China International Sulphur & Sulphuric Acid Conference (212) Economic Status and Policies Zhao Jinping Dept. of Foreign Economic Relations The Development Research Center of the State Council of China (DRC) Contents Features of modern world economy Outlook of China economy in 212 Enterprises strategies based on forecasts of economic policies 1
China International Sulphur & Sulphuric Acid Conference (212) World Economy Will Continue to Recover Slowly in 212 International organizations now expect a slower economic growth Forecast (Sep and Nov 211) Quarterly Growth Rate (%) World Total China Japan -.7 -.3 Eurozone The US 3.5 3.9 5.2 2 4.4 1.5 1.9 2.1 1.7 3 8.2 9.2 1.4 212 211 21 Eurozone The US Japan -1.2-1.2.1.6.6 2.9 2.2 3 1.8 1.3.4 4.1.1 121 114 113 112 111 7.6-5 5 1 15-7 -5-3 -1 1 3 5 7 9 Uncertainties with World Demand Growth Growth rate of international trade fell remarkably 7 6 5 4 3 2 1 PMI by JPMorgan (%) World Output World Orders Boundary 28 8 Jun n 29 9 Jun n 21 Jun 2 1 1 212 2 2 Jun 4 3 2 1-1 -2-3 -4-5 -6 Imp. Growth Y-o-Y(%) + The US Eurozone Japan 2 82 8 2 9 J u n 2 1 J u n 2 1 1 2 1 2 J u n 2
China International Sulphur & Sulphuric Acid Conference (212) Debt Crisis the Greatest Threat to Economy Recovery A sharp increase in matured debts of the four south European countries in Q1 and Q3 Greece Spain Italy Portugal 6 5 4 3 2 1 211 Dec Jan 212 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Perspective of World Economy Slow recovery, possible slight improvement in Q4 Mild recovery in the US due to sluggish consumption Debt crisis goes on in the Eurozone. Economic recession unavoidable Reconstruction in Japan will drive economy, but influence from deflation will persist Danger of slower economic growth due to hampered export of emerging economies More challengers facing China economy from a more complicated world economic environment 3
China International Sulphur & Sulphuric Acid Conference (212) Contents Features of modern world economy Outlook of China economy in 212 Enterprises strategies based on forecasts of economic policies Outlook of China economy in 212 GDP expected to grow by 8.-8.7% Q u arte rly G D P G row th of 16 C hina (%) 14 12 1 8 6 4 2 27 28 29 21 211 212 1 CPI Growth Y-o-Y(%) Y 8 6 4 2-2 -4 27 6 28 29 21 211 212 25 Accumulated IAV Growth Y-o-Y(%) 2 Growth of Housing Price (%) 2 15 16.9 13.8 15 1 5 13.4 1 5 5 9.8 9.5 12.6 8.2 2.6 6.8 27 28 29 21 211 212 6 27 28 29 21 211 212-5 4
China International Sulphur & Sulphuric Acid Conference (212) Export Growth Slows down since H2 211 Trade expected to go more balanced 6 5 4 Trade balance(billion $) Exp. Growth(%) 9 6 3 2 3 1-1 -2-3 21 22 23 2 4 25 2 6 27 2 8 29 21 211 212 Jun Domestic demand Expected to Go More Volatile Overseas demand remains less optimistic China PMI (%) China PMI (%) 7 7 5 PMI of Manufacturing Industry Production Index New Orders Boundary 5 New Export Orders Import Index Boundary 3 29 21 211 212 6 3 29 21 211 212 6 5
China International Sulphur & Sulphuric Acid Conference (212) Industries with Fastest Growth in Sales Value during Jan-May 212 Mainly Final Consumption Goods Falls of Sales Value Growth -12.7-9.8-1.1-1.1-1.3 -.1-5.7-8.9-9.2-11.8-12.1-4.6-17.9-1.9-9 -22-14.3-21.6-15 -4-3 -2-1 Woodware Agricultural Drinks Foods Medicine Stationery Instrument Furniture Leather Rubber Plastics tobacco Handcraft Paper Print media Non-ferrous Apparel Chemicals Manufacturing Growth of Sales Value(%) 24.2 23.4 23.2 21.4 19.7 18 16.8 16.7 15.7 15.7 15.4 15.3 13.9 13.8 13.7 13.6 13.3 13.1 12.7 1 2 3 4 Manufacturing Industries with the Sharpest Fall in Sales Value during Jan-May 212 Mainly Raw Material Industries Falls of Sales Value Growth (%) Falls of Export Value Growth (%) -33.1 Nonmetall mineral -2-25.3 Chemical fiber -31.1-22 Non-ferros metal -25.2-21.6 Chemical goods -24.4-2.2 Metal products -14.2-18.6 Special equipment -11.5-17.9 Handcraft -21.1-17.2 General equipments -8-16.7 Oil refinery -11.5-15.6 Ferros metal -33.8-15 Manufacturing -9.4-4 -3-2 -1-1 -2-3 -4 6
China International Sulphur & Sulphuric Acid Conference (212) In 212, Privately-owned Enterprises Perform Better Shares of Export-oriented Firms Shrink Slightly Manufacturing Enterprise G row th in M anufacturing Industry during Jan-M M ar 212(% ) China-funded Small Enterprise 5.9 7.9 7.5 11.2 18.1 13.4 14.8 15 Export Value Sales Value 24.2 24.8 1 2 3 4 Small Enterprise Shares of Different Kinds of Enterprises (%) Foreignfunded Chinafunded Privatelyowned Foreignfunded Privatelyowned 3.3 28.4 34 36.7 31.1 33.7 69.7 71.6 Jan-Mar 211 Jan-Mar 212 2 4 6 8 1 Fast Development of Manufacturing Industries in Center and Western China during Jan-May 212 Faster Transfer of Manufacturing from East to Mid-West Growth in Manufacturing Industry (%) 65 West China 17 Share of Regions in 212 (%) Export Value Sales Value Central China 29.7 17.8 West China 4 1.6 Bohai Rim Yangtze River Delta 7.2 14 2 7.3 Export Value Sales Value Central China Bohai Rim 7 21 16.1 27 Pearl River Delta 5.4 1.5 Yangtze River Delta 25.5 39.5 Total 7.3 12.7 Pearl River Delta 15.8 33.3 2 4 6 8 1 1 2 3 4 7
China International Sulphur & Sulphuric Acid Conference (212) Manufacturing Industries in Center and Western China are More Export-Dependent Export Orders Transferring from East to Mid-West Shares in Manufacturing Industry by Regions (%) West China Central China Bohai Rim Yangtze River Delta Pearl River Delta -2.4-1.29 -.1 -.58 -.31 1.41.39.3 1.21.91 Export Value Sales Value -3-2 -1 1 2 3 West China Central China Bohai Rim Yangtze River Delta Pearl River Delta Export Dependent Rate by Regions (%) Total 3.7 5.2 4.1 4.5 8.7 8.2 14.4 13.7 Jan-May 211 Jan-May 212 22.4 21.3 3.3 28.9 1 2 3 4 Sales of Chemical Fibers See Great Impact during Jan-May 212, in Both Domestic and Export Markets Sales Value Growth of Manufacturing Industry (%) Jan-May 212 Jan-May 211 Manufacturing Chemical Fiber Chemicals Oil Refinery Apparel Textile 4.8 1 12.7 13.1 13.3 12 27.7 26.8 27.6 26 3.1 34.7 1 2 3 4 Export Value Growth of Manufacturing Industry (%) Jan-May 212 Jan-May 211 Manufacturing Chemical Fiber Chemicals Oil Refinery -11.2 Apparel Textile -5.8-2.1-1.2.3 7.3 4.5 16.7 16.6 13.7 25.4 22.3-2 -1 1 2 3 8
China International Sulphur & Sulphuric Acid Conference (212) Forecasts of China Economy Growth rate above 8% expected, driven by domestic demand Export growth slowing down remarkably due to weak overseas demand Inflation pressure will remain Higher employing costs and short of workers Faster transfer of manufacturing from eastern China to mid-west regions. Contents Features of modern world economy Outlook of China economy in 212 Enterprises strategies based on forecasts of economic policies 9
China International Sulphur & Sulphuric Acid Conference (212) Higher Growth of Currency Supply and Loan Fine tuning of monetary policies makes achievements Growth of Currency Supply Y-O-Y (%) M2 4 Increase of Loans Y-O-Y (%) M 4 Gro wth of Funds outsta nding for 35 for eign e xchange(%) 3 25 2 15 1 5 27 28 29 21 211 212 33.9 3 2 14.1 15 1 28 29 21 211 212 6 RMB Exchange Rate Goes Stable Raise of composite effective exchange rate got restrained 15 Nominal Rate of Exchange Rate (RMB vs USD) Nominal Effective Exchange Rate (61 countries) Real Effective Exchange Rate (61 countries) 1 5 11.7 8.4 7 21 6 211 6 212 6-5 1
China International Sulphur & Sulphuric Acid Conference (212) Comparatively Stable Exchange Rate in 212 Price control policies proved to be successful Changes of composite effective exchange rate of major emerging economies in 211(%) Changes of composite effective exchange rate of major emerging economies in Jan-Apr 212 (%) Jan-Jun 211 Jul-Dec 211 Turkey 5.58 China 8.9 South Africa 5.49-2.4 Chile 5.34 Singapore 2.6 Mexico 4.24 Chinese Taibei -3.7 -.2 India 3.36 South Korea -3.7 Philipines 2.46 3.2 Malasia Russia -7.1 2.8 8.4 Russia 2 Brazil -9.2 4.8 Thailand.86 India -9.9 South Korea.62 -.8 China Mexico -1.3 -.54.5 Brazil -.83 South Africa -12.4-2.5 Indonesia -1.61-2 -1 1 2-5 5 1 Advices from Enterprises (based on a survey with 5 Chinese enterprises on 11 June) A d vices for G overnm e nts from E nte rprises(% ) Efficiently implementing existing foreign trading policies Stabilizing RMB exchange rate Enhancing financial guarantee services Accelerate the progress of export tariff rebate Better response to trade friction Stabilizing prices Preventing labor costs rising too fast Others Increasing loans 42.6 28.6 29.8 28.6 29.8 14.3 21.3 35.7 19.1 17 21.4 8.5 7.1 8.5 64.3 59.6 64.3 64.3 Small Enterprises All 2 4 6 8 1 11
China International Sulphur & Sulphuric Acid Conference (212) Short-and-long-term Strategies (based on a survey with 5 Chinese enterprises on 11 June) Short-term Strategies (%) Long-term Strategies (%) New products Selling to domestic market Price cut Output-cut Layoff 21.4 31.9 14.3 19.1 14.3 12.8 6.4 78.6 63.8 Small enterprises All Diversified market OBM More investment in R&D Production shifted to inland China Cooperate with industry leaders Replace human labors with machines Production shifted to overseas regions Others 64.3 55.3 21.4 48.9 35.7 29.8 28.6 25.5 21.4 12.8 14.3 6.4 6.4 7.1 2.1 Small enterprises All 2 4 6 8 1 2 4 6 8 1 Thank You! Shanghai/21 June 212 12