Deregulation and Fragility:
China
ZHU Andong
Tsinghua University, Beijing
2015.1.25
Evolvement of the Growth Models since 1978
Relatively
Balanced/Outward
Looking Growth
Balanced/Inward
Looking Growth
Imbalanced/outward
Looking
New growth model?
Overdependent
On
International
Market
And
Investment
Marketization
Planned
Economy
With
Market
Mechanism
Privatization
Liberalization
1978
1992
Sustainable
(Economic,
Social,
Environment)
Development
2001
2012?
Gross Domestic Product Growth Rate (%):1978-2014
16
15.2
14.2
14.0
14
13.5
12
11.7
11.6
11.3
10.9
8
7.6
9.2
8.8
7.8
0
9.1
7.8
5.2
2
11.3
10.1
10.0
10.0
9.3
8.4
6
4
12.7
10.9
10
9.1
14.2
13.1
4.1
3.8
7.6
10.4
9.6
9.2
9.3
8.3
7.8
7.7
7.4
20+ times Increase in GDP
Gross Domestic Product Growth Rate (%):1978-2014
16
15.2
14.2
14.0
14
13.5
12
11.7
13.1
11.6
11.3
10.9
8
7.6
9.2
8.8
7.8
12.7
11.3
10.9
10
9.1
14.2
10.010.1
10.0
9.3
9.1
7.8 7.6
5.2
4.1 3.8
2
0
Source: CSY2013, NSB
9.6
9.2
9.8
9.3
8.4 8.3
6
4
10.4
15+ times Growth with per capita GDP
7.8 7.7
7.4
Over-dependence on Investment
Investment in China: 1978-2013 (as % of GDP)
50
48.148.3
47.747.8
47.2
48
46
43.8
44
43.0
42.6
42
40.540.3
40
41.541.741.6
40.9
38.8
38.2
38.1
37.5
38
36.1
36
37.8
37.0
36.6
36.3
34.8
34
36.7
36.5
36.236.2
35.3
36.6
34.934.8
34.2
32.8
32.5
31.9
32
Source: CYS 2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
30
Over-dependency on International Trade
40
35
Exports of goods and services (% of GDP)
Imports of goods and services (% of GDP)
30
25
20
15
10
5
0
1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: WDI 2014
China’s Consumption:1978-2012 (as % of GDP)
70
67.1
65.5
66.5 66.4
65.8 66.0
64.4
65
Final Consumption
64.9
63.6 63.9
Household Consumption
64.5
62.5 62.4 62.4
62.1
62.3
61.1
59.3
60
58.2 58.1
61.4
59.2 59.0 59.6
59.6
56.9
54.4
55
52.5
53.0
51.9 52
50.8
50
50.8
51.6
50.5
48.8 49.1
51.1 50.9
50.8
49.9
49.6
48.8
48.6 48.5 48.2
47.5 47.2
44.4
45
44.9
45.8
45.2 45.3
46 46.4
49.1 49.5
49.8
45.3
44
43.5
42.2
40.5
40
38.9
37.1
36.1
35.4 35.4
35
34.9
36.2
35.7 36
Source: CYS 2013, CSA 2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
30
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
0.50
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
The Widening Income Inequality
中国居民收入基尼系数:1978-2013
0.60
0.4870.4840.491 0.49 0.481
0.4790.4730.485
0.4770.4740.473
0.412
0.40
0.30
0.20
0.10
0.00
China will still Grow fastly
Oct/14
Jul/14
Apr/14
Jan/14
Oct/13
Exports Growth (%)
Jul/13
Apr/13
Jan/13
Oct/12
Jul/12
Apr/12
Jan/12
Imports(100m$)
Oct/11
Jul/11
Apr/11
Jan/11
Oct/10
Jul/10
Exports(100m$)
Apr/10
Jan/10
Oct/09
Jul/09
Apr/09
Jan/09
Oct/08
Jul/08
Apr/08
Jan/08
The Change of International Trade
2500
100
Imports Growth (%)
80
2000
60
1500
40
20
1000
0
-20
500
-40
0
-60
Residential House Index
New Residential House Index: 2011.1~2014.12
Beijing
Shanghai
129.3
129.2
128.9
128.7
128.1
127.8
127.6
127.1
126.4126
126.3
126.2
126.1
125.5
125.4
125.1
125
124.5
124.3125
123.5
123.4
123.4123122.7
123
122.7
121.9
121.7 121.7
120.6
119.8
119.7 119.8
119.2
118.8
117.8 117.8
115.9 115.6
113.9 113.2
2014/12/1
2014/11/1
2014/10/1
2014/9/1
2014/8/1
2014/7/1
2014/6/1
2014/5/1
2014/4/1
2014/3/1
2014/2/1
2014/1/1
2013/12/1
2013/11/1
2013/10/1
2013/9/1
2013/8/1
2013/7/1
2013/6/1
2013/5/1
2013/4/1
2013/3/1
2013/2/1
2013/1/1
2012/12/1
2012/11/1
2012/10/1
2012/9/1
2012/8/1
2012/7/1
2012/6/1
2012/5/1
2012/4/1
2012/3/1
2012/2/1
2012/1/1
2011/12/1
2011/11/1
2011/10/1
2011/9/1
2011/8/1
2011/7/1
2011/6/1
2011/5/1
2011/4/1
2011/3/1
2011/2/1
2011/1/1
110.9 111.4
109.1
107.6
105.4 105.7
104.3
103.9
103.9
103.9
103.9
103.8
103.8
103.6
103.5
103.5
103.5
103.4
103.4
103.3
103.2
103.2
103.1
103
102.9103103103103.1
102.9
102.8
102.7
102.5
102.4102101.8103102.4
102.3
102.3
102.2
102.1
102
101.6
101.3
101.3
101.2
101.1 101.1
101.1
101.1
101
101100.9
From Deflation to Inflation
Inflation-CPI in China (%): 2008.1-2014.12
10
8.7
8.5
8.3
7.7
8
7.1
7.1
6.5
6.4
6.2
6.1
6.3
6
5.5
5.4
5.3
5.1
4.9
4.9
4.6
4.4
4.9
4.6
5.5
4.5
4.2
4.1
4.0
4
3.6
3.5
3.3
3.1
2.9
2.7 2.8
2.4
2.4
3.6
3.4
3.2
3.0
3.2
3.1
3.0
2.7
2.7
2.6
2.5
2.5
2.5 2.4 2.5
2.4
2.3
2.3
2.2
2.1 2.1
2.0
2.0
2.0
2.0
2.0
1.8 1.9
1.8
1.7
1.6
1.6 1.5
1.4
1.9
1.5
2
1.2
1.0
3.2
0.6
-2
-4
Nov/14
Sep/14
Jul/14
May/14
Mar/14
Jan/14
Nov/13
Sep/13
Jul/13
May/13
Mar/13
Jan/13
Nov/12
Sep/12
Jul/12
May/12
Mar/12
Jan/12
Nov/11
Sep/11
Jul/11
May/11
Mar/11
Jan/11
Nov/10
Sep/10
Jul/10
May/10
Mar/10
-0.5
-0.8
-1.2
-1.2
-1.4
-1.6-1.5-1.7
-1.8
Jan/10
Nov/09
Sep/09
Jul/09
May/09
Mar/09
Jan/09
Nov/08
Sep/08
Jul/08
May/08
Mar/08
Jan/08
0
0%
16%
GDP
Agricuture sector
Industry Sector
Sevice Sector
2014年第1-4…
2013年第1-2…
2013年第1-3…
2013年第1-4…
2014年第1-2…
2014年第1…
2014年第1-2…
2014年第1-3…
2012年第1-3…
2012年第1-4…
2013年第1…
2011年第1…
2011年第1-2…
2011年第1-3…
2011年第1-4…
2012年第1…
2012年第1-2…
2006年第1…
2006年第1-2…
2006年第1-3…
2006年第1-4…
2007年第1…
2007年第1-2…
2007年第1-3…
2007年第1-4…
2008年第1…
2008年第1-2…
2008年第1-3…
2008年第1-4…
2009年第1…
2009年第1-2…
2009年第1-3…
2009年第1-4…
2010年第1…
2010年第1-2…
2010年第1-3…
2010年第1-4…
China’s GDP Growth(%):2006Q1~2014Q4
18%
14%
12%
10%
8%
6%
4%
2%
Rapid Growth of Government Revenue and expenditure
14
35
Tr.RMB
Government Revenue(Tr.RMB)
Government Expenditure(Tr.RMB)
Government Revenue as % GDP
Government Expenditure as % GDP
%
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
0
1990
0
1989
5
1988
2
1987
10
1986
4
1985
15
1984
6
1983
20
1982
8
1981
25
1980
10
1979
30
1978
12
In 2014, it was
estimated
government
revenue would be
14+Tr.RMB.
Besides, the
PBOC's Fiscal
Deposit is 3.13 Tr.
RMB at the end of
2014, and ranged
between 2.84 to
4.54 Tr. RMB in
2014.
Low External Debt Risk
Risk Indicators on External Debts of China(%): 1985-2013
100
96.5
91.6 91.9
90
87.1 86.4
87.9
80
78.0
77.1
72.4
72.1
70
70.4
67.7
68.7
67.9
63.2
60
56.0
55.5
50
Foreign Debt Ratio
40
Liability Ratio
52.1
45.2
Debt Service Ratio
30
40.2
35.6
33.3 32.8
35.4
32.2
31.9
29.2
29.0
24.7
20
15.4
10
0
5.2
2.7
7.3
9.4
9.0
10.0 9.2
8.3
6.5
16.6
15.3 13.9
14.6 13.6 13.7 14.3 14.0
13.6 14.9 14.4 13.6
13.4 13.6 13.1 12.5
12.2
11.2
11.1
10.9
10.2 9.1
9.2
8.7 8.5
8.6
7.9
7.6
7.5
7.1
6.9
6.0 7.3
3.2 3.1 2.1 2.0 1.8
Source: CSA 2014
8.6
9.3
9.5
9.0 9.4
2.9
1.6
1.7
1.6 1.6
Monetary Policies-RRR
The Required Reserve Ratio of RMB:1985~2012.5 (%)
23
Now M2 is 107.74 Tr. RMB, Lower 1
percentage point of RRR would release around
1.08 Tr. RMB money supply.
21
19
17
15
13.0
13.0
13.0
13.0
13.0
13.0
13.0
13.0
13.0
13.0
13
11
9
7
21.5
21.021.0
20.5
20.5
20.0
20.0
19.5
19.0
18.5
18.0
17.5
17.5
17.5
17.0
17.0
16.5
16.5
18.0
16.017.5 16.016.0
17.517.5
15.5
15.5
17.0
17.0
15.0
16.5
16.5
16.5
14.5
16.0
16.0
15.5
13.5
15.0
13.0
14.5
12.5
14.0
14.0
12.0
13.5
13.5
13.5
13.5
11.5
11.0
10.5
10.0
9.5
9.0
8.5
8.0
7.5
7.5
7.0
12.0
10.0
10.0
8.0
6.0
6.0
6.0
6.0
1985
1986
1987
1988-9-1
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998-3-21
1999-11-21
2000
2001
2002
2003-9-21
2004-4-25
2005
2006-7-5
2006-8-15
2006-11-15
2007-1-15
2007-2-25
2007-4-16
2007-5-15
2007-6-5
2007-8-15
2007-9-25
2007-10-25
2007-11-26
2007-12-25
2008-1-25
2008-3-25
2008-4-25
2008-5-20
2008-6-25
2008-9-25
2008-10-15
2008-12-5
2008-12-25
2010-1-18
2010-2-25
2010-5-10
2010-11-16
2010-11-29
2010-12-20
2011-1-20
2011-2-24
2011-3-25
2011-4-21
2011-5-18
2011-6-20
2011-12-5
2012-2-24
2012-5-18
5
No change for big and middle sized banks then after
Monetary Policies-Interest Rate
Base Interest Rate of 1-yr Saving and Loan in China (%): 1978-2015.1
14
Savings
12.1
12
11.3
11.0
11.310.1
10
10.1
10.1
9.4
8.6
8.6
9.2
7.9
8
11.0
11.011.0
9.4
9.2
7.9
8.6
6.9
7.6
7.2
6
Loan
6.4
7.5
5.9
5.3 5.3
5.0 5.0
5.8
5.6
5.9
6.1
6.4 6.6
6.8 7.0
7.3 7.5 7.5 7.2
6.9
6.7
5.6
5.3
5.6
5.8
6.1
6.3
6.6
6.3
6.0
5.6
5.7
5.2
4.8
4
3.8
3.2
2
2.3
2.0 2.0
2.3 2.3
2.5
2.8
3.1
3.3
3.6
3.9
4.1 4.1 4.1
3.9
3.6
2.5
2.3
2.5
2.8
3.0
3.3
3.5
3.3
3.0
2.8
2014.11.22
2012.7.6
2012.6.8
2011.7.7
2011.4.6
2011.2.9
2010.12.26
2010.10.20
2008.12.23
2008.11.27
2008.10.30
2008.10.09
2008.09.16
2008.01.01
2007.12.21
2007.09.15
2007.08.22
2007.07.21
2007.05.19
2007.03.18
2006.08.19
2006.04.28
2004.10.29
2004.03.25
2002.02.21
1999.06.10
1998.12.07
1998.07.01
1998.03.25
1997.10.23
1996.08.23
1996.05.01
1995.07.01
1993.07.11
1993.05.15
1991.04.21
1990.08.21
1990.04.15
1990.01.01
1985
1980
1978
0
1990/12/19
1991/05/08
1991/09/19
1992/02/10
1992/06/24
1992/11/09
1993/03/26
1993/08/09
1993/12/22
1994/05/13
1994/09/26
1995/02/17
1995/07/04
1995/11/17
1996/04/16
1996/08/29
1997/01/16
1997/06/17
1997/11/05
1998/04/06
1998/08/19
1999/01/05
1999/06/08
1999/10/27
2000/03/28
2000/08/16
2001/01/05
2001/06/11
2001/10/30
2002/04/01
2002/08/20
2003/01/10
2003/06/13
2003/11/03
2004/03/29
2004/08/17
2005/01/06
2005/06/07
2005/10/26
2006/03/22
2006/08/10
2006/12/29
2007/05/31
2007/10/19
2008/03/12
2008/07/30
2008/12/19
2009/05/15
2009/09/30
2010/03/01
2010/07/20
2010/12/13
2011/05/09
2011/09/22
2012/02/21
2012/07/12
2012/11/30
2013/05/02
2013/09/18
20140218
20140708
20141127
Shanghai Stock Exchange Index: 1990.12.19~2015.1.23
7000
6000
5000
4000
3000
2000
1000
0
2007/01/04
2007/02/09
2007/03/26
2007/05/08
2007/06/13
2007/07/19
2007/08/24
2007/10/08
2007/11/13
2007/12/19
2008/01/28
2008/03/11
2008/04/17
2008/05/27
2008/07/03
2008/08/08
2008/09/16
2008/10/29
2008/12/04
2009/01/13
2009/02/25
2009/04/02
2009/05/12
2009/06/19
2009/07/27
2009/09/01
2009/10/15
2009/11/20
2009/12/28
2010/02/03
2010/03/18
2010/04/26
2010/06/02
2010/07/13
2010/08/18
2010/09/28
2010/11/10
2010/12/16
2011/01/24
2011/03/08
2011/04/15
2011/05/24
2011/06/30
2011/08/05
2011/09/13
2011/10/26
2011/12/01
2012/01/10
2012/02/22
2012/03/29
2012/05/11
2012/06/18
2012/07/25
2012/08/30
2012/10/12
2012/11/19
2012/12/25
2013/02/04
2013/03/19
2013/04/26
2013/06/06
2013/07/17
2013/08/22
2013/10/08
20131113
20131219
20140127
20140311
20140417
20140527
20140703
20140808
20140916
20141029
20141204
20150113
Shanghai Stock Exchange Index: 2007.1.4~2015.1.23
7000
6000
5000
4000
3000
2000
1000
0
Latest Development
• eliminated or reduced regulations concerning price
• eliminated or reduced regulations market entry barriers in relation to
trade in both goods and services
• removal of administrative approval procedures in certain sectors
• Finance
•
•
•
•
Private banks
Bank failure and deposit insurance
Expanding QFII and QDII
Capital account—internationalization of RMB
Figure 1. China’s Balance of Payment (US dollar 100 million)
5000
Current account surplus
4000
Capital account surplus
Net errors and omissions
3000
2000
1000
0
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
-1000
Sources: China Statistical Yearbook and China Financial Yearbook, various issues.
24
Figure 2. Capital Account Balances (US dollar 100 million)
2500
Net FDI
2000
Portfolio investment surplus
Other investment surplus
1500
Capital account surplus
1000
500
0
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
-500
-1000
-1500
Sources: China Statistical Yearbook and China Financial Yearbook, various issues.
25
Figure 3. “Unaccounted for” Capital Flows
6.00%
4.00%
A of GDP
B of GDP
2.00%
0.00%
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
-2.00%
-4.00%
-6.00%
-8.00%
Sources: China Statistical Yearbook and China Financial Yearbook, various issues.
Note:
A = errors and omissions;
B = change in official reserves – current account balance – net FDI.
26
•Thank You!