Tuesday, May 31, 2011

China Shakes The World




I recently read a book recently published by James Kyng, former Financial Times correspondent in China, under the title "China Shakes the World, The Rise of a hungry nation."
Some ideas to be learned from this fascinating book:
- The Chinese labor force increases by 25 million people each year who must find work. This is without counting the internal population movements, with the influx from the countryside to the cities. The strong long-term growth of the economy is a vital necessity. To simplify, China said the jobs to us, the West said to us profits.
- The vastness of the Chinese domestic market is a dream, not only the West; the Chinese as well. In fact, the Chinese domestic competition in all segments of consumer products is intense, especially since the producers are on equal terms. The consequence is that the margins are very low, and profits are sought for export.
- At the cultural level, the numbers of very great importance. The official slogans are an illustration. This is a consequence of the permanent situation of overpopulation, and the difficulty to feed every mouth. China is a country that really hungry, in every sense of the word. We can better understand the speed with which China has integrated science and technology.

For the future, let us ask some questions about the future role of China in the world of finance. With 1.2 trillion dollars in foreign reserves, increasing rapidly, and a large domestic savings, the raw material does not fail! For now, the asset allocation is not optimal. But it is likely that major Chinese banks will quickly integrate the tools of modern finance. With the size of their balance sheets, they will become formidable competitors. Moreover, the government plans to create an investment agency, with $ 200 billion to begin with, history of investing a portion of foreign exchange reserves of more optimally, a little on the model of Singapore's Temasek. This will be an institutional investor interest. The time is not far distant when China initiated the takeover bid will win over European and U.S. exchanges.

0 comments:

Post a Comment