China Research

A discussion forum on emerging markets, mainly China – from a macro, micro, institutional and corporate angle.

Learn more about China’s geography and history!

February 6, 2018

During many years as a chief and academic economist, I visited quite a number of emerging countries in all continents. Particularly China drew my attention many times. One of my conclusions from all these trips to China, for example, has to do with insufficient Western knowledge about this giant country. But also the understanding of China and of many other emerging markets – and, of course, also of advanced countries – is very important when we meet people from these countries.

Necessary knowledge and understanding include history, traditions, culture, popular sports, geography and many other issues. It is always good to know what people from other countries are proud of and what may be sensitive national issues for them. Talking about undesirable sensitive issues can even shatter business negotiations. We are talking about applied business psychology.

Turning to China again, I still get particularly confused about the lean knowledge that foreigners tend to have about Chinese geography (apart from business people with commercial reasons to get around). My experience is clearly that the Chinese like to tell their foreign guests during a dinner or a coffee break where they come from – or to be asked about it. One certainly can get bonus points when knowing the location of this specific province and the name of a major city there. Furthermore, if you also can mention the names of China’s currently best table tennis players like Fan Zhengdong, Ma Long or Chen Meng, you can quite easily gain further sympathy points.

I got the idea for this article with its “knowledge angle” when I recently saw a message in the Chinese press that another two cities had joined China’s
“1 trillion yuan GDP City Club” (not considering in this context statistical shortcomings). Now there are 14 cities that have exceeded this magical amount of production; altogether they stand for as much as 30 percent of China’s GDP.

If you need assistance: 10 of these 14 places can be found in Eastern China, 2 of them in Central China and two in the West. Now you can try and find out (or know) where these 14 expanding cities are located (east, central or west) – and then you can try to add the name of the province. Enjoy!

China’s 1 trillion yuan GDP City Club, 2017  (ranked):

¤  Shanghai
¤  Beijing
¤  Shenzhen
¤  Guangzhou
¤  Chongqing
¤  Tianjin
¤  Suzhou
¤  Chengdu
¤  Wuhan
¤  Hangzhou
¤  Nanjing
¤  Qingdao
¤  Wuxi
¤  Changsha

Hubert Fromlet
Affiliate Professor at the School of Business and Economics, Linnaeus University
Editorial board

 

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China’s National Bureau of Statistics praises the country’s political leader(s) for good GDP growth in 2017

January 18, 2018

This morning, China’s National Bureau of Statistics (NBS) announced that GDP had risen by 6.9 percent in 2017, well in line with the official objective of “6.5 percent or more”. China’s political leader XI Jinping is praised particularly for this result by the statisticians. Having read the document, I would like to add some comments on the new statistical numbers for 2017.

  1. Expected result: The China Survey Panel of Linnaeus University (chinaresearch.se) predicted in December a GDP growth for 2017 at roughly 6 ½ percent. My own estimate, however, was somewhat higher, i.e. at 6.8 percent because of the obviously good mood and optimism shown by most of the important political leaders. In my eyes – without further discussing the credibility of Chinese statistics – achieved GDP growth at the upper end of the official objective was very predictable.
  2. Services somewhat disappointing: The downsizing of the growth rate for the primary and secondary industry is visible again in the latest annual statistics. However, one must wonder why the production of services rose by just 0.1 percent to 8.2 compared to 8.1 in 2016. One could have expected a somewhat higher increase since the expansion of the service sector has so much political priority.
  3. Investment in secondary industry continues to weaken: The development of investments during 2017 pointed in the right direction: slowing down of investments by the secondary industry but good investment growth of the high-tech industry and the tertiary sector. Investment in residential buildings picked up strongly also in 2017 but it seems still unclear where healthy equilibria between supply and demand in the residential housing sector of major cities may be located. Thus, bubble and debt risks still exist also from this angle.
  4. Too little information about private consumption: The official accounting of private consumption still shows obvious shortcomings in classification. Double-digit increases of retail sales indicate, however, that private consumption in China should have developed quite well in the recent year. But more detailed information about the composition of private consumption would have been appreciated.
  5. Supply-side reforms on track: The Chinese mean – unlike Westerners – by supply-side policy mainly the modernization of production structures and capacity (reducing overcapacity in traditional sectors and achieving visible progress for the innovation-driven enterprises) – and also improvements of the environment. According to the NBS further supply-side progress was noted in 2017. This is positive and should probably not be doubted – and will remain crucial for the future development of China.

 

Hubert Fromlet
Affiliate Professor at the School of Business and Economics, Linnaeus University
Editorial board

 

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“Satisfactory survey numbers from China”

January 8, 2018

LNU’s China Panel No 24 re-visited – January 8, 2018

In the beginning of December, Linnaeus University prepared its traditional fall/winter survey on the business climate and economic conditions in China, both with shorter and longer time perspectives. The (independent) responding China experts – around 15 of them – come from Asia, the U.S. and Europe – thanks a lot!

Unfortunately, the publication of the survey took place on December 22/23 when seasonal holidays already had started for many readers. For this this reason, we re-publish the results of the survey, provided with some additional comments. We see no reason why any result from the December Panel should be obsolete already today.

Summary: LNU’s China Panel remains cautiously optimistic on China – despite the risks”

¤ LNU’s “Temperature Indicator” for GDP growth remained stable at 6.1 in December 2017 compared to 6.4 in May 2017 – still satisfactory despite the small decrease (10 means “very hot” on the scale).

¤ The panel expects Chinese GDP growth to come in at 6.2 percent in 2018 as a whole and at – somewhat slower – 6 percent in q4 2018. But also this latter number would still be acceptable inside and outside China.

¤ The forecasts of the panel have rather a downward bias than an upward bias.

¤ There are very divided views on the course of the currency RMB in 2018.

¤ GDP growth is seen at 5.6 percent on average until 2022 (five years from now).

Click to zoom the image.

Download the full article here, chinapanelno24-re jan 2018.

 

Hubert Fromlet
Affiliate Professor at the School of Business and Economics, Linnaeus University
Editorial board

 

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