Date post: | 22-Sep-2014 |
Category: |
Economy & Finance |
View: | 10 times |
Download: | 5 times |
McCombs Knowledge To Go
April 13, 2010
Global Trade Outlook
by Professor John Doggett
We Are In The Eye of a S.I.P.
S.I.P.’s Are Scary
Birth of the BRICs In 2001, as the Internet Bubble was
collapsing and the stock market was imploding, Goldman Sachs predicted that four countries would dominate global economic activity in the 21st Century.
Brazil Russia India China
The Axis of the Future
Are These Guys Crazy?
6,100% Annual Inflation (1994)
Shock Therapy and the Oligarchs (1990s)
Two Weeks of Foreign Reserves (1991)
The Cultural Revolution (1966-1976)
Largest Countries By Population1. China 1,338,612,968 (slightly smaller than the US)
2. India 1,156,897,766 (slightly more than one-third the size of the US)
3. United States 307,212,123 (6.25% of the earth’s land mass = 424,378,888)
4. Indonesia 240,271,522 (slightly less than three times the size of Texas)
5. Brazil 198,739,269 (slightly smaller than the US)
6. Pakistan 174,578,558 (slightly less than twice the size of California)
7. Bangladesh 156,050,883 (slightly smaller than Iowa)
8. Nigeria 149,229,090 (slightly more than twice the size of California)
9. Russia 140,041,247 (approximately 1.8 times the size of the US )
10.Japan 127,078,679 (slightly smaller than California)
11. Mexico 111,211,789 (slightly less than three times the size of Texas)
12.Philippines 97,976,603 (slightly larger than Arizona)
13.Vietnam 88,576,758 (slightly larger than New Mexico)
CIA World Factbook - April, 2010
National GDP in 2009 (purchasing power parity)
Country GDP 2009 Growth %1. United States $ 14,260,000,000,000 - 2.4%
2. China $ 8,789,000,000,000 8.7%
3. Japan $ 4,137,000,000,000 - 5.3%
4. India $ 3,560,000,000,000 6.5%
5. Germany $ 2,811,000,000,000 - 5.00%
6. United Kingdom $ 2,149,000,000,000 - 4.3%
7. Russia $ 2,116,000,000,000 - 7.9%
8. France $ 2,110,000,000,000 - 2.2%
9. Brazil $ 2,025,000,000,000 0.2%
10.Italy $ 1,760,000,000,000 - 4.8%
11.Mexico $ 1,482,000,000,000 - 7.1%
12.Spain $ 1,368,000,000,000 - 3.6%
13.South Korea $ 1,356,000,000,000 0.2%
14.Canada $ 1,285,000,000,000 - 2.5%
CIA World Factbook – April, 2010
Elephants Emerging from the Mist Total World Population = 6,790,062,216 BRIC Population = 2,834,291,250 (41.7%)
Total World Land Area = 174,814,000 sq. km. (- oceans)
BRIC Land Area = 38,471,715 (22%)
Total World Gross Domestic Product = $58.07 Trillion (Official Exchange Rate)
Total World Gross Domestic Product = $70.29 Trillion (Purchasing Power Parity) (p.p.p.)
BRIC Gross Domestic Product (p.p.p.) = $ 16.49 Trillion (23.5%)
Source: CIA World Factbook – April 2010
Today, The BRICs Have Arrived BRICs Economies collectively are now 23.5% of
global GDP, which is $2.2 trillion larger than America’s GDP.
China is the second largest economy in the world. Today!
India is the fourth largest economy in the world. Today!
The Trade Implications are Obvious
CIA World FactBook, Goldman Sachs and Professor Doggett Analysis
China is On the Move Goldman Sachs says that China can
become the largest economy in the world by 2035 by growing by 5% a year.
What does the world look like when China’s economy is 9x bigger than it is today?
What opportunities does this represent for American entrepreneurs?
India is Rising Goldman Sachs says that India can
challenge the US for #2 by 2040 by growing by 6% a year.
What does the world look like when the Indian economy is 12x bigger than it is today?
What opportunities does this represent for American entrepreneurs?
Here Comes The BRIC Middle Class Goldman Sachs predicts that the BRIC Middle
Class could grow 4x in the next decade
Never before have we seen the addition of 750 million new members of the middle class in one decade.
Goldman says that the BRIC Middle Class could grow from 250 million in 2005 to 3.5 billion by 2050*
Jim O'Neill, Managing Director & Head of Global Economic Research, Goldman Sachs, 5/06
Future GDP (PPP) Estimates
Source IMF (Oct 2009)
GDP Predictions
Dr. P. Konana, McCombs Business School, University of Texas at Austin
A Swarm of Inflection Points
India - Total Trade
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Bill
ions
Japan - Total Trade
$0
$50
$100
$150
$200
$250
$300
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
$ B
illions
China - Total Trade
$0
$50
$100
$150
$200
$250
$300
$350
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
$ B
illio
ns
1964-70 1989-94
2000-2005
How Far The BRICs Have Come In 2006 the G7 (US, Japan, Germany, France, Britain,
Italy & Canada) held $1,253,900,000,000 in FOREX
By the end of 2007 China’s FOREX reserves had passed $1,500,000,000,000
China spent $65 billion for the Olympics. 5x the cost of the Athens Olympics.
China’s China Investment Corporation is a $300 billion State VC Fund
Today, China has $2,400,000,000,000 in FOREX reserves.
Professor P. Konana, McCombs School of Business, University of Texas at Austin & Goldman Sachs
Go Where the Market Is 756 million Mobile Phone Users in
China (January, 2010)
Only 56.3% of China’s population
550 million Mobile Phone Users in India
19,000,000 Indians signed up for cell phone service in January, 2010 . . . for the first time ever
612,903 new subscribers every day of the month
All of Motorola’s mobile phone ads are developed and designed in Beijing They outsource to the US and Europe for
“localization”
Exports in 2009 (Trillion US $)1. China $1.194
2. Germany $1.121
3. U.S.A. $0.995
4. Japan $0.516
5. France $0.457
6. Netherlands $0.398
7. Italy $0.369
8. South Korea $0.355
9. United Kingdom $0.351
10.Hong Kong $0.317
Exports, continued13. Russia $0.296
14. Singapore $0.269
15. Mexico $0.230
17. Taiwan $0.204
21. India $0.165
23. Brazil $0.159
24. Malaysia $0.156
25. Thailand $0.151
30. Indonesia $0.116
Greater China $2.270
Export Partners (2008) China
USA 17.7% Hong Kong 13.3% Japan 8.1% South Korea 5.2% Germany 4.1%
India U.A.E. 12.3% USA 11.7% China 5.4% Singapore 4.5%
United States Canada
20.1% Mexico
11.7% China 5.5% Japan 5.1% Germany 4.2% United Kingdom 4.1%
Brazil USA 13.7% Argentina 8.7% China 8.1% Netherlands 5.2% Germany 4.4%
Imports in 2009 (Trillions US $)1. USA $1.445
2. Germany $0.931
3. China $0.922
4. France $0.532
5. Japan $0.491
6. United Kingdom $0.474
7. Netherlands $0.3589
8. Italy $0.3587
9. Hong Kong $0.345
10.Belgium $0.315
Imports, continues14. India $0.254
15. Singapore $0.245
16. Mexico $0.234
17. Russia $0.197
19. Taiwan $0.175
25. Brazil $0.136
26. Thailand $0.132
28. Malaysia $0.120
31. Indonesia $0.087
Greater China $2.407
Import Partners (2008) China
Japan 13.3% South Korea 9.9% Taiwan
9.2% USA 7.2% Germany 4.9%
India China 10.8% Saudi Arabia 6.9% USA 6.7% U.A.E. 6.7% Iran 4.2%
United States China 16.4% Canada
15.7% Mexico
10.1% Japan 6.6% Germany 4.6%
Brazil USA 14.9% China 11.6% Argentina 7.9% Germany 7.0%
LET’S FOCUS ON CHINANow
Welcome to the New China
copyright - John N. Doggett, 2008
31
Growth at Warp Speed
The People’s Republic of Communist China?
www.lenbracken.com/images/china31
Shenzhen in 1979
30,000 people lived here in 1983
Source: http://en.wikipedia.org/wiki/Image:57440.jpg
China’s Exploding Middle Class
Chinese Banks and The World
36
GDP Growth Rate
Exports as percent of GDP
Imports as percent of GDP
GDP vs. Exports (% of GDP)
Source: World Bank World Development Indicators
GDP vs. Imports (% of GDP)
Source: World Bank World Development Indicators
US Trade (Im)Balance with China
http://www.census.gov/foreign-trade/balance/c5700.html
Who Owns Our Debt? (Billion US$) May 2008
China = $506.8 Japan= $575.3 Caribbean Banking
Centers = $104.5 Oil Exporters = $164.2 UK = $271.2 Brazil = $151.4 Russia = $63.7 Luxembourg = $75.2 Hong Kong = $61.4 Taiwan = $38.9
January 2010 China = $889.0 Japan = $765.4 Oil Exporters = $218.4 UK = $206.0 Brazil = $169.1 Hong Kong = $146.6 Caribbean Banking
Centers = $143.5 Russia = $124.2 Taiwan = $119.6 Switzerland = $84.4
http://www.treas.gov/tic/mfh.txt
Who is Our Banker? In May, 2008, we owed China, Inc.
$607.1 billion.
By January, 2010, this number had grown to $1.16 trillion
We borrowed an additional $552.9 billion in 1 ½ years. This is a 91.07% increase in their “line of credit”
to US
What Are They Buying Now? Majority Share of GM China & GM India Hummer from GM (Not anymore)Hummer from GM (Not anymore) Volvo from Ford 15% of the Cleveland Cavaliers 20% of Fisher & Pavkel (New Zealand) Oz Minerals (Australia) for $1.4 billion Addax Petroleum (Swiss oil company)
for $7 billion Access to Kurdish & Nigerian oil fields
9.9% of Morgan Stanley & Citibank
Rank Country Volume % change over 2008
1 United States 298.3 -10.6
2 Japan 228.9 -14.2
3 Hong Kong 174.9 -14.1
4 South Korea 156.2 -16.0
5 Taiwan 106.2 -17.8
6 Germany 105.7 -8.1
7 Australia 60.1 0.7
8 Malaysia 52.0 -3.0
9 Singapore 47.9 -8.8
10 India 43.4 -16.3
Source: PRC General Administration of Customs, China's Customs Statistics
China’s Top Trade Partners (2009 US $ Billions)
China’s #1 Trading Partners Australia 15.4% Bangladesh 15.8% Benin 36.1% Burma 31.3% Equatorial
Guinea 18.2% Ethiopia
16.3% Gambia
21.6% Ghana 16.0% Guinea 15.4% Hong Kong 46.6% Japan 18.8% North Korea 57.0% South Korea 17.7%
Lesotho26.3%
Macau 31.1% Madagascar 20.1% Malaysia 13.9% Nigeria
16.1% Pakistan 14.3% Paraguay 30.0% Sierra Leone 10.2% Sudan 20.3% Tanzania 13.7% Togo 35.3% U.A.E. 12.9% USA 16.4% Vietnam 22.4%
China’s #2 Trading Partners Angola
15.2% Argentina 12.4% Armenia 8.6% Brazil 11.1% Canada 9.8% Chile 11.9% Columbia 11.5% Comoros 12.5% Democratic
Rep of Congo18.7%
Cuba 11.8% Egypt 9.9% Germany 8.2%
Indonesia 11.8% Iran 12.6% Jordan 10.4% Kazakhstan 25.0% Kyrgyzstan 17.9% Laos 10.4% Libya 9.3% Mauritania 8.9% Mexico 13.5% Mongolia 27.8% Netherlands 10.1% New Zealand
13.2% Niger 11.0%
China’s #2 Trading Partners, cont. Peru 10.5% Saudi Arabia 10.4% South Africa 11.0% Sri Lanka 12.4% Syria 8.7% Taiwan 14.0% Tajikistan 11.9% Thailand 12.7% Turkmenistan 16.7% Uzbekistan 15.3% Yemen 11.8% Zimbabwe 4.2%
Income per Capita in 2050 (2006 US$)
The “Rich Club” United States $92,000 Korea $90,000 United Kingdom $80,000 Russia $78,000 Canada $75,000 France $74,000 Germany $68,000 Japan $67,000
Upper Middle Income Group
Mexico $62,000 Italy $58,000 Brazil $50,000 China $48,000 Turkey $45,000
Goldman Sachs BRIC Book (2007) - page 155
Income per Capita in 2050 (2006 US$)
Lower Middle Income Group
Vietnam$35,000
Iran$32,000
Indonesia$20,000
India $18,000 Egypt $17,000 Philippines $16,000
Low Income Group
Nigeria $10,000 Pakistan $5,000 Bangladesh $4,000
Goldman Sachs BRIC Book (2007) - Page 155
Dr. P. Konana, McCombs Business School, University of Texas at Austin
Energy per Capita Rising with Incomes
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
- 5,000 10,000 15,000 20,000 25,000 30,000
Energy Consumption and GDP per Capita: 2002
Energy usage per capita (oil equivalent litres per person per year)
GDP per capita (1990 US dollars per person per year)
India
South Korea
China
Japan
UK
Australia
US
Source: GGDC, BP, GSJBW
Source: Roopa Purushothaman, Goldman Sachs, BRICs Report 2003
Japan
UK
South Korea
Unprecedented Energy Growth China became the World’s Largest Emitter of
energy-related CO2 in 2008.
China will become the World’s Largest Consumer of Energy in 2010.
From 2007 and 2030, China will install more new electricity generating capacity than exists in the United States in 2007
World Energy needs in 2030 will be 55% higher than in 2006
China and India will = 45% of this new demand
World Energy Outlook - 2007
China’s Exploding Energy Demand China’s Primary Energy demand will more
than double from 1,742 million toe in 2005 to 3,819 million toe in 2030 ( 3.2% annual growth rate)
In 2005, the United States used 1/3 more energy than China
By 2010, China will use more energy than the United States
China’s primary energy demand will grow by 5.1% until 2015
World Energy Outlook - 2007
Who is Worried About IP? Thermal Power Research Institute is
China’s world-leading laboratory on cleaner coal, has just licensed its latest design to Future Fuels in the US. Future Fuels will pay about $100 million to import
from China a 130-foot-high maze of equipment that turns coal into a gas before burning it. This method reduces toxic pollution and makes it easier to capture and sequester gases like carbon dioxide under ground. Future Fuels will ship the equipment to
Pennsylvania and have Chinese engineers teach American workers how to assemble and operate it.
China Drawing High-Tech Research Mark Pinto, Chief Technology Officer of
Applied Materials moved to Beijing in January
Applied Materials is building its newest and largest research labs in China
Applied held its annual shareholder’s meeting in Xi’an, China. Applied’s global headquarters are in Santa Clara,
California
Applied’s New Xi’an R&D Plant
This Will Be China’s Century
The Ball is In Your Court You Control the Future
You Will Be The Captains of The Future
Your Children Will Either Cheer or Jeer
It’s Show Time!
Please Give Back to McCombs!This webinar has been brought to you by the
McCombs MBA Alumni Advisory Board, coordinated by
alumni for the benefit of the Alumni Network.
Please get involved with the Alumni Network!
All alumni benefit when we work together to build the quality
and value of the Alumni Network and the McCombs brand.
Time: Get involved in your local club
Talent: Mentor another alumni or speak at a future webinar
Treasure: Make a donation to McCombs
www.mccombs.utexas.edu/alumni
Suggested fund: MBA Alumni Excellence Fund
Please use response code KTG
Send your feedback -- [email protected]