China's Winning Strategies
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Transcript of China's Winning Strategies
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CHINA
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Fact file of China
Area: 9,596,960 square kilometres.
Population: 1.2 billion.
Capital City: Beijing.
People: Han Chinese 93%, other immigrants (including Mongol, Zhuang, Manchu and
Uighur) 7%.
Main Language: Mandarin (Beijing dialect).
Religion: Officially atheist; Confucianism, Buddhism, Taoism. Also Islamic and Christian
communities.
Major Industries: Iron, steel, coal, machinery, textiles, etc.
Currency: Renminbi (RMB)
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Par ticulars 1990 2010
GNP Rs 16,59,200 Cr Rs 80,52,000 Cr
POPULATION 1.14 billion 1.38 billion
PER CAPITAGNP Rs 14,554 Rs 58,347
EXPORTS Rs 3,02,560 Cr Rs 19,54,200 Cr
PER CAPITA INDIVIDUAL CONSUMPTION Rs 4,267 Rs 20,836
PER CAPITA RURAL INCOME N.A. Rs 47,222
PER CAPITA URBAN INCOME N.A. Rs 1,18,055
CONTRIBUTION OF PRIMARY INDUSTRY INGNP
28.4% 12.7%
CONTRIBUTION OF SECONDRY INDUSTRY ING
NP
43.6% 51.3%
CONTRIBUTION OF TERTIARY INDUSTRY INGNP
28% 36%
WORKFORCE IN PRIMARY INDUSTRY 340.49 Million 287 Million
WORKFORCE IN SECONDRY INDUSTRY 121.58 Million 179.38 Million
WORKFORCE IN TERTIARY INDUSTRY 105.33 Million 251.13 Million
AVERAGE ANNUAL FOREIGN INVESTMENT Rs 10,161.8 Cr Rs 4,54,170 Cr
FACTS OF CHINESE ECONOMY 1990-2010
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Chinas Winning Strategy
An authoritarian government
High savings rate
Investment in models and showcases
A consistent and thoughtful marketing effort
Creation of zones and infrastructure for businesses
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Chinas Winning Strategy (condt)
The business-above-all attitude
A passionate Diaspora
A strong manufacturing base
Ability to respond quickly
Putting Chinese interests above everything else
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The Chinese Economy Today
East Asia is the fastest-growing region in the world over the past two decades.
China is the fastest growing country in East Asiaapproximately 9% p.a. sincebeginning of economic reform (1979) and 7.9% over the past five years.
Despite the SARS epidemic, the rate of growth of real GDP in 2003 was 9.1%, the
highest since the mid-1990s.
Between 1979 and 2003, Chinese real GDP grew from $177 billion to $1.41
trillion (6th largest GDP in the world).
China is the 4th largest exporting country (behind Germany, Japan and the U.S.)and the 3rd largest importing country (behind U.S. and Germany) in the world
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Exports, Imports and Foreign Exchange Reserves
In 2003, exports of goods totaled US$438.4 billion and imports of goods totaled
US$412.8 billion, with a trade surplus of US$25.5 billion, compared to US30.4billion in 2002.
The exchange rate of the Renminbi vis--vis the U.S. Dollar has remained stablesince 1994 (in fact, there has been a slight appreciation from 8.7 Yuan/US$ to
8.28 Yuan/US$) and is expected to remain so.
China has become Japans second largest export market, after the United States;Greater China (including Mainland China, Hong Kong, Macau and Taiwan) has
become Japans largest export market in 2003.
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Privatization
Provincial and local governments can dispose of their shares in the local enterprises,
including selling them to other investors, both domestic and foreign.
The central government maintains control over approximately 190 large state-
owned enterprises under its recently established State Assets ManagementCommission.
The central government will issue rules on the sale of government shares.
A more promising target for merger and acquisition activities is the foreign-investedenterprises, either joint ventures or wholly-owned.
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The Eleventh Five-Year Plan (2006-2010)
Doubling of real GDP between 2001 and 2010, with an implied rate of growth of
7.2% p.a.
An inflation target of less than 3% p.a.
Indirect (macroeconomic) control of the economy using instruments such as money
supply, interest rate and exchange rates rather than direct (microeconomic) controlthrough administrative directives, commands and central planning with mandatory
targets
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Foreign Direct Investment (FDI)
FDI, at approximately US$60 billion a year (US$53.5 billion in 2003, should have
been higher if it were not for SARS), amounts to approximately 11% of the annualChinese aggregate gross domestic investment of approximately US$560 billion.
Cumulative FDI at year end 2002 amounted to US$ 448.17 billion.
Qualitatively, FDI is probably more important because it brings in technology, know-how, business methods, management techniques and markets that will otherwise be
unavailable in China.
China became the Worlds leading recipient of FDI for the first time in 2002, with
US$52.7 billion, overtaking the United States with approximately US$44 billion.
FDI has been responsible for most of the growth of exports (and imports).
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Conclusion
The prospects for continued rapid growth of the Chinese economy are excellent.
The high domestic savings rate implies a high rate of capital accumulation. The
abundant supply of surplus labor implies a low and steady real wage rate and
keeps the marginal productivity of capital high. A continuing high rate of growth
of real output is the result.
The low external debt (coupled with capital control) and the existence ofsignificant state-owned assets minimize the probability of a major crisis.
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