Your preview of China in 2020

China in the next Five years till 2020*:

Top priorities in the next five years:

  • Poverty- improve living standards of rural and impoverished people
  • Education – invest in schools, including subsidies for rural areas
  • Innovative society – increase positive employment policies
  • Environmental – reduce pollution, enforce strict regulations
  • Stability – controlling dissent in mass incidents
  • Urbanization – reform hukou system, city planning

Top trends

  • Aging population
  • Rapid urbanization
  • Disposable income
  • Transformation from a manufacturing to service-based economy
  • Decrease in household savings

Goals for the economy

  • Stead growth: 6.5 – 7% necessary growth rate to achieve projected 2020 GDP goal in the 13th 5 year plan
    • Premier Li calls for 6.5% or better in 2017
  • Transform the economy
    • Overcapacity: widespread across many sectors including stell, aluminum, cement, shipbuilding
  • China must shift away from dirty, low-return manufacturing to higher productivity sectors – including the services sectors

13th Five-Year Plan:

sets targets for China’s economy

  • Create 10M urban jobs
  • Decrease unemployment rate to below 4.5%
  • Higher internet penetration rate

Also proscribes goals for economy policy

  • Develop an innovate and modern economy
  • Establish new regional cooperation methods
  • Improve quality of life, including by putting “ecology first”
  • Deepen market-oriented reforms and increase market openness

Industrial policies

China manufacturing 2025

  • Targets 10 priority sectors for development
  • Sets Targets for Domestic Content of Core Components by 2025
  • Government support provided for projects under the plan

Internet Plus

  • Internet + [existing industry]
  • Fuel economic growth by integrating internet in Existing industries
  • Encourage innovation and technological advancements
  • Government financial support and tax incentives for related projects

One Belt One Road

  • Development framework focused on cooperation between China and primarily Eurasia
  • Two components
    • Silk road economic belt
    • 21st century Maritime silk road
  • Economic objective is to open markets to Chinese firms and capacity
  • $40bn funding for related infrastructure projects
  • potential opportunities for U.S. Firms

 U.S. Business Outlook in China

The good

  • most companies had revenue growth
  • urbanization
  • rising spending power
  • digital technologies

The bad

  • rising labor cost
  • foreign investment restrictions
  • IP protection
  • Regulatory transparency & enforcement
  • Administrative licensing

Opportunities

Energy sector

In 2015

  • China remained the largest global energy consumers
  • Coal accounted for 64%, down 10% from Mid-2000s
  • Became worlds’ top solar generator & wind turbine manufacturer

By 2020

  • $360 Billion USD invested in renewable energy
  • 3 Million new jobs created in renewable energy
  • 50% of new energy capacity will come from renewables
  • 1/3 of global investments in Hydro, wind, % solar energy will be by China

Environmental Tech

  • $60.7 USD market value in 2016
  • 20-30% expected annual industry growth in 2016-2020
  • 33% of surface & 80% of underground water is polluted
  • 20% of arable land is polluted
  • $1T USD projected investment in air, water, & soil
  • 17% decrease in PM 2.5 air pollution from 2010-2015

Automotive

  • China is the world’s largest vehicle market
  • 02M units sold in China in 2016
  • 5M units sold in the U.S. in 2016
  • 53% YOY increase of EV units sales
  • 1% YOY increase of pure electric units sales
  • 30,000 RVS in China by 2016

Automotive policy

  • National V emission standard has been implemented started 1/1/2017
  • Tax-Free purchase of EVs – Ends 2017
  • 200,000 Units of EV public Transportation and 100,000 Units of EV Taxi’s and logistic vehicles by 2020
  • At least 50% of the official use vehicles must be NEVs
  • 800,000 EV Charging pillars to be established in 2017

Healthcare

  • 8% annual growth in spending 2015 to 2019
  • expected to reach $1 Trillion by 2020
  • Older, Sicker, & Richer population
  • Emerging private healthcare
  • Mobile health (mHealth) development

 Healthcare Policy

  • Bilateral cooperation on registration and approval
  • Annual reports: more transparency
    • Expand clinical trial exemption catalogues
    • Registration consultation
    • Feedback & comment opportunity during drafting stage
    • Standardize medical device market access
  • Remaining issues
    • NCE & Drug lag
    • Clinical trials, pricing and tendering

Travel & Tourism

2016: U.S. – China Tourism year

  • 6 M Chinese tourists in 2015
  • 7 M Chinese tourists expected in2021
    • 121% growth from 2015
  • $30B USD in travel& tourism exports to Chinese visitors
    • 59% percent of all service exports to China
  • Highest spending per visitor per trip at $6000 to $7,200 per individual

 Education

  • 328,547 Chinese students studied in the U.S. (2015 – 16)
    • 1% increase from the previous year
    • 5% of all foreign students in the US are Chinese
  • 355,159 Estimated Chinese students now studying in the U.S.
  • $11.43 Billion USD from Chinese students in the U.S. Colleges

Aviation

  • Commercial aviation, comparing 2016 vs. 2015:
    • Civil aircrafts increase from 4,554 to 5,037
    • Civil airports increase from 206 to 218
  • General aviation: 2016 and plan by 2020
    • GA Aircrafts: increase from 1,472 to 5,000 by 2020
    • GA airports: increase from 300 to 500 by 2020

Ecommerce

  • 601M Chinese internet users (80% mobile) 2015
  • $453B USD retail goods sold in China 2014
  • 520M online shoppers China vs. 200M in the US
  • $2.1T USD estimated B2B market by 2020
  • $2.09T USD E-Commerce transactions value (2014)
  • 52% consumer electronics & Appliances
  • 27% apparel

 ICT Challenges

  • most challenging industry sector in 2016 and beyond
  • “secure and controllable” policies
    • Exceedingly wide scope of application
    • Onerous, potentially discriminatory testing requirements
    • Requires domestic data storage and prohibits certain Data transfers
    • Requires use of domestic standards and encryption technologies
      • Example policies: Cybersecurity Law, Counterterrorism Law, Guidelines for the Banking and Insurance Sectors, etc
    • Integrated circuit fund
      • Targeted plan to become global industry leader by 2030
      • Potentially over $100bn in state funding
      • Potentially for significant discrimination and generation of overcapacity

 IPR

Patents, Copyrights, Trademarks, Trade Secrets

  • US – held IP rights do not give protection in China
  • You need to protect yourself in China
  • China has improved its IP system, but complications still exist
  • Know how to protect yourself, and do it

* Source U.S. Commercial Service download it

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Lisa11

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