1. Mr. Tanweer; Head of Economics; Oundle School;
@MoTanweer; M.T@cantab.net

3. China’s growth miracle
In 1978, 1/20th of
U.S - now over ½ 2010: 19% of
US world GDP
The World’s Workshop growth
Socialism with
Chinese
characteristics
2007-2011 –
grown by more
Xiaoping’s market than 40pc…
oriented economic
reforms WTO
Great Leap Forward
2012: 7.5%
target

4. GDP/c Japan vs China
GNI per capita:
91/184
HDI: 0.687 –
101/187
GBR: INSERT GRAPH OF
At PPP levels:
below Ecuador Below Libya and
CHINA’S GDP per capita
and just above
Albania
Iran
levels… vs
USA/UK/Japan/Brazil

6. 1990s China vs the ‘modern
China’…

7. Cluster agglomeration

8. The ‘new China’… China is now a
major exporter of
higher-value added
products
Source: US Comtrade, The Beijing Axis
Analysis

9. Shift towards higher-value
add…
‘Magic Seven’ industries to
become 15% of GDP by 2020
R&D expenditure to rise to
2.5% of GDP by 2015

10. Designed in China…
No longer purely
importing
sophisticated inputs
and assembling them
into consumer goods
for the West
Huawei 2008

11. SWF…

12. Broad generalisations…
Complex, but not necessarily
malign
China in Africa is not a new
phenomenon…

13. Imported crude oil
Africa’s oil… dependence
1999: 19%... 2010: 55%
1/3 of Angola’s oil
More than 2/3 of goes to China
Africa’s exports
to China consist
of crude oil
China relies on
Angola for c.12%
of its oil M
But… 40% of
Nigeria’s oil goes
to USA

14. China’s neo-colonialism
Source: Mofcom (2011)

15. China-Africa trade…
Two-way
process…
This is a little over 5%
of China’s global
trade.
U.S net
importer
from Africa
of $60bn EU and US bilateral
trade value -

16. China’s motivation
Oil-for-infrastructure
China’s Exim Bank
Preferential export buyer’s
credits
Export-secured finance
Addis-Djibouti road for
landlocked Ethiopia access to

17. rica’s exports.
Political vs Commercial
investments
Poor CSR
Alternatives
3% of Chinese outward
2007: Exim
? FDI
Bank: Project
5% of Africa’s inward FDI
environmental
The US gives more official
China and social
finance to Africa than China
complement impact
s US/EU aid assessments of
Agency
restraint
China’s land grab… Commercial agreements

18. Win-win?
Chad petroleum refinery
DRC Hydropower station
Over 30 schools, anti-malaria
centres
Agricultural demonstration
centres

19. Changing nature of
investment…
Special Economic Cooperation
Zones – 6 in Africa:
Egypt, Ethiopia, Mauritius, Zam
bia and Nigeria Chinalco + Rio Tinto –
iron ore project
Private investments:
$300m syndicated loan –
CCB, Citi, HSBC, Mizuho
Sinopec+Technip –
Ghana gas pipeline

20. The largest migration in
history
Extensive vs Intensive growth
Catch-up growth

21. Lewis Turning Point?
China will grow old, before it
grows rich
1978: ‘One Child Policy’
TFR 1.5 vs 2.08; (Shanghai
0.6)
Population set to peak in 2026
Shanghai 2020: >1/3 over 60

22. Working age population vs active
population In recent years, economic growth
has not been driven by working
age population growth
Productivity growth

23. Human capital
12 million people p.a are newly added to
the job market, outnumbering the
population of Greece
6.3 mln
college grads
p.a
Structural adjustment issue;
not a labour constraint issue

24. It is RULC’s that matter…
Productivity improvements

25. Urban-rural ratio still low…
Re-allocation of labour
Hukuo
Overemployment in
agriculture: 10%:40%

26. Minimum wages rise…
Target of min.wage 2011: Migrant minimum
to be 40% of local wages rose 21%
salaries by 2015
But: Wage growth is key to execute
the blueprint of the 12th Five Year
Plan rebalancing and sustainability
Source: Roubini Group Economics
2006-10: Average minimum
wage increase: 12.5% p.a

27. The 2008 stimulus…
And its cost…
Infrastructure binge:
High speed
rail, roads, bridges, h
Credit fuelled binge ousing, universities,
towns
Credit surged to 171% of $8 trillion since 2008
GDP by 2010

28. China’s Investment bubble…
Chanos – Dubai x 1000
2010: Capital stock per
capita 7% of USA’s

29. Local
Hidden debts govts Shadow
RMB banking
10.7trn
China’s Govt Debt Breakdown
Debt Item Amount (RMB) % of GDP
PBC issued govt 3.8 trillion 10
bills
China 5.0 trillion 13
Development
Bank debt
MoR network 1.5 trillion 4
finance
Local Govt Debt 10.7 trillion 27
Bank system debt 3.4 trillion 9
Total 24.4 trillion 63
Source: Dragonomics
NPL’s: 1.14% LGFV’

30. Short term fixes…
1998;2004:
$500bn writeoff
Distressed
debt
Free
market vs
China

31. China’s currency
manipulation
Appreciated
25% in 7
years…

32. Current account imbalances…
China’s current acc
surplus fallen to <2.8% of
GDP 2011
‘Fair value’
currency

33. It’s all China’s fault…

34. U.S bluster: Structural problems

35. Global forex reserves
Internationalisation
of the yuan…
3x Japan’s
Cross-border trade
in RMB
RMB
denominated Jan 2012:
bonds x3 in Yuan/Yen
2012 has direct trading
Overall, the country
trimmed 5 percent of its
holdings over the entire year
of 2011.

36. Myths…
Currency Type of
manipulator exports…
…
Labour
constraint…
China in
Africa…
Hidden debts…

37. Mo Tanweer; Head of Economics; Oundle School;
@MoTanweer; M.T@cantab.net