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US$ bn Myth 1:Not a Superpower Yet Exports plus imports, US$ bn 12,000 10,000 GDP at current prices External trade excluding intra-regional shipments (right scale) 2,500 2,000 8,000 6,000 4,000 Not a superpower 1,500 1,000 2,000 500 0 US EU-15 Japan Asia-7 China Canada Mexico 0
Myth 1:Impressive, Not Unprecedented Share of world output (%) 12 China (1970-2000) 10 8 Asia-7 (1965-1995) Japan (1955-1985) 6 4 2 0 0 5 10 15 20 25 30
Myth 1:Impressive, Not Unprecedented Share of world trade (%) 9 China (1970-2000) 8 Asia-7 (1965-1995) 7 Japan (1955-1985) 6 5 4 3 2 1 0 0 5 10 15 20 25 30
Myth 2:China Growth Increasing Surplus Share of ASEAN GDP (%) 1.6 US$ bn 40 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 ASEAN trade balance with China/HK (left) China net imports of primary resources (right) China's raw materials appetite is driving ASEAN's increasing bilateral surplus 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 35 30 25 20 15 10 5 0-5 -10
Myth 2: China FDI Impressive, But Not Decreasing US$ Billion 80 70 60 50 40 30 20 10 ASEAN NIEs / ASEAN China - likely "roundtripping" China - net 0 1985 1990 1995 2000
Myth 3:Deflation is Most Apparent in IT US$ price index, 2000=100 160 150 140 IT equipment Traditional manufacturing Other manufacturing 130 120 110 100 90 80 93 94 95 96 97 98 99 00 01 02
Myth 3:Deflation Not Just a Chinese Issue US$ price index, 2000=100 140 130 120 Taiwan exports Korea exports China exports 110 100 90 80 93 93 94 94 95 95 96 96 97 97 98 98 99 99 00 00 01 01 02
Myth 3:China Exports Are Not High Value Added Trade balance (exports less imports), US$ bn 100 Textiles/light consumer manufactures 80 Electronics Machinery, equipment, inputs 60 Primary/natural resource 40 20 0-20 -40-60 -80-100 China is still not a net electronics exporter 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Rise of Electronic Sector in China Value added, % of GDP 40 35 30 Significant decline in light manufacturing, with a sharp increase in electronics production 1985 2000 25 20 15 10 5 0 Traditional light manufacturing Electronics Other manufacturing Agriculture Services
China s Regions in Int l Trade Regional Comparison Exports Imports Region US$bn Percent US$bn Percent East 242.6 91.2% 222.7 91.4% Central 15.84 6.0% 13.2 5.4% West 7.72 2.9% 7.7 3.2%
China Regional Comparison Share of Output, Consumption & Population Region Land Per Capita Retail Population GDP Area GDP* Sales East 13.5% 41.6% 91.4% 12,071 59.9% Central 59.6% 29.9% 5.4% 6,452 23.0% West 56.9% 28.5% 3.2% 5,166 17.1% *RMB bn
US$ Billions 14 12 10 8 6 4 Foreign Capital Utilization Top 5 Cities 2 Beijing Shenghai Guangzhou Shenzhen Honzhou
China s International Transactions Exports and Imports as Percent of GDP Percent 28 26 24 22 20 18 16 Exports Imports 14 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Percent 140 130 Int l Transactions in Hong Kong Exports and Imports as Percent of GDP Exports Imports 120 110 100 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Percent 56 54 Int l Transactions in Taiwan Exports and Imports as Percent of GDP Exports Imports 52 50 48 46 44 42 40 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
US$ 1000 900 800 700 600 500 400 GDP Per Capita China vs. Hong Kong China (Left) Hong Kong (Right) US$ Thousands 28 26 24 22 20 18 16 300 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 14
US$ 1000 900 800 700 600 500 400 China (Left) Taiwan (Right) GDP Per Capita China vs. Taiwan US$ Thousands 14 13 12 11 10 9 300 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 8
Government Expenditures Per Capita China US$ 2500 2000 Per Capita - L As Percent of GDP - R Percent 25 20 1500 15 1000 10 500 5 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 0
Government Expenditures Per Capita Taiwan US$ 3000 Per Capita - L As Percent of GDP - R Percent 22 20 2500 18 16 2000 14 12 1500 10 8 1000 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 6
Government Expenditures Per Capita Hong Kong US$ 4000 3500 Per Capita - L As Percent of GDP - R Percent 16 15 3000 2500 14 13 12 2000 11 1500 10 1000 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 9
Average Annual Wage & Exports China US$ Index 1991=100 1400 1200 Wage - L Export Growth - R 400 350 1000 800 300 250 200 600 150 400 100 200 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 50
Shanghai Services Employment By Sector, 2002 Finance & Insurance, 25% Other Services, 40% Telecomm & Transp., 13% Retail / Wholesale Trade & Restaurants, 21%
China Industrial Production Real Growth Rate Percent Change, Year Ago 22 20 18 16 14 12 10 8 6 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Percent 54 52 China Industrial Production Value Added of Industry Industrial Output - L Services Output - R Percent 35 34 50 48 46 33 32 44 31 42 30 40 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 29
China Principal Imports 2001 Steel & products 4% Primary plastics 5% Others 33% Crude oil 5% Machinery & transport equipment 46% Electronic & electronic products 7%
China Principal Exports 2001 Computer & telecom products 14% Textile yarn & fabrics 6% Garments & clothing 14% Others 11% Machinery & transport equipment 36% Electric & electronic products 19%
China: A Producer s Haven 1992-2002 US$ Billions 60 50 FDI Inflows Outward Profit Repatriation 40 30 20 10 0 92 93 94 95 96 97 98 99 00 01 02
China s Rural Migrant Workers In Millions Region 1997 2001 Across-country 23.9 33.2 Across-province 14.8 28.2 Total 38.9 61.4
Asian Economies Real GDP Growth Rates* Percent 8 6 2002 2001 4 2 0-2 -4 China North Asia Taiwan ASEAN 5 Hong Kong *Note: 2002 Estimated
Per Capita Income 2001 12,900 RMB and Above 7,900 RMB 12,900 RMB 5,900 RMB 7,900 RMB 5,300 RMB 5,900 RMB 5,300 RMB and Below
International Trade Imports & Exports, 2001 US$ 29 Billion and Above US$ 29 Bil. US$ 357 Mil. US$ 357 Mil. US$206 Mil. US$ 206 Mil. US$177 Mil. US$ 177 Mil. and Below
Establishment Employment 2001 5.19 Million and Above 3.72 Million - 5.19 Million 2.90 Million 3.72 Million 2.01 Million 2.90 Million 2.01 Million and Below
China Foreign Debt Per Capita US$ 130 120 110 100 90 80 70 60 1992-2002 50 92 93 94 95 96 97 98 99 00 01 02
China Budget Balance* As Percent of GDP Percent -0.5-1.0-1.5-2.0-2.5-3.0-3.5 92 93 94 95 96 97 98 99 00 01 02 *Note: 2002 Estimated
Building the Export Machine FDI as share of GDP, % 7 6 5 China total China net NIEs / ASEAN 4 3 2 1 0 1985 1990 1995 2000
Will China Over-take ASEAN in Int l Trade? Share of world trade (%) China 10 NIEs / ASEAN Asian Malaise... 9 Japan 8 7 6 5 4 3 2 1 0... and Chinese Dynamism 1985 1990 1995 2000
Edging Out its Competitors in Trade Growth rate of US dollar trade value (%) 40 China NIEs / ASEAN 30 Japan 20 Global IT downturn Asian crisis 10 0-10 -20 1993 1994 1995 1996 1997 1998 1999 2000 2001
US$ Billions 50 China s Export Machines Top 5 Cities 40 30 20 10 0 Shenzhen Shenghai Suzhou Beijing Guangzhou
Value-added by Ownership 2000 State-owned, foreign and government 50% Domestic nonstate 50%
Financial System Loan Assets by Ownership, 2000 State-owned, foreign and government 89% Domestic nonstate 11%
Tough Balancing Act Growth rate (% yoy) 40 Nominal GDP (left scale) 35 M1 (lagged, right scale) M2 (lagged, right scale) 30 25 20 15 10 5 Growth rate (% yoy) 50 45 40 35 30 25 20 15 0 1987 1989 1991 1993 1995 1997 1999 2001 10
1,400 1,200 1,000 Economic Expansion in the 90 s GDP, Trade and Income growth Total trade (US$ bn) GDP (US$ bn) Per-capita GDP (US$) 800 600 400 200 0 1960 1965 1970 1975 1980 1985 1990 1995 2000
Share (%) 8 China: The World s Factory? 7 6 Share of world GDP Share of world trade 5 4 Initial opening Trade-led growth 3 2 1 0 1960 1965 1970 1975 1980 1985 1990 1995 2000
US$ bn 300 250 The Chinese IT Dream Electronics Textiles/light consumer manufactures Electronics is now the fastest-growing export category in China Machinery, equipment, inputs 200 Primary/natural resources 150 100 50 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Hong Kong The Frontier Economy As Percent of GDP Sector 1980 1990 2000 Import/Export 11% 15% 20% Finance & Insurance 7% 7% 13% Transport 6% 7% 8% Manufacturing 24% 17% 6% Business Services 2% 4% 5% Retail & Wholesale 7% 5% 4% Communications 1% 2% 2%
Hong Kong Trade Balance In HK$ Bil. 2002 Sector 2000 2001 Q1 Q2 Q3 Goods -64-68.2-12.4-16.4-5.6 Services 126 133.5 31.9 37.2 41.4 Goods & Services 62 65.2 19.5 20.8 35.8
Hong Kong Goods Exports Percent Share of Total Exports by Global Market Region 1980 1990 2002 Mainland China 6% 25% 39% United States 26% 24% 21% Asia (excl. China) 23% 22% 18% European Union 25% 19% 13%
H.K. Export Structural Shift Domestic Exports vs. Re-Exports by Percentage Share 1980 1990 2002 Domestic Exports 69% 35% 8% Re-Exports 31% 65% 92% Total Exports 100% 100% 100%
H.K. Export Structural Shift Re-Exports to Offshore Trade (Year Over Year Change) 1990 1995 2000 Mainland China: Goods Exports 18% 23% 28% Hong Kong: Re-Exports 20% 17% 18% Offshore Trade: Sales of Goods NA NA 54%
A Rising Star in the Global Economy What s Hot: If you can image it, China can build it If you don t want it, China can make a buck out of it
If You Can Image it, China Can Build it 60% of USA imports last year sourced from China, including Hong Kong, if adding Taiwan, this will go up to as high as 65%,
If You Don t Want it, China Can Make a Buck Out of it 35% of USA s exports go to China, so what s being shipped out?
Exports From USA Into China Top 5 GROWING COMMODITIES Commodity % of Total Exports 1) Waste Paper 25.9% 2) Metal Scrap 9.8% 3) Resin 8.7% 4) Plastic Scrap 4.9% 5) Logs & Lumber 3.9% Commodities of Potential Machinery, Auto & Building Materials
Exports From USA Into China Top 5 DIMINISHING COMMODITIES Commodity % of Total Exports 1) Frozen Poultry 3.5% 2) Kraft Liner Board 3.0% 3) Foodstuff 0.5% 4) Shellfish 0.3% 5) Lettuce 0.1%
Hot Shots 1 Single Euro Land Bridge 2 Go West 3 Link 4 PL 5 fix s 6 vital links 7 % GDP 8 yes, 2008 Olympics
A Rising Star in the Global Economy What s Not Everything is possible, nothing is easy
Everything is Possible, Nothing is Easy Transition to market economy, Logistic overrun, Aging infra-structure, Central, provincial and local government agencies legistration, Financial practices, Licensing
China Export Partners 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% USA Japan Germany % of US$ 312.8 Bn Source: CIA
China Import Partners 20.0% 15.0% 10.0% 5.0% 0.0% Japan Taiwan USA S. Korea Germany HKG % of US$ 268.6Bn Source: CIA
Outbound International Travel Passengers Carried 40,000 (000's) 30,000 20,000 10,000 China Taiwan SIN HKG - 2002 2003 2004 2005 2006 IATA forecast
China - Annual Visitor Arrivals 10,000 Unit: 10,000 8,000 6,000 4,000 2,000-1988 1990 1995 2000 2002 Foreigners HK & Macao Taiwan Source: CNTA
Foreign Tourists Visiting China In 10,000 1,200.00 1,000.00 800.00 600.00 400.00 200.00-1990 1995 1998 1999 2000 Tourists Handled by Travel Service Source china.org.cn
CHINA - TOP 15: COUNTRIES OF ORIGIN IN 2002 Visitors ('000) Percentage Total Growth (%) 1 Japan 2926 21.8 22.6 2 Korea 2124 15.8 26.5 3 Russia 1271 9.5 6.3 4 USA 1121 8.3 18.1 5 Malaysia 592 4.4 26.4 6 Philippines 509 3.8 24.7 7 Singpore 497 3.7 19.8 8 Mongolia 453 3.4 17.1 9 Thailand 386 2.9 29.5 10 UK 343 2.6 13.4 11 Canada 291 2.2 14.8 12 Australia 291 2.2 14.2 13 Germany 282 2.1 11.2 14 Indonesia 275 2 22.5 15 France 222 1.7 11.3 Source: China National Tourism Association (CNTA)
CHINA - International Tourists by locality, 2002 Others 23.6% Beijing 7.7% Shanghai 6.7% Jiangsu 5.5% Zhejiang 5.0% Yunnan 3.2% Guangxi 3.4% Fujian 4.6% Hubei 2.5% Guangdong 37.7% Source: China National Tourism Association (CNTA)
Cargo Traffic at Asia s Top Airports First 10 months of 2002 World Total Cargo % Change Ranking Airport In Tonnes Over 2001 2 Hong Kong 2,043,428 20.1% 4 Tokyo Haneda 1,621,600 16.5% 6 Seoul 1,426,204 57.3% 7 Singapore 1,374,146 8.5% 13 Taipei 1,134,801 16.1% 17 Bangkok 790,666 14.3% 20 Osaka 664,572-8.1% 23 Tokyo Narita 570,081-4.8% 25 Beijing 555,932 14.1% 28 Guangzhou 493,739 11.8% 29 Shanghai Pudong 458,151 60.1% Source: Airports Council International
Cargo Traffic at China s Top Airports First 6 months of 2002 World Total Cargo % Change Ranking Airport In Tonnes Over 2001 2 Hong Kong 1,664,337 17.0% 26 Beijing 291,905 6.1% 28 Guangzhou 284,578 12.9% 30 Shanghai Hongqiao 259,404 25.4% 56 Shanghai Pudong 222,304 39.7% 62 Shenzen 126,596 34.6% 77 Chengdu 94,469 17.6% 113 Xiamen 50,266 43.2% 116 Macau 49,569 52.6% 157 Nanjing 24,587 10.6% Source: Airports Council International
Inbound Air Freight Metric Tonnes (000's) 1,200,000 1,000,000 800,000 600,000 400,000 200,000-2002 2003 2004 China Taiwan SIN HKG IATA forecast
Outbound Air Freight Metric Tonnes (000's) 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 2002 2003 2004 SIN Taiwan China HKG IATA forecast
Hong Kong Trade 2002 2,000,000 1,500,000 1,000,000 500,000 - Domestic Exports Re-exports Total Exports Imports HK$ Millions HK Govt Data
Hong Kong Total Trade HK$ millions 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 - China Japan Singapore HK Govt Data 1993 2000 2002
Hong Kong Trade Domestic Exports to Destinations HK$ Millions 80,000 60,000 40,000 20,000 1993 2000 2002 - USA China UK Taiwan Germany HK Govt Data
Hong Kong Trade Imports by Origin HK$ Millions 800,000 600,000 400,000 200,000 1993 2000 2002 - China Japan Taiwan USA R. Korea HK Govt Data
Hong Kong Trade Re-exports By Destination HK$ millions 600,000 500,000 400,000 300,000 200,000 100,000 - China USA Japan UK Germany 1993 2000 2002 HK Govt Data
Hong Kong Trade Re-exports by Origin HK$ millions 1,000,000 800,000 600,000 400,000 200,000 - China Japan Taiwan USA R. Korea 1993 2000 2002 HK Govt Data
Hong Kong Trade by Mode of Transport Domestic Exports HK$ Millions 100,000 80,000 60,000 40,000 20,000 1993 2000 2002 - Ocean Land Air River HK Govt Data
Hong Kong Trade by mode of Transport Re-exports HK$ millions 800,000 600,000 400,000 200,000 1993 2000 2002 - Ocean Land Air River HK Govt Data
Hong Kong Trade by mode of Transport Imports HK$ millions 600,000 500,000 400,000 300,000 200,000 100,000 - Ocean Land Air River 1993 2000 2002 HK Govt Data
Pearl River Delta Guangdong Province Hong Kong Population 30M 40M 7M Pearl River Delta
Hong Kong and The Pearl River Delta Over 80% of HKG air cargo originates from or destined for China, particularly to the Pearl River Delta area About 40% of China export by value via HKG Pearl River Delta: Area - 42,000 sq. km Population - 40M GDP - 732 RMB billion (90 USD billion) Hong Kong: Population - 7m
GATEWAY TO CHINA HKG continues to handle about 40% of all exports to Mainland China, and accounts for about half of foreign direct investment there. Every day there are about 800 sailings, 140 flights, 35 train connections and 27,000 vehicle crossings between HKG and Mainland China. About 50,000 HKG companies have production facilities in southern China, employing some 5M workers. Approximately 190,000 HKG expatriates work on the mainland, mainly in managerial and professional positions. Source: www.info.gov.hk
HONG KONG - PREMIER HUB WITH GLOBAL REACH Reach all geographical markets & half the world s population within 5 hour s flying time Bangkok Beijing Jakarta Kuala Lumpur Manila Seoul Shanghai Singapore Taipei Tokyo and many others
HONG KONG - WORLD S 3RD BUSIEST AIRPORT 34.32M int l passengers in 2002 (+3.8% vs 2001) Served by 62 airlines Offers connection to 112 destinations WORLD S BUSIEST INT L CARGO HUB 2.48M tonnes of air cargo in 2002 (+19.6% vs 2001)
HONG KONG - REGIONAL HQ CAPITAL IN THE ASIA PACIFIC A total of 3119 overseas companies had regional operations in HKG as at 1 June 2002. This figure comprised 948 regional headquarters and 2171 regional offices. Source: Census & Statistics Department, HKSAR Number of members American Chamber of Commerce 2,300 Australian Chamber of Commerce 1,000 British Chamber 850 Canadian Chamber 700 Japanese Chamber 660 French Chamber 450 German Business Association 400 Dutch Business Association 350 Swiss Business Council 140 Italian Chamber 130 Source: Invest HK
GATEWAY TO CHINA Overseas Visitors going via HKG to Mainland 2001 ( 000) Dep for Gth % Share to total Mainland HKG arrivals Americas 447-2% 36% Europe, Africa/ME 330-3% 23% SW Pacific 115 1% 30% N. Asia 520 13% 30% S., SE Asia 570 10% 34% Sub Total 1,982^ 5% 30% Taiwan 1,145 5% 48% Grand Total 3,172 6% 34%* ^ 18% of China inbound (excl HKG/Macao/TWN) go via HKG * 34% of total overseas visitor arrivals in HKG go to Mainland
GATEWAY TO CHINA Overseas Visitors going via HKG to Mainland 2001 ( 000) Ttl Gth Air Sea Land Americas 447-2% 97 79 272 Europe, Africa/ME 330-3% 83 55 192 Australasia 115 1% 23 18 73 N. Asia 520 13% 40 106 374 S. & SE Asia 570 10% 40 41 489 Sub Total 1,982^ 5% 283 299 1,400 Taiwan 1,145 5% 49 85 1,010 Grand Total 3,172* 6% 334 391 2,447 ^ 18% of China inbound (excl HKG/Macao/TWN) go via HKG * 34% of total overseas visitor arrivals in HKG go to Mainland
Milken Institute Global Conference 1 April 2003 Tom Wright Senior Vice President Americas Cathay Pacific Airways 88