MillerChinaTrade

MillerChinaTrade - China International Trade Matt Miller...

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Unformatted text preview: China International Trade Matt Miller March 1st, 2005 Outline: 1. 2. 3. 4. 5. History/Background Current Demographics Labor Market Economics International Trade Background History Timeline: 1949 People's Republic of China (PRC) founded 1953-57 The Transition to Socialism 1958-60 The Great Leap Forward 1966-76 The Cultural Revolution Decade 1966-68 The Militant Phase 1969-71 The 9th National Congress Party to the Demise of Lin Biao 1972-76 End of the Era of Mao Zedong 1976-78 The Post-Mao Period 1979-82 Four Modernizations of China 1980-88 Reforms 2001 Admission to the WTO Capital: Beijing Largest City: Shanghai Demographics: 4th Largest Country in the World Highest Population 1.3 Billion people Speculation that figures underestimate true total population Geographic area slightly smaller than U.S. Age Structure 0-14 years = 22.3% of population 15-64 years = 70.3% of population 65 years and over = 7.5% of population Median Age = 31.8 years Population Growth Rate = 0.57% (2004 est.) Birth Rate = 12.98 births/1,000 population Death Rate = 6.92 deaths/1,000 population Demographics: Sex Ratio At birth = 1.12 males/females Total Population = 1.06 males/females Infant Mortality Rate = 25.28 deaths per 1,000 live births Life Expectancy at birth = 71.96 years Literacy Rates = 90.9% over 15 years of age can read and write Multi-ethnic nation - 56 recognized ethnicities Han Chinese = 93% of total population Several different Chinese dialects Labor Market Labor Force 778.1 Million (2003) Labor Force by Occupation: Agriculture = 50% Services = 28% Industry = 22% Unemployment Rate 2003 = 10.1% (CIA.gov) World Factbook 2003 = 4.4% (Official NBS figures) NBS figures do not include underemployment or the migrant population Major Industries Iron & Steel, Coal, Machine Building, Textiles & Apparel, Petroleum, Cement, Footwear, Toys, Food Processing, Automobiles, Consumer Electronics, Telecommunications, etc. Economy GDP - $1.409 Trillion USD (2003) 6th GDP (PPP) - $6.449 Trillion USD (2003) 2nd GDP Real Growth Rate = 9.1% (2003) 1998 1999 2000 2001 2002 2003 7.8% 7.1% 8.0% 7.5% 8.0% 9.1% GDP per Capita = $1,227 USD (2003) 113th GDP per Capita (PPP) = $5,000 (2003) 91st Population below poverty line = 10% (2001) Distribution of Household Consumption Income/Consumption Lowest 10% = 2.4% Highest 10% = 30.4% (1998) Economy GDP Composition by Sector (2003) Industry & Construction = 52.9% Services = 32.3% Agriculture = 14.8% Ave Rural income 1/3 of Urban areas Currency = Renminbi (yuan) Inflation on the rise due to high food prices CPI hit 5.3% in July & August 2004 after averaging 3.6% in the first half of 2004. Steepest rise in over 6 years. 1998 1999 2000 2001 2002 2003 -0.8% -1.4% 0.4% 0.7% -0.8% 1.2% Economy Gross Fixed Investment = 43.4% of GDP (2003) Budget (2003) Revenues = $265.8 Billion USD Expenditures = $300.2 Billion USD Government Deficit: (figures in Billions of RMB) 1998 1999 2000 2001 2002 2003 92.2 174.4 249.1 251.7 315.0 319.8 Budget Deficit 2.7% of GDP Public Debt = 30.1% of GDP (2003) Tax Revenues increased 20.3% in 2003 from 2002 Foreign Reserves = $403.3 Billion (2003) - up 40% from 2002 Foreign Investment in China Despite the government's efforts to cool the economy, FDI in China continues to rise In 2004, the total number of contracts signed was up 15% In 2004, the contracted amount of FDI rose 42.7% Retail investment has increased Wal-mart 7-Eleven Financial Institutions HSBC Holdings Foreign Investment in China Government is trying to spur investment in northeastern & western China Intel Corp. announced a $375 million chip testing & packaging facility in Chengdu Other major investors in Western China include: Ford Motor Co. Tenneco Automotive Lear Corp. High Tech companies are also establishing operations in western China Origins of FDI in China (2004) Country of Origin Amount Hong Kong British Virgin Islands South Korea Japan $10.84 Billion $3.79 Billion $3.51 Billion $2.95 Billion United States Taiwan $2.43 Billion $1.89 Billion Trends and Issues to Watch Power Shortages continue R&D Investment keeps rising Rising costs of popular destinations Trading & Distribution rights New rules Regulatory Developments Anti-Monopoly Law Bankruptcy Law Direct Selling Law International Trade China's Trade with the World ($ Billion) 1999 2000 2001 2002 2003 Exports 194.9 Imports 165.7 249.2 225.1 266.2 243.6 325.6 295.2 438.4 412.8 Total % Change: 360.6 474.3 31.5% 509.8 7.5% 620.8 21.8% 851.2 37.1% 500 450 400 350 300 250 200 150 100 1997 1998 1999 2000 2001 2002 2003 ** Figures in ($ Billions) Exports Imports International Trade Exports Exports = $438.4 Billion f.o.b. (2003) Export Commodities Top Export Partners (2003): U.S. = 21.1% Hong Kong = 17.4% Japan = 13.6% South Korea = 4.6% Germany = 4% Machinery & Equipment, Textiles & Clothing, Footwear, Toys, Sporting Goods, Mineral Fuels, etc. China's Top Exports (2003) ** Figures in ($ Billion) Rank Commodity Electrical Machinery & Equipment 2002 58.691 2003 %Change 78.473 33.7% 1 2 3 4 Power Generation Equipment Apparel Toys & Games 45.404 33.250 10.734 73.958 41.287 12.239 62.9% 24.2% 14.0% 5 6 7 Footwear Furniture Iron & Steel 10.069 8.953 8.615 11.651 11.555 11.517 15.7% 29.1% 33.7% Export Regulations: Chinese Export Controls China maintains export bans and restrictive licensing procedures on certain items. Prohibited Exports: Musk, Copper, Platinum, Specified Chemical Compounds, and products whose export is banned under international treaties. Products subject to strict licensing controls include dual-use chemicals, chemical precursors, heavy water, and exports of fish, fresh vegetables and fruits to Hong Kong & Macao. Foreign-invested companies are restricted to exporting only products that they manufacture. International Trade Imports Imports = $412.8 Billion f.o.b. (2003) Import Commodities Machinery & Equipment, Mineral Fuels, Plastics, Iron & Steel, Chemicals Top Import Partners (2003) Japan = 18% Taiwan = 11.9% South Korea = 10.4% U.S. = 8.2% Germany = 5.9% China's Top Imports (2003) ** Figures in ($ Billion) Rank Commodity Electrical Machinery & Equipment Power Generation Equipment Mineral Fuel & Oil Iron & Steel 2002 65.842 46.867 17.588 14.536 2003 %Change 92.910 64.245 26.349 23.291 1 2 3 4 41.1% 37.1% 49.8% 60.2% 5 6 7 Optics & Medical Equipment Plastics Chemicals 12.020 15.795 11.839 22.192 18.928 16.902 84.6% 19.9% 42.8% Import Regulations: Chinese Import Controls The following items are prohibited from entering China: Arms, ammunition, explosives, counterfeit currencies, printed matter, magnetic media, films or photographs that are deemed detrimental to the political, economic, cultural, or moral interests of China, lethal poisons, illicit drugs, disease-carrying animals and plants, foods, medicines, and other articles, and old/used garments In addition rules went into effect in 1999 that further restrict or prohibit importation of certain commodities related to the processing trade. International Trade China posted a trade deficit for the first time in over a decade in 2004 Overall trade grew roughly 39% in the first half of 2004 same as in first half of 2003 US-China Trade expanded the largest margin the past decade Mostly due to jump in exports to U.S. Grew a record 36% In 2004, China export mix remained mostly the same except toys failed to make the top 10 export list for the first time in more than 15 years! China's Competitive Advantage Labor-rich country Low-skilled, Labor-intensive goods Manufacturing (Low-Tech) Capital-poor country FDI Trade Barriers While China has an increasingly open and competitive economy, substantial barriers have yet to be dismantled! Tariffs Import Quotas Tariff-Rate Quotas Import Licensing Export Licenses Transparency Legal Framework Trading Rights Distribution Rights Import Substitution Standards/Testing Anti-Competitive Practices Services Barriers U.S. China Trade In 2003, US/China Trade topped $190 Billion US Trade Deficit with China totaled $134 Billion U.S. exports to China are increasing US has benefited from China's demand for raw materials US Cotton exports to China increased over 500%! US Soybean exports to China rose over 188%! US/China trade grew more than 30% in first half of 2004 U.S. China Trade * Figures in $ Billion 1999 U.S. Imports U.S. Exports 2000 2001 2002 2003 13.1 87.8 16.3 107.6 19.2 109.4 22.1 133.5 28.4 163.3 Total 100.9 123.9 -91.3 128.6 155.6 191.7 U.S. Balance: -74.7 -90.2 -111.4 -134.9 U.S. China Trade U.S. Benefits Firms --- gain a large export market Consumers --- opportunity to purchase cheap imports from China China Benefits Obtain raw materials to convert into products for export Obtain agricultural imports from U.S. ...
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This note was uploaded on 07/17/2008 for the course ECON 508 taught by Professor Fleisher during the Winter '06 term at Ohio State.

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