A report for the ICAEW by Cebr

Q1 2013

 

Economic Insight: Greater China is a quarterly report produced by Cebr, ICAEW’s partner and forecaster. Commissioned by ICAEW, it provides a current snapshot of the region’s economic performance for ICAEW Chartered Accountants and other stakeholders.

Key findings include:

• Global growth as a whole was low last year, but Chinese exports rose by around $150bn. Around two thirds of that was increased exports to Asia, which already accounts for about half of foreign sales for China.
• South America, Africa and the Middle East are also becoming increasingly important markets for China. Overall, this means that rich Western countries are becoming less crucial to Chinese prosperity.
• China has invested heavily in infrastructure, buildings and machinery which should benefit the country in the long term. However, there is a possibility this could create challenges around loan repayment. A wave of bad loans would have an impact on banks’ ability to lend, meaning credit would become scarcer unless the government intervenes.
• The use of the renminbi has grown faster than trade in general, and trades settled in the currency have risen dramatically.  In the second quarter of 1012 alone, CNY671bn of trade was conducted in yuan, although about 90% of trade was still in other currencies

 

James Lee, Regional Director, ICAEW Greater China, said: “Opening the Chinese capital markets will eventually make the yuan more attractive as an international investment currency. However, demonstrating the benefits and communicating effectively with investors will be critical. Activity over the next few years will be crucial in ensuring China’s future prosperity.”

 

For more information, please download the full press release (below) or visit the ICAEW’s micro-site.