Scenario Planning on China in 2030

BySyndicate J Shibani Gogoi Shiney Gupta Vasanth Arumugam

Contents

Work allocation
Shiney Gupta: introduction

Overview
China officially the People's Republic of China (PRC), located in East Asia is the most populous state in the world, with over 1.3 billion citizens. China has become the world's fastest-growing major economy, and the world's largest exporter and secondlargest importer of goods. It is the world's second-largest economy, after the United States, by both nominal GDP and purchasing power parity (PPP). The PRC's success has been primarily due to manufacturing as a low-cost producer. This is attributed to a combination of cheap labor, good infrastructure, relatively high productivity, favorable government policy, and a possibly undervalued exchange rate.

Contd
For China, strong economic growth started in the1970-80s with the introduction of market orientated reforms. The market reforms enabled China to capitalize on its comparative advantage in an international market. China began to become a market in its own right. The Chinese economy is highly energy-intensive and inefficienton average, industrial processes in China use 20%100% more energy than similar ones in OECD countries. Energy consumption is expected to increase by 50 percent by the year 2030 and China is projected to overtake the USA as the worlds leading energy producer in 2012.

Contd
China currently has the most cellphone users of any country in the world, with over 800 million users as of July 2010 and also has the world's largest number of internet and broadband users. China also possesses the worlds longest high-speed rail network. In 2011, China unveiled a prototype train capable of reaching speeds of 310 mph (500 km/h), the first ultrahigh-speed train developed solely by its domestic railway industry. The state still dominates in strategic "pillar" industries (such as energy and heavy industries) In an effort to reduce pollution from coal-burning power plants, China has been pioneering the deployment of pebble bed nuclear reactors, which run cooler and safer than conventional nuclear reactors, and have potential applications for the development of a hydrogen economy.

 Currently, China makes up for 9.5% of world trade which is approximately $3.6 trillion. The number predictably will overtake the U.S. in 2015 and become 16.7% of world trade ($24.9 trillion) in 2030. The country was not affected by the global financial crisis which put negative impact on the West. The Chinese government has out stress in building economy and moving ahead in a steady pace. Although India could not make itself in the top three countries by trade in 2010, it will reach 8.4% of world trade in 2015. The current world leader in trade is predicted to have 7.6% of world trade in 2030 and give floor to India and China with 5.9%.

4 factors that bolster Chinas economic growth

Social & Economic Reforms

Urbanization

FDI

Education & Technology

 Population Tradition of confucianism Political homogeneity

Population Income distribution Technological growth

Strengths

Weaknesses

Opportunities

Threats
Sovereignty issues Japanese military build-up Overheated economy

To become economic leader of the pacific rim Buy up the reserves of the world natural resources while prosperous Make political and economic gains while prosperous

Outlook for 2012

Strengths
One party system Population Flat tax system No bail out policy Strategic alliance policies Non military involvement

Weaknesses

Naval power Population Lac of political choice Overheated real estate market Tradition of xenophobia Rapid gdp growth Brain drain

Threats

Japan India Real estate meltdown Economic disparity between countryside and cities Unrest among non-han groups

Who would be the next giant economy in 2030

China remains on target to take the number-one slot from the US between 2020 and 2030, after leapfrogging Japan

China to dominate global trade by 2030

China will overtake the US and dominate global trade within two decades, according to a new PwC report.

Economist Arvind Subramanian who has calculated that China passed the USA in PPP in 2010, expects that by 2030 the Chinese economy to be twice as large as that of the US (in purchasing power parity dollars).

Chinas lead will not be confined to gross domestic product. China is already the worlds largest exporter of goods. By 2030, Chinas trade volume will be twice that of the US. And, of course, China is also the net creditor to US.

 The combination of economic size, trade and creditor status will confer on China a kind of economic dominance that the US enjoyed for about five to six decades after World War II and that Britain enjoyed at the peak of the empire in the late nineteenth century.

This will matter in two important ways. Americas ability to influence China will be seriously diminished, which is already evident in Chinas unwillingness to change its exchange rate policy despite US urging. And the open trading and financial system that the US fashioned after World War II will be increasingly Chinas to sustain or undermine.

 PwC economists believe that the trade landscape will undergo fundamental changes over the next 20 years as the emerging economies increase their domination of the top sea and air freight routes by 2030. In the report, the economists have employed modelling techniques to project bilateral trade between 25 economies in the years leading up to 2030. It has earmarked four key areas that could present significant opportunities for transport and logistics firms: i) Trade within the Asia-Pacific region ii) Trade between emerging and developed economies iii) Trade between emerging economies, such as parts of Asia and Latin America iv) Trade between China and Africa

 Long-term planning and careful execution are essential when entering new markets. China has moved into a dominant position, appearing in 17 of the top 25 trade pairings. And into the mix come emerging countries such as Indonesia, Malaysia, Nigeria, Thailand, Saudi Arabia, Brazil, India and UAE.

China in 2030

Automobile sector
Chinas Automobile Production

Infrastructure

Carbon emission & Electricity production

Electricity Production in China, 1990-2030

Fuel consumption & CO

Water Crisis

Forecast summary passenger traffic development: 2009 to 2029

Forecast summary Annual traffic growth: 2009 to 2029

Growth Model

Why the US Will Still be the Only Superpower in 2030

A genuine superpower does not merely have military and political influence, but also must be at the top of the economic, scientific, and cultural pyramids. Thus, the Soviet Union was only a partial superpower, and the most recent genuine superpower before the United States was the British Empire. To match the US by 2030, China would have to : 1) Have an economy near the size of the US economy. 2) Create original consumer brands that are household names everywhere in the world (including in America), such as CocaCola, Nike, McDonalds, Citigroup, Xerox, Microsoft, or Google. 3) Have a military capable of waging wars anywhere in the globe (even if it does not actually wage any).

Contd 4) Have major universities that are household names, that many of the worlds top students aspire to attend. 5) Attract the best and brightest to immigrate into China, where they can expect to live a good life in Chinese society. 6) Become the nation that produces the new inventions and corporations that are adopted by the mass market into their daily lives. 7) Be the leader in entertainment and culture. 8) Be the nation that engineers many of the greatest moments of human accomplishment. 9) Be the nation expected to thanklessly use its own resources to solve many of the world's problems. 10) Adapt to the underappreciated burden of superpowerdom the huge double standards that a benign superpower must withstand in that role.

Conclusion
How far China has come and how much it might achieve, but nonetheless, there is no other country that will be a superpower on par with the US by 2030. This is one of the safest predictions The Futurist can make.

Thank you