xi's mission: avoid the middle income trap

7/28/2019 Xi's Mission: Avoid the Middle Income Trap

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Kiyoyuki Seguchi

The Canon Institute for Global Studies

May 30, 2013

1

Kissinger Institute on China and the United States

Woodrow Wilson International Center for Scholars


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Xi Jinpings Historic Mission

To Avoid the Middle Income Trap

Japan, Korea, Taiwan, Singapore and China?

2


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Policies for avoiding the Middle income trap

3

Privatization of SOE

Reduction of excessive equipment

Financial liberalization

Reducing income gap

Improving the environment

Correcting the corruption

Solution

Marketization

Democratization

Political leadership


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Anti-corruption campaign

The Eight-item Regulations1.Sentences : Short and easy to understand

2.Foreign business trip of VIP : Observance of rules

3.Security for VIP : Dont be too much4.Broadcasting : Cut meaningless news of VIP

5.Publishing books : Allowed publishing only

6.Austerity of daily life spending7.Prohibition of excessive entertainment

8.Meetings : Effectiveness

4


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Ripple Effect of Distrust of Government

Explosion of ordinary peoples anger againstcorruption of leaders of the communist party andofficials of the government

Refusal of donation for the earthquake in SichuanProvince through the governmental organizationand the Red Cross

Serious criticism against the former premier WenJiabao

5


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Real GDP Growth

Y to Y %

6

SourceCEIC

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0


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CPI

7

-5.0

0.0

5.0

10.0

15.0

20.0

CPI food others

%

Source : CEIC


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Increase of employee in urban area

and real GDP growth rate

8

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2004 2005 2006 2007 2008 2009 2010 2011 2012

increase of employee in urban area GDP growth rateThousand people %

Source:CEIC


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Balance of Trade

9

100 million USD

Source : CEIC

0

500

1000

1500

2000

2500

3000

3500

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012


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Contribution Rate to GDP by Component

10

-50.0

0.0

50.0

100.0

150.0

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Consumption Investment Net Export%

Source : CEIC


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Increasing Income level of the Major CitiesAfter GDP per capita reaches 10 thousand USD, Consumers Behavior change.Major cities of which GDP per capita reached 10 thousand USD

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The year when GDP

per capita

Reached 10,000 USD

Major cities and their population(10,000 person, on 2010 basis) Sub total ofeach cityspopulation

2007 Suzhou638Wuxi467Shenzhen1,037 2,142

2008 Guangzhou806Shanghai2,303Hangzhou689Ninbo574Erdos152Baotou220

4,744

2009 Beijing1,962Dalian586,Changzhou361 2,909

2010 Tianjin1,299Huhhot230 1,529

2011 Wuhan837Shenyang720Changsha652

Qingdao764Nanjing632Tangshan735 etc.6,495

2012 Jinan(607), Yangzhou(460) 1,067

2013 Nantong(765), Zhengzhou(963), Fuzhou(649) etc. 4,216

200713 Total Total population of the all major cities 23,102

Source : CEIC


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Price level of Automobiles Volume Zone

2010 Around 50 thousand RMB

2012 Around 100 thousand RMB

(Shanghai Around 150 thousand RMB)

SUV around 200 thousand RMB are also popular.

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Expansion of Market for Japanese Companies

2008 2013

Nominal GDPJapanChina 10093 100160

Population of major cities of which

GDP per capita reached 10 thousandUSD

68.9 mil. people 231.02 mil. people

3.4 times as large as 2008

Profit per sales ratio lower higher

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Japanese goods are high quality but a little too expensive. Japanese goods are a little expensive but high quality.


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FDI to China by countries100 million USD

(right scale) (left scale for each country)

Source : CEIC

Note : Data of 2013 is calculated by Y to Y growth rate of the total amount of 4 months from January to April.

0

200

400

600

800

1000

1200

1400

1600

0

10

20

30

40

50

60

70

80

90

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Total Japan Taiwan Korea US Germany


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Feature of the 4thboom of Japans FDI to China

Aiming at Domestic Market

(Focusing Inland Area)

Increase of Service Sector

Increase of Reinvestment of Return in China

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Perspective on the win-win development

between Japan and China

China is lacking in advanced technology andsophisticated service. Japan is lacking in

vigor of the domestic market.

If Japan and China cooperate each othercomplementally, both countries can enjoy

sustainable and harmonious development.

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Win-Win Relation between Japan and China

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Increase of Japans

FDI to China

Short termIncrease of employmentand tax revenue in China

Long termImprovement of Chinastechnology level

Enhancement of Chinascompetitiveness

Stability of trade and fiscal balance

Expansion of the Chinese

domestic market

Increase of business chances of

Japanese companies in China

Increase of return of Japanese

companies and domestic

employment in Japan


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xi's mission: avoid the middle income trap

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