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CHINA ANALYST
A knowledge tool by THE BEIJING AXIS for executives with a China agenda April 2008
Taking a fresh
look at the
China-Africa link
p.6
Features:
China’s Urban Population Boom 4
Africa-China Relations Revisited 6
Regulars:
China Business News Highlights 10
China Perspectives 12
China Sourcing Blog Highlights 13
Upcoming Events 14
3
Table of Contents
April 2008
8 China in Statistics
Breakdown of China’s trade with other BRICS countries; China import & export figures; China’s largest trade
surplus destinations; actual use of foreign investment; Shanghai composite index performance; China’s foreign
exchange reserves..
12 China Perspectives
A summary of high level debates and trends in the Chinese media, including coverage of the January
snowstorms, Taiwan’s election, the opening of the new Beijing Airport and more...
14 Upcoming Events
A list of upcoming fairs, exhibitions and conferences in China, with particular focus on sourcing from China.
THE CHINA ANALYST is published and distributed by THE BEIJING AXIS Ltd. For more information on
services, please contact any of the following persons:
Beijing Shanghai
Dirk Kotze Julian Hewitt
Tel: +86 10 6440 2347 Tel: +86 21 5882 0048
dirk@thebeijingaxis.com julianhewitt@thebeijingaxis.com
McKinsey Global Institute’s latest All this is necessary to contain a reminder that the largest
report titled ‘Preparing for China’s sharp rise in urbanization from 44% industrialization in history is being
Urban Millions’ is a fascinating in 2005 to a projected 66% two accompanied by a similarly great
insight into the China of the future. decades into the future. human migration.
In some ways, it reads like a
science fiction novel. Within 17 Furthermore, if McKinsey’s Creating Context
years, China will have 221 cities recommendations are taken to heart, To really appreciate the
with million strong populations the Chinese Government needs to implications of China’s urban billion
(Europe has 35 today) and the look at a path of concentrated from a business context, let us take
urban population will have reached urbanization that will result in the a step back and understand things
a billion by 2030, with a population development of 15 mega cities each as they are before we look at what
the size of USA descending on with a population in excess of a the future holds.
China’s urban areas between today massive 25 million people.
and the year 2025. To date, China has made the most
Economically, by 2025 China’s cities sense for two kinds of business
To deal with this, China will need to will generate 95% of Chinese GDP interests. The easiest equation is
consider building 170 mass transit and consume a quarter of the that China is the world’s industrial
systems – twice the current world’s energy, while it is estimated hub and second largest exporter.
European number. The country will that urban consumption of GDP will Walk through any African market or
have to build 20 000 – 50 000 rise to 33% of GDP. USA strip mall and more often than
skyscrapers, amounting to around not the manufactured goods will
10 New York cities being added to McKinsey’s projections are carry a ‘Made in China’ label. It is
China’s already crowded skylines. phenomenal, and serve as a stark this ubiquitous trade that pushed
China’s exports to USD1.22 trillion
in 2007 and, according to the
China is Moving towards an Urban Billion by 2030 WTO, will result in China
surpassing Germany as the world’s
largest exporter by 2009.
China Urban Populations
2025: 926 Million The higher one goes up the value
chain, the more cost savings China
can offer your company. As China
Total Populations in millions (2005) focuses more heavily on research
and development and high tech
2005: 572 Million
products, the attractiveness of
European Union seeing China as a sourcing
Megacity (10M+) destination for high value industrial
United States
493
Large City (5-10M) machinery and equipment will only
Brazil
increase.
Russia
Midsized City (1.5-5M)
298
Nigeria The next step is to view China as a
South Africa 186
long-term manufacturing base, not
Small City (0.5-1.5M)
132 143 only in order to save costs, but to
Australia
have access to a huge market.
47 Large Town (<0.5M)
20 From a labour cost perspective
China is by no means the cheapest
Source: McKinsey Global Institute China All City Model; McKinsey Global Institute analysis destination anymore, but it still
5
China in Statistics
The China in Statistics page contains recently released data that best illustrate the main trends in
the growth and transformation of Chinese commerce and industry, with an emphasis on trade and
foreign investment.
Share of BRI(C)S Total Trade with China (Jan-Dec 07) China Total Trade (12 month historical data, USD bn)
v
c
ct
ay
g
r
ar
b
p
Ju
Ap
No
Ju
De
Ja
Au
Fe
Se
O
M
M
Source: PRC Ministry of Commerce Source: PRC Ministry of Commerce
10 Largest Trade Deficits with China (Jan-Nov 07) Actual Use of Foreign Investment (2007, USD bn)
Britain
5
United Arab Emirates
Singapore
Spain 3
Italy
India
Turkey 0
b
ov
pr
ug
l
ct
n
p
ay
n
ar
ec
Ju
Fe
Ju
Ja
Se
N
M
D
M
Shanghai Composite Index (12 month historical avg.) China’s Foreign Exchange Reserves (2007-08, USD bn)
2,500 500
0
0
ov
b
pr
ug
l
ct
n
p
ay
n
ar
ec
Ju
Fe
Ju
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Sovereign wealth funds are making their force felt in the global investment arena
The China Investment Corporation (CIC) is the newest UAE
member of the “Super Seven” USD100+ billion state-
owned sovereign wealth funds. Morgan Stanley recently Norw ay
published a report saying that up to USD2.9 trillion is Singapore
7 Largest Sovereign
under sovereign wealth control and this could grow to Kuw ait Wealth Funds (USD bn)
USD12 trillion by the year 2015 making it the world’s
China
largest global investment pool. The largest, UAE’s Abu
Dhabi Investment Authority, was established in 1976 Singapore (TH*)
and has an asset base of USD875 billion. While China Russia
Investment Corporation is only valued at USD200
billion, it could soon become the largest on the back of 0 200 400 600 800 1000
China’s USD1.6 trillion foreign reserves. * Singapore’s Temasek Holdings does not consider itself a SWF
The Chinese Ministry of Environmental Protection ranks 500 Shanghai's Air Pollution Index (2007)
84 Chinese cities on a daily Air Pollution Indices (API)
basis according to three major air pollutants - sulphur 400
dioxide, nitrogen dioxide and inhaleable pollutants. The
API scale goes from 1 to 300 with anything in excess of 300
300 being heavily polluted. According to these
statistics, Shanghai had an Air Pollution Index (API) 200
average of 68 (qualified as ‘Not affecting daily activities’)
for 2007 compared with Beijing’s average of over 90. 100
However, Shanghai did have two days for serious
0
concern in 2007. On 19th January, the API was 412
while a staggering 500 was recorded on 2nd April. Jan Apr Jul Oct Dec
07
08
20
20
20
produce.
10
China Perspective
Taking a look at the issues discussed in the Chinese media, China Perspectives aims to track the
opinions and criticisms of the very people that are driving and living China’s breakneck
transformation.
Upcoming Events
THE BEIJING AXIS can assist delegates that wish to attend events such as fairs, exhibitions and
conferences in China. Services include research, interpretation, negotiation and travel logistics.
For more information: info@thebeijingaxis.com, or contact one of our offices.
13 - 15 May CECIA - International China Exhibition & Conference on Instrumental Analysis Guangzhou
19 - 21 May AES China - International Automotive Electronics Products and Technologies Show Shanghai
23 - 25 May Logistics World Suzhou China - Logistics Technology and Service Exhibition Suzhou
28 - 30 May Biotech China - International Trade Fair & Congress for Biotechnology Shanghai
Danielle Olivier joined The Beijing delivered a presentation on and Selected Cases’ was delivered
Axis Johannesburg Office as an ‘Chinese Investment in African to the Council of Supply Chain
Analyst on 1 January. She Mining’ at the Macquarie First Management Professionals
graduated from the Institute of South China Day in South Africa, (CSCMP) in Johannesburg, while a
Marketing Management in held in Cape Town on 1 February presentation titled ‘Gaining
Johannesburg in 2007, and has 2008. Advantage through China
been employed part-time since Sourcing: From Strategy to
November 2007. In early March Lilian Luca, The Implementation’ was delivered to a
Beijing Axis Director for Russia and gathering of the International
Vladimir Tsiba joined The Beijing Eastern Europe, delivered a Purchasing & Supply Education &
Axis Moscow Office as an Analyst presentation titled ‘Advantage Research Association (IPSERA) in
on 1 March. Vladimir speaks through Sourcing from China’ at Perth from 9 to 12 March.
Russian, English and Mandarin sourcing summits in Moscow and in
Chinese, and graduated in Donetsk, Ukraine. Cheryl Tang and Dirk Kotze from
Mathematics from the Far Eastern the Beijing office and Julain Hewitt
National University in Vladivostok. Kobus van der Wath, Managing from the Shanghai office attended
He has worked as a management Director of The Beijing Axis the China Sourcing Summit 2008
consultant in Russia for the past addressed two events on issues in Shanghai on 13 March. Dirk
two years. related to sourcing from China. On Kotze, General Manager for China,
3 March a presentation titled ‘China delivered a presentation titled
Dirk Kotze, The Beijing Axis in your Low Cost Country Sourcing ‘China Sourcing in the Sphere of
General Manager for China, World: Strategy, Implementation High-Value Industrial Products’ .