Transcript China in the Global Economy

中国经济的全球定位
谢丹阳：瑞安经管中心主任
香港科技大学商学院
新浪微博：谢丹阳
2011年12月
Outline
The Relative Size of China’s GDP
RMB as an International Currency
China as a knowledge-based Economy
World GDP in 2000 (PPP): $44.5 Trillion
Source: Robert Fogel
China’s GDP in 2040: $123 Trillion (PPP,
2000) and 40% of World GDP
According to Nobel Laureate Robert Fogel:
China’s GDP per capita in 2040: $85,000 (PPP, 2000)
Doubts on the Main Assumptions in Fogel’s
Predictions
Political Stability in China
Income inequality
Housing bubble
Environmental damage under control
25 percent water supply gap by 2030
(McKinsey & Co)
Productivity improvement due to improved
education
College graduates are eager to join civil service
Growth for the past 30 years





Improved Incentives (rise of private enterprises)
Opening up to global trade and global capital
Advantage of Backwardness
Borrowing ideas (Baidu, Youku, Alipay) abroad
Urbanization
Growth for the next 30 years
 Urbanization to continue
 Improvement in Education
 Proprietary invention and innovation
But note that knowledge creation is much tougher
than reverse engineering
 Improvement in Rule of Law
Risks: Pressure for changes from world
powers and Rise of Commodity Prices
Which risk is more important to China?
High Oil Price?
High Copper Price?
Copper and Oil Prices (1998-2011)
160
10,000
Copper (LHS)
140
Oil (RHS)
120
8,000
100
6,000
80
60
4,000
40
2,000
20
0
11/30/1998
0
11/30/2001
Source: CEIC
11/30/2004
11/30/2007
11/30/2010
Alberta, Canada
Global crisis presented an
opportunity for China to build
up reserves in commodities
• So far, China has failed to grab the
opportunity!
By 2040：
China’s GDP : $60 trillion (PPP, 2000)
1/4 of World GDP
Outline
The Relative Size of China’s GDP
RMB as an International Currency
China as a knowledge-based Economy
Internationalization of RMB
 The world-wide concerns over the stability of the
USD (especially after QE2) call for a new
international financial architecture (G20 Meeting,
Nov 3-4, 2011)
 The internationalization of RMB: the next
impetus for economic reform in China (Haizhou
Huang, Chief Strategist in CICC)
Preconditions for RMB’s Expanded Role
RMB in SDR? (Lagarde, November 2011
in Beijing: a matter of time, but RMB not
yet ready)
RMB inconvertible under capital account
RMB as a trading currency
 RMB Internationalization is a natural process
RMB as invoicing currency is gaining
popularity
 The natural process is being encouraged by the
government, gradually. China signed agreement
in 2009 with 8 neighboring nations for the use of
RMB in bilateral trade.
Monthly RMB settlement of cross-border trade
Source: Monetary Policy Report, August 2011, PBoC
RMB Deposits in HK (in 100 mil. Yuan)
7,000
6,222
6,000
5,000
4,000
3,000
2,000
1,000
8.95
0
Source: Hong Kong Monetary Authority
RMB as an Investment Currency
Currency
Swaps
RMB
Bonds
• HK, Korea,
Singapore,
Indonesia,
Malaysia,
Belarus
• Dim-sum
(State Dev
Bank,
World Bank)
• IMF $50 b
RQFII
• 20 billion
Yuan
RMB as a Reserve Currency
Preconditions
An important currency in cross-border trade
Stable purchasing power
Free capital movement across borders
Benefit of RMB Internationalization
 Further integration into the global economy
 China could trade more easily with the rest of
the world in its own currency
 Cross-border M&A could be conducted in RMB
 It is a necessary condition for world financial
centers to emerge in China
 China would play a more important role in global
economic dialog
Cost of RMB Internationalization
RMB may be under heavier speculative
attack when it is fully convertible
Precise control of money supply is more
difficult
Need to strike a balance between being a
responsible international currency and a
policy instrument for managing domestic
business cycles
By 2025：
￥
€
$
？
Outline
The Relative Size of China’s GDP
RMB as an International Currency
China as a knowledge-based Economy
China as a Knowledge-based Economy
 The next phase of China’s development aims at
a transition from the world manufacturing center
into a knowledge-based economy, with
proprietary invention of technologies
Human Capital
 The return of overseas-trained professionals has quickly
gathered pace, with heavy subsidy from the central
government
From brain drain to brain gain similar to Taiwan
(Taiwan: over 100,000 students went abroad during
the second half of 20th century for higher education,
the return rate has climbed to more than 30 percent
from 8 percent initially)
 More resources have been devoted to education
 Among Top 500 corporations, 346 of them (IBM, Nokia,
Microsoft, Motorola, Samsung,…) have established
research institutes/R&D centers in China
R&D Expenditure in Selected Countries
2007
Annual growth rate in R&D personnel : 14.7%
Invention Patents Granted (2007)
Pay Attention to Growth Rates
A 19% Growth in Patents Granted
A 38% Growth in Invention Patents Granted
By 2030：
Factory of
the World
Knowledge
Center of
the World
Summary
2025
2030
2040
￥: World’s Knowledge
One
Center of Quarter of
Major
the World World GDP
Currency