China & India. A visual essay. October 10, 2005

Transcription

1 - Chartbook Global Risk Analysis & October 1, A visual essay The - chartbook is a visual essay to depict key similarities and differences between these two emerging economies, which are poised to change the global economic landscape. s GDP per capita is now. times higher than s (in USD PPP terms). Until the early 199s, GDP per capita in and was at comparable levels, but adopted wide-ranging economic reform one decade earlier than. The Chinese economy is much more integrated with the world economy through international trade and investment, which helps to explain its stronger rate of GDP growth during most of the past decades. For its economic development, has relied on industry and on services. s ratios of domestic savings and investment to GDP are roughly double those of s. Editors: J. A.-Mund / N. Brandt / S. Hansakul, Frankfurt Both economies currently enjoy strong external positions, with ample foreign exchange reserves. Higher oil prices are not likely to have a significant adverse impact on external liquidity. and have low external debt as a percentage of GDP, and the ratio of short-term external debt to foreign reserves is low. Despite declining fiscal deficits, the level of public sector debt is a cause for concern, especially in. In particular, interest payments as a percentage of general government revenue are very high in, making the prospect of fiscal consolidation more remote. Excess domestic liquidity presents a bigger challenge to than. M in is heading toward with domestic credit almost 17. This explains the rapid rise in CPI inflation during, on which the Chinese authorities are still keeping a tight rein. Surveys indicate has better corporate governance standards and its companies are more commercially-driven. This explains why, despite s superior economic growth and macroeconomic stability, s rate of return on assets has been much higher, non-performing loans in the banking sector lower, and stock market performance much better. Social indicators reflect generally improving living conditions for the average Chinese. also enjoys superior physical infrastructure, although s availability of skilled workers, especially engineers, is much better regarded. s early steps to liberalise its economy and invest heavily to modernise its physical infrastructure gave it a substantial edge over in terms of income per capita levels. They also made a more attractive destination to foreign investors. However, although started economic reforms only a decade later than, it is far more advanced in its institutional infrastructure and corporate governance. This is reflected in contrasting outcomes: foreign direct investment is considerably lower than in, but returns on investment are better on average. The key to unlock s potential to rival as an FDI destination is a decisive effort by the n authorities to push ahead with reforms. 1

2 GDP & : Real GDP growth & : Nominal GDP % change, yoy 1 USD bn & : GDP per capita (nominal) & : GDP per capita (PPP) USD 1 USD Source: IMF : Nominal GDP vs. GDP based on PPP : Nominal GDP vs. GDP based on PPP GDP based on PPP nom GDP USD bn 7 GDP based on PPP nom GDP USD bn Source: IMF, IIF Source: IMF, IIF

3 GDP and structure of economy & : GDP based on PPP as % of world total in Others % 1% 7% Euro area 1% Source: IMF % 1% : Composition of GDP : Composition of GDP % % Industry 199 Services 1% % % Industry % 199 % % 7% Agriculture 1% % Agriculture % Services Source: DBR Source: DBR & : Gross domestic savings & : Gross domestic investment

4 External sector & : Export of goods & services as % of world total in 1% % Other % Euro area 1% Source: IMF 1% % & : Total merchandise trade & : Exports of goods as as Source: Reserve Bank of, CEIC 199 Source: Reserve Bank of, CEIC & : Merchandise exports & : Merchandise imports USD bn 7 USD bn

5 External sector : Top export partners in, as % of total exports : Top export partners in 199, as % of total exports South Korea.7% Germ any.9%.% 1.% Hong Kong.9%.% Hong Kong 1.1% 199 South Kore a.%.% Germany.% : Top export partners in, as % of total exports : Top export partners in 199, as % of total exports Unite d Kingdom.% Hong Kong.1%.7% United Arab Em ir ate s.% 1.1% United Kingdom.% Germany.% Hong Kong.% % 19.1% Source: Reserve Bank of Source: Reserve Bank of : Key export products % of total exports 1 : Key export products % of total exports Clothing & garments Source: EIU Electrical machinery & equipment Yarn & textiles Non-metallic mineral manuf. Source: EIU Clothing Textile, yarn, fabric

6 External sector : Top import partners in, as % of total imports : Top import partners in 199, as % of total imports.% Taiwan 11.% EU 1.% Taiwan 1.% 199 Hong Kong.% 1.1% 1.% South Korea 11.1%.% EU 1.7% : Top import partners in, as % of total imports : Top import partners in 199, as % of total imports Sw itzerland.% United Kingdom.1%.% Saudi Arabia.% Unite d Kingdom.% % Belgium.1%.% 7.1% Germany 7.% Source: Reserve Bank of Source: Reserve Bank of : Key import products : Key import products % of total imports % of total imports Electrical machinery Source: EIU Crude oil & products Yarn & textiles Basic manufactures Source: EIU Mineral fuels Machines & transport equipment

7 External sector : Trade balance : Trade balance 1 1 USD bn (right) (left) 1 USD bn (right) (left) : Current account balance 1 USD bn (right) (left) : Current account balance 1 USD bn (right) (left) & : FX reserves USD bn Jan- Feb- Mar- Apr- May- Jun- 7

8 External sector : Oil imports : Oil imports 1 1 USD bn (left) % of total imports (right) USD bn (left) % of total imports (right) Source: Reserve Bank of : External debt : External debt 1 1 USD bn (right) (left) USD bn (right) (left) : Short-term debt : Short-term debt 1 1 USD bn (right) as % of reserves (left) USD bn (right) as % of reserves (left)

9 FDI inflows : Net FDI inflows : Net FDI inflows USD bn (right) % yoy (left) USD bn (right) % yoy (left) Source: DBR Source: Reserve Bank of : Top sources of FDI in, in % of total utilised FDI : Top sources of FDI in 199, in % of total utilised FDI Hong Kong.% 1.% South Korea 1.7% EU % Hong Kong 7.% 199 Taiw an 11.%.% 11.% 7.1% EU-1.% : Top sources of FDI in, in % of actual flows : Top sources of FDI in 199, in % of actual flows Mauritius.9% United Kingdom.% 1.% Unite d Arab Em ir ate s 9.% Singapore 9.%.% 199 United Kingdom.% Germany 9.% Mauritius.%.% 9

10 Fiscal accounts : Fiscal balance & total public sector debt : Fiscal balance & total public sector debt Total public sector debt (left) Central gov't fiscal balance (right) Total public sector debt (left) General gov't fiscal balance (right) Source: DBR Source: DBR, Reserve Bank of : Central government revenues & expenditures : Central government revenues & expenditures Source: DBR Central gov't expenditures (left) Central gov't revenues (right) Central gov't expenditures (left) Central gov't revenues (right) Source: DBR, Reserve Bank of & : Interest payments as % of general government revenues 7 (left) (right) Source: Moody's 1

11 Monetary sector and prices : Monetary sector (M) : Monetary sector (M) RMB bn (lef t) (right) 1 1 INR bn (left) (right) Source: DBR Source: Reserve Bank of, DBR : Domestic credit : Domestic credit RMB tr (left) (right) INR tr (left) (right) Source: IFS Source: IFS & : Annual inflation & : Recent inflation trend : WPI, aop : CPI, aop % yoy CPI WPI % yoy Source: DBR - Source: Bloomberg 11

12 Exchange rates & interest rates : Exchange rate (nominal & REER*) : Exchange rate (nominal & REER*) Index, =1 inverted scale Index, =1 inverted scale 1 1 RMB/USD, aop (right) REER (left) * a low er value indicates depreciation 1 1 RMB/USD, aop (right) REER (left) * a low er value indicates depreciation 1 : Base lending rate* : RBI Bank Rate %. % * 1 month w orking capital 1 Source: CMABB. Apr- Apr-1 Apr- Apr- Apr- Apr- Source: Reserve Bank of.. : 7-year generic government bond yield : 1-year government bond yield % % 7 Feb Jun Dec Apr Sep Jun Source: Bloomberg Jan- Jul- Jan- Jul- Jan- Jul- Source: Bloomberg 1

13 Banking sector & financial markets & : Bank return on assets & : NPL ratios % of total loans Source: IMF 1 Source: IMF : Stock market : Stock market 1 BSE National Index, eop Mumbai SENSEX Index, eop Shanghai B-Share Index, eop (right) Shanghai A-Share Index, eop (left) 1 1 Source: Bloomberg Source: Bloomberg 1 & : Bond issuance & : Price earnings ratios* USD bn Source: IMF 1 1 *: Shenzhen A-Share Index; : Mumbai SENSEX Index Source: IMF 1

14 Population & labour force Population: CN, IN, DE, US & : Urban population CN IN DE US millions of people E Source: UN, DBR as % of total 1 Source: World Development Indicators, Workforce, ages 1 - : CN, IN, DE, US & : Labour force participation* CN IN DE US millions of people E Source: UN, DBR % 1 as % of total population, ages 1- Source: DBR, World Development Indicators, & : Female labour force participation & : Skilled labour & engineers Qualified engineering as % of total Source: World Development Indicators, Skilled labor *) Data are based on response from Institute for Management & Development's annual Executive Opinion Survey. High score equals high availability of skilled labour and qualified engineers. 1

15 Social indicators & : Average life expectancy & : Infant mortality* Source: World Development Indicators, years 1 * per 1 live births Source: World Development Indicators, & : Health expenditure in 1 & : Gini coefficient Health expenditure,. Health expenditure per capita in USD Source: World Development Indicators, 1 Source: World Development Indicators, & : Adult literacy* & : Tertiary enrolment rate % * % ages 1 or older Source: World Development Indicators, 1 1 Source: World Development Indicators, 1

16 Infrastructure & : Fixed-line vs. mobile phones per 1 people in & : Internet users per 1 people in Mobile phones 1 17 Telephone mainlines Source: World Development Indicators, & : PCs per 1 people in Source: World Development Indicators, & : Aircraft departures in 7 9 in thousands 1 1 Source: World Development Indicators, 1 Source: World Development Indicators, & : Roads network in 1 & : Electric power in 1 Paved roads, % 91 Transmission & distribution losses, % of output 7 7 Total road netw ork, millions of km Consumption per capita, kw h 9 1 Source: World Development Indicators, 1 Source: World Development Indicators, 1

17 Business environment & investment climate & : Governance indicators* & : Obstacles in doing business indicators Control of corruption Employment law index* Rule of law Regulatory effectiveness Procedures to enforce a contract Government effectiveness Days to start a business Political stability Voice and accountability Number of start-up procedures 1 *) The six governance indicators are measured in units ranging from about -. to., with higher values corresponding to better governance outcomes. Data have been rescaled to -. Source: World Bank Governance Index 1 *) Higher score = more rigid labour laws Source: World Development Indicators, 17