Transcript 幻灯片 1
Financial Crisis, Innovation and China Xielin Liu, Professor and PhD [email protected] Peng Cheng Associate Professor and PhD Graduation University of Chinese Academy Sciences 1 Outline 2 Is Financial crisis a threat or an opportunity for China? Can investment of US$580 billion dollars lead to more innovation for China? Conclusion A. Is Financial crisis a threat or an opportunity for China? 3 Financial crisis produces unfavorable effect on economic growth of China China's GDP growth rate from Q1’ 06 to Q2’09 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 2009Q2 2009Q1 2008Q4 2008Q3 2008Q2 2008Q1 2007Q4 2007Q3 2007Q2 2007Q1 2006Q4 2006Q3 2006Q2 4 2006Q1 0.00% Financial crisis has difference impact on various industries in China Export-based manufacturing industries have been in trouble, such as textiles, toys, furniture, sanitary, hardware industries. Steel, fertilizers, non-ferrous metals industries are in recession because they purchased high price of raw materials during the economic upsurge and have to sale finished goods in low prices during financial crisis. Car, daily necessity, household appliance and food industries are free from crisis. Real estates have returned to normal after half a year. The financial services maintain good momentum because of capital projects and effective credit being 5 in control. Case of automobile: 7 months in 2009 car sales reached 7,184,400, an increase of 23.38%. Auto parts business has also been rapid development. SALE 120 100 80 60 40 20 200907 200905 200906 200903 200904 200902 200901 200812 200811 200810 200809 200808 200806 200807 200804 200805 6 200803 200802 200801 0 Case of high tech industry: 7 New energy sources (nuclear power, wind energy), high-speed train, ICT and other high-tech industry maintained a rapid development momentum. Case of real estates: Real estates have returned to normal after half a year. Beijing real estate prices-week draw line from 2008-2009 8 General map of China now Imports and exports continued to decline, but decline speed is slower month by month. It shows that the production of some industries and enterprises is being gradually recovered. Manufacturing purchasing managers index and business confidence index rose, indicate that China's economy began to stabilize in some industries. The confidence of the market trade, such as stock and real estate market, is in active. 9 Factors for rapid recovery of China in the Crisis 1. Spur domestic demand to fill the gap left by decreasing exporting 2. Power of Chinese business model innovation 3. Chinese financing system is healthy to fight with low demanding 4. China uses the crisis as an great opportunity for China to adjust economic structure 10 1. Spur domestic demand to fill the gap left by decreasing exporting Three engines for China's economic development from 1978-2009 Consumption, investment, export are three engines of China's economic development. 15 10 5 -10 11 consumption investment export 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984 1983 1982 1981 1980 1979 -5 1978 0 The balance between local and overseas market Rapid international economic recovery in near term is impossible, European and American consumption patterns are changing. These adverse factors will make traditional model of export outdated. Stimulation of local demand, household consumption and investment, will have different aspects on local market. 12 Specific measures for domestic demand Improve the income of low-income residents by subsidies. Increase agriculture-related subsidies. Stimulation of farmer demands of industrial goods such as house appliances, agricultural vehicles and motorcycles. Subsidy the activity of replacing the old car with a new one to stimulate the car consumption. 13 Investment for infrastructure National special Investment in sectors of highspeed railway, express way, airport, new generation of broadband communications network infrastructure. This will stimulate steel, cement, cable, highspeed locomotive demand. 14 2. Power of Chinese business model innovation ZTE mobile phone shipments to 45 million, ranking No. 6 in 2008, and in Q1 and Q2’ 2009 shipments have been the same with Sony Ericsson and Motorola, most likely ranked No. 4. 15 Case of telecommunication equipment In this period, Nortel, Motorola and other traditional giants are in big trouble. How can Chinese business to catch more while some western companies down in the same period? The Chinese business model, such as integrated innovation for low cost market, matched the needs of operator in the crisis. Chinese elements work here: the bank can give them loan or credit to extend their business while USA and Canada cannot. 16 Case of garment industry Because of financial crisis, many international sport brands (e.g. Nike, Adidas) have to cut down business, and not be able to fully focus on the Chinese market as used to be. In the same time, leading sport apparel and footwear manufacturers of China, such as Li Ning, Anta company, have an opportunity to expand domestic market share, turnover increased by 31.6% and 54.8% in 2009. 17 3. Chinese financing system is healthy for fighting with low demanding Financial resources are line with an important projects and state's economy. Chinese financing system is not in crisis, so, they can push commercial banks to invest more rather than to cut loan. This help industry to fight with crisis. 18 4. China uses the crisis as an great opportunity to adjust economic structure The industrial structure needs to be upgraded as most of industry are cost-driven, low efficiency, overcapacity and lack of core technology. The new strategy of development to make innovation as an engine or to find new growth model, will provide an important opportunity to solve China's economic deep-seated problems. 19 B. Can investment of US$580 billion dollars lead China to be more innovative? 20 Investment results of US$580 billion dollars earthquake area reconstruction 25% House Constructing 10% rural infrastructure projects 9% innovation and industrial restructuring 9% New Energy and eco-construction projects 5% Health care, education and culture 21 4% communication infrastructure 38% Investment results of US$580 billion dollars Infrastructure construction undoubtedly accounted for the largest share, reached to 37.5 percent of the total US$ 580 billion dollars investment. It leads to demand of high-speed train and accessory industries. 22 Stimulus package of China is conducive to innovation? A series of national policy for stimulating the energy of traditional, export-oriented and employment growth industries, such as the construction of high-speed railway, will stimulate the demand for the building materials, iron and steel development Though they are not directly leading to innovation, but it can drive R&D and innovation in high-speed train and other related industry. 23 Program for mega-R&D projects China changes the timetable to push forward future mega R&D projects as one of ways to help the economy out of crisis. By investing 16 major R&D projects and new lowcarbon energy sources, China invest US$54 billion dollars to speed up the innovation, to adjust economic structure, to encourage enterprise technical renovation. The project for next generation of wireless telecommunication will subsidy to Huawei and ZTE each a24US$44 million dollars for R&D. 16 Target technologies for 2020 General CPU New broad wireless mobile telecommunication High end digital machine tools Nuclear station New drugs Large Airplane Moon flight Trans-genetics products Anti-HIV and other dieses Etc. Not do all in the same time, which one is mature in terms of 25 technology, it starts. Programs for revitalization of ten industries In accordance with the following criteria, the Chinese government put forward programs for revitalization of ten industries Industries with high exporting capability but facing shrinking external demand Service Industries which are closely related to the manufacturing industry Industries far behind the developed countries Industries can change the consumption pattern Industries that fuel economic growth Industries with a matching 16 major R&D projects 26 Programs for revitalization of ten industries 27 Steel industry Automobile industry Shipbuilding industry Petrochemical industry Textile industry Light Industry Nonferrous Metal industry Equipment manufacturing industry Electronics and information industry Logistics industry Programs for revitalization of ten industries In 2008, China promoted the construction of 176 high-tech industrialization projects and 146 industrial projects. These projects have entered the installation phase of equipment procurement. 28 Programs for revitalization of ten industries Program for revitalization of electronics and information industry included 12 major projects, such as Integrated circuits, software, a new generation of mobile communications, next generation Internet, digital audio and video, broadband communications, advanced computing, the new electronic components, universal telecommunication service, network and information security, postal services and radio monitoring 222 electronics and information industry revitalization 29 and innovation projects have been issued in 2009. Program for new energy China invests a total US$30 billion dollars to encourage energy-efficient emission reduction and eco-construction projects, promote new energy and environmental protection technology industry, accelerate the use of new energy and environmental protection technology to transform traditional industries, and develop recycling economy and clean production. For example, nuclear energy, wind energy, solar energy, new energy construction, and water pollution control and management. 30 C. Conclusion 31 Conclusion Some industries can take this opportunity to strengthen their international competitiveness. The healthy financing system helps China to stimulate domestic demands to fit the gap left by the declining of export sector. Quick and strong actions from Chinese government help the industry to recover, though it is important to note that the effect of investment in innovation is relatively slow. The new policies are good for China to solve long-term China's economic structural problems, strengthen innovation capability and provide impetus for post-crisis development of China's economy. 32