Kissinger Institute on China and the United States Woodrow Wilson International Center for Scholars Kiyoyuki Seguchi The Canon Institute for Global Studies May 30, 2013 1
Xi Jinping s Historic Mission To Avoid the Middle Income Trap Japan, Korea, Taiwan, Singapore and China? 2
Policies for avoiding the Middle income trap Privatization of SOE Reduction of excessive equipment Financial liberalization Reducing income gap Improving the environment Correcting the corruption <Solution> Marketization Political leadership Democratization 3
Anti-corruption campaign The Eight-item Regulations 1.Sentences : Short and easy to understand 2.Foreign business trip of VIP : Observance of rules 3.Security for VIP : Don t be too much 4.Broadcasting : Cut meaningless news of VIP 5.Publishing books : Allowed publishing only 6.Austerity of daily life spending 7.Prohibition of excessive entertainment 8.Meetings : Effectiveness 4
Ripple Effect of Distrust of Government Explosion of ordinary people s anger against corruption of leaders of the communist party and officials of the government Refusal of donation for the earthquake in Sichuan Province through the governmental organization and the Red Cross Serious criticism against the former premier Wen Jiabao 5
Real GDP Growth Y to Y % 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 Source:CEIC 6
CPI 20.0 % CPI food others 15.0 10.0 5.0 0.0-5.0 Source : CEIC 7
Increase of employee in urban area and real GDP growth rate Thousand people increase of employee in urban area GDP growth rate % 14,000 16.0 12,000 10,000 8,000 6,000 4,000 2,000 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 0.0 Source:CEIC 8
Balance of Trade 3500 (100 million USD) 3000 2500 2000 1500 1000 500 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source : CEIC 9
Contribution Rate to GDP by Component 150.0 % Consumption Investment Net Export 100.0 50.0 0.0-50.0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source : CEIC 10
Increasing Income level of the Major Cities After GDP per capita reaches 10 thousand USD, Consumer s Behavior change. Major cities of which GDP per capita reached 10 thousand USD The year when GDP per capita Reached 10,000 USD Major cities and their population (10,000 person, on 2010 basis) Sub total of each city s population 2007 Suzhou(638) Wuxi(467) Shenzhen(1,037) 2,142 2008 Guangzhou(806) Shanghai(2,303) Hangzhou(689) Ninbo(574) Erdos(152) Baotou(220) 4,744 2009 Beijing(1,962) Dalian(586),Changzhou(361) 2,909 2010 Tianjin(1,299) Huhhot(230) 1,529 2011 Wuhan(837) Shenyang(720) Changsha(652) Qingdao(764) Nanjing(632) Tangshan(735) etc. 6,495 2012 Jinan(607), Yangzhou(460) 1,067 2013 Nantong(765), Zhengzhou(963), Fuzhou(649) etc. 4,216 2007~13 Total Total population of the all major cities 23,102 Source : CEIC 11
Price level of Automobile s Volume Zone 2010 Around 50 thousand RMB 2012 Around 100 thousand RMB (Shanghai Around 150 thousand RMB) SUV around 200 thousand RMB are also popular. 12
Expansion of Market for Japanese Companies 2008 2013 Nominal GDP(Japan:China) 100:93 100:160 Population of major cities of which GDP per capita reached 10 thousand USD 68.9 mil. people 231.02 mil. people (3.4 times as large as 2008) Profit per sales ratio lower higher Japanese goods are high quality but a little too expensive. Japanese goods are a little expensive but high quality. 13
FDI to China by countries(100 million USD) 90 (right scale) Total Japan Taiwan Korea US Germany (left scale for each country) 1600 80 70 60 50 40 30 20 10 1400 1200 1000 800 600 400 200 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Note : Data of 2013 is calculated by Y to Y growth rate of the total amount of 4 months from January to April. Source : CEIC 0
Feature of the 4 th boom of Japan s FDI to China 1Aiming at Domestic Market (Focusing Inland Area) 2Increase of Service Sector 3Increase of Reinvestment of Return in China 15
Perspective on the win-win development between Japan and China China is lacking in advanced technology and sophisticated service. Japan is lacking in vigor of the domestic market. If Japan and China cooperate each other complementally, both countries can enjoy sustainable and harmonious development. 16
Win-Win Relation between Japan and China Increase of Japan s FDI to China Short term:increase of employment and tax revenue in China Long term:improvement of China s technology level Increase of return of Japanese companies and domestic employment in Japan Enhancement of China s competitiveness Stability of trade and fiscal balance Increase of business chances of Japanese companies in China Expansion of the Chinese domestic market 17
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