China at a Turning Point?

BUSS4 students researching China and Emerging Markets need to develop a good overview of the "big picture" issues facing China. This short article posted by Michael Andrew (Global Chairman and CEO at Accountants KPMG) provides some useful key points that ought to be added to student research notes.

The key is then for students to revisit each point as they identify relevant examples and then to develop chains of argument about HOW and WHY each point is important. There's plenty of time left to do that!

Looking at the article, some of the key points are:

• China's economy will continue to grow, but at a lower rate (the "new normal"). China's leadership have set a target of 7.5%
• China is making a transition from being a low-cost manufacturer to a mature domestic producer (with many large domestic firms) and a significant exporter
• Environmental protection is becoming more important in China - a move towards more stringent (costly) environmental standards and a push towards renewable energy
• Mass urbanisation is placing great pressure on China's food supply
• The Chinese banking system is still immature and poorly regulated
• Little sign (yet) of a change in trend of an ageing population or a relaxation of controls over popuation growth.
• The returns for foreign investment in China are poor. Those foreign firms that have done well have been there for a long time already. The risk of investing in China remains substantial and there may be better returns elsewhere in other emerging markets. But, in the long-term, can a multinational afford NOT to be in China?
• Corruption remains embedded in Chinese business
• The political and social external environment in China remains highly volatile!