China Economy in a Glance

Shane Zhang

A brief history of China - Qin

Qin221BC

Han100BC

Tang618

Song960

Yuan1279

Ming1368

Qing1644

ROC 1911

PRC1949

First Emperor

Great Wall

A brief history of China - Han

Qin221BC

Han100BC

Tang618

Song960

Yuan1279

Ming1368

Qing1644

ROC 1911

PRC1949

Golden age.China's majority ethnic group refers to itself as the "Han people".

Silk RoadTrade route connecting ChinaAnd Europe

A brief history of China - Tang

Qin221BC

Han100BC

Tang618

Song960

Yuan1279

Ming1368

Qing1644

ROC 1911

PRC1949

Most prosperous timeTang exerted a powerful cultural influence over neighboring states such asKorea, Japan, and Vietnam

A brief history of China - Song

Qin221BC

Han100BC

Tang618

Song960

Yuan1279

Ming1368

Qing1644

ROC 1911

PRC1949

Age of invention

A brief history of China - Yuan

Qin221BC

Han100BC

Tang618

Song960

Yuan1279

Ming1368

Qing1644

ROC 1911

PRC1949

Conquered byMongol

A brief history of China - Ming

Qin221BC

Han100BC

Tang618

Song960

Yuan1279

Ming1368

Qing1644

ROC 1911

PRC1949

Forbidden city

A brief history of China - Qing

Qin221BC

Han100BC

Tang618

Song960

Yuan1279

Ming1368

Qing1644

ROC 1911

PRC1949

Starting from 1840, Qing suffereda series of military defeats by western Powers due to Inferior technology

Conquered byMan Chu

A brief history of China – 20th Century

Qin221BC

Han100BC

Tang618

Song960

Yuan1279

Ming1368

Qing1644

ROC 1911

PRC1949

The last emperor

vs.

Mao

Jiang

China Today

• Population 1.3 billion (expected to peak at 1.5 billion in 2030s)– Growth rate .47% (156th)

• GDP $5.7 trillion (10% YOY, 2nd)• Labor force: 800 million• 2010 FDI - $100 billion• Foreign reserve: $2.9 trillion (1st)

China GDP grew 100 times during 30 years of economic reform

In 1995, the public sector accounted for 78% of GDP. In 2007, it went down to 37%.

39 Trillion RMB in 2010

Will China’s GDP overtake US?

Assumption: China GDP grows at 8% CAGR, currency appreciate from 6.6 RMB/US$ to 5.5 RMB/US$ U.S. GDP grows at 3%

Cargo Transportation Industry in China

• Export: $1.6 trillion (No. 1)• Import: $1.4 trillion (No. 2)

• Ocean – Shanghai overtook Singapore as world’s busiest container port in 2010. Seven out of the top 10 container ports are in China.

• Air – Hong Kong (1st), Shanghai (3rd), Beijing (14th), Guangzhou (20th)

• High Way – 46K miles. About the same as U.S.

Exchange Rate and Trade

Unified official rate with black market rate

RMB pegged with U.S. dollar

depegging pegging

depegging

Emerging Middle Class presents big market opportunity

Billionaire 150 1st (14 million)

1st

2nd (65 million units)

1st (40 million units)

1st (800 mm mobile user)

2nd

Car

Housing

Computers

LCD TV

Cell Phones

Luxury Goods

Three coastal regions account for 29% of China’s population,48% of China’s GDP, 75% of the foreign direct investment in China, and 84% of China’s international trade.

Economic locomotives of China

China GDP by Province

Shenzhen

• Shenzhen is the first city to open door to the west.• With rapid growth and modernization, Shenzhen grew to a population of 10

million people.• The export volume ranks the first in China for 18 consecutive years.

Shanghai• Shanghai was a fishing village

near the Yangtze River until it was settled by foreigners after the Opium War in 1842. The city was then divided into concessions inside which countries had their own territory, outside the

control of Chinese law.

• By the 1930s, many came to seek wealth while others sought refuge. It earned title "Paris of the East“

• In 1990 Shanghai opened its doors to the world and pronounced the Pudong New Area as a free trade zone.

2009

1997

Beijing

• Beijing has 2000 year of history and serves as Chinese capital since 1403.

• It is believed that Beijing was the largest city in the world between 1425-1800.

• In late 1990s, Beijing officials unveils the plan to build a Central Business District which will forever alter Beijing’s skyline.

• 2008 Olympic game was a huge stimulation to the local economy.

Why Did China Grow So Fast?

• Being a poor country is a recent phenomenon for China. Historically prosperous before 1700.

• The growth in the past 30 year is explainable.– Growth, growth, and growth, as the national focus– Pragmatic leadership: “Who cares whether a cat is

black or white as long as it catches mice.”– Industrious and relatively well-educated labor force– Relatively efficient bureaucracy– High savings rate (over 35%)– Integration with the world economy

How Long Can China Sustain the Rapid Growth?

• For at least a decade or two– Hundreds of millions of farmers are still

underemployed• Industrialization will continue• Growth in services will continue• Infrastructure growth will continue

– Much of the growth in the past 30 years has concentrated in coastal regions• More growth will be realized in the interior and in the

western regions

Recent headline news on China

• China Overtakes Japan as World's Second-Biggest Economy - Bloomberg

• China Leads World In High-Speed Rail Tracks - NPR• In PISA Test, Top Scores From Shanghai Stun Experts -

NYTimes.com• Google left China - CNET• Evergreen Solar cutting and running to China - Boston

Business Journal• Chinese dissident awarded Nobel Peace Prize – CNN