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News and Views on China (15-31 March, 2016
The global impact of China's continued 'reform and opening up'
By John Ross, March 15, 2016
China's 13th Five Year Plan, running from 2016 to 2020, presented to this year's National People's Congress session, sets the framework not only for China's domestic development, but for other countries' economic interaction with it. Consequently, it is important that other states accurately judge the main effects that China's "reform and opening up" process will have on them. The key trends confirm China will continue to show the greatest prospects for international cooperation with any major economy. The first key point is that the 6.5 percent minimum annual GDP growth target over the Plan's entire duration is more important for China and other countries than 2016's individual 6.5 to 7.0 percent target. Some commentators have suggested that while China may achieve a 6.5 percent growth target in 2016, this will be followed by a significant slowdown - to 5.0 percent or below by 2020. If this occurs, China would be drifting towards, in the worst case scenario, the "middle income trap." The Plan's arithmetic makes clear that China is not prepared to let this happen, while the key features of China's economic structure show there is no reason for it to do so.
The decisive target of the 13th Five Year Plan is to achieve a "moderately prosperous" society - in numbers, this means doubling China's GDP between 2010 and 2020. Growth in the first half of this decade averaged 7.8 percent. Therefore, to achieve the decade's target average annual growth throughout 2016-2020, the rate must equal at least 6.5 percent. As 2016's target is 6.5 to 7.0 percent, this means no significant slowing will be accepted in the Plan's later years. More important than verbal commitment is that China's fundamental economic parameters show this target can be achieved - China's fixed investment is over 40 percent of GDP, more than double the U.S., while statistics confirm China's efficiency of investment in generating growth is higher than that of the U.S. This means China will maintain its present position as the world economy's strongest development point throughout the Plan. U.S. GDP growth in 2015 was 2.4 percent, in line with U.S. average annual growth for the last 20 years. Even assuming U.S. growth does not slow further (it has been decelerating for several decades), in the next five years, China's economy will expand by 37 percent compared to the U.S.'s 13 percent. The second key impact for other countries is created by the combination of China's rapid growth, with China being a more "open" trade economy than the U.S. The latest internationally comparable data shows that trade constituted 40.1 percent of China's GDP compared to 30.1 percent for the U.S. China's greater openness means its growth generates a proportionately greater increase in international trade than equivalent U.S. growth.
China's electric aircraft ready for takeoff
China Daily, March 17, 2016
File photo taken on Feb 6, 2015 shows a two-seater electric aircraft RX1E flying in Shenyang, northeast China's Liaoning Province. After the test flights in low temperatures, RX1E has been put into production recently. The domestically developed electric aircraft has a 14.5-meter wingspan and a maximum payload of 230 kg. It can fly at an altitude of 3,000 meters. [Photo/Xinhua] Every sunny day, there are always three white electric RX1E airplanes circling overhead at northern Shenyang's Caihu general aviation airport in Liaoning Province. The two-seater plane can fly for 45 to 60 minutes at a maximum speed of 120 kilometers an hour after an hour-and-a-half of charging. And it is China's first electric airplane which is ready for mass production. Four aircraft are currently in service, and another 20 due to be produced this year. "Due to the positive market feedback, we will build a new factory with an output of 100 aircraft per year. It is planned to go into operation in 2017," said Zhao Lijie, vice-president of Liaoning General Aviation Academy. Developed by LGAA and its partners, the RX1E could be used for pilot training, sightseeing and aerial photography. The plane is environmentally friendly and has many advantages compared with gasoline-fueled ones. "It's pollution-free, quiet and easy to pilot," Zhao said. It took two-and-a-half years of intense work to develop the aircraft.
Alibaba to soon become world’s No.1 retail platform Source:  22 March, 2016
E-commerce giant Alibaba Group announced on Monday afternoon that transaction volume on its sites hit 3 trillion yuan (US$463 billion), an equivalent GDP value of 3.01 trillion yuan in China's southeastern Sichuan province last year. The company made the announcement at its Hangzhou headquarters the gross merchandise volume or GMV, is a measure of the total value of third party sellers' transactions on Alibaba's platforms. The number marks a milestone for the company that it could overtake Walmart to become the world's largest retail network in the fiscal year ending later this month. Walmart posted revenue at more than 480 billion U.S. dollars for the fiscal year ending Jan 31, while Alibaba's 2015 revenue stands less than 15 billion U.S. dollars.
M&As boosted by China’s overseas deals
Shanghai Daily, March 24, 2016
China-related mergers and acquisitions started on a high note this year, driven by overseas buying spree by Chinese companies, industry data showed. The value of M&A deals involving China reached a record high of US$189.7 billion so far this year — a 31.5 percent growth from the same period of last year, according to Thomson Reuters data as of Monday. Outbound acquisitions by Chinese companies reached an all-time high, with transactions worth US$97.8 billion, up 237.8 percent year-on-year, data showed. The momentum was led by China National Chemical Corp, which in February agreed to purchase the entire stake of Swiss agrochemical and seed producer Syngenta AG in a deal worth US$46.8 billion, the largest-ever foreign acquisition by a Chinese firm. The mega Chem China-Syngenta deal pushed the value of Chinese overseas acquisitions in Europe up 262.8 percent from last year to US$53.9 billion so far this year. In the US, China’s outbound M&As reached US$38.6 billion, at least four times of that in the full year of 2015.In contrast, domestic M&A in China fell 8 percent in deal value to US$84.7 billion as the high technology, industrial, real estate and retail sectors continued to witness year-on-year increase while the rest of industries saw declines.
409,100 overseas graduates return to China in 2015
Xinhua, March 24, 2016
A total of 409,100 Chinese students returned from overseas after graduating in 2015, said an official on Wednesday. The returnees brings the total of returned Chinese students to over 2.21 million by the end of 2015, said Tang Tao, vice minister of the Ministry of Human Resources and Social Security, at a multi-ministerial meeting on services for returned overseas students. China at present has 321 industrial parks where returned overseas students can start their own businesses, housing 24,000 enterprises, according to Tang. The vice minister said China will improve measures to persuade Chinese students to return home in 2016, including better public services and projects such as the "Thousand Talents" recruitment program for global experts launched in 2008.A multi-ministerial meeting system was created in 2003, ordered by the State Council, to assist returned overseas Chinese students.
Li: 'two engines' to propel China's growth, March 24, 2016
China will actively foster new growth drivers while transforming and upgrading traditional ones so that they will form "twin engines" to propel China's development, Premier Li Keqiang said while delivering a speech at the opening ceremony of the 2016 annual conference of the Boao Forum for Asia in China's southernmost island province of Hainan on Thursday morning.Eight years have passed since the occurrence of the international financial crisis, but its profound impacts have not been eliminated, the premier said. The recovery remains uneven in the emerging economies and sluggish in the developed ones. He said the government will prevent the loss of speed by maintaining medium-high growth in the long term and promote the development toward the medium-high end. He also expressed hope that all countries in the world will deepen cooperation, coordinate policy and oppose protectionism in any form.
In Asia, developing countries alone recorded average growth of 6.5 percent in 2015, contributing about 44 percent of the world's total growth, he said. One important reason why Asia had achieved a rapid growth over the past decades is that the region kept a generally peaceful and stable environment. Dialogue and cooperation is the golden key, the premier said. He stressed that, inspired by history and experiences after the WWII, Asian countries should be good neighbors and friends and not be disturbed by minor frictions and contradictions, no matter what stage of development they are in.  "We have reason to be more confident, but we must foster further growth momentum, and play a more important role in the economic recovery of Asia itself and the world at large," he said. Li said the region has achieved a "miracle" thanks to the diligence and intelligence of the people and should make more use of those qualities. Innovation is one of the key principles in China's pursuit of an economic transition from growth driven by investment and exports to growth led by consumption. Li said that the region should try to raise productivity of the labor force through education and training, and increase investment in research and development. "We should make use of new models such as the Internet Plus. We should build platforms for innovation cooperation and encourage the sharing of best practices ... to involve the general public, especially young people," he said." This will help countries in our region to embark on a path of development driven by innovation and growth led by upgrades," he said.
What China's economic transition mean to the world
By Zhang Yugui, March 30, 2016.By Jiao Haiyang/
In light of the off-track global economy, the recently concluded 2016 Boao Forum for Asia (BFA) in China's Hainan Province has introduced China, Asia and the world's high-level sharing of intelligence as well as strategies regarding global economic recovery and governance reform. According to the information delivered by Chinese Premier Li Keqiang in his keynote speech at the opening ceremony, despite the slowdown of economic growth rate, the Chinese economy is still the engine of global economic growth with positive changes in its structure and spacious momentum. China, a country that is committed to the economic restructure, will be an important participant in global economic governance reform along with Asian countries and emerging economies.
At present, China is actively participating in the reform of the International Monetary Fund and pursuing a discourse power matched with its economic strength through the establishment of the Asian Infrastructure Investment Bank, the New Development Bank of BRICS, the Silk Road Fund and the Regional Comprehensive Economic Partnership. China's efforts in guiding the building of multi-leveled financial systems will help to establish a new pattern of global governance in the 21th Century. As an important bridge connecting China, Asia and the world, the BFA's influence has been rising yearly with the continuous growth of China's economic strength. Meanwhile, the China Development Forum held in Beijing on March 19-21 was a window for the world to look at the trend of Chinese policies. China has been working on narrowing the communication gap on its economic policies by holding such high-level forums.
China now faces three challenges in the economic field. First is how to change the growth model. Second is how to steadily control the unavoidable economic slowdown. Third is how to interface the Chinese economy with the global economy. They can be summarized into one question, how to ensure the orderly expansion of Chinese economic activity in the world during economic transition and growth among global financial competition and the changes of international patterns.China's economic transition is unique in world economic history. China's economic factors, resources, population quality and structure, development concept, decision mechanism and technological development stage are all hugely different with those of developed countries. Therefore, China cannot find a ready-made path for its economic transition
80% of China's overseas students return home By Chen Xia, March 30, 2016
Nearly 80 percent of Chinese students have chosen to return home after studying abroad since the late 1970s, a recent report from a government-backed agency revealed. An overseas returnee attends an interview at a job fair in Beijing. An overseas returnee attends an interview at a job fair in Beijing. From 1978 to 2015, more than 4.04 million Chinese students went to study overseas. Of this number, nearly 2.78 million people finished their education and nearly 2.22 million people, or 79.87 percent, returned home for career development, according to a blue paper released by an agency under the Ministry of Education.
In 2015, the ratio of Chinese students going abroad for education to those returning home after pursuing overseas education lowered to 1.28:1, compared with 3.15:1 in 2006. The majority of the returnees, 80.7 percent of the total, returned home with a master's degree. Most of them studied in the UK, the United States, Australia and France. The most popular majors were management, science and economics. Nearly half of the returnees hoped to work in Beijing, Shanghai, Guangzhou and Shenzhen, the four most developed cities in China. More than three tenths of them wanted to work in the financial industry. "You might live an affluent life overseas, but you will achieve your full career potential in China with the country's many favorable policies," said Chen Peng, who returned to China in 2009 after obtaining a doctorate at the University of Chicago. Chen was born in the late 1970s. In 2009, he joined a project run by the prestigious Peking University with the aim of promoting young talents. Later, he joined an inter-university research center sponsored by three ministries. In 2014, he was promoted to the rank of professor and became one of the youngest professors at Peking University.
China caps amount of local gov't debt   Xinhua, March 31, 2016
China has put a ceiling on the amount of local government debt, according to the central budget for 2016 released by the Ministry of Finance (MOF) Wednesday. The total outstanding debt of China's local governments must be kept under 17.2 trillion Yuan (2.6 trillion U.S. dollars) at the end of 2016, said the MOF. The budget was approved by the National People's Congress, China's top legislature, on March 16.China is trying to rein in local government debt mainly caused by borrowing during an investment and construction binge that followed the global financial crisis in 2008. A debt swap mechanism allows local governments to convert their debt to low-interest bonds, easing the debt burden without disrupting the broader economy.
Nuclear security in an age of terrorism
By Sajjad Malik, March 31, 2016
China has played an important role in nuclear security at the international level and also in the peaceful use of nuclear energy.The fourth Nuclear Security Summit being held this week in Washington is a major effort by the international community to discuss the issue of nuclear security in an age faced with an increasing threat of terrorism. According to the summit's organizers, the objective of the high-level meeting is to "energize, enhance, empower, and elevate the many existing multilateral and cooperative institutions and structures aimed at securing nuclear materials and preventing nuclear smuggling." The idea of holding such summits is rooted in a 2009 speech in Prague by President Barack Obama. He explicitly highlighted the threat of nuclear terrorism and urged world leaders to take immediate action to combat it. The key to success was securing vulnerable nuclear materials around the world. Since no single country could carry out such a huge task, President Obama proposed a global summit on nuclear security.
About 50 world leaders attended the first nuclear security summit in Washington in 2010. It was followed by the Seoul summit in 2012 and a summit in the Hague in 2014. These regular meetings on a matter of critical importance have produced tangible progress in the realm of nuclear security. The previous three summits agreed to achieve a series of goals, including: minimizing the use of highly enriched uranium (HEU); bolstering security at nuclear facilities through enhanced national regulations and implementation of best practices; enhanced membership in international instruments and organizations such as the International Atomic Energy Agency; instituting measures to detect and prevent illicit trafficking in nuclear and other radioactive materials; and building capacity, developing technology and coordinating assistance on nuclear security. The good news is that 95 percent of the commitments made in Washington were completed by 2014. The key achievement was the removal of over 3.2 metric tons of vulnerable HEU and plutonium material, including the complete removal of HEU from 12 countries.