China: Rebalance or Hard-Landing Qian Liu (Louise), Ph.D. Deputy Director, China Service Qingdao, May 2012
Cheap Labor to Consumer Power 2
2001 - Jan 2001 - May 2001 - Sep 2002 - Jan 2002 - May 2002 - Sep 2003 - Jan 2003 - May 2003 - Sep 2004 - Jan 2004 - May 2004 - Sep 2005 - Jan 2005 - May 2005 - Sep 2006 - Jan 2006 - May 2006 - Sep 2007 - Jan 2007 - May 2007 - Sep 2008 - Jan 2008 - May 2008 - Sep 2009 - Jan 2009 - May 2009 - Sep 2010 - Jan 2010 - May 2010 - Sep 2011 - Jan 2011 - May 2011 - Sep 2012 - Jan Made in China, 30% GDP 60.0% 出口涨幅跟去年同期相比 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% -10.0% -20.0% Eurozone 30% chance of breakup? -30.0% Source:Haver Analytics 3
Mar-01 Aug-01 Jan-02 Jun-02 Nov-02 Apr-03 Sep-03 Feb-04 Jul-04 Dec-04 May-05 Oct-05 Mar-06 Aug-06 Jan-07 Jun-07 Nov-07 Apr-08 Sep-08 Feb-09 Jul-09 Dec-09 May-10 Oct-10 Mar-11 share of China's exports, (%, 3-month rolling sum) Competing in developing countries Changing buyers, changing suppliers Share exported to OECD countries Share exported by foreign-invested firms 65 60 55 50 45 40 Source: China Customs, EIU calculations
What recovery? The bigger threat Property Market
Real GDP growth (yoy) Turning point? Eastern Central Northeast Western 6 17% 16% 15% 14% 13% 12% 11% 10% 9% 8% 7% 1996 1998 2000 2002 2004 2006 Q2 2007 Q4 2007 Q2 2008 Q4 2008 Source: NBS, EIU estimates Note: Differing accounting methods and false reporting usually results in a discrepancy bet ween provincial growt h and nat ional growt h
中国房地产市场 全球经济最重要的产业? * 两周建成罗马 * 一年建成西班牙 *15 年建成欧洲
China is Dubai times 1,000, if not a million. --- James S. Chanos Erdos, Inner Mongolia Is this the end of the Chinese economic miracle?
China: Watch the housing market, the politics *Property tax *Gender imbalance *Building quality Source: National statistical offices, UNECE, Eurostat, EIU estimates
Urban inflows (persons m) Urbanisation rate (%) Hyper-urbanisation The long march to modernity 25 20 15 10 5 0 2005 2006 Source: EIU projections Urban inflows 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Urbanisation rate 70 60 50 40 30 20 10 0 2011 Urban population becomes majority 160m Total urban net inflows 2011 2020
Average urban disposable income: Crossing the Rmb30,000 mark Average urban disposable income: Crossing the Rmb30,000 mark Anyang Bengbu Fushun Zhengzhou Guiyang Kunming Huaibei Shijiazhuang Jiaozuo Nanchang Jilin Harbin Jiujiang Changchun Liuzhou Changsha Tangshan Luoyang Fuzhou(F) Yueyang Mianyang Xi'an Daqing Pingdingshan Beijing Yangzhou Hengyang Qinhuangdao Nanjing Zhenjiang Anshan Taiyuan Suzhou(J) Zhongshan Yinchuan Xinxiang Wuxi Zhuhai Huaian Zhangjiakou Lanzhou Xiamen Zibo Zaozhuang Zunyi Xining 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Dongguan Guangzhou Baotou Chengdu Changde Baoding Shantou Hangzhou Changzhou Dalian Chongqing Puyang Ningbo Dongying Hefei Datong Qiqihar Shanghai Hohhot Linyi Guilin Xiangfan Shenzhen Jinan Shenyang Haikou Xingtai Wenzhou Maanshan Tai'an Handan Zhanjiang Qingdao Weifang Huainan Taizhou(Z) Wuhan Jining Tianjin Wuhu Nanning Yantai Xiangtan Panzhihua Xianyang Xuzhou Zhuzhou 11
Personal consumption (% growth) Let s go shopping 12 10 China 8 Malaysia Vietnam 6 Singapore India 4 Thailand South Korea Indonesia Taiwan Philippines US 2 Japan UK 0 30 35 40 45 50 55 60 65 70 75 80 Personal consumption (% of GDP) Size of bubbles reflects private consumption in US$ bn, 2010. Source: Economist Intelligence Unit.
Prepare for RMB China s currency is no longer hugely undervalued, close to a market equilibrium point Significant real effective exchange rate appreciation in 2005-10 Trade and current-account surpluses both falling, well down on 2007 peak as % of GDP BUT US deficit with China still high and rising. Continued appreciation needed to reflect productivity growth 500 450 400 350 300 250 200 150 100 50 0 12% 10% 8% 6% 4% 2% 0%
Where is the growth? 1 Hefei 2 Baotou 3 Shenyang 4 Jiaozuo 5 Changchun 6 Hohhot 7 Wuhu 8 Zhengzhou 9 Xinxiang 10 Chongqing 11 Pingdingshan 12 Nanchang 13 Luoyang 14 Xiamen 15 Xuzhou 16 Maanshan 17 Wuhan 18 Anshan 19 Changsha 20 Huainan 14
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