Jan. 16, Mansoo Jee.

Transcription

1 Euro-zone Crisis and China Jan. 16, 213 Mansoo Jee

2 목차 Ⅰ. Impact of Euro-zone crisis on China Ⅱ. China s responses ses to Euro crisis Ⅲ. Prospect 1

3 1. Impact of Euro-zone crisis on China No De-coupling at all, China hit hard Before the Global Financial Crisis, there were stories (and evidences) of De-coupling between China(or emerging) and developed countries. But after 28, we can see a high correlation of the growth rates between them. Quarterly GDP growth Quarterly GDP growth (%, YoY) (%, YoY) (%, YoY) (%, YoY) 2 U.S Euro area (17 countries) G7 China (R) EU (27 countries) China (R) Source: OECD Source: OECD

4 1. Impact of Euro-zone crisis on China China has become more dependent on external demand After China s accession to the WTO in 21, China went more export-oriented. Also, China s export doing bigger role in the GDP growth change. Export/GDP ratio Contribution of China s GDP growth (%) China U.S. Korea (%, %p, YoY) 18 Consumption 15 Investment Net export 12 GDP Source: IMF

5 1. Impact of Euro-zone crisis on China EU became the largest trading partner of China Among China s trade partners, EU is the largest trading partner since 24 and so in the export market since 27. Share of EU in Trade Share of EU in Export (%) Trade (%) Export 2 EU US EU 22 US

6 1. Impact of Euro-zone crisis on China China s export market distribution Share of China s export by region 2 others 211 others S. America N. America Asia 28 others N. America S. America Asia 15% EU Africa S. America N. America Asia 19% EU Africa 2% EU Africa

7 1. Impact of Euro-zone crisis on China So hit hard The slow down of EU economies directly hit China s export to the area. In 212, again, China s export to EU turned negative. GDP growth of EU China s export growth to EU 8 (%) (%) 8 EU Source: IMF Germany Greece Italy Spain EU World

8 1. Impact of Euro-zone crisis on China And hit hardest The decline of export was most serious in the EU market among major partners. China s export declined 6.2% to the EU market while increased 8.4% to the U.S. in 212. China s export growth to global China s export growth by region (%, YoY) Export to EU Export to global 6 Export to Asia Export to US (%, YoY) n.a EU Asia US Global

9 1. Impact of Euro-zone crisis on China Exchange rate The volatility of Yuan-Euro exchange rate also contributes to the magnitude of the impact on the trade. Nominal exchange rate Real effective exchange rate (RMB) 12. CNY-USD (L) (USD) 1.7 (27.1=1) 13 China US Euro area CNY-EUR (L) EUR Source: BIS, REER Broad

10 2. China s responses to Euro crisis Internally, New development strategy China faces two big challenges: Income inequality and External demand instability. These are the inevitable(?) results of Investment-export driven growth during 2s. New path would rely more on domestic demand d by boosting private consumption. Gini index of China Contribution of net export in GDP growth (%p) Net export

11 2. China s responses to Euro crisis Internally, New development strategy Long-term mechanism of boosting consumption : income and will to consume Focused on the functional distribution between biz and household Share of Labor in GDP source : Brookings(disposable income/gdp) Urban Average propensity to consumption Changes in the minimum wage level Source: Bureau of Statistics Source: China s media (Yuan/month)

12 2. China s responses to Euro crisis Outwardly, Going out" is going to Europe China started to promote Outward Direct Investment(ODI) from late 2s under the name of Going out( 走出去 }" during the Crisis, EU became major destination for China s ODI. China s ODI flow China s ODI to Europe (USD bn) (%) 8 ODI Total ex. Europe ODI to Europe 12 7 Share of Europe (R) (USD bn) 9 ODI to Europe 8 ODI to North America

13 2. China s responses to Euro crisis Euro crisis provides opportunities to China Euro-zone crisis gives China the opportunities of taking advantage of, 1. relatively weak euro, 2. de-valuation of European firms, 3. smaller negative sentiment to China s takeover Exchange rate and overseas investment De-valued European stocks (USD bn) ODI to EU CNY-EUR (RMB) (multiples) % Historical PE 53% Current PE 4% 38% 22% 12% 2% % 55% Note: 1. PE represents cyclically-adjusted PE, country MSCI price index divided by the inflation adjusted 1-year average earnings per share. 2. Historical PE uses median value. Source: Ned Davis Research ( )

14 2. China s responses to Euro crisis M&A is a fast track to get technology and brand China s M&A in Europe grow rapidly by major player of SOE( 55%), SWF(17%), Private (28%). (Target country) Industrialized France, Germany, Sweden (Target sector) Materials, utilities, i auto, energy new trend: technology, consumer brand (USD mn) China's investment in EU by country China's investment in EU by industry (2-211) 211) (2-211) 211) value number (Units) Consumer electornics, 6% Metal mining, 6% others, 23% Chemicals, plastic, rubber, 17% Utility, sanitary, 16% 1 2 Transporta tion, 6% Communic ation, 6% Coal, oil, gas, 8% Automative, 12% Source: Rhodium Group, UNCTAD Source: Rhodium Group, UNCTAD

15 2. China s responses to Euro crisis China worldwide investment (25~July, 212) Source: Heritage foundation 14

16 3. Prospects China provides larger MARKET to EU China is the second largest market to EU, import from EU more than doubled(26~211). The New development strategy" of China will provide larger market in the future. Import from EU Share of EU s export (USD bn) 25 Import from EU (%, YoY) 5 (%) 25 EU to U.S. 2 Imports from EU growth (R) EU to China Source: KITA

17 3. Prospects Those market may help the recovery AND rebalancing Bilateral trade imbalance(china s surplus) is decreasing. And some of the members are doing better already. Trade balance to EU China s trade balance to EU members (USD bn) Trade balance Export to EU (R) Import to EU (R) Germany -2 France -1 Greece -3-2 Italy -3-4 Spain

18 3. Prospects From Workshop to Market China to become the biggest consumer market in the near future. The New development strategy will accelerate this change. China may overtake the US to become the EU s biggest exports destination. - Markus Ederer EU ambassador to China (Feb. 212) China is expected to become the world's largest consumer market in Chen Deming, China's Commerce Minister (May 212) Consumer expenditure per capita Share of World GDP, IMF (' RMB) 3 25 Ub Urban Rural (%) 3 U.S. 25 China Estimates 2 avg.+7%/year Source: IMF

19 3. Prospects China became net investor to EU and will go on Even though China seemed to fail to make major engagement into the debt crisis of the peripheral members,... Now China is the one who invest more finally after 15 years. China-EU out and inward investment China-global out and inward investment (USD bn) (USDbn) 1 8 FDI from Europe ODI to Europe 2 16 FDI ODI FDI 7.5%, ODI 2%/year growth estimated

20 3. Prospects Bilateral cooporations China-Europe bilateral trade and investment cooperation talks after Euro crisis Country Trade volume (USDbn, 211) Note Germany 169 Aug. 212, China buys 5 airbus($3.5bn) during Merkel visit. U.K. 58 Jan. 211, vice premier, Li Keqiang signs $4bn of deals. France 52 Italy 51 Spain 27 Greece 4 Nov. 211, President Hu signed $28.1bn of cooperation agre ements in nuclear energy, aviation, finance, energy efficienc y, environmental protection, climate change and culture. Oct. 21, premier Wen Jiabao joint ambitions to more than double bilateral trade to $1bn by 215, with the focus on boosting investment. Nov. 211, Li Keqiang signed $7.5bn of trade deals and reaffi rmed to buy Spanish government bonds Oct. 21, premier Wen Jiabao signs $5bn deals in maritime transportation, loan, telecommunication, export and culture.

21 Thank you 謝謝