China s Economic Stimulus Package -Overview and Opportunities. October 28, 2009 Andrew Pan & Robert Fraser

Transcription

1 China s Economic Stimulus Package -Overview and Opportunities October 28, 2009 Andrew Pan & Robert Fraser 1

2 Outline China s Economy Under Global Economic Slowdown China s Economic Stimulus Package Opportunities by Industry Sectors Updates and Conclusion 2

3 China s Economy Under Global Economic Slowdown 15% 12% 9% 6% 3% 0% China's GDP growth ( ) Source: National Bureau of Statistics of China Recent GDP growth data 2008 in quarters 10.6% (Q1) 10.1% (Q2) 9.0% (Q3) 6.8% (Q4) 6.1% in Q1, target: 8% 3

4 China s Economy Under Global Economic Slowdown Export decline Export declined 19.7% in Q1, 2009 Export volume decreased from $111.4 billion (Jul 2008) to $51.3 billion (Jan 2009) FDI decline FDI flows declined 20.6% in Q1, 2009 Unemployment rate increase Raised 2009 target to 4.6%, the highest since

5 China s Economy Under Global Economic Slowdown Shanghai SSE Composite Index Stock market, housing market, auto market and other key economic figures were all down sharply In d e x 7,000 6,000 5,000 4,000 3,000 2,000 1, Sep Year 5

6 China s Stimulus Package Announced Nov. 9, 2008, projects and spending already started in trillion RMB ($586 billion USD) stimulus package for government investment in infrastructure, tax deductions and subsidies, to stimulate domestic spending 2 years, 10 major areas: Finance, housing, rural infrastructure, transportation, industry, health and education, disaster rebuilding, environmental protection, technology innovation, and tax reform 6

7 China s Stimulus Package 12 major industries revitalization/expansion plans: Steel and iron industry Automobile industry Ship building industry Oil and chemical industry Non-ferrous metal industry Machinery industry Textile industry Light industry IT industry Logistics industry New energy industry Culture industry 7

8 Opportunities by Industry Sectors Finance Removing lending quota on commercial banks Increasing the lending scale Credit support to M&A Credit support to rural areas Credit support to small and medium enterprises 8

9 Opportunities by Industry Sectors Tax (VAT) reform 120 billion RMB tax reduction from January 1 st, 2009 Export VAT refund rate increases to help exporters, applicable to 3,770 products 9

10 Opportunities by Industry Sectors Housing Budget: 280 billion RMB Tax reduction to boost real estate market Affordable and low-rent housing Expanding the pilot program to rebuild rural housing Increasing senior housing 10

11 Opportunities by Industry Sectors Rural infrastructure/modernization Budget: 370 billion RMB Improving countryside roads and power grids Ensuring drinking water safety Expediting the North-South water diversion project and country-wide reservoirs Rural Home Appliance Subsidies Program 11

12 Opportunities by Industry Sectors Transportation Budget: 1.8 trillion RMB Building more dedicated passenger railways and coal routes Expanding highway system Building more airports in the western areas 12

13 Opportunities by Industry Sectors Automobile Tax reduction for purchasing economic cars less than 1.6L Subsidies to farmers for purchasing light trucks and minivans 10 billion RMB to subsidize auto industry technological innovation and new energy vehicles Encouraging M&A and brand name development to tap overseas market Expanding auto financing 13

14 Opportunities by Industry Sectors Telecom Long awaited 3G licenses issued to China Mobile (TD-SCDMA), China Telecom (CDMA2000) and China Unicom (WCDMA) Will spend 170 billion RMB in 2009, and 400 billion RMB by 2011 on 3G network Could lead to US $290 billion in private-sector investment by 2011 Target: 50 million subscribers by 2011, covering all cities and bigger townships 14

15 Opportunities by Industry Sectors Healthcare and education Budget: 40 billion RMB Improving health and medical systems in rural areas Restructuring the healthcare system Building more joint-venture hospitals Expanding health insurance, especially to rural areas Developing cultural and educational sectors in rural areas Building more schools in rural western and central areas 15

16 Opportunities by Industry Sectors Energy and environment Budget: 350 billion RMB Technology upgrade of coal-burning power plants to reduce pollution Encouraging investment in renewable energy such as nuclear, wind, solar, and biomass Encouraging energy conservation, and improving energy efficiency Clean Development Mechanism (CDM) projects greenhouse gases reduction projects Waste management Eco-city plan 16

17 Opportunities by Industry Sectors Other industry sectors Sichuan earthquake rebuilding: 1 trillion RMB Technology innovation: 160 billion RMB E-commerce Animation, entertainment, media and advertising Logistics 17

18 Updates Challenges: Global/U.S. economic slowdown lasting can cause China s economic growth sluggish and market (most sectors) downsize continuously Are 4 trillion RMB enough? Saving vs. spending Over liquidity concern Banking trouble again: non-performing loans may rise Currency and trade disputes between the U.S. and China 18

19 Updates Most recent 2009 GDP growth data 6.1% (Q1) 7.9% (Q2) 8.9% (Q3) 8.3% in 2009 (estimated) Transformation of growth pattern Before: excess consumption of natural resources; environmental pollution; too much dependable on investment and export; insufficient domestic consumption Aim: more balanced, sustainable and steady growth with a better skilled work force and technological innovation; boost domestic consumption 19

20 Contact North American Representative Office of Shenzhen, P.R. China (NAROS) Andrew Pan Chief Representative & Managing Director Robert Fraser Business Development Director 350 S. Figueroa Street, Suite 288 Los Angeles, CA Tel: (213) Fax: (213)