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China Is Ready for the '08 Limelight
by
findingDulcinea Staff
A tiger economy and the host of this year’s Summer Games, China is on course for a historic twelve months. Beijing’s predicted economic and Olympic ascendancy may offer a lesson for America.
30-Second Summary
Already the world’s second-largest economy after the United States, China plays an increasingly important role on the world stage. Many analysts believe that 2008 will be the country’s watershed year.
The Olympic Games will be the most visible symbol of China's new status. Al Neuharth, founder of USA Today, predicts that the country will overtake perennial Olympic frontrunners the United States and Russia to win the most gold medals.
But it doesn't stop there. If China maintains its current annual economic growth rate of 11.5 percent, it should surpass Germany as the world’s largest exporter within the next 12 months, according to The Economist.
In 2006, the country took Japan’s spot as the world’s number-two auto manufacturer. And China has for several years been the top producer of copper, aluminum, cement and coal.
The projection that sets off alarm bells among American investors, however, is that China is set to overtake America as the world’s largest economy within the next 10 years.
Investment experts are now drawing inspiration from China’s example as they advise Western companies.
Cambridge University Professor Peter Williamson, an expert in international management, wrote for the Harvard Business Review that companies should explore the expansion strategies of Chinese businesses. “Ask what you can learn from the emerging Chinese dragons about the tricks of cost innovation,” Williamson writes.
The Olympic Games will be the most visible symbol of China's new status. Al Neuharth, founder of USA Today, predicts that the country will overtake perennial Olympic frontrunners the United States and Russia to win the most gold medals.
But it doesn't stop there. If China maintains its current annual economic growth rate of 11.5 percent, it should surpass Germany as the world’s largest exporter within the next 12 months, according to The Economist.
In 2006, the country took Japan’s spot as the world’s number-two auto manufacturer. And China has for several years been the top producer of copper, aluminum, cement and coal.
The projection that sets off alarm bells among American investors, however, is that China is set to overtake America as the world’s largest economy within the next 10 years.
Investment experts are now drawing inspiration from China’s example as they advise Western companies.
Cambridge University Professor Peter Williamson, an expert in international management, wrote for the Harvard Business Review that companies should explore the expansion strategies of Chinese businesses. “Ask what you can learn from the emerging Chinese dragons about the tricks of cost innovation,” Williamson writes.
Headline Links: Dragon economy spreads its wings
Despite reporting that China’s GDP figures are 40 percent lower than originally thought, The Economist writes that China’s 30-year economic growth rate was the fastest of any large country in history. The country is on track to pass Germany as the world’s top exporter within the next 12 months and the United States as the world’s largest economy within the coming decade.
Source: The Economist
Background: The Beijing Olympics
Some analysts are predicting that China’s buoyant stock market may drop after the 2008 Olympic Games. Other economists contest this theory. Garry Evans, chief Asian equity strategist for HSBC’s Hong Kong office, says, “An impressive, smoothly run Olympics tends to boost the confidence of the host nation’s citizens and the respect of the rest of the world.” According to his research, beginning with the 1964 Tokyo Olympics, host country stock markets rose an average of 21 percent in the 12 months following the games, with very strong growth seen in the first 7 months. China’s economy now has 11.5 percent annual growth rate.
Source: Financial Times (registration required)
Opinion & Analysis: China’s boom
Cambridge University Professor Peter Williamson writes in “Conversation Starter,” a blog on the Harvard Business Review, that Western investors should keep an eye on China in the coming year vis-à-vis financial opportunities as well as market strategy. The tiger economy offers consumers competitive pricing, threatening lower-end segments of Western-run businesses. Williamson argues that Chinese companies may seek out and exploit these often-ignored markets. “Ask what you can learn from the emerging Chinese dragons about the tricks of cost innovation,” Williamson writes.
Source: Harvard Business Review
Al Neuharth, founder of USA Today, compiled a list of likely headlines for 2008, among which was a forecast of China’s athletic domination of the Beijing Olympic Games. “Host China will win the most medals in the Olympics for the first time in history, topping traditional leaders USA and Russia,” he writes. He reflects on his visit to China in 2001, when the country was bidding to host the Olympics: “Fact is, no host country has ever done more to ensure hospitality, comfort and safety for visiting athletes and fans.”
Source: USA Today
John J. Tkacik Jr., senior research fellow at the Heritage Foundation, argues that China needs to be taken seriously as an economic superpower. The country has been the world’s leading producer of steel, copper, aluminum, cement and coal for many years now, and in 2006 it overtook Japan as the world’s second-largest automobile manufacturer. Tkacik refers to World Bank purchasing power parity statistics, which show that Chinese consumers get 2.38 times the value of goods and services on the domestic market than their U.S. counterparts. Taking this factor into account, “China's $1.124 trillion worth of manufacturing output would be worth $2.717 trillion on the U.S. market—slightly higher than America's $2.7 trillion in manufacturing output,” he writes.
Source: Heritage Foundation
Reference Material: China in numbers
The World Bank has a grid showing China’s basic economic indicators for 2000, 2005 and 2006.
Source: The World Bank
In the Dec. 31, 2007, installment of BBC Radio 4’s weekly Start the Week podcast, John Micklethwait, the editor-in-chief of The Economist, says that the world’s eyes will be on Beijing as its hosts the Olympic Games this summer and enjoys booming economic growth.
Source: The BBC
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