2015 China Overview (Economy Part)
1) Having been the country with largest population, China’s population now has been exceeded to 1.3 billion. In 3-5 years, this number could climb to 1.4 billion. Economically, China is world’s second largest economic entity, and it could be expected to be the largest one in the future. However, several issues, such as urbanization and aging, may significantly affect China’s future development.
2) China’s GDP growth is now presenting downward trend instead of continuing soaring. In 2015, GDP could maintain or even fall below 7%. Moreover, the fact that China’s GDP per capita has been declining below country’s GDP growth demonstrates China’s inevitable economic downturn and domestic productivity shortage. Also the change and adjustment of China’s population structure will also influent China’s future economy.
3) In recent years, China’s PPI has been continuing negative growth, while its CPI is maintaining positive growth. It can be expected that China’s economic downturn pressure and inflation risk will still exist in the future. However, national confidence on economy recovery is growing with climbing consumption confidence and satisfaction indices.
4) The rise of domestic manufacturing industry cost, the lack of openness of services and the continuing adjustment of overseas corporation strategies have led less obvious growth in foreign investment. China, however, has increased capital out-flow in recent years. The fact that China has become a capital out-flow country attributes to the demand of overseas resource, technology and market by domestic corporations.
5) The employment rate in China’s services industry has been rising, and for the first time, service’s contribution to GDP has exceeded to half of industry’s China’s economy has turned to service-oriented from industry-oriented, which will significantly influence the country’s economic growth, employment and other aspects.
6) From the perspectives of international economy and the trend of de-globlization, China’s fast export growth is hard to achieve. The weakness in international trade has demonstrated the lack of demand from global economy.
7) Chinese market, is and will always be, the most important “foreign capital-friendly” market. Most of the foreign enterprises regard China as their manufacturing country. They not only reject to withdraw their investment, but believe that China is the world’s biggest market as well.
8) The anticipation that Chinese Yuan will keep appreciate against Euro and US dollar is strengthened, which will accelerate certain industry structural adjustment as well as the speed and quality of strategic adjustment in macro-economic.
In recent 10 years, the population of China still keeps rising, while the birth rate and natural growth is getting slower, which leads to the annual population growth maintaining at around 10 million per year.
In the recent decade, male population has been slightly more than female’s in terms of China’s overall gender structure.
Beginning in 2000, China’s urbanization and city modernization phenomenon continues to deepen, rural population is shrinking at an annual rate of 1%.
In the past 15 years, China's aging phenomenon is accelerating, the over 65 year old population have accounted for 1/10 of the whole population, there will be more and more elder people in the future.
The per-capita GDP growth is constantly getting lower and is even lower than the national GDP growth, which shows that China’s overall productivity is greatly infected by the change and adjustment of China’s population structure.
PPI(ProducerPriceIndex) keeps a negative growth in recent years, which proves that China is still facing economic downturn. Meanwhile, the latest 5 years’ CPI(ConsumerPriceIndex) keeps positive, indicating that China is also facing inflation risk.
With CEI(Consumer Expectation Index) downing, CSI(Consumer Satisfaction Index) rising in 2012 as well as CCI(Consumer Confidence Index) having started to rise, the nation has higher confidence that the country's overall economic will back to its former rapid growth.
Since 2011, there has been no more sustained climbing on the amount of foreign direct investment. In recent 5 years, China’s foreign direct investment volume has maintained a roughly 120 billion dollars, due to the increasing costs of domestic manufacturing, the restrictions of service industry and the strategy adjustments of oversea enterprises.
Till 2014, China’s total amount of outward direct investment has accumulated to 770 billion dollars. Along with domestic enterprises’ financing and reinvestment, China has become a net capital exporter in 2014. This significant growth results from domestic enterprises’ needs for oversea resources, technology and markets.
Service industry has a direct connection with consumption. The proportion of staff in service industry is increasing, which means that China is shifting from the old industry-dominated economy to a service-oriented type. This trend will bring a profound and lasting influence on China’s economic growth, employment and other aspects.
In 2014, the disposable income of nationwide resident per capita reached 20, 167RMB, with an increase of 10.1% from last year. After deducting the factor of natural growth in population, the growth of real GDP per capitais 7.1%, with nationwide resident’s per capita disposable income has increased by 8.1% accordingly. Resident’s income is no longer lower than per capita GDP.
In 2014, the disposable income of nationwide resident per capita reached 20,167 RMB, with an increase of 10.1% from last year. After deducting the factor of natural growth in population, the growth of real GDP per capita is 7.1%, with nationwide resident’s per capita disposable income has increased by 8.1% accordingly. Resident’s income is no longer lower than per capita GDP.
In terms of peripheral economies and the global de-commercialization, significant export growth is hard to show again. The weakening in trade indicates that there is an insufficient demand in the global economy. Weak domestic demand, declining price of commodity, along with the expectations of RMB depreciation, import will remain downward for a while.
China market is still and will be the most important “foreign capital friendly” market. Most foreign enterprises not only position China as a manufacturing place but also the world’s largest market with no intention to withdraw or exit their investment.
The national market has seen a steady growth, the number of new registered enterprises keeps high level, the market operation is smooth and orderly. The number of new registered foreign-funded enterprises in China has a slight increase, meaning the economic vitality is becoming more robust.
The appreciation expectations of Chinese Yuan against euro and US dollars keeps strengthening, and it will accelerate the restructuring of some domestic industries. It will benefit the nation when implementing strategic structural adjustment in a fast and high-quality way from a macroscopic level, which serves China’s long-term interest.
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