Download Chinese economy

Talking points on…
Chinese economy
Government
Dr. Jessica Stowell, University of
Oklahoma
Essentials
 Chief
of state,
President:
Hu Jintao
 Head of Gov’t,
Premier:
Wen Jiabao
Dr. Jessica Stowell, University of
Oklahoma
Politics
 5%
of Chinese are Communist
 3 branches:
– Executive
– Legislative:
unicameral, Nat’l
People’s Congress
– Judicial: supreme, Local &
special courts
Dr. Jessica Stowell, University of
Oklahoma
Labor force
 753.6
million (2002)
 Agriculture 50%
 Industry 22%
 Services 28%
– Unemployment
10%
Dr. Jessica Stowell, University of
Oklahoma
Economy quadrupled between
1980 & 2000
 It
will double between 2000 & 2010
 GDP growing at 8-9%
 3rd largest importer in the world
 4th largest exporter in the world
Dr. Jessica Stowell, University of
Oklahoma
What we sell China









Computer parts, communication equip
Machinery & equipment
Soybeans & cotton
Aircraft & components
Optics & medical equipment
Mineral fuels
Plastics & chemicals
Iron & steel
Dr. Jessica Stowell, University of
Oklahoma
Pulp & paper
What we buy from China







Consumer electronics & appliances
Textiles & clothing
Footwear
Toys & sporting goods
Mineral fuels
Furniture
Leather & travel goods
Dr. Jessica Stowell, University of
Oklahoma
China is not evenly developed


PPP in Shanghai $5,000
PPP in rural areas $1,000
–

PPP is Purchasing power per person compared to
U.S.
Coastal areas are richest…
Dr. Jessica Stowell, University of
Oklahoma
Special Economic zones
Dr. Jessica Stowell, University of
Oklahoma
Foreign Trade





1. European Union
2. U.S.
3. Japan
Trade deficit with U.S. is $123 billion
because of U.S. tariffs on Chinese goods.
Deficits with ASEAN, SK, Taiwan
Dr. Jessica Stowell, University of
Oklahoma
1/2 goods “ Made in China” are
manufactured by U.S. or Japanese
firms.

Computer mouse that sells for $40 leaves
only $3 in China
–
–
China has to import raw materials
China sells cheap labor & environmental
protection
Dr. Jessica Stowell, University of
Oklahoma
Foreign Investment



$540 billion in foreign investment since 1980
Majority from HK, Taiwan, Singapore,
Cayman Islands by ethnic Chinese
There are 300,000 Taiwanese in Shanghai
–
“They know how to bribe officials better than U.S.
merchants do”.
Dr. Jessica Stowell, University of
Oklahoma
Origins of Foreign Direct Investment
2004
(in billions)







Hong Kong
BVI
South Korea
Japan
U.S.
Taiwan
Cayman
$19
$6.73
$6.25
$ 5.45
$3.94
$3.18
$2.04
Dr. Jessica Stowell, University of
Oklahoma
No Free lunch





Price is trial and error system
Moving from government control to privatization
causing corruption in price setting
Must keep balance of food to people
One Child policy has reduced potential population by
300 million
Chinese not rich enough to be old
Dr. Jessica Stowell, University of
Oklahoma
Environmental Pressures


2nd largest oil importer
Acute water shortage
–
–
–
14 tons of water to produce 1 ton of steel
Some rivers running dry
Yellow River tapped upstream more & more
Dr. Jessica Stowell, University of
Oklahoma
Energy, water, land are 3
shortages


Using hot house agriculture with less water
Land measured in mu (1/15 of an acre)
Dr. Jessica Stowell, University of
Oklahoma
Growth of cars—new & used



2001, ½ million
2002, 1 million
2003, 2 million
2004, 2.5 million
–
–
50% of market is VW
Chinese pay 150% of the world mkt price for car

Santana costs $40,000
Dr. Jessica Stowell, University of
Oklahoma
NEW CARS



2006 1 million NEW cars sold
2008 8 million NEW cars
New factory building electric cars
–
–
20,000 expected
500 exported to U.S.
Dr. Jessica Stowell, University of
Oklahoma
Strength of China



People & government are willing to change
Resilience & adaptability
Human resources
Dr. Jessica Stowell, University of
Oklahoma
Challenges





Trade issues & U.S. political pressures
Intellectual property rights protection
Standards
Non-tariff barriers/customs/technical
regulations
Strategic issues
Dr. Jessica Stowell, University of
Oklahoma
John Frisbee U.S. China Business
Council, 2006
 CIA Factbook—China, 2004
 Dr. Zhou, Prof. of Ecnomics, Fudan
University Summer 2004

Dr. Jessica Stowell, University of
Oklahoma