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CHINA

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by

Lizbeth Dominguez

on 10 February 2017

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Transcript of CHINA

CHINA

Devaluation of the renminbi
Questions?

Trade Policy Challenges
High rate of corporate loan default and lack of access to financing/investment
China’s banking system is overexposed to the corporate sector

The rise of shadow banking in China threatens to hurt the credit boom

Borrowers are struggling to refinance

Solutions:

Encourage development of the securities market

Reduce government debt levels

Meeting the demands of a large population
Aging population
- 9% of their population is over the age of 65
Lack of workforce
- not enough people to take care of the elders
Urban vs rural living
- the cities are growing and developing, but people living in rural areas are not benefiting from this

Solutions:

Poverty Relief program
- which plans to focus in the rural areas. This will target 10 million people, and hopes to provide a social safety net for another 20 million people that are unable to work
Innovation
- there is a push for more innovation coming from the population of China
Entrepreneurship
- is part of the innovation push, and more universities are adding more education around this. They want more leaders and technology development


Shifting
from external demand to a domestic demand economy
Strengthen foreign
-trade policies with other countries
Enhancing the quality
of products exported out of the country

Solutions:

This is helping the Chinese economy grow, but making it more challenging for foreign businesses wanting to expand footprint in China
Made in china 2025 plan to create high quality products, an efficient industry, relying more on market institutions and providing better paying jobs for the workforce
One belt, one road initiative- will grow foreign trade, making it easier to transport products

Restricting freedom of doing foreign business
No discipline means asset bubbles are ready to burst-
real estate, stocks, bonds, and commodities
Internet restrictions -
this is hurting foreign businesses, internet speed and services such as Google
Corruption and unreliable legal system-
not having a way to take someone to court, or enforce laws. Politics controlling the law

Solutions:

Free trade, free investment- make it easier for foreign investors, by lifting restrictions such as Industrial policies, equity caps and ownership policies. Also, targeting corruption issues
Lifting the firewall and strict regulations this creates a slowdown in the systems and the inability to freely surf the web
Allowing the population to talk freely- about politics in the country,and target courts corruption (what they know, instead of who they know)


Overexposure to the U.S. dollar has contributed to high capital outflows in China

Prices are falling due to industrial overcapacity

Chinese exports are cheaper internationally


Solutions:

Increase aggregate demand

Continue free market reform

Pursue a balanced monetary policy


Full transcript