TWO WORLD ECONOMIES – AT GLANCE:
TWO WORLD ECONOMIES – AT GLANCE
CHINA - TODAY:
CHINA - TODAY This has caused shortages and higher costs for these resources on the global market, as well as air and water pollution within China. China’s economy has grown rapidly as market reforms have continued. Today, China’s economy is the second largest in the world, behind only the United States. As the economy has improved, so has the standard of living for many Chinese. Economic growth has not reached all China’s 1.3 billion people To prevent further population growth, Chinese government encourages families to have only one child Economic Development Large population, rapidly expanding industries High demands on resources, environment Imports coal, iron ore, oil, natural gas to meet energy needs Other Challenges
Foreign Direct Investment (FDI):
Foreign Direct Investment (FDI) FDI, at US$60 billion a year, amounts to approximately 10% of the annual Chinese aggregate gross domestic investment of approximately US$500 billion. Moreover, a significant proportion of it is what is known as “recycled” or “round-tripped” , Investment ultimately originated by Chinese entities and individuals. 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 World’s 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). However, the nature of FDI has also changed--from export-oriented to domestic market oriented; from light industry to heavy and high-technology industries; and from small projects to large projects. China as the World’s Factory as well as the World’s market.
Financial Regulatory Structure :
Financial Regulatory Structure The State Council CBRC CSRC Commercial Banks Credit Cooperatives CIRC Trust & Investment Securities Firms Exchanges Fund Management Insurance Companies
The State’s Dominance of the Banking Industry:
The State’s Dominance of the Banking Industry
Progress of Chinese Stock Market Reform:
Progress of Chinese Stock Market Reform Before 2005, state-owned and legal person-owned shares could not be traded on stock exchanges. Large shareholders paid little attention to the prices of tradable shares held by the public. In 2005, the government initiated reforms that made non-tradable shares tradable. This aligned the interests of large shareholders with that of outside shareholders
Great Leap Forward in Equity Market:
Great Leap Forward in Equity Market An average of US$9 billion raised per year from 1991 to 2006 In 2007, $50 billion new A-shares were issued, taking the first place in the world (the second place US equity markets raised less than $40 billion in 2007) Shanghai Stock index increased by almost 100% in 2007