Transcript US and China - Irvine Chamber Economic Development

U.S. and China
Too Much to Fathom?
Presentation Roadmap
Macro
Overview
12th Five Year
Plan
Best
Prospects
How CS China
Can Help?
Macro Overview
12th Five Year
Plan
Best
Prospects
How CS China
Can Help?
An Abridged History of US-China Relations
The Latest
Vice Chairman Xi Jinping to U.S.
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Heir Apparent
Met with POTUS & VPOTUS
Spoke with Congress
$38 B in Deals (or $5.8 B?)
RMB / Export Credits / Films
Mandatory Tech Transfer /
Auto Insurance / Trade Secrets
JCCT 2011 Highlights
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Smart Grid Standards
Tourism – 27 Provinces
“No” to Indigenous Innovation Catalogues
Vice Premier Lead IPR Enforcement
Pharmaceuticals Data Protection
NEVs – No Tech Transfer / No Domestic Brand
Subsidies OK
10th Anniversary Joining WTO
PLUS
• Improved Access to China market
• Lower Barriers to opening / operating business
• Easier to Repatriate Profits
NOT SO PLUS
• Liberalization Downshift
• AD / CVD Cases Growing
• Transparency and the Rule of Law
Transfer of Power
• Hu Jintao’s Handoff Late 2012 +
U.S. Silly Season = Posturing
Positive U.S. Business Outlook
US Companies in China
• 59% - “optimistic” 5-year business outlook
• 76% - recent economic reforms helped
“great” / “very great” extent
• 54% - expand operations 2nd / 3rd tier cities
• 78% - rank China within top-3 destinations for
near-term global investment plans
SOME Obstacles for U.S. Firms in China
• Protectionism
• Catalogue Guiding Foreign Investment
• Standards
• Labor Costs
• Wages double-digit growth over 2010
• Hiring / Retention Mid - Senior Management
• Foreigners Social Insurance Costs
• Certifications / Approvals
• CCC Mark Costly, Slow
• Duplicative
• Unclear Regulatory Environment
China’s Response to 2008 Financial Crisis
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Total Stimulus $586B
• $1.45 trillion new Regional Bank loans
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Goals
• Stimulate Economy
• 2nd, 3rd, 4th Tier City Infrastructure
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Major Glitches
• Non-Productive Investment
• Debt Horizon Not Match Project Timing
• $250B Already Unrecoverable
Trends
China’s GDP
11.0%
10.3%
10.0%
9.2%
9.2%
9.0%
8.0%
7.7%
7.5%
7.0%
6.0%
2009
2010
2011
2012 (est.)
2013 (est.)
Trends
• Trade surplus with U.S. new high $295.5B
• U.S. imports from China
• Up $34.4B ($399.3B Total)
• U.S. exports to China
• Up $12B – 13.1% ($103.9B Total)
• U.S. Worldwide exports up 15.8%
Trends
• Foreign Currency Holdings Down
• Weakening Exports
• Outbound FDI Up
• Inflation Steady
• Food Twice CPI Rate
• Housing
• Labor
Trends
• Technology
• 513M Netizens
• 250M Micro-bloggers
• 356M Mobile Users
• Rebalancing economy
• From Fixed Asset Investment 
to Domestic Consumption
• 2010 35%  2015 50% of GDP
Trends
Urbanization
• 171 Cities > 1M (9 in U.S.)
• 47% Urban 2010
• 51.5% Urban 2015
Middle Class
• 23% Now
• 48% 2020
Trends
Luxury Consumption
• 20% ($27B) Worldwide Luxury Goods 2015
• 80% Buyers < Age 45 (50% in U.S.)
• (40% < Age 35)
Trends
China’s E-Commerce Market
No. of Online Shoppers
300
36.4%
250
26.8%
28.2%
30.2%
32.4%
34.1%
240
210
200
180
142
150
20%
110
100
China
35%
• Revenue $114B 2011
30%
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4.6%
of
Total
Sales
25%
40%
15%
80
U.S.
5%
• Revenue $194B
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• 8% of Total Sales
10%
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2008
2009
2010
2011e
2012e
No. of online customers (mn)
As % of total internet users
2013e
2nd / 3rd Tier Cities
U.S. EXPORTS
Top 15 – 60%
•Hefei Up 164%
•Ningbo Up 90%
•Chengdu Up 75%
•Hangzhou Up 63%
China 40: The Rising Urban Stars. Jones, Lang, LaSalle, 2009.
Trends
Rural vs. Urban Incomes
25,000
20,000
15,000
10,000
5,000
2007
2008
Rural Incomes
Source: National Bureau of Statistics of China
2009
2010
Urban Incomes
2011
China’s 12th Five Year Plan
Macroeconomic
View
Best Prospects
How CS China
Can Help?
12th Five Year Plan
• Restructure Economy
• From Fixed Asset Investment to 
Consumption
• Basic Manufacturing Up Value Chain
• Promote Domestic Market Growth
• Promote Social Equality
• Income Imbalance
• Poor Regions Economic Growth
• Protect Environment
• Lower Emissions per Unit GDP
• More Renewable/Non-Fossil Fuel Energy
12th Five Year Plan
Economic Targets
• 7% GDP Annual Growth
• 4% Inflation Target
• ≥ 5% Urban Unemployment
• 8% Rise Government Expenditures
• 45M Urban Jobs Created
12th Five Year Plan
Economic Restructuring
• 7 Strategic Industries 3% to 8% GDP
• Service Sector Up to 47% GDP
• Urbanization to 51.5%
Innovation
• R&D Funding Up 12.5%
• 2.2% GDP
• 3.3 patents /per 10,000 population
Trade
• Expand Use of RMB
12th Five Year Plan
Energy Saving & Environment Protection
• Environmental Protection Up 10%
• Energy Consumption
• Cut 16%
• From Non-Fossil Fuel 11.4%
• Carbon dioxide emission cut 17%
• Water Consumption/
Unit Value-Added Output cut 30%
• 14 nuclear reactors & 27 under construction
12th Five Year Plan
Energy Saving & Environment Protection
• Crude oil consumption will increase 5%
annually
• Natural gas consumption will increase 19.4%
annually
• China leads world in solar & wind energy
• 2011: 28 of 51 clean-tech IPOs Chinese
12th Five Year Plan
Strategic & Emerging Industries – Magic 7
• Energy-Saving and Environment Protection
• Efficiency / Recycling / Smart Grid
• New Energy
• Nuclear / Solar / Wind /
Biomass / Hydro
• Biotechnology
• Medicine / Ag / Mfg.
• New materials
• Composites
12th Five Year Plan
Strategic & Emerging Industries – Magic 7
• High-End Manufacturing
• Aeronautics / Astronautics / Marine / Hi-Speed Rail
• Clean-Energy Vehicles
• Plug-In Hybrid / Electric
• Next Generation Info Tech
• Comm Networks/Flat Panel Display/
Integrated Circuits/Hi-End SW
12th Five Year Plan
Livelihood: “Social Harmony”
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Population ≥ 1.39B
Per Capita Income Up 7+%
Affordable Housing Up 14.8%
Minimum Wage Up 13%
Education Spending Up 16.3%
Healthcare Spending Up 16.3%
Best Prospects
Macroeconomic
View
12th Five Year
Plan
How CS China
Can Help?
Best Prospects
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Clean Energy
Green Building
Renewable Energy
Water & Water Pollution
Travel & Tourism
Medical Devices & Healthcare
Railroads and Metro Transit
Aviation
Information & Communications Technology
Marine Industries
Agriculture
Chinese Outbound FDI
Cleaner Conventional Energy
• 12th FYP Targeting 10% Emissions Reduction
• Best Prospects- De-NOx Solutions / Monitoring
• De-Sox Campaign of 11th FYP is Model
Electric Power Infrastructure
• State Grid Invest $595B 2009 thru 2020
• Grid Development
• $83B
• Smart Grid Solutions
• Standards Critical
• U.S. Company Participation Essential
• Best Prospects • Power Storage
• IT Solutions
• Smart Meters
Greenbuilding
• New Buildings By 2020 - 65% Energy Use Savings
• From 1980 Base
• Best Prospects –
• Building Design
• HVAC
• Building Envelope
• Building Integrated Renewable Energy
Renewable Energy
Did you know?
 U.S. had a $240 million trade SURPLUS in
solar products with China in 2010.
 The 2011 stats show a disturbing trend:
$1.6 billion DEFICIT with China.
Best prospects include –
 Waste to energy – municipal, agricultural, industrial
 Wind and solar power plant financing construction,
integration and management
Water Treatment
Investing $450B in EP Industry
• Increase 121% Over 11th FYP
• Investing $11.25B WW Treatment
• Increase 39% Over 11th FYP
Best Prospects
• Industrial Wastewater Treatment
• Building Greywater Reuse Systems
• Sludge Treatment / Disposal Systems
Travel & Tourism
• US$6,000 Per Tourist  #1 “Spender”
• 2011 1.09M -- Up 37% from 2010
2016 2.9M
• Best Prospects
• Luxury Travel
• Wine / Golf Tours
• National Parks
• Cruise Lines
• Honeymoons/Weddings
• Meetings, Incentives,
Conferences and Exhibitions
Medical Devices, Healthcare Equipment &
Services
•178M over 60
• 221M by 2015
2nd
•World’s
Market –
• $15B in 2010
• 22% Annually
•US Products Reputation
• Superior Quality
• Technologically
Advanced
Forecast of Medical
Device Sales in China to
2016 ($B)
45
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35
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25
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15
10
5
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Railroads & Metro Transit
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56K miles (#2) to 74K miles by 2015
Hi-Speed Rail 5200 miles (#1) to 10K by 2015
Urban Rail Transit #1 Market–35 cities by 2015
U.S. Design / engineering
U.S. Materials / Rail Car & Locomotive
Components
• U.S. Rail Track products / Services / Signaling
Aviation
• Grow 7% Annually through 2020
• Aircraft Parts Imports >$1.6B
• U.S. Market Share 35% -- $560M
• Beijing Airport -- World’s 2nd Busiest
• From 180 Airports to 244 by 2020
• Invest $234B in industry through 2016
Education
China’s #1 Education Destination
• 160,000 Students 2011
up 24% from 2010
• Increasing Demand
Vocational Schools
Community Colleges
• FCS Vetted Agents List
Information & Communications Technology (ICT)
•Total Market $317B, Up 12%
•U.S. Share 4%, down 1%
China's ICT Market
350
300
250
•Software Market $8B
•High-End Software Solutions
•U.S. Share 70%
200
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100
50
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2009
2010
Packaged Software
2011
Semiconductors
•Piracy
ICT China Market
US ICT Exports to China, share of domestic market
2009
2010
2011
4.78%
4.66%
3.76%
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Marine Industries
Largest Shipbuilding Base - >40% Mkt Share
U.S. Expertise / Design  Offshore Energy Projects
• Including Spill Response Services
Recreational Marine Industry  $10B Next 10 Years
Pleasure Boats and Accessories  >$90M in 2010
Investing in Marinas / Cruise Ship Centers
• Shanghai, Zhoushan, Qingdao, Dalian, Ningbo,
Beihai, Dongguan, Shenzhen, and Hainan Island
Agriculture
• U.S. Agriculture, Fishery, Forestry Exports to
China Up 17% from 2010
• $18.9B – 14% of U.S. Total
• Second Largest U.S. Market
• Tractors, Harvesting/Planting/Fertilizing Mach.
• Mechanization Up 60% by 2015
Chinese Investment in the U.S.
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US$1.4 B Chinese FDI into U.S. 2010 (MOFCOM)
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US$3.2 B Total Chinese FDI in U.S., 2010
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60% Annual Growth Rate 2006-2010
Total Chinese FDI in United States
Billions of U.S. Dollars
4.0
$3.2
3.0
$1.6
2.0
1.0
$1.1
$0.57
$0.79
$0.58
0.0
2005
2006
2007
SelectUSA.gov
2008
2009
2010
Source: U.S. Bureau of Economic Analysis
How CS China can help?
Macroeconomic
View
12th Five Year
Plan
Best Prospects
Your Global Business Development Team
• 19 Cities
• 5 CS Offices
• > 100 Staff
• 14 Second Tier
Cities
How We Can Help
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Find Distributors/Agents for U.S. Exports (GKS)
Screen Chinese Companies (ICP)
Promote Your Firm to Target Markets (SCP)
Multi-City U.S.G.-Led Trade Missions
Trade Show Support
Market Research (CMR)
Organize/Lead Chinese Buying Delegations (IBP)
How We Can Help
Public Private Partnerships
• Aviation Cooperation Program
• Energy Cooperation Program
• Healthcare Cooperation Program
• American Rail Working Group
U.S. Patent & Trademark Office (PTO)
The US Embassy IPR Toolkit
http://beijing.usembassy-china.org.cn/ipr.html
China IPR Advisory Program -1 hr free consultation
http://www.abanet.org/intlaw/china_program2.html
USPTO: Free China Conferences
http://www.stopfakes.gov/events/china_webinar_series.asp
IP Webinar Series
www.stopfakes.gov
What Motivates Us?
U.S. Jobs
Created and Maintained
Contact:
export.gov |
800.USA.TRADE
www.buyusa.gov/china