China Business Forecast Report Q4 2008

Publication Date	August 2008
Publisher	Business Monitor
Product Type	Report
Pages	68
ISBN Number	1744-8778
Product Code	BMI02404

Price

£250.00
approximately: $365 | €274

PDF immediate delivery

Order above formats by FAX

Summary

Rising Risk Of Policy Missteps

A weaker-than-anticipated first half of the year has prompted us to revise down our 2008 growth forecast for China from 10.7% to 10.1%. Moreover, with China's most recent boom period seemingly over, we are now expecting real GDP growth to continue moderating gently out to 2012, by which time we are expecting it to have dipped below 9.0%. The country's red-hot economy continues to gradually cool on the back of a weaker performance of exports and official monetary tightening efforts, with real GDP growth slowing for the fourth consecutive quarter in Q208 to 10.1% y-o-y - its weakest outturn since Q405. However, we caution that slowing growth has reignited fears over policy missteps, which in turn have once again raised concerns over the country's medium-term macroeconomic stability.

The Beijing Olympics will thrust China into the international spotlight, helping it match its heady political aspirations with its already significant economic influence. However, at the same time, Beijing must also brace itself for greater international criticism as China's domestic and foreign policies come under increased scrutiny from outside observers. President Hu Jintao has promised that China will stand by the pledges it made when it was awarded the Olympic Games back in 2001 to improve its human rights record and engender greater freedom of the press, but with such little progress made on this front in the past seven years, we continue to expect political reform to push forward at a glacial pace.

Mounting concerns over slowing economic growth have prompted Beijing to adopt a far more accommodative monetary policy stance as its focus moves away from prioritizing the fight against inflation and back towards supporting real GDP expansion and employment. However, we believe that this change in attitude represents a potentially dangerous shift in government sentiment, and feel that easing what we already consider to be still too loose monetary a policy would once again stoke the inflationary fire, increasing the risk of a 'hard-landing' scenario playing out. Indeed, even though headline consumer price inflation decelerated for the third consecutive month in July, producer price growth continued to accelerate, rising to a record 10.0% y-o-y.

Massive investment in infrastructure in recent times has helped China score a solid 68.0/100 in the infrastructure subcomponent in our Business Environment Ratings, but with bureaucracy and a weak legal system continuing to be key obstacles to doing business within the country, China's scores of 46.8/100 for market orientation and 42.7/100 for institutions. This drags its overall score to 50.5, and places China seventh in emerging Asia (behind Singapore, Hong Kong, South Korea, Taiwan, Malaysia and Thailand) and 55th globally. Nonetheless, a vast supply of cheap labour and rapid economic growth ensure that China remains the top destination for foreign direct investment (FDI) in the developing world, despite the shortcomings of its business environment.

Content

Executive Summary
- Fears of Policy Missteps to Continue to Grow
Chapter 1: Political Outlook
- SWOT Analysis
- Bmi Political Risk Ratings
- Domestic Politics
- Looking beyond The Olympics
- President Hu Jintao Has Promised That China Will Stand by The Pledges IT Made When IT Was Awarded The Olympic
- Games Back in 2001 to Improve Its Human Rights Record and Engender Greater Freedom of The Press, Insisting That
- Reforms of The Political System Will Continue after The Spectacle of The Olympic Games Has Passed.
- Table: China Political Overview
- Foreign Policy
- with Great Power Comes Great Responsibility
- The Beijing Olympics Will Provide China with A Clear Platform to Elevate Itself onto The World Stage, Helping IT
- Match Its Heady Political Aspirations with Its Already Significant Economic Influence.
Chapter 2: Economic Outlook
- SWOT Analysis
- Bmi Economic Risk Ratings
- Economic Activity
- Slowing Growth Raises Risk of Policy Missteps
- A Weaker-than-Anticipated First Half of The Year Has Prompted US to Revise down Our 2008 Growth Forecast from
- 10.7% to 10.1%.
- Table: Economic Activity
- Monetary Policy
- The Easing Begins
- Mounting Concerns over Slowing Economic Growth Have Prompted Beijing to Adopt A Far More Accommodative
- Monetary Policy Stance as Its Focus Moves Away from Prioritising Inflation and Back towards Supporting Real Gdp
- Expansion and Employment.
- Table: Monetary Policy
- Balance of Payments
- External Asymmetries Continue to Build
- Chinas Massive Trade Surplus Will Continue to Pose Medium-Term Risks to Macroeconomic Stability, as Rampant
- Liquidity Growth Inflates Asset Prices.
- Capital Markets
- Stock Market Will Remain under Pressure
- Chinas Shanghai Composite Index Will Remain Weak in The near Future, and We Do Not Rule out Further Losses
- towards The 1,800 Level, before A Recovery Begins.
Chapter 3: 10-Year Forecast
- The Chinese Economy to 2017
- Can The Dragon Be Tamed?
- Our Core Scenario for The Chinese Economy over The Coming Ten Years Is That Real Gdp Growth Will Gradually Cool
- from Its Current Double-Digit Levels towards A More Balanced Growth Path, LED by A Structural Shift Away from Fixed
- Asset Investment and Net Exports and towards Private Consumption.
- Table: China Long-Term Macroeconomic Forecasts
Chapter 4: Special Report
- Mega-Urban Regions
- Table: The Worlds 30 Largest Urban Agglomerations
- Table: The Worlds Richest Cities in 2020 by Gdp
- Table: The Worlds Fastest Growing Urban Areas by Population
Chapter 5: Business Environment
- SWOT Analysis
- Bmi Business Environment Risk Ratings
- Business Environment
- Table: Bmi Business and Operational Risk Ratings
- Institutions
- Table: Bmi Legal Framework Ratings
- Infrastructure
- Table: Asia, Fdi Inflows
- Market Orientation
- Table: Bmi Trade Ratings
- Operational Risk
Chapter 6: Key Sectors
- Oil &Gas
Executive Summary
- Chinas Oil Demand by 2012 Is Expected to Reach at Least 10.07mn B/D, Reflecting A Likely Average 5% Annual
- Growth Rate.
- Table: China Oil &Gas Historic Data &Forecasts
- Telecommunications
Executive Summary
- We Have Marginally Revised Our Forecasts Downwards Once Again, and Expect The Number of Fixed-Lines to
- Reach 350mn by The End of This Year, A Penetration Rate of 26%.
- Table: China Telecoms Sector Mobiles Historical Data &Forecasts
- Table: China Telecoms Sector Internet Historical Data &Forecasts
Chapter 7: Bmi Global Assumptions
- Global Outlook
- Table: Global Assumptions
- United States
- Eurozone
- Japan
- China
- Commodities