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Investment Spending in China: Reap What You
Meaning of Investment
• Investment means to place a portion of our
money in company shares or banking in order
to obtain an increase.
About china’s economy
• China has the world’s second largest economy in
terms of nominal GDP, i.e. US$ 9.3253 trillion.
• In 1978 China became the country with the
fastest economic development in the world, it is
the second largest exporter and third largest
importer of goods.
An Incredible Growth
• Over the last 20 years China has
got an extremely high savings rate,
averaging around 40 %, Chinese
economy has enjoyed one of the
highest growth rates in the world.
• At the beginning of the 90s there
was an incredible increase in GDP,
from 4% in 1990 to 12.7% in 1994.
• In the ranking of GDP, in 2007
China surpassed Germany and in
Coming to Grips with the
Numbers and therefore Potentials
1.3 billion people
0.7 billion peasants
0.2 billion migrant workers
200m aspiring middle class
100m middle class as now
• This case study is all about China, whom export is going
down (49% to 39%) but he maintained his economic
• Export growth fell to just 2.9 percent year-on-year last
month, down from 11.6 percent in October.
• China’s GDP, which grew at 7.4 percent in the third
quarter and 7.6 percent in the second, to bounce back
above the 8 percent threshold this quarter, with
growth coming in at 8.2 percent.
• GDP of investment is 44% last year which is greater
then America, i.e. 18%.
• China’s investment spending surged as a nation
poured money into roads, railways, and power
grids to counter a plunge in exports.
• Urban fixed asset investment climbed a more
than estimated 26.5% January and February
combined to 1.03 trillion yuan ($150 billion) from
a year earlier.
• China is spending on railways a tripled,
agriculture spending is doubled and coal mining
expenditure jumped 59.6%.
• According to National Bureau of Statistics data,
the share of fixed investment in China’s gross
domestic product rose to 46.1% in 2012, up from
45.6% in 2011.And now it is 47%.
• China’s GDP decelerated to 7.8% growth in 2012,
down from 9.3% in 2011 and the slowest since
1999. As the firms and local governments turned
to borrowing to finance investment, a ratio of
household, corporate and local government debt
to GDP has ballooned from around 123% of GDP
in 2008 to about 180% in 2012.
Ques:-Do you think that China’s investment
spending could soon be bigger than US?
Ans. Yes, China’s investment spending should
soon be bigger than US because according to
statistics released by Rhodium Group, last
year China’s investment in the US is doubled,
reaching a record high of 14 billion USD. FDI
from Chinese private enterprise also increased
quickly : before 2011, private companies only
represented 30% of China’s total investment in
the U.S., in 2012 this figure is 54% and in 2013
this figure is 76%.
The external environment is also an incentive for
Chinese enterprises to go abroad.
• Firstly, since the outbreak of the international
financial crisis, the US government is looking to
create more job opportunities through absorbing
foreign capital, providing a favourable situation
for Chinese enterprises. By the end of 2013
Chinese enterprises had created more than 70
thousand job opportunities in the US.
"reindustrialization" is an important part of U.S. strat
egy. While the U.S. government improves the
business environment to attract investment, China’s
high end manufacturers are seizing the resulting
• Thirdly, investing in the US helps Chinese enterprises
to improve their result, research, and design ability
and get closer to American consumers through
developing local logistics and distribution channels.
The rapid increase in China's investments in the U.S.
has its internal logic. As the world's
biggest mature market, with the most advance
technologies and the strongest R&D
capability, the US will continue to attract Chi
nese investment. Areas with the greatest
investment potential include infrastructure, ene
rgy, and middle and high end manufacturing.