Industrial overcapacity, the reform of state-owned enterprises and the depreciating renminbi will remain key concerns in 2017, but opportunities abound in China’s technology and services sector, particularly healthcare and education. That was the conclusion of CKGSB’s 3rd China Economic Symposium, held on November 30, 2016, at Cheung Kong Graduate School of Business in Beijing. The event was held in association with the British Chamber of Commerce, the China-Britain Business Council and Sina News. More than 200 attendees gathered – with more than half a million more watching live online – to hear a distinguished group of economists, business leaders, professors and experts discuss China’s future macro-economic outlook.
Assistant Dean of CKGSB, Zhou Li (pictured above), kicked off the symposium with welcome remarks before introducing CKGSB Finance Professor and Director of the Center on Finance and Economic Growth Gan Jie to present her Business Sentiment Index (BSI). Described as the first of its kind, Professor Gan’s large-scale, micro-level quarterly company survey is based on a stratified random sampling by industry, region and size from China’s National Bureau of Statistics’ company database, with around 2,000 firms responding to her survey each quarter. Professor Gan presented the highlights from her latest detailed report, which indicates that China’s industrial economy has not yet stabilized and overcapacity remains the biggest challenge.
After Gan Jie’s presentation, a robust debate on China’s industrial economy took place. Moderated by Bloomberg TV’s China Correspondent, Tom Mackenzie, Prof Gan was joined on the panel by Raphael Lam, Resident Representative for the IMF office in China, and Shirley Chen, Managing Director at CICC. While all the panelists recognized the short-term challenges facing China’s industrial economy, they focused their discussion on the potential growth areas such as the rise of the service sector, internet-based tech companies and the reform of state-owned enterprises.
Gan Jie’s report indicates that although the GDP figure for the third quarter was good, China’s industrial economy has not yet stabilized, with only 8 percent of companies investing in fixed assets and 2 percent of companies investing for expansion. While overcapacity is one of the biggest challenges facing China’s economy, Gan Jie said there are many sectors with growth potential, like high-tech.
From left to right: Shirley Chen, Managing Director at CICC; Raphael Lam, Resident Representative for the IMF office in China; Tom Mackenzie, China Correspondent for Bloomberg TV; and Gan Jie, Professor of Finance at CKGSB.
Shirley Chen, managing director of the China International Capital Cooperation Ltd, echoed the sentiment saying that emerging industries will be the new engine for China’s economic development. These include information technology, biotechnology, new materials, smart manufacturing, mobile internet industry, education, culture and healthcare. She said CICC has already set up a fund of 40 billion RMB to invest in these emerging markets.
CKGSB Economics Professor and Director of the Case Center Li Wei (pictured above) opened the second half of the event with a presentation of his Business Conditions Index (BCI). The survey gauges the business sentiment of executives about the macro-economic environment in China. Respondents are asked to indicate whether certain aspects of their business are expected to increase, remain unchanged, or decrease over the forthcoming six months as compared to the same time period last year. The BCI comprises four sub-indices for corporate sales, corporate profits, corporate financing environment and inventory levels. Li Wei revealed that all four of these sub-indices rose in November.
From left to right: Andrew Polk, China Economist at Medley Global Advisors; Li Wei, Professor of Economics and Director of the Case Center at CKGSB; He Gang, Managing Editor of Caijing Magazine; and Gao Zhanjun, Managing Director of CITIC Securities.
The second panel, moderated by He Gang, Managing Editor of Caijing Magazine, included Andrew Polk, China Economist from Medley Global Advisors; Gao Zhanjun, Managing Director of CITIC Securities; and Li Wei, Professor of Economics and Director of the Case Center at CKGSB. The experts debated the depreciation of China’s renminbi and its effects on China’s macroeconomics, globalization in the age of increasing protectionism and whether US President-elect Donald Trump’s proposed tariffs on Chinese goods would benefit the US in the long run.
At one point in the discussion, Professor Li Wei and moderator He Gang debated whether the depreciation of the renminbi is a good thing or not. Professor Li Wei said that the depreciation of the renminbi is actually beneficial to China. “For many people, their wealth is linked to asset prices. That’s why there is such panic over the depreciation of the renminbi.”
The last portion of the symposium was a conversation between Tom Rafferty, Regional Manager for China at The Economist Intelligence Unit, and Xu Chenggang (pictured above), Professor of Economics at CKGSB, on China’s economic potential. On the development of China’s economy, Professor Xu said he believes that there are two basic problems: “One is stability and one is growth.” He continued, “The first major threat to China’s economic growth is overcapacity. The proportion of disposable income from domestic households in China’s GDP is far too low.”
When asked how a Trump presidency would affect the future of China-US relationship, Professor Xu Chenggang replied, “Trump’s statements are full of contradictions. He says one thing today, another thing tomorrow, so who knows what he actually thinks. The future is very uncertain.”
With more than 650,000 people following the event live online via Sina News, in addition to the hundreds in attendance at CKGSB’s Beijing campus, the 3rd China Economic Symposium was not only a great success, but had a wide-ranging impact.