank
 Member of International Monetary
Fond
 Member of WTO since 2001
 World biggest exporting country
 China’s purchases of crude oil and
raw materials influence world prices
 Growing importance of China as
investor in Africa and Latin America
Results of Reform Policy
 Three
decades growth rate more than
9% per year
 Growing regional differences between
coastal regions and inland China
 Growing social differences: GINI
index: 48
 Growing pressure on ecosystems,
energy, and raw material resources
 Big migrant workers’ population: 211
million
China’s Position in World
Economy
 World’s
second largest economy
 For the last 3 decades world fastest
growing economy
 World’s largest market with biggest
potential for expansion over next 20
years
 World’s largest exporter: 9% of world
export
 World’s biggest foreign currency
reserves: $3.236 trillion on 31st
December 2011
Advantages of large system
 Relies
on enormous domestic market
 More self-sufficient then small
system
 Less dependent on foreign trade and
less vulnerable to foreign influences
 Greater inertia of the system
 More opportunities for investment
 More possibilities for protection
 Can concentrate more resources to
achieve strategic purposes
Challenge from global economy
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From mid 90ties on Chinese development
is increasingly determined by global
situation
Affected by Asian financial crisis in 1997
Adapting to the world monetary system
Growing dependence on the conditions of
world markets
Adapting to the global financial system
The Challenge of the World
Financial Crisis
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The concept of neo-liberalism in global economy
proved to be insufficient
Lack of global economic coordination and
financial control
China was less affected by the crisis then most
other countries
China maintained more than 8% GDP growth
Because of financial protection China was not
affected by financial crisis
China was affected mainly by shrinking foreign
markets
China in Times of the World
Financial Crisis
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China increased domestic spending mainly
by new investment in infrastructure
Many foreign owned export oriented
production lines closed down
Some 25 million migrant workers lost jobs
and returned to their homes in villages
When economic situation improved many
of migrant workers didn’t want to return,
because of new opportunities near home
For the first time China is experiencing
lack of cheap labour
GDP Production structure 2011
40
35
30
25
Agriculture
Industry
Services
20
15
10
50
45
40
35
30
25
20
15
10
5
0
Agricult.
Industry
Services
Strukture of
GDP by sector
5
0
Strukture of labor force
GDP Consumption Structure
60
50
40
Investment
Consumption
Government
Net export
30
20
10
0
2000
2007
2010
2011
Problems of domestic market
Problems of overheated economy
 Problems of poluted environment
 Extremely high proportion of investment:
over 40% since 2003, 46,2% in 2010, and
54.2% in 2011
 Growing problem of inflation
 Problems of uncontrolled local borrowings
 High tensions in house construction
 The pending real estate bubble
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Requirements for future growth
Greater importance to the growth of
domestic demand
 Continuing the process of urbanisation
 Adjusting of investment policy and
consolidation of real estate market
 Introduction of social security system for
all social groups
 Smaller social differences by increasing
the income of workers
 Creating wider middle class
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Adjustments to the changing
global markets
China should play a stronger role in world
monetary system
 Growing importance of Asian, African, and
Latin American markets.
 Labor intensive production will become
less competitive
 China will have to change the structure of
its export industries
 China becoming stronger foreign investor
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The Concept of Greater China
China economically integrated with
Taiwan, Hong Kong, Macao, and
partly Singapore
P.R. China and Taiwan signed
Economic Cooperation Framework
Agreement ECFA in June 2010
The Greater China totals 16% of
world export and $3.757 trillion of
foreign currency reserves on 31st
December 2010
Faster Economic Integration in
East Asia
Creation of Common market in
Southeast Asia basing on ASEAN
Further integration of Mainland
China, Taiwan, and Hong Kong
economies
Free trade agreements – Taiwan
entering via China
Faster integration into broader
regional economic zone: ASEAN+3