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 作者是摩根士丹利亚洲的首席经济学家，研究除日本之外的亚洲宏观经济。（转载） |
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自由原子弹
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游客
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作者：游客 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
Gathering Clouds（ZT）
*****Protectionist measures imposed by the US could be imminent
The US political system is responding to manufacturing job losses during
a political season. This could result in textile quotas being
reintroduced or maintained or high tariffs being applied to industrial
commodities. China's exports could be significantly affected in 2004.
****China's credit tightening is cooling the property sector
China needs to slow growth in the property sector so that it is more in
line with GDP growth. Property has been growing at three times GDP. A
slowdown in this sector could cut GDP growth by two percentage points.
****Consumption should shine for the next two years
Property has attracted a disproportionate share of household
expenditure. As property growth moves into line with GDP growth,
household expenditure for consumption should be normalized.
Summary and Conclusion
----------------------
Clouds are gathering over China's economic outlook for 2004. US
presidential politics will likely lead to protectionist measures that
apply to China's exports. Multinational investors are more hesitant
about setting up production in China because of the threatening noises
over China's exchange rate structure. China's property sector must slow
quickly to prevent a financial collapse, in our view.
Exports probably contributed five percentage points and property a
further three percentage points to China's GDP increase in the first
half of 2003. It is conceivable that the two sectors' contribution to
GDP growth will be cut by half in 2004.
Consumption could be China's bright spot from next year. Household
savings deposits increased by 19% in August from last year's level and
may reach 90% of GDP (or Rmb10.3 trillion) this year compared with 68%
in 1998 and 45% in 1992. Furthermore, public housing flats have been
privatized at one-third to one-fourth of today's market prices, adding a
further 30% of GDP in household wealth. Chinese households are strongly
positioned to support a sustained consumption boom, in our view.
Protectionism in the Air
------------------------
Employment in US manufacturing has suddenly declined in the past three
years to 14.7 million jobs after fluctuating between 17 and 18 million
for 15 years (Exhibit 1). The US political system is feeling the
intense pressure as presidential politics heat up. Unless the US labor
market improves soon through rapid expansion of service employment, some
protectionist measures look inevitable.
The US could possibly reinstate or maintain MFA quotas in textiles and
apply high tariffs to some commodity industries similar to what occurred
in the steel sector. Higher tariffs on selected products in other
sectors are also possible. The US National Association of Manufacturers
(NAM) may use Section 301 to pick and choose its strategy. The US is
unlikely to increase tariffs on Chinese products alone since this would
simply shift demand to other countries.
The Failure of MBA Capitalism
-----------------------------
American politicians have singled out China's currency peg to the dollar
as the main culprit of their current economic woes. The validity of
this argument (see "Currency Intervention Likely to Resume", September
22, 2003) does not appear to be important as US politicians consider
possible actions.
Many US manufacturers know that the result of a modest renminbi
appreciation would be either no change in their competitive positions or
simply a shift in demand to other low-cost countries like Vietnam. This
is why they are pushing for quantitative measures or high tariffs on
selected products.
US manufacturers appear to be using China as an easy target for pushing
the US towards protectionism in general. The business reality explains
why they have adopted such a stance. Most US manufacturing industries
have lost their quality edge in the global market. They must now
compete on price to survive. This means that the US should lower wages
in manufacturing to levels in developing countries. This is clearly not
possible. The US has, therefore, little choice but to resort to
protectionism to hang onto most of its manufacturing jobs, in my view.
How the US lost its competitiveness is a complicated story. American
politicians blame it on the strong dollar. But, the US is losing market
shares to countries with similar or higher wages. The automobile
industry is a good example. The most likely culprit, in my view, is
that the US has adopted "MBA" capitalism in the past two decades.
Financial bureaucrats rather than entrepreneurs now dominate the great
American corporations. This has turned out to be a disaster for
America's competitiveness. American business schools may have destroyed
US manufacturing competitiveness for good.
Uncertainty Unsettles Foreign Investors
----------------------------------------
All the noise on China, especially with respect to its currency, will
likely have an impact on foreign investors' confidence in China's
stability as a supply base for the global economy. Multinational
corporations were already concerned about supply concentration in China
after the SARS crisis. The focus of protectionist sentiment on China
increases the perception of risks in basing production in China.
A massive wave of foreign direct investment (FDI) into China followed
its entry into the WTO. This kicked off another period of rapid
productivity growth in China. While it is too early to estimate the
rate of productivity growth, my guesstimate is that total factor
productivity is considerably above the 4% that I estimate for the period
1980-2000.
The combination of rapid productivity growth and unlimited supply of
labor across the skill spectrum make China an incomparable production
base. Hence, there is a tendency for an industry suddenly to migrate to
China en masse. Whenever the production of a product is found to work
effectively in China, the low cost makes similar production elsewhere
unviable.
Assuming no interference of political intervention against market
forces, China should have 50% or more market share for any industry that
becomes rooted in China. Indeed, we have observed such market shares
for China in soft goods industries (e.g., shoes, toys, garments).
Consumer electronics and telecom equipment are likely to follow a
similar pattern. However, it appears that political forces may be
interrupting the process. Even though FDI contracts could exceed US$100
billion in 2003, realized FDI may slow next year (Exhibit 2).
A slowdown in FDI would have a negative impact on exports. Enterprises
with foreign investment accounted for 65% of China's export increase in
the first eight months of 2003. If FDI slows, China's exports will
slow.
Domestic companies will try to occupy whatever space foreign companies
vacate. However, they are likely to face greater difficulty in
accessing foreign markets, as they could easily be subject to
discrimination by foreign buyers or even in the customs process. They
would probably be successful in tapping overseas markets over time,
which would then result in product prices reflecting China's cost
structure. This force would eventually require multinational companies
to follow market forces once again.
Property Threatens Stability
----------------------------
Since China introduced home mortgage in 1998, the property sector has
taken off rapidly. Both new projects and sales have risen by 24% a year
in terms of square meters or three times GDP growth.
We estimate property sales will reach 9.2% of GDP this year compared
with 3.9% in 1998. The property sector has accounted directly for
one-fifth of China's GDP increase since 1998. The multiplier effect
could be as much as 1.5-2, in my view. I estimate property could
explain most of China's GDP growth other than exports since 1998.
Exhibit 3
Property Boom Threatens to Burst
----------------------------------------------------------------
New Starts Completed Sold Avg Sales Price
Total Residential
----------(mn sq m)----------- (Yuan/sq m)
----------------------------------------------------------------
1995 154 131 60
1996 126 144 76
1997 128 138 79 1977
1998 188 154 107 2002
1999 216 198 134 1984
2000 283 230 170 2103 1952
2001 359 273 208 2226 2068
2002 423 325 250 2291
Jan-Aug 02 247 93 93 2319 2170
Jan-Aug 03 325 124 126 2422 2271
--------------------------------------------------------------
Source: CEIC.
By the end of 2003, 1.2 billion square meters of property could be under
construction. I estimate loans tied among property developers at 80% of
sales value or more. This would put development loans at Rmb2.3
trillion. Material producers also depend on earnings from the property
sector for servicing their loans. If the property sector were to grow
three times as fast as GDP for a further two years, this could cause a
financial crisis, in my view.
The central government is trying to prevent such an eventuality by
limiting credit growth. The banking sector's claims on the
non-financial sector (NFS) increased by Rmb1.9 trillion in the first
half of 2003 compared with a Rmb2.8 trillion increase in 2002. The
central government is trying to keep the credit increase below the
previous year's level, which implies a cut in loan growth in the second
half of 2003 to Rmb900 billion. I estimate the macro tightening should
cut property sector growth by half to about 12%.
The tightening is probably timely enough to prevent a financial crisis.
But growth in the property sector will have to be in line with GDP
growth in the future to ensure financial stability. I calculate this
would reduce China's GDP growth rate by at least two percentage points.
Consumption Should Remain Strong
---------------------------------
Chinese household wealth is below equilibrium, and so wealth
accumulation has to be faster than consumption. This is why retail sales
tend to follow household savings deposits with a lag (Exhibit 4).
Retail sales and household savings deposits diverged sharply in 2002 and
have continued to do so in 2003. This is not surprising as the property
sector has been attracting a rising share of household expenditure.
As the macro tightening lowers property sector growth, household
expenditure for consumption should also be normalized. Consumption was
at 58% of GDP - an historical low - last year. It could hit 57% this
year. However, the cooling property sector should reverse this trend.
China's public housing flats have been privatized at one-third to
one-fourth of today's prices. This wealth redistribution could amount
to 30% of GDP in favor of the household sector. The balance sheet of
Chinese households is in incredibly strong shape, which should support
consumption strength for years.
Furthermore, if exports come under pressure, the government would likely
respond this time by stimulating consumption. In 1998, the government
boosted infrastructure investment and housing to improve the economy.
As investment levels are already high, the government's only option in
the event of economic difficulties is to stimulate consumption.
China's Growth Should Remain Resilient
---------------------------------------
China is facing the greatest uncertainty in its economic outlook since
1999. The current situation is perhaps more challenging than in 1998
because the reason for the expected difficulties is the inability of the
global economy to digest China's rapid growth.
China is pursuing modernization with whatever means or methods
available. It has maneuvered through major difficulties in the past.
China should be able to find the right responses this time.
First, China could pursue measures to lessen the political pressure in
the US on China. For example, major purchases of agricultural
commodities could win goodwill from the politically important farm
states.
Second, China could announce a timetable for phasing out all tax
privileges for foreign investors. China's cost structure is likely low
enough to attract FDI without such concessions.
Third, China could open up more sectors to foreign investment. FDI into
China's financial sector could improve financial efficiency and rope
western interests further into China's development process.
Fourth, China should announce a timetable for opening its capital
account. This would, of course, require a similar timetable for
financial reforms.
Fifth, China should expand its involvement in global affairs, such as
peace-keeping missions, to increase its bargaining power in economic
matters. China's role in the negotiations over North Korea's nuclear
program has already generated considerable benefits for the country.
Andy Xie (Hong Kong)
作者：游客 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
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 作者是摩根士丹利亚洲的首席经济学家，研究除日本之外的亚洲宏观经济。（转载） -- 自由原子弹 - (26758 Byte) 2003-10-11 周六, 11:48 (1404 reads)
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