Happy New Year everyone. As we move to set our goals for the new year, the following is a couple of goals the Chinese has for their economy in 2012:
1. Increase domestic consumption - With the debt crisis in Europe and the U.S. economy in a slow recovery and the rise in value of the Chinese currency, Chinese exports have been significantly affected. Exports grew by only 13.8% in November, year-on-year, down from the 15.9% growth in October. 2012 is likely to see further decline. Therefore, the government is focused on growing its domestic market, so there is less reliance on exports. Look for growth to the GDP to be at around 8.8% in 2012 with inflation hovering around 3%-4%.
2. Increased foreign acquisitions - Chinese government is actively encouraging its companies to expand overseas. With a huge amount of foreign reserves, Chinese government is looking for ways to buy up assets to lower the holdings. Also, with the global economic downturn, Chinese companies are finding great deals on assets overseas. This "go out" plan also conforms well into Chinese government's plans to shift away from an export focused economy. Recent overseas moves by Chinese state-owned companies include: (a) $2.5 billion deal between China Petrochemical Corp. and Devon Energy Corp. to help develop U.S. shale oil and natural-gas fields; (b) China Telecom's recent move into the U.K. mobile industry; and (c) China Three Gorges Corp. buying 21% in EDP-Energias de Portugal SA for $3.51 billion.
3. Focus on environment - pollution is a huge problem in China. Therefore, the government is taking many measures (from encouraging development of electric vehicles, to the promotion of alternative energy industry, to providing subsidies for the purchase of more energy efficient home appliances). In 2012, you can see more programs aimed at controlling pollution and encouraging environmentally friendly innovations. This is especially apparent in recent Ministry of Commerce guidelines that encourage more foreign investment into energy-saving and environmentally-friendly technologies, new-generation information technology, biotech, high-end equipment manufacturing, alternative energy, advanced materials and alternative fuel cars.
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China is still looking like an attractive destination for me. I’m currently based in Thailand and we just don’t seem to get any breaks over here. If it’s not one thing It’s the other the latest being the horrid flooding that hit Bangkok and ruined the business landscape for the foreseeable future.
ReplyDeleteCompany Registration Thailand is a bit of a nightmare and doing business in China just seems a lot more transparent than over here especially without the headaches involved with the red tape.
I think as far as the stability of the region is concerned the Chinese don’t seem to want to rock the boat. There is too much of a good thing happening over there at the moment and I think they will try and keep it that way. It always amazes me of the potential out here in Asia it just need s a little more unity amongst the neighboring countries to make it an even more successful story.