China’s government wants its economy to grow more sustainably. Currently, the Chinese economy is growing at a rate of 7.8% in the period July to September, compared to 7.5% in the previous quarter. However, this is significantly lower than the high and unsustainable rates of growth that the Chinese economy experienced over the last decade. The Chinese government have set a target growth rate of 7.5% over the next year and analysts believe that this will be achieved.

1. Andy Reeve The Grange School, Hartford, Northwich
October 2013
China invests in UK Plc
China’s government wants its economy
to grow more sustainably. Currently, the
Chinese economy is growing at a rate of
7.8% in the period July to September,
compared to 7.5% in the previous quarter.
However, this is significantly lower than the
high and unsustainable rates of growth that
the Chinese economy experienced over the
last decade. The Chinese government have
set a target growth rate of 7.5% over the
next year and analysts believe that this
will be achieved.
However, the manner in which China grows is also a
target for its government. Currently, China experiences
growth due to the high levels of export-led growth
and also large governmental infrastructural investment
projects. Investment by firms represents 48% of
Chinese national output, compared to 15% in the
USA, 14% in the United Kingdom and 20% in
Japan. However, the level of consumption in China
only accounts for 34% of China’s national output,
whereas it accounts for 72% in the US, 66% in the
UK and 61% in Japan (See chart) .The Chinese
government want the proportion of investment and
consumption to switch – as they see this leading to
more sustainable long term growth.
However, Michael Pettis, reporting in the Financial
Times, doubts that this is a feasible objective. He
argues that if China aims to increase its proportion
of consumption to approximately 50% of GDP then
this will take many years. Chinese GDP average
annual growth of 6 or 7% would require growth
rates in consumption of 10 -11% per annum over
a decade for China to rebalance to any extent. The
Financial Times report states that
“China was not able to achieve such high consumption growth rates even in the best of times,
when it and the world were growing much more
briskly, and it will prove near impossible for
China to manage such high consumption growth
under weaker Chinese and global conditions”
China
USA
Japan
UK
0%
10%
20%
30%
40%
50%
60%
70%
80%
The data for Consumption as % of GDP is China 34%, USA 72%, Japan 61%,
UK 66%
(source: World Bank 2013)

2. Andy Reeve The Grange School, Hartford, Northwich
Chinese Investment in the UK
Recently, the Chancellor, George Osborne visited
China with other officials from the United Kingdom,
including the charismatic Mayor of London; Boris
Johnson. The aim of the trade delegation was to
foster increasing trading links between the two
nations. The headlines at the end of the visit were
that the Government plan to allow Chinese state
controlled firms to invest in the UK’s nuclear fuel
industry. Osborne has announced that originally the
Chinese investment will only be a minority holding
but that, over time, the ruling will be relaxed to allow
them to become majority stakeholders.
China has invested heavily in continental Europe
over the past few years. In 2012, it is reported that
Chinese state-owned companies invested more than
$12.6 billion (£7.8 billion) in the continent – a year
on year increase of 20%.
In October, the Chancellor also announced a £800
million investment by the Beijing Construction
Engineering Group (BCEG) in the development of
“Airport City” in Manchester. The development, a joint
venture between Manchester Airports Group (MAG),
BCEG, Carillion PLC and the Greater Manchester
Pension Fund will develop 5 million square feet
around the airport, creating hotels, advanced
manufacturing sites, logistics hubs and warehousing
facilities. It is estimated that the development will
create 16,000 new jobs in the region.
Overall, the United Kingdom continues to attract
inward direct investment. During 2012, it saw a 22%
rise in inflows of inward investment. Foreign Direct
Investment (FDI) was valued at £40 billion, whilst
global inflows fell by 18% to £0.88 trillion. This
places the UK in 6th position for attracting FDI –
behind the USA, China, Hong Kong, Brazil and the
British Virgin Islands.
Visit the video clip at the following website
www.bbc.co.uk/news/business-24576773
Other sources
www.dailymail.co.uk/travel/article-2458582/800mChinese-investment-Manchesters-Airport-City-UKvisa-rules-relaxed.html
www.chinadaily.com.cn/china/2013-01/04/content_
16078867.htm
www.ft.com/cms/s/0/7a0f1660-ddc0-11e2-892b00144feab7de.html#axzz2ij1AZzon