Business Monitor International


China Business Forecast Report

Published 24 September 2014

  • 53 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
 
$1,195.00
China Business Forecast Report

Core Views

  • As evidenced by strong rhetoric regarding its economic growth target in 2014, Beijing is likely to continue to implement targeted stimulus measures in order to avert a more acute economic slowdown. As a result of what we expect to be a balance between short-term stimulatory measures and longer-term economic reforms, we have upgraded our 2015 real GDP forecast to 6.7% from 6.0% previously. At the same time, we see the economy achieving a 7.3% rate of growth in 2014, versus our previous forecast of 7.1%.

  • The Chinese government's official investigation in Zhou Yongkang is a major split from past precedent, and will likely be the zenith of Xi Jinping's anti-corruption campaign. The campaign has also served as a purge to eliminate hostile political forces, and we believe that it will pave the way for Xi to enact more aggressive economic reforms over the coming years.

Major Forecast Changes

  • Following the Chinese yuan's recent appreciatory run, we have upgraded our end-2014 and end-2015 forecasts on the unit to CNY6.2000/USD and 6.2500/USD, respectively, from CNY6.3500/USD and CNY6.4000/USD previously. That said, we continue to see downside forces acting against the currency, as the PBoC may look to utilise the currency as a stimulatory tool in the face of a slowing economy.

Key Risks To Outlook

  • A key downside risk to our economic outlook remains another collapse in external demand, such as the one that occurred at the height of the global financial crisis. This would seriously undermine growth in trade-dependent industries and hasten a fall in the property market, potentially leading to an outright recession. There is also a risk that greater-than-expected fiscal and monetary stimulus by government and the People's Bank of China could usher in stagflation.

  • A hard-landing scenario is also a key risk in China, as falling property prices amid rising domestic debt levels could set the stage for a financial crisis. While we believe that this...

Table of Contents

Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Ratings
7
Domestic Politics
8
Political Purge Bolsters Xi's Reform Credentials
8
Table : Political Overview
8
Long-Term Political Outlook
9
Major Challenges Over The Coming Decades
9
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Ratings
13
Economic Activity
14
Cooling Property Market To Exacerbate Economic Downturn
14
Table : Economic Activity
14
Fiscal Policy
16
Piecemeal Stimulus Does Not Alter Core View
16
Table : Fiscal Policy
16
Monetary Policy
17
More Targeted Easing Ahead
17
Table : Monetary Policy
17
Currency Forecast/BoP
18
CNY: Still At Mercy Of Downside Risks
18
TABLE : BMI CHINA CURRENCY FORECAST
19
Table : Current Account
20
Chapter 3: 10-Year Forecast
21
The Chinese Economy To 2023
21
6
21
TABLE : Long-Term Macroeconomic Forecasts
21
Chapter 4: Business Environment
25
SWOT Analysis
25
BMI Business Environment Risk Ratings
25
Institutions
26
Table : BMI Business & Operation Risk Ratings
26
Table : BMI Legal Framework Rating
27
Infrastructure
28
Table: Labour Force Quality
28
TABLE: ASIA - ANNUAL FDI INFLOWS
29
Table: Trade & Investment Ratings
30
Market Orientation
31
Table : Top Exp ort Desti nati ons
31
Operational Risk
33
Chapter 5: Key Sectors
35
Defence
35
Table : Defe nce Expe nditure , 2011-2018
35
Freight Transport
39
Table : Road Freight
40
table : Inland Waterway Freight
41
table : Rail Freight
42
table : Air Freight
42
Other Key Sectors
43
Table : Oil and Gas Sector Key Indicators
43
Table : Pharma Sector Key Indicators
43
Table : Infrastructure Sector Key Indicators
43
Table : Telecoms Sector Key Indicators
44
Table : Food and Drink Sector Key Indicators
44
Table : Autos Sector Key Indicators
44
Chapter 6: BMI Global Assumptions
45
Global Outlook
45
Emerging Market Deceleration
45
Table: Global Assumptions
45
Table: Developed States, Real GDP GrowtH, %
46
Table: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
46
Table: Emerging Markets, Real GDP Growth, %
47

The China Business Forecast Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in China and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of China's economic, political and financial prospects through end-2018, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

  • Forecast the pace and stability of China's economic and industry growth through end-2018.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise China's country risks against regional peers using BMI's country comparative Risk Rankings system.
  • Evaluate external threats to doing business in China, including currency volatility, the commodity price boom and protectionist policies.

The China Business Forecast Report by Business Monitor International (BMI) includes four major sections: Economic Outlook, Political Outlook, Business Environment and Key Sector Outlook.

Economic Outlook:

How will the China economic policy-making and performance impact on corporate profitability over 2014-2018?

BMI provides our fully independent 5-year forecasts for China through end-2018 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The China Business Forecast Report features BMI's forecasts with supporting analysis for 2014 through to end-2018, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Rankings system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector exposure).
  • Global Assumptions - forecasts for each year to end-2018 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for China and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on China, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in China over the next 5-years?

BMI's China country Risk Rankings evaluate the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the China Market - Political Strengths, Weaknesses, Opportunities and Threats facing China.
  • Political Stability and Risk Assessment - BMI's Risk Rankings assess explicit short- and long-term risks to political stability; latest ankings, rankings and trends for China's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.

Key Benefits

  • Benchmark China's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Business Environment

Business Environment Risk Rankings with SWOT Analysis - Business Environment Risk Rankings for China, benchmarked against rankings for regional neighbours.

Country Competitiveness - Competitiveness of China's business operating environment in supporting corporate growth and profitability, compared with regional neighbours.

Business Environment Contents

  • Domestic Environment - Transparency, cronyism and corruption; labour market flexibility; corporate tax burden; interest rate levels; sophistication of banking sector and stock market; levels of business confidence; infrastructure and IT.
  • Foreign Direct Investment - Analysis of foreign investment regime; foreign ownership laws; attractiveness of business environment to foreign investors.
  • Foreign Trade - Analysis of trading environment, government trade policy, liberalisation measures, tariffs and membership of trade areas.

Key Benefits

  • Assess your company's evolving exposure to country specific operational and business risks, using BMI's in-depth analysis of the legal and regulatory business environment.
  • Understand your market's comparative strengths and weaknesses in the key areas of commercial infrastructure and business institutions, using BMI's proprietary global Business Environment Risk Rankings.

Key Sector Outlook

Which industry sectors in China will grow fastest, and where are the major investment opportunities in the market?

BMI's identifies investment opportunities in China's high growth industries including automotives, defence & security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and telecommunications & IT.

Key Areas Covered:

  • Market Overview - Size and value of each industry with developments over 2009-2013, covering major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2014-2018, using BMI's proprietary industry modeling technique, which incorporates all key domestic and international indicators - including economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to provide fully integrated forecasts across, and within, each industry.
  • Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well as capacity growth within each industry.

Key Benefits

  • Target strategic opportunities in high growth industries, which are benefiting from global mega trends, and thus offer strong investment and growth opportunities.
  • Compare the growth path of different industries to identify which are best placed to benefit from domestic and international economic prospects, and which have historically suffered from volatile growth trends - a key indicator of future risks.

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Testimonials

The sections that I find most interesting and useful are the macroeconomic data and forecasts for the country, top export destinations and economic activity. The indicators/analysis of these areas helps us orient our thinking, our assumptions and, consequently, our decisions in the commercial area.

Country Manager, DHL Express