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Talking points on…

Talking points on…. Chinese economy Government. Essentials . Chief of state, President: Hu Jintao Head of Gov’t, Premier: Wen Jiabao. Politics. 3 branches: Executive Legislative: unicameral, Nat’l People’s Congress Judicial: supreme, Local & special courts. Labor force.

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Talking points on…

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  1. Talking points on… Chinese economy Government Dr. Jessica Stowell, University of Oklahoma

  2. Essentials • Chief of state, President: Hu Jintao • Head of Gov’t, Premier: Wen Jiabao Dr. Jessica Stowell, University of Oklahoma

  3. Politics • 3 branches: • Executive • Legislative: unicameral, Nat’l People’s Congress • Judicial: supreme, Local & special courts Dr. Jessica Stowell, University of Oklahoma

  4. Labor force • 753.6 million (2002) • Agriculture 50% • Industry 22% • Services 28% • Unemployment 10% Dr. Jessica Stowell, University of Oklahoma

  5. Economy quadrupled between 1980 & 2000 • It will double between 2000 & 2010 • GDP growing at 8-9% • 3rd largest importer in the world • 4th largest exporter in the world Dr. Jessica Stowell, University of Oklahoma

  6. What we sell China • Computer parts, communication equip • Machinery & equipment • Soybeans & cotton • Aircraft & components • Optics & medical equipment • Mineral fuels • Plastics & chemicals • Iron & steel • Pulp & paper Dr. Jessica Stowell, University of Oklahoma

  7. What we buy from China • Consumer electronics & appliances • Textiles & clothing • Footwear • Toys & sporting goods • Mineral fuels • Furniture • Leather & travel goods Dr. Jessica Stowell, University of Oklahoma

  8. China is not evenly developed • PPP in Shanghai $5,000 • PPP in rural areas $1,000 • PPP is Purchasing power per person compared to U.S. • Coastal areas are richest… Dr. Jessica Stowell, University of Oklahoma

  9. Special Economic zones Dr. Jessica Stowell, University of Oklahoma

  10. Foreign Trade • 1. European Union • 2. U.S. • 3. Japan • Trade deficit with U.S. is $123 billion because of U.S. tariffs on Chinese goods. • Deficits with ASEAN, SK, Taiwan Dr. Jessica Stowell, University of Oklahoma

  11. 1/2 goods “ Made in China” are manufactured by U.S. or Japanese firms. • Computer mouse that sells for $40 leaves only $3 in China • China has to import raw materials • China sells cheap labor & environmental protection Dr. Jessica Stowell, University of Oklahoma

  12. Foreign Investment • $540 billion in foreign investment since 1980 • Majority from HK, Taiwan, Singapore, Cayman Islands by ethnic Chinese • There are 300,000 Taiwanese in Shanghai • “They know how to bribe officials better than U.S. merchants do”. Dr. Jessica Stowell, University of Oklahoma

  13. Origins of Foreign Direct Investment 2004 (in billions) • Hong Kong $19 • BVI $6.73 • South Korea $6.25 • Japan $ 5.45 • U.S. $3.94 • Taiwan $3.18 • Cayman $2.04 Dr. Jessica Stowell, University of Oklahoma

  14. No Free lunch • Price is trial and error system • Moving from government control to privatization causing corruption in price setting • Must keep balance of food to people • One Child policy has reduced potential population by 300 million • Chinese not rich enough to be old Dr. Jessica Stowell, University of Oklahoma

  15. Environmental Pressures • 2nd largest oil importer • Acute water shortage • 14 tons of water to produce 1 ton of steel • Some rivers running dry • Yellow River tapped upstream more & more Dr. Jessica Stowell, University of Oklahoma

  16. Energy, water, land are 3 shortages • Using hot house agriculture with less water • Land measured in mu (1/15 of an acre) Dr. Jessica Stowell, University of Oklahoma

  17. Growth of cars—new & used • 2001, ½ million • 2002, 1 million 2003, 2 million • 2004, 2.5 million • 50% of market is VW • Chinese pay 150% of the world mkt price for car • Santana costs $40,000 Dr. Jessica Stowell, University of Oklahoma

  18. NEW CARS • 2006 1 million NEW cars sold • 2008 8 million NEW cars • New factory building electric cars • 20,000 expected • 500 exported to U.S. Dr. Jessica Stowell, University of Oklahoma

  19. Strength of China • People & government are willing to change • Resilience & adaptability • Human resources Dr. Jessica Stowell, University of Oklahoma

  20. Challenges • Trade issues & U.S. political pressures • Intellectual property rights protection • Standards • Non-tariff barriers/customs/technical regulations • Strategic issues Dr. Jessica Stowell, University of Oklahoma

  21. John Frisbee U.S. China Business Council, 2006 • CIA Factbook—China, 2004 • Dr. Zhou, Prof. of Ecnomics, Fudan UniversitySummer 2004 Dr. Jessica Stowell, University of Oklahoma

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