Download Liwei.Hua Máster Comercio y Finanzas Internacional Modulo III

Liwei.Hua
Máster Comercio y Finanzas Internacional
Modulo III
Walking in the World Economic Crisis
-----The Challenges and Opportunities
of China
Liwei. Hua
Máster Comercio y Finanzas Internacional
Universidad de Barcelona
1
Liwei.Hua
Máster Comercio y Finanzas Internacional
Modulo III
Index
Introduction------------------------------------------------------------------------3
Working hypothesis------------------------------------------------------------6
Methodology----------------------------------------------------------------------7
Chapters´ Index and labor issues------------------------------------------8
Consult bibliography-----------------------------------------------------------9
Schedule of the tasks--------------------------------------------------------10
2
Liwei.Hua
Máster Comercio y Finanzas Internacional
Modulo III
Introduction
Since 2008 the Wall Street financial crisis blown up, the international society
has occupied by anxious and fight-flight reaction. From developed economies
to emerging economies, the world is filling up the thick restless mood.
In the end of 2009, the world has not left the sub-prime crisis umbra behind; the
European debt crisis has knocked the door, after Greece, Ireland, Portugal and
Spain also elevate the temperature of sovereignty debt crisis. At the same time,
euro zone and so on Germany, France those main countries start to feel crisis´
influence too.
When those developed countries struggling in the crisis, China´s performance
could be judged as ¨ signature achievement¨, compared to the same period, in
2008, Chinese GDP grew 9,6%, in 2009 was 9,2% and in 2010 was 10,3%.
Stand with Brazil, Moscow, India, China is one member of BRICs. In the last
G20 Finance Ministers and Central Bank governors, China also become one of
the important role, obviously, Europe western world wish China could lend them
a hand.
Economic crisis brings business failure, the inflation, price rising, unemployment
increases sharply, the social economy backs up, etc. but like that old adage
said ¨ everything has two side¨, this world economic crisis not only brings big
challenge to China but also opportunities, and at present, China aid Europe or
not also has become one interesting topic both en domestic and international,
this is the challenge or another opportunity for China? so I want to discuss
these challenges and opportunities in this thesis, and also try to looking for
more effective method which suit for China.
Different from Europe, Japan etc. these economic systems, Chinese finance
market has not open completely, the entrance system also exist difference too,
so the direct influence of sub-prime crisis was relatively weak, but the in-direct
influence has an affects very obviously.
International trade could being the sensitive economic part, after the finance
crisis, China´s commodity trade slow down even had some degression, in 2007,
commodity active trade balance declined 17% compare the same period in
2006, in 2008, commodity active trade balance declined 31%, thereinto, import
declined 1% and export declined 8%. 2009 declined anther 31% too compare
with 2008. In the Chinese export product, textile, shoes, socks, and low end
daily necessities take very big rate, the main consumer groups are middle-low
income estate, but in the crisis, they suffer a very big loss, this must reduce the
demand of Chinese products.
3
Liwei.Hua
Máster Comercio y Finanzas Internacional
Modulo III
Another problem is trade protection society. Finance crisis reflect on those
developed countries face a grim domestic unemployment, signify the
government has big press, this force the government use the trade protection
society. Therefore, trade barrier like anti-dumping, technicality-standard etc.
more and more green trade barriers has and will put on the table, China´s
export trade will face a very tough examination
.Taking about international trade must involve the RMB exchange rate, in fact,
from 2007 to 2009, RMB to US dollar exchange rate was continually revaluing,
especially in 2007 and 2008, both of these two year increased 6,9%,
accumulative total 21% since 2005. This evaporate China´s foreign exchange
reserve, reduced the USA foreign debt. China must take Japan as a caution,
avoids Japan´s situation occurring again in China. There is another item also
brings froth which called ¨hot money¨ must be controlled too. Therefore, the
RMB rate system facing with the very tremendous pressure, RMB cannot
revalue excessively quickly. RMB revaluation also impact import and export
trade too, ¨made in China¨ will lose its price ascendancy, will strike all those
Chinese international trade industry.
In addition, the world economic crisis also brings impact on material economy,
employment and consumption.
About material economy, the world economic crisis made some export
enterprises go into liquidation, and these enterprises purchased origin material
and equipments from domestic manufacturing, therefore, the influence of
economic crisis spreaded to the material economy system. So in China, steel
price fell, auto sells difficult, profit became slight, enterprise had difficult in
operation, stock increased, etc.
As that famous old proverb said ¨ every coin has two sides.¨ the world economic
crisis not only brought crisis but also opportunities, beyond all doubt, China
should catch all these opportunities and enlarge the effect.
The first opportunity is restructuring. On the basis of micro economy, Aggregate
supply= deposit+ consume + expenses of taxation+ import, and aggregate
demand= invest+ consume+ the government purchase+ export, under
equilibrium state, the aggregate supply = the aggregate demand. But in China’s
economic structure, the expense accounts for the GDP proportion and the
consumer demand technical progress factor are reducing, the resident savings
is about 20%, favorable balance of current account and foreign exchange
reserve swift and violent grow swift and violent. Unjustified structure has
become a very difficult problem for China economy’s development.
4
Liwei.Hua
Máster Comercio y Finanzas Internacional
Modulo III
Walking along with the economic crisis, China could work on 4 parts for the
restructure.
First, continue adjust “expand the demand structure”. On one hand, rise the
citizens spending power, especially rise the income level of middle-low end
group, optimize citizens consume structure, breed new consume hot spot, rich
China’s consume market. On another hand, expand countryside’s consume
market, increase the agricultural subsidy.
Second, advance the new industrialization, promote industry level, implement
the technological transformation, eliminate the after-birth energy, cultivate the
new point of growth, and create the new market demand.
Third, increase technology and innovation, expand the product’s
competitiveness for gaining the strength to break through the international trade
protectionism.
Four, accelerate the rise of the Midwest, support the development of specialized
mainland enterprises, and accelerate the transformation of old industrial bases.
Independent innovation. China’s popular and dependable product face the
export difficulty, China’s traditional manufacturing industry is being challenged
China need upgrades and transforms the industry, expand their intangible
assets, create high-tech brand, so as to remain invincible in the competition.
Enterprise reconstitutes. In the difficult economic times, companies often have
to shuffle survival of the fittest and eliminate backward production capacity,
develop the high-tech industries and environmental protection industry.
Enterprises should adjust their structure and orientation in the shuffle;
accelerate the pace of mergers and acquisitions to achieve the survival of the
fittest. Seize the opportunity to target direction, choose the right partner to
accelerate restructuring, enlarge and strengthen themselves.
Deepen reform. Financial crisis bought economic recession downturn,
increases the pressure, this is a good opportunity for deepening the reform.
State sector reform launched a new round of administrative reform. The various
provinces are doing now, integration of departments, streamlining functions,
relaxed environment for economic development, allow enterprises to develop
faster and better.
A basic judgment is, the current world economics already evolved to this of
stage: namely adjust the global benefit and the region benefit through the noneconomic and international politics game. This is the major characteristic of the
world economic change. Recognizes these new tendencies and new
5
Liwei.Hua
Máster Comercio y Finanzas Internacional
Modulo III
characteristic clearly, breaks through from world economics´ predicament, and
then find the recent development opportunity is very important.
Working hypothesis
1. Which are those impacts brought by the world economic crisis to China?
2. Which are those opportunities brought by the world economic crisis to China?
3. Europe drop deep into the debt crisis, lots of countries wish China do
something for them, what can China do? Or what should China do?
6
Liwei.Hua
Máster Comercio y Finanzas Internacional
Modulo III
Methodology
For realize the whole thesis work, deductive method had been used as the
basic with all those data and graphics, according to looking for useful
information from internet and books, not only the numerical information but also
those experts´ valuable opinions.
In the impact part, will use big volume of numerical information and graphics to
show what impact been brought to Chinese economy by the world financial
crisis, what characters have on these impacts? From make analysis and
corresponding method about these number and graphics, try to draw out the
unreasonable structure, peccant phronesis model, try to give suggestion and
solution.
In the opportunity part, will use positivism method, reference real examples of
Chinese enterprises to prove which kind of opportunity should be caught in this
world economic crisis, also reference different economic experts’ opinions, use
the dialectic method to analysis their ideas and opinions.
As the latest news, G20 was discuss how to help Greece release from the debt
crisis, Spain also waver on the border of debt crisis, Portugal´s national repute
has just been down to the refuse level. In one moment, it seems all the world
look attentively at China, western world want China do something for them, they
warning ¨ if the western economic system break down, China won’t release from
this disaster either,etc.¨ the case looks quite simple, ¨to be or not to be¨,
obviously this is a question! For this part, I want to use dialectic method to
discuss which way is better for China, if China protrude one hand, what risks
will China has to face? And is there exist any good opportunities too for China?
Which kind of method or model should be used?
According to valuable information, varies economists´ opinion, using
corresponding method, dialectic method, these will help me finding out the
result and solution.
7
Liwei.Hua
Máster Comercio y Finanzas Internacional
Modulo III
Chapters´ Index and labor issues
1. Introduction
1.1 The world economic crisis since 2008
1.2 The Chinese performance in the economic crisis
2. Challenges of China
2.1 The impact to the export
2.2 The impact to the RMB exchange rate
2.3 The impact to the material economy
2.4 The impact to the employment
2.5 The impact to the consumption
3. Opportunities of China
3.1 The opportunity of ¨ restructuring¨
3.2 The opportunity of ¨Independent innovation¨
3.3 The opportunity of ¨ Enterprise reconstitute¨
3.4 The opportunity of ¨deepen reform¨
4. The Europe debt crisis and China
4.1 The Europe debt crisis
4.2 The signification of Europe debt crisis to China
5. Conclusion
6. Bibliography
8
Liwei.Hua
Máster Comercio y Finanzas Internacional
Modulo III
Consult Bibliography




















China.org: http://www.china.org.cn/
The Expansion: http://www.expansion.com/
The Wall Street Journal: http://online.wsj.com.
The Financial Times: http://www.ft.com
The Economist: http://www.economist.com
Euorropean Central Bank: http://www.ecb.int/home/html/index.en.html
Cinco Días: http://www.cincodias.com/
The World Bank: http://www.worldbank.org/
International Monetary Fund: http://www.imf.org/external/index.htm
The People´s Bank of China:
http://www.pbc.gov.cn/publish/english/963/index.html
National Bureau of Statistics of China: http://www.stats.gov.cn/english/
Inside China Today: http://www.einnews.com/china-taiwan-hongkong/News
The New York Time: http://www.nytimes.com/
Financial Times: http://www.ft.com/home/uk
Bloomberg Businessweek: http://www.businessweek.com/
Bloomberg: http://www.bloomberg.com/
Time: http://www.time.com/time/
Reuters: http://www.reuters.com/
Cotizalia: http://www.cotizalia.com/
Portafolio: http://www.portafolio.co/
9
Liwei.Hua
Máster Comercio y Finanzas Internacional
Modulo III
Schedule of the tasks
Activity
2011
Nov
Deliver Project
Correction/Review
of the project
Literature review
Drafting and
correct the
Chapter 1
Drafting and
correct the
Chapter 2
Drafting and
correct the
Chapter 3
Drafting and
correct the
Chapter 4
Drafting and
correct the
Chapter 5,6
Review and
correct the
complete thesis
Deliver the final
thesis
2012
Dec
Jan Feb Mar
Apr
May Jun Jul Aug Sep Oct Nov Dec
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
10