China economy transition

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Re: China economy transition

Post by Wu_Shenglan on Sat Nov 08, 2014 4:45 pm

Opportunities:
1. China's economic status in the world do not comport with its power. With the latest statistics, China's per capita income is already reached nearly $4000 in 2009. From a historical point of view, there will be a watershed about the economy when per capita income is $4000, the economy will have a reform.
2. The government's reform measures are to adjust the traditional mode of enterprise development, to encourage more innovative companies and innovative talents.
3. With the emergence of new technology and high-tech companies, China's economy has been developed better than before.
4. We are moving into a direction of a fair and justice society.
Challenges:
1.China, as a world factory, still rely on labor-intensive products to make profits. we are lack of innovative products.
2.The government's public service function is weak, the main energy and most of the money of the government has not been used on the development of social undertakings and public products supply.
3. It's hard to change China's traditional education system to a more free and committed innovation one.
4. Bad environment may hinder the development of the economy.

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Re: China economy transition

Post by Michelle, LI Jing on Sat Nov 08, 2014 7:40 pm

Chen Yonglei wrote:Opportunities: lol!  lol!  lol!
1. New-tech, new proucts and new business mode will create and folurish more relative industries, boom China's economy rapidly and bring in new economic structure in China.
2. More job opportunities avalible to increase China's employment rate.
3. Develop rural areas and motainous areas through those innovation projects, products or businesses to achieve development from points to facets.
4. Add China's bargain point during the international trade.
5. Facilitate reform of China's education system to bring up more and more innovative students so that virtuous cycle will always be a health operation.
6. China's GDP growth will remain back to 2-digit growth without the push of the real-estate industry.

Challenges: bounce  bounce  bounce
1. How China's government will take actions to protect intellectual property? if not doing well, steps to innovation roads will just stop.
2. How China will create a ecosystem to balance the development of low-cost bulk manufacturing and innovation-based businesses? No doubt that China's labour and costs of raw materials are highing up, hence most multinational corporations are withdrawing investments from China, and instead trasfer to ASEAN whcih has much lower costs. As such, we may still consider to keep manufacturing industry booming in China to leverage those innovation industries, but the CHANGE is to place the manufaturing in mountainous areas.
3. How China will improve education system???it's a really harsh and tough question getting in the way ahead.

I agree with Yong lei that China has more opportunities than Challenges. However, regarding Challenges, I have two more points to add. First, Pollution problem. How China would face and provide solution for those Cities and Provinces suffering from serious air and water pollution. Many years ago, I hear from a media overseas, questioning China that the rapid development will surely damage the air and landscape. People will be impact from pollution. Now the problem occurred, look at Beijing today. Often the city is suffered from bad air quality. People joking that they have APEC blue sky, and just like a dream will fed away quickly. I think this is a very serious problem that China should look into immediately.

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Re: China economy transition

Post by Michelle, LI Jing on Sat Nov 08, 2014 7:50 pm

Second is Medical Service, people are often complaining how long they have waited to see a doctor. How many useless medicine doctors prescript to them. How bad doctor's attitude was. Those all leads us to thinking how China should plan for it's Medical service reform. Doctors should be treat with more respect, their salary, compensation and benefit should be largely improved than what they have now. So that they should be more seriously treat their job and patients, no longer rely on sell more medicine to patient to earn under table commission. All citizens should be covered by medical insurance, even the farmer at countryside. In that sense, people will more willing to spend money on food, traveling and shopping, since they don't have to concern much when they get sick. And no need to save large amount of money for seeing doctor. This would also contribute to China's economy.

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The most important task for China is economic structural adjustment

Post by Tang Weijie on Sun Nov 09, 2014 2:08 am

So many good poionts upstairs. In my piont of view, the transion of Chinese economy will be a way to restructure.
Having experienced rapid development for more than three decades, the most important task for China is economic structural adjustment, to realize both the quantity and the quality of sustainable growth.
The extensive mode of economic growth over the last 30 years has led to serious structural imbalances, high energy consumption, low efficiency and a low technological level. There are all chanlleges  await Chinese economy.
Restructuring the economy means first changing the mode of economic development from an extensive to intensive pattern, boosting its scale and efficiency. The driving force for economic growth should be technical innovation rather than the input of resources. There should be a technical innovation system with corporations as the main body that is market-based and features cooperation among enterprises, universities and research institutions. Innovation, fundamental research and the transformation of scientific research achievements should rank top with science and technology contributing more to the economy.
Moreover, the structure of the national economy should be further optimized, with the service sector leading the economy and industry being the backbone.
The imbalances and unsustainable issues in the economy can be eradicated with more effective allocation of resources, a clear boundary between the government and the market, and a fairer income distribution system.

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the challenges and opportunities

Post by chelseawangxi on Sun Nov 09, 2014 7:40 am

Challenges
1. financial system
1.1 inefficient financing system
SMEs contributes more than 60% GDP, 50% tax returns and 80% employment rate in China, no doubt they are the most important component in Chinese economy, however the major financing methods (ie loan from banks and list on stock exchange) are not the realistic financing solution for SMEs in china, financing limitation makes SMEs lose business opportunities, which also lower the economy growth
1.2 inefficient investment channels, regulation and credit system
10 years ago Chinese investors have two investment choices: invest in the stock market or invest in the real estates, after the financial crisis, invest in the real estate seems is the only reliable investment way left, which makes the property-value bubble problem in China. Then Chinese investors started to invest in local PE, P2P, and trust funds in order to gain sufficient returns instead of real estate investments, however, many investors got caught in the scams due to poor financial regulation and useless credit record system,
2. structural unemployment
2.1 university-first opinion
Year 1977, the resumption of university entrance examination makes Chinese parents believe a bachelor degree means bright future for their child but diploma from technician training school means lower position and bad future. Now we can see more and more undergraduates get pitiful pays or even cannot find a job after they graduated but technician school students always can find a good-pay job before the leave the school. In a labor intensive economy, too many lack-of-skill undergraduates and the labor shortage is a tough challenge for China.
3. the gap between the rich and the poor
3.1 lower consumption
The GDP is calculated as consumption + investment + government expenditure +net export and the middle class is the major contributor of consumption. In 2013, the Gini Coefficient is 0.473, much higher than the warning line, the big gap between the rich and the poor means we have insufficient middle-classes number in China, which can lower the consumption part in the GDP.
3.2 wealth outflow
The GDP calculation method has a serious bug, the investment and government expenditure in labor intensive industries will leads the environment pollution and nature resource disaster, which is the current situation in China. The new-moneys in China started to migrate to the US, Australia and Canada with their money for unpolluted air, water and food. The thinking set of earn money then migrate to other countries will destroy the economy.

opportunities
1. Chinese yuan internationalization
1.1 Enhance international trade volume
Chinese enterprises used to bear the USD, EURO or JPY FX risk against CNY when they doing international business. Now the Chinese government is trying to build more Chinese Yuan settlement centers all over the world, the CNY cross-border settlement can 1. Reduce the cost of a FX derivative (usually 2.5% - 5% of total amount according to short or long) the enterprises used to pay, 2. Remove the uncertainty of the FX rate for the revenue. 3. CNY settlement can shorten the settlement time compares to foreign currency settlement, enterprises can have better cash flow.
1.2 International currency makes Chinese lower risk
The bulk commodity always priced as the USD and the major countries holding the US treasures a lot, one the USD facing problem, the world facing problem too. Chinese Yuan internationalization can lower the risk and give China strong words power in the world.
2. Change the GDP only model
2.1 GDP measurement
The GDP calculation method has disadvantages. The environment pollution is difficult to measure and it is not calculated as a negative point in the GDP, the recent growth of China sacrifice the forest, land, rivers and the air. Fortunately Chinese government realized this problem and started to change.
2.2 Use unemployment to measure the government
Compares to the European low inflation target method, I think the US low unemployment method is better for Chinese situation. The huge population in China can give a high GDP than small countries but not means the people do richer than others. If the China can use the long-term nature unemployment rate as the government’s performance appraisal, government must give more monetary and fiscal benefits to the SMEs to expand in order to lower the unemployment, then the “invisible hand” will do the left.

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Re: China economy transition

Post by chenjiyu on Sun Nov 09, 2014 1:40 pm

lifeng11 wrote:As we all know the word-wide wave has already spread to us, and we have been enjoying the profits of the global village by 2001, the year China joined WTO. Under the terms of its WTO accession agreement, China is expected to receive market-economy status automatically in 2016. However these years the negotiations of TTP and TTIP, new rules of world trade, are in full swing without China since China is not accepted as a country with market economy. In face of such pressing situation, China has no choice but to do transition.
Meanwhile, overcapacity and environmental pollution, especially in the field of steelworks and heavy industry, block the sustainable development of China. The elimination of this excess and the process of adjustment to a new industrial structure to reflect changed demands means a greater service orientation to address an aging population, is invariably painful.
All of these domestic and international challenge are both demanding tasks which we still must to do. Otherwise The depression of economy will bring the decline of unemployment, furthermore which will cause a lot of social unrest.
So in short, in my opinion, instead of over thinking the economic benefits of the transition we should stand on the solid ground to overcome various kinds of challenges in it.

Very insightful point. Chinese government has been managing our country in the past years, rather serve the country. It set complicated business process to manager economy without consideration of new market demand. In addition, China have been always criticized for its interfere with market economy. So the developed countries are trying to except China from international trade negotiations
I would like to add more points about Shanghai Free Trade Zone based on your opinions.In my opinion, there are two purpose to set Shanghai Free Trade Zone(SFTZ).
One is from external. The setting of SFTZ is an experiment and also great opportunity to seek a good way to solve all there problems. Actually there is no special preferences for SFTZ, but its regulation is very open and do not limit much on the business. It encourages innovation to simplify current business process and create new business model. Through these innovations, it will let more foreign capital come into China and learn more advanced economic model. Until now some successful business innovations have already been carried out in SFTZ and I believe it will increasingly benefit Chinese economy.
Another is from internal. To adapt to new changes and external pressure from the world, the government organization will be forced to reform its system and explore new rule to support the market demand. In other words, Chinese government has to transform itself to a service-oriented government and be more open to the world. I think this is a more important and harder goal for our country and cannot be achieved in a short term.

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Re: China economy transition

Post by Wang Qin on Sun Nov 09, 2014 3:47 pm

The most challenges thing is the economy bounded with politics. China is not the fully opened market economy. The economy is highly influenced by the government's rules.
Another point is internal demand not well-developed,so now highly relay on export.

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Re: China economy transition

Post by Chen Yonglei on Sun Nov 09, 2014 4:36 pm

chelseawangxi wrote:Challenges
1. financial system
1.1 inefficient financing system
SMEs contributes more than 60% GDP, 50% tax returns and 80% employment rate in China, no doubt they are the most important component in Chinese economy, however the major financing methods (ie loan from banks and list on stock exchange) are not the realistic financing solution for SMEs in china, financing limitation makes SMEs lose business opportunities, which also lower the economy growth
1.2 inefficient investment channels, regulation and credit system
10 years ago Chinese investors have two investment choices: invest in the stock market or invest in the real estates, after the financial crisis, invest in the real estate seems is the only reliable investment way left, which makes the property-value bubble problem in China. Then Chinese investors started to invest in local PE, P2P, and trust funds in order to gain sufficient returns instead of real estate investments, however, many investors got caught in the scams due to poor financial regulation and useless credit record system,
2. structural unemployment
2.1 university-first opinion
Year 1977, the resumption of university entrance examination makes Chinese parents believe a bachelor degree means bright future for their child but diploma from technician training school means lower position and bad future. Now we can see more and more undergraduates get pitiful pays or even cannot find a job after they graduated but technician school students always can find a good-pay job before the leave the school. In a labor intensive economy, too many lack-of-skill undergraduates and the labor shortage is a tough challenge for China.
3. the gap between the rich and the poor
3.1 lower consumption
The GDP is calculated as consumption + investment + government expenditure +net export and the middle class is the major contributor of consumption. In 2013, the Gini Coefficient is 0.473, much higher than the warning line, the big gap between the rich and the poor means we have insufficient middle-classes number in China, which can lower the consumption part in the GDP.
3.2 wealth outflow
The GDP calculation method has a serious bug, the investment and government expenditure in labor intensive industries will leads the environment pollution and nature resource disaster, which is the current situation in China. The new-moneys in China started to migrate to the US, Australia and Canada with their money for unpolluted air, water and food. The thinking set of earn money then migrate to other countries will destroy the economy.

opportunities
1. Chinese yuan internationalization
1.1 Enhance international trade volume
Chinese enterprises used to bear the USD, EURO or JPY FX risk against CNY when they doing international business. Now the Chinese government is trying to build more Chinese Yuan settlement centers all over the world, the CNY cross-border settlement can 1. Reduce the cost of a FX derivative (usually 2.5% - 5% of total amount according to short or long) the enterprises used to pay, 2. Remove the uncertainty of the FX rate for the revenue. 3. CNY settlement can shorten the settlement time compares to foreign currency settlement, enterprises can have better cash flow.
1.2 International currency makes Chinese lower risk
The bulk commodity always priced as the USD and the major countries holding the US treasures a lot, one the USD facing problem, the world facing problem too. Chinese Yuan internationalization can lower the risk and give China strong words power in the world.
2. Change the GDP only model
2.1 GDP measurement
The GDP calculation method has disadvantages. The environment pollution is difficult to measure and it is not calculated as a negative point in the GDP, the recent growth of China sacrifice the forest, land, rivers and the air. Fortunately Chinese government realized this problem and started to change.
2.2 Use unemployment to measure the government
Compares to the European low inflation target method, I think the US low unemployment method is better for Chinese situation. The huge population in China can give a high GDP than small countries but not means the people do richer than others. If the China can use the long-term nature unemployment rate as the government’s performance appraisal, government must give more monetary and fiscal benefits to the SMEs to expand in order to lower the unemployment, then the “invisible hand” will do the left.

Very good and logic statement.
"2.1 university-first opinion
Year 1977, the resumption of university entrance examination makes Chinese parents believe a bachelor degree means bright future for their child but diploma from technician training school means lower position and bad future. Now we can see more and more undergraduates get pitiful pays or even cannot find a job after they graduated but technician school students always can find a good-pay job before the leave the school. In a labor intensive economy, too many lack-of-skill undergraduates and the labor shortage is a tough challenge for China. "
I do agree your point. China now is not only at the transition of economy, but also at the transition of business environment system. The NEW economy is leading China's big and modern places, and meantime boosting other lagging areas. To remain such rhythm and pace, China must pay pretty much attention to the latter. There is no more diploma oriented education system, rahter, a knowledge-based, creative and innovative drived system so that the intellectual property would one day be a precious and protected fortune, which would motivated China's teenagers to cut the "me too" pattern. As I mentioned again and again, China's education development needs a good start, and more needs a long lasting good environment to change our kids' current thinkPAD, otherwise every one would be same after leaving their schools. That teachers or professors always like obedient students to satisfy that every one follows his/her words would kill China.

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Re: China economy transition

Post by Tang Weijie on Sun Nov 09, 2014 5:37 pm

Kelly Xu Yanyan wrote:Actually, China's labor cost is not that low as before. That's why some manufactories transfer to India or Thailand for cheap labor cost. China cannot keep relying on cheap labor to attract foregin investment. Innvoation is the core that can bring China Economy into a new era. We all understand that it's not easy based on the "talents" here are almost all educated by China traditional education style. But at least it's good that we realize this.

I agree with Kelly.
The cheap labor cost has been the comparative advantage of China for a long time. Many Chinese economists argue about whether China should keep this advantage recently. We should admit that cheap labor cost has helped Chinese economy especially export trade grow up rapidly, but meanwhile the added value in this kind of trade is very low. If we choose to change our perception, impart labors more knowledge and skill, then we will find the comparative advantage can be dynamic. I think China should not stick in the trap of cheap labor cost, release the potential of these labors through education, Chinese economy will find more opportunities.

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Re: China economy transition

Post by Cherry YAO on Mon Nov 10, 2014 7:47 am

As a Chinese, I am so pound of that China has been the world's second largest economy country. Then for the transition period, there are a lot of opportunities but also along with many challenges.
Opportunities: The economic environment better than before; more respected; More new chance.
Challenges: Air Pollution by the overdevelopment; More difficult for Managing; High Risk

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Re: China economy transition

Post by zhaoxiaotian on Mon Nov 10, 2014 9:19 am

I believe the biggest challenge during this transition is brand building. China has millions of companies but only few are known around the world. That is because Chinese companies are lack of brand awareness among consumers. Their product has low added value but highly replaceable. As China's labour cost keeps going up, it is vital for Chinese companies to build up their own brands among clients. However, most Chinese companies haven't possessed leading technologies for them to develop such brand awareness. Without leading technologies that can help building up the brand, it is hard to step out of the circle of low cost-manufacturing and price wars.

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Re: China economy transition

Post by wangtao on Mon Nov 10, 2014 4:00 pm

Yes, I agree with xiaotian about the brand building in China.
The brand building is a very big challenge during the transtion of economy of China.
We could get the information about it from the homepage of INTERBAND.The top 5 of 2014 global best brands are Apple, Google,Coca-cola,IBM and Microsoft.For China, only one company. It is Huawei ranking No.94.And we should realize that Coca-cola and IBM are more than 100 years old.
Last week I listened to the marketing strategy and results of Cocacola in FuDan University.The product of Coca-cola is the same . Unchanged for more than 128 years.
However, the brand is worthy 81563 m(USD).And the marketing manager of Coca-cola told us brand building is very important. Now the brand of  Coca-cola does not mean soft drinks only. It means happiness.The company has built their  brand into the same meaning of happiness.  Good brand could bring much more margin to the company.The percentage of brand pricing of Coca-cola is more than 2/3.
    And another case about branding building is the story of Apple and Foxconn. Everyone knows that Foxconn is providing OEM for Apple.Foxconn could only get about 2% of the marketing price of Apple's products. It is a pity.
   From the above, I am sure everyone could understand the importance of brand building.Of course, more and more China's companies realized that and they are on the road of branding building. Like, Huawei,Lenovo,Mi, Alibaba,Mi, etc.      
 
  WANG TAO GB


Last edited by wangtao on Mon Nov 10, 2014 5:02 pm; edited 1 time in total

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China economy transition:chances and challenges

Post by Susan Yuan on Mon Nov 10, 2014 4:51 pm

Although China was international factory, we use the facts to short our GDP gap with other advanced nations in short years. We show our capabilities there but still we can learn something from the process and other foreign countries advantages so that continue to grow.
The future way is full of chances. Firstly, we can know from news such as APEC, recently. Our government shows big partnership cross national and regional. We can create more space to cooperate with others to initiate many innovation ideas or business. Secondly, the internal purchase power still can be motivated from government recently policy. Through urbanization, more and more rural people will live and work in big cities. They can study and explore the experience at the development of urban also they can take these returns to the hometown to open new innovation jobs opportunities such as e-commerce production base. They can deliver organic foods to the cities etc. Finally, now it is global village. There is almost no any news or information can be blocked in the corner of the world. Chinese people are smart and hard work. We can continue to keep our aggressive attitude to grow. With the chances, we need to face some challenges. First, the competition from talents is one side. If we have no good education investment from GDP from primary school to the university, many top elites will run off to European and American areas. Secondly, the image or branding of China needs to take time to change in the world. The top brands belong to China is seldom and we need to increase the intelligence at this area. This is great part to enjoy the advantage of high margin. Apple is great example for US and China role in the branding and innovation aspects. Finally, the development gap is huge in China. We should quick the cities development and leverage the differences between the regions from education resources to economic investments. But on the whole, we have bright future indeed.

Susan Yuan (Yuan Shuo)

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Re: China economy transition

Post by lynn0620 on Fri Sep 23, 2016 7:27 am

“New Normal”, which was first mentioned by Xi Jinping in May 2014, means returning to normal state after a period of abnormal state. This is a comprehensive, lasting and profound period of change and also an optimization, adjustment, restructuring, upgrading and parallel process.
Many can be done to improve services, make innovation, reduce inequalities and strengthen environmental sustainability. For example, We-chat, an innovative internet chat tool, does provide many services and conveniences. People can connect better than before, send and receive valuable message immediately and search for useful information from the platform that We-chat provides to business. In the past ten years, we never imagined that one day our life could be so effective only with such a small hand-holding electronic instrument.
In addition to this kind of project, distance education that along with broadcast technology, communications and information technology, is a rapidly developing new form of education. It particularly helps the government reduce urban-rural and regional inequalities. People with different ages, educational background, places and demands can enjoy high-quality education resources. This project also provides educational services to various cities because it integrates many advantageous resources and saves labor costs.
China is developing more and more useful and helpful projects to change our lives and make itself a better place for people to live. If we can cautiously implement these projects, we will surely promote the regional economy and enhance economic potentiality to initiatively adapt to the economic development of the “new normal”.

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Re: China economy transition

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