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Hung-Gay FUNG University of Missouri-St. Louis

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1 Hung-Gay FUNG University of Missouri-St. Louis
Chinese Business Hung-Gay FUNG University of Missouri-St. Louis

2 China The word China in the Chinese language literally means “middle kingdom.” The Chinese are thinking that China is the middle (center) of the world. This mentality is similar to the US (in fact we are thinking that we are the universe).

3 The map of China

4 Beijing

5 Beijing

6 Shanghai

7 Shenzhen

8 Xi’an

9 A small town in western China

10 A primary school in western area

11 Village

12 Weaving woman

13 Economic Data 1998 2000 2001 Population 1.24b 1.26b
Population b 1.26b Population growth 1.2% Urban population 30% Life Expectancy 71 years Literacy rate 81.5% GDP (US$ b) ,073 1,196.4 GDP growth 7.8% 7.4.% 7.4% Current account (US$b) Foreign reserves (US$b) Exports (US$b) Imports (US$b) Inflation (CPI) -0.8% 0.4% 1.6%

14 China 's Top Trade Partners in 2000 (US$ Billion)
Rank Country Total trade % Total Trade % GDP 1 Japan 2 US 3 HK 4 S. Korea 5 Taiwan 6 Germany 7 Singapore 8 UK 9 Australia 10 Russia Source: General Administration of Customs, China Customs Statistics (2001)

15 China and Yangtze Delta
Since 1978’s open-door policy (adopted by Deng Xiaoping) to foreign countries, China’s growth has been around 9% until the Asian currency crisis FDI- come from Taiwan, Hong Kong, Singapore, South Korea and U.S. Reforms --economic and political, downsizing the state-owned enterprises and government bureaucracy Development of private and non-state owned enterprises

16 Continued Historical High inflation 1988 (23%) and 1994 (21.7%)
Policies to keep inflation down to 10% reforms led to overheated economy and wage hike in 1980s government implemented a wage and bonus tax control inflation in 1994, using contractual monetary aggregate and fiscal deficits.

17 continued Success factors: High Saving rates: 30-50% of GDP
Growth in FDI accumulation of reserves (confidence) as a result of trade surplus relative stable working environment (no major revolution) hardworking of the Chinese people

18 4 Growing Regions in China
Regions GDP (%) Yangtze River Valley 38.5% Shanghai, Jiangsu, Zhejiang Yellow River Valley 30.2% Beijing, Tianjin, Shandong North-east Areas % Heilongjiang, Jilin, Liaoning Zhujian (Pearl) River Valley 16.8% Guangdong and Fujian

19 Regions of Development
Economic and Development Zones along the cost successful for the past 20 years Development of the West and Central China Railways and roads oil lines

20 Economy Structure Composition Percentage Industry 45 % Service 27 %
(commerce, construction, others) Agriculture 28%

21 Banking Sector Central bank - People’s Bank of China
4 big banks - control 80 % business Bank of China, Industrial and Commercial Bank of China, Agricultural bank, China’s Construction bank Under financial reforms bad debts

22 Financial Markets Two Stock Markets Underdeveloped bond markets
Shanghai Stock exchange Shenzhen Stock exchange enables state firms to raise money A-share vs. B-share Underdeveloped bond markets

23 Investments in China Two types Foreign Direct Investment (FDI)
in forms of setting up plants and factory Portfolio investment in stock markets (B-share investments)

24 Total (Realized) FDI in China
Year FDI ($ billion)

25 Choices of investment Representative office, Joint venture,
Wholly-owned foreign enterprise Foreign investor shareholding corporation

26 China and World Trade Organization (WTO)
Sept 17, 2001 Accord on China’s entry into WTO is signed, clearing China’s way to WTO The last big dispute between the US and EU over the status in the Chinese market of AIG, the US insurer is resolved signs bilateral deal with Mexico, the last WTO member to sign for approval to admit China Nov, 2001, formal agreement was signed

27 WTO Effects on China Agriculture import tariff reduces from 21.2% to 17% over time quota and permit for trade will be phased out farmers may suffer most State-owned enterprises (SOEs) - employ over 50 % population; face tense competition Automobile industries - worst hit tariffs cut from 25 % from current % Textiles - shoes, toy industries may gain (export) Financial services - may suffer

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