Transcript http://video.cnbc.com/gallery/?video=3000219037

PRESENTED BYRUPAM MONDAL (PGFA 13 43)
PRESENTED TOPROF. SHIKHA BHATIA
Beijing announced its boldest economic reforms in decades. Measures
unveiled after the Third Plenum of the country's Communist Party
leadership are supposed to put the economy on a growth path less reliant
on domestic investment and manufacturing, with more emphasis on
consumption and services. Most observers have focused on what these
plans mean domestically. But there is a significant foreign dimension to
the Plenum as well.
The new reforms do contain elements that could negatively affect
overseas investment in some circumstances. First, capital discipline on
state-owned enterprises imposed through higher dividend payments and
market-driven interest rates may reduce their outward investment and
create volatility, particularly for resource firms, which have been a big
driver of China's global investment footprint.
After decades of interaction with the world through exports, Chinese
firms now have increasing freedom to decide whether they want to invest
at home or overseas. If China does not implement the announced reforms
aggressively enough, Chinese firms may "vote with their feet" and take
their money elsewhere.
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A major question is how the adjustments will affect China's CHA +0.99% global
investment position, in particular outbound foreign direct investment, which has just
recently become a source of new-found positivity about China from Australia to Europe
and the United States.
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Some observers worry that a preoccupation with domestic reform and a general shift to
quality rather than quantity growth will keep Chinese money bogged down at home,
cutting off this channel of international engagement before it had a chance to get going.
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The reforms announced at the Third Plenum are likely to bolster China's outbound
foreign direct investment stock, which we project to grow from the current $500 billion to
$1-2 trillion by 2020. And the relationship between this investment and reforms also goes
the other way: Flexibility for Chinese firms to invest globally will be a major driver for
reform and growth at home.
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After decades of interaction with the world through exports, Chinese firms now have
increasing freedom to decide whether they want to invest at home or overseas. If China
does not implement the announced reforms aggressively enough, Chinese firms may
"vote with their feet" and take their money elsewhere.
 1) One-child policy relaxed:
 The policy is to be eased to allow couples to have two
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children if one the parents is an only child.
Baby-product related stocks such as Good baby
International soared in Hong Kong on Monday following
the easing of the one-child policy.
2) Welfare-system reformed:
China said it would relax its system of household
registration, known as the hukou system.
They are entitled to when they move to urban areas.
Analysts say changing this system is a key step towards
liberalizing the labour market, allowing the free movement
of labour and encouraging urbanization
 3) Greater rights for farmers:
According to China's official Xinhua news agency farmers will be granted
rights to "possess, use, benefit from and transfer their contracted land, as
well as the right to use their land ownership as collateral or a guarantee.“
 4) Stepping up financial reforms
 Giving qualified private investors the go ahead to set up banks.
 Loosening controls on the pricing of water, electricity and natural
resources and revamping the system for Initial Public Offerings (IPOs).
 5) State-Owned Enterprises (SOEs):
 SOEs will be required to pay larger dividends to the government.
 Private firms, meanwhile, will be encouraged to play a greater role in
the economy.
 But while there is some risk of outbound investment volatility, Beijing's
reforms generally expand the rationale for Chinese firms to go global.
 The linchpin of President Xi Jinking's new reform program is letting
the market allocate resources, which will affect the pricing of almost
everything China's firms touch.
 With rising costs and a stronger yuan exchange rate vis-à-vis the dollar,
Chinese firms must adjust their business models, moving into higher
value-added products and down the value chain to capture margins
closer to consumers.
 Going abroad is key to this adjustment. Offshoring low-value-added
activities to other countries, acquiring brands and technological
capabilities, and serving customers in overseas markets directly all
require foreign direct investment. This will particularly boost
investments in the services sector, as firms exporting higher-quality
goods such as machinery or self-branded electronics necessitate
greater on-the-ground presence, significant investments in brands
and marketing, sophisticated distribution networks, and the
provision of after-sales services.
 Going abroad is key to this adjustment. Offshoring low-value-added
activities to other countries, acquiring brands and technological
capabilities, and serving customers in overseas markets directly all
require foreign direct investment. This will particularly boost
investments in the services sector, as firms exporting higher-quality
goods such as machinery or self-branded electronics necessitate
greater on-the-ground presence, significant investments in brands
and marketing, sophisticated distribution networks, and the
provision of after-sales services.
 Politically, the announced economic reforms will also make it easier for
Chinese enterprises to invest overseas. Private-sector Chinese companies in
particular currently face a complicated approval process for outbound
investment, which often involves multiple bureaucratic entities with
different interests and priorities. This process delays decisions, increases
deal risk and puts Chinese firms at a disadvantage in competitive bidding
processes. The reforms laid out in Beijing would eliminate some of these
hurdles, leaving the decision of whether to make direct investments abroad
more squarely in the hands of businesses, which would also allay foreign
suspicions about political motives for overseas investments.
 The macroeconomic elements of Beijing's Big Bang initiative, including
interest-rate and industrial-policy reforms, will also go a long way toward
addressing foreign worries about the distortive impact of Chinese companies
buying into their back yards. Chinese firms are more likely to be accepted as
"normal" players in global markets as a result of these new policies.
 India and China are two fastest growing economies, while China is far
ahead from India in the figures of Project Management professional.
 The numbers in comparison between India and China leave a very sad
impression of India’s position in the world of Project Management.
 PM and PMA is divided into levels and India’s number of PM
professionals is lagging behind on each and every level. While China
has 105 certified project directors (IPMA Level A), India only has 12. In
IPMA Level B, China has got over thousands of Certified Senior Project
Manager in comparison to India’s 17.
 The level C is even worse with the figures like more than 18,000 for
China and not even close to 2,000 for India. PMA has begun its work to
fix this gap and it the dedication remains the same, the gap will be
reduced in the coming years.
 The Indian economy is going through a sluggish period but has great
potential for the future, a Chinese economist has said, adding a word of
caution that the growth will not be in the same bracket as that of the
last decade.
 "When the Indian economy was growing fast in the early and mid
2000s, many western economists said by 2015 India would overtake
China and compete with the US. Now, they are not giving India any
chance," Wen told HT at his office in the university's Institute of South
Asian Studies.
 "India's economic growth may find it difficult to gain new momentum
in the short term but still has credible potential in the long term," Wen
wrote in the Institute’s journal.
 Talking about India’s market for capital goods, Wen said there is huge
demand in developing infrastructure in the railways, energy, power and
manufacturing sectors.
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