The Chinese economy has grown at just under 10 per cent a year for 32 years, overtaking Japan in 2010 to become the world’s 2nd largest economy. According to the OECD, China is projected to overtake the US in 2016 (in PPP terms).
While many of the world’s major economies are still struggling to recover from economic contraction, China’s economy grew by 9.2 per cent in 2011, down from 10.3 per cent in 2010, and this economic slowdown continued in 2012, to around 8.2 per cent. This is partly due to suppressed demand in China’s largest export markets (Europe, USA) but also to tightening of monetary policy in late 2011. The Chinese government has subsequently now begun loosening monetary policy and has launched a major investment programme to ensure growth does not slip below the official “target rate” of 7.5 per cent.
There are significant changes in China’s growth strategy. Traditionally, China has provided low-cost manufacturing solutions for the global market, but exports declined sharply after the global downturn and China’s manufacturing industry has responded by quickly moving up the value chain.
The Chinese Government is pressing hard to improve infrastructure and social welfare as well as targeting resources to develop China’s vast rural and interior regions, aiming to unleash domestic consumption among the wider population. Industrial structures are shifting inland with dozens of new cities emerging and coastal areas developing into sophisticated urban clusters.
While the rise of China is easy to acknowledge, businesses constantly need to catch up with the speed and depth of change and development in China’s large and complex market space.
Whether selling, trading, investing or franchising, China offers opportunities in abundance to UK companies, large or small.