GLOBAL CRISIS: Impact On Growth StrategiesArvind Virmani(views are personal)

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10 March, 2010AV*IntroductionGlobal Crises: Worst since Great DepressionSlower Growth of World GDP, TradeExport oriented economies will looseDevelopment strategy/Growth ModelE, S E Asia: FDI-Export or Public Investment-Export led growth modelChinas Growth/Development model

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11/20/2009EconomicCrisesEcPower*IntroductionIndia: Domestic Entrepreneur led growthExport Neutrality, Investment neutralityContinue Policy, Institutional ReformIndia has to speed up existing approachCrisis originating AEs (USA, UK..)Credit/Debt(de-leveraging) -> GrowthFiscal Constraints: Ec power Energy/Oil rich: Return to normal growthRussia, Brazil

EconomicCrisesEcPower

19 March, 2009CPR: AV*Global Financial & Economic CrisisGrowth bubble => Below trendGDP medium Term: Lower trend growth due to higher public debt?Trade/Exports: Globalisation of Production (fragmentation and dispersal)Trend reaching completion?Bubble element => Compensated by below trendHeightened risk and risk perception

10 March, 2010*AV

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20th August 2010TripolarInstPeace:av*Fiscal ImpactFiscal Deficits: USA, EU (Japan)Foreign Aid, Military expendituresChina: Fiscal Surplus, CASGlobal rebalancing(US CAD)?China: Domestic caution (Ec-tech)External Assertion(Pol-Mil nationalists) S China Sea, Arunachal-Kashmir

TripolarInstPeace:av

20th August 2010TripolarInstPeace:av*Impact on ExportsGlobal GDP & Import slowdownExport oriented => Export neutralDevelopment strategy, Growth modelE, S E Asia: FDI-Export or Public Investment-Export led growth modelIndia: Domestic Entrepreneur led grExport Neutrality, Investment neutralityContinue Policy, Institutional Reform

TripolarInstPeace:av

10 March, 2010AV*Growth Model: CHINAGoal / Objective : Growth MaximizationMeans: Maximize InvestmentFoundation of GrowthSocialist Owned Enterprise =>100% Reinvestment of returns (0 dividends) => High investment (Kuijs)Govt: Low tax rates, Low social expenditures, Solid investment in (quasi) Public goodsEngine of Growth: Exports and FDI/Public InvestmentExport Machine: Comprehensive Support till full establishment, support at any sign of troubleInitial (pre Asian crisis): FDIPost Asian Crisis: Public/Infrastructure Investment

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10 March, 2010AV*Socialist Control And SubsidiesCapital IntermediationDomestic Saving Banks: Public Sector or Govt. Depts?Controls used to provide indirect subsidies forFDI (Capital/Skill intensive- KI/SI) Exports: Vent for Surplus, export at any costCap cost 0 to supplier of CG, Intermediate, materialsSOE production, investment (inefficiency)Infrastructure: Supply & Pricing (Capital subsidy) to ensure FDI (technology, expertise, export marketing)Flip side: Controls subject to CorruptionUseful in catch up phase, not at the frontier (HIC)

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10 March, 2010AV*Strategic Weakness and RisksWeakness: Other side of coin of past growth drivers

Govt/Socialist Ownership: Excess capacity (e.g. infrastructure), Falling returns, Rising NPAs, Falling public saving/investment

Rising export share: Vent for Surplus=>Falling unit values; Rising subsidies (NPAs)

Knife-edge character of FDI-export modelAsian crises (euphoria risk)Over dependence on FDICenter and Periphery (Prebisch-Singer)

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Share of World Exports10 March, 2010AV*

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Country Shares of World Exports10 March, 2010AV*

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Export-GDP RATIOS10 March, 2010AV*

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Balance of Payments and Exchange Rate10 March, 2010AV*

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Demand Contribution To Growth: China and India10 March, 2010AV*

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Consumption-GDP RATIOS10 March, 2010AV*

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Manufacturing: Export-Gdp10 March, 2010AV*

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Chart1

0.01693789150.3607089941

-0.02937450380.3077439202

-0.00721579990.4463443384

0.06197862760.4215765031

0.04077481540.3604288142

0.10971564530.3958007452

0.11170492710.3937185558

0.08154336720.4013755489

0.08414772460.4590830864

0.07809126010.4506813622

0.07571297230.5194523814

0.07775824680.6083638685

0.11243679310.703517846

0.18733860420.7582011328

0.24353750510.799004345

0.28733374520.8195944557

Mf:ExNet/Gdp

Mf:Exp/Gdp

fig

Figure: Ratio of Gross and Net Manufactured exports to GDP from manufacturing

Figure: Balance of Payments

fig

0.01693789150.3607089941

-0.02937450380.3077439202

-0.00721579990.4463443384

0.06197862760.4215765031

0.04077481540.3604288142

0.10971564530.3958007452

0.11170492710.3937185558

0.08154336720.4013755489

0.08414772460.4590830864

0.07809126010.4506813622

0.07571297230.5194523814

0.07775824680.6083638685

0.11243679310.703517846

0.18733860420.7582011328

0.24353750510.799004345

0.28733374520.8195944557

Mf:ExNet/Gdp

Mf:Exp/Gdp

trd

2.33.13.1

2.13.23.6

1.11.3-0.4

-1.7-1.90.3

1.31.45.5

2.50.23.1

2.30.83.7

4.93.93.8

4.63.10.6

3.31.90.8

2.91.70.9

2.61.33.6

32.45.2

2.72.87.1

3.13.610.7

67.29.2

8.29.49.3

9.611.314.1

Balance on goods

Current account balance

Overall balance

gdpk

2.33.13.14.7832

2.13.23.65.3234

1.11.3-0.45.5146

-1.7-1.90.35.762

1.31.45.58.6187

2.50.23.18.3514

2.30.83.78.3142

4.93.93.88.2898

4.63.10.68.279

3.31.90.88.2783

2.91.70.98.2785

2.61.33.68.2771

32.45.28.277

2.72.87.18.277

3.13.610.78.2768

67.29.28.1943

8.29.49.37.9734

9.611.314.17.6075

Balance on goods

Current account balance

Overall balance

ExRateAvg(Y/$)

gdp

50.614.136.13.4

49.315.436.13.6

48.315.637.51

46.415.544.5-1.9

45.315.342.21.3

46.713.841.91.6

47.71440.42.1

46.814.237.94.5

46.514.637.14.3

46.715.336.72.8

46.215.835.12.4

44.916.136.32.1

43.715.937.92.3

41.815.241.22

39.914.543.32.6

38.614.143.35.6

3814.244.57.8

37.114.444.29.3

Private consumption

Government consumption

Gross domestic capital formation

Net Exports: Goods & Services

bop

EXTERNAL TRADE (mil US Dollars; cy)

199019911992199319941995199619971998199920002001200220032004200520062007

Exports, fob620917191084940917441210061487801510481827921837121949312492032661003256004382285933267619539689361218015

Imports, cif533456379180585103959115614132084138833142370140237165699225094243550295170412760561229659953791461955818

Trade balance874681194355-12215539216696122154042243475292322410922550304302546832097102001177475262196

Exports18.215.818.18.031.923.01.521.00.56.127.86.822.434.635.428.427.225.7

Imports-9.819.626.329.011.214.25.12.5-1.518.235.88.221.239.836.017.619.920.8

Exports, by HSC

Animal and animal products ... ... 2790 2563 3620 4485 4183 4203 3842 3814 4355 4619 4730 5271 6301 6700 7120 7397

Vegetable products ... ... 4280 4371 5458 4139 4088 4905 4922 4570 5202 4920 5861 7579 6605 8282 8897 11269

Animal or vegetable fats ... ... ... 206 ... ... ... ... ... ... ... 118 108 128 158 284 391 327

Prepared foodstuffs ... ... 3295 3612 3837 4627 5075 4655 4285 4326 5166 5791 6701 7660 9412 11196 13802 16477

Mineral products ... ... 5617 4874 5014 6721 7375 8599 6508 5854 9201 9842 9839 12735 16573 20920 21398 23578

Chemical products4123439857698421842593939654100041163912794146141852724580318533775351115

Plastics and rubber1829219831244281442158026174630079498321100271253216908232862963836523

Hides and skins291334434813564353886268591458837505838993331157313668156021538216367

Wood and wood products12543566435960647570991211434

Wood pulp products5256307451108102513241345129118521981233930303797511468969199

Textiles and textile articles24617260643421735878349654322440477412704937949829578497334688767107661138102165821

Footwear, headgear514462917389815985461018810270105631195812256134051562918417227732625330583

Articles of stone, plaster, cement, asbestos1300132919932663263832403183341340474202546169349336122571554418296

Pearls, precious or semiprecious stones, metals100588114991752127817872095252825342403284332954463553368948121

Base metals and articles thereof455146706832120791039613385126281257816608160951890725120437415708685317115526

Machinery, mechanical appliances, electrical equipment11543139071971527667310653827043615520857288584878115921172334247784322008414065528939

Transportation equipment2203192628234116417952736392658293379380105481559220999284103843154996

Instrumentsmeasuring, musical232926843569470351886321656268848536846595231310519087283983563040727

Arms and ammunition190283959

Miscellaneous manufactured articles t5192610282109482101461270813468144921777918302233342848036666470235516069013

Works of art ... ... 43 43 47 44 51 75 55 41 23 21 23 21 30 45 65 75

Exports, by principal commodity

1. Cotton yarn and cloth 1993 2199 2448 2645 3193 3990 3393 3120 3110 3240 3716 3934 5264 6842 7379 8398 9740 9359

2. Aquatic products 1316 1181 1366 1254 1815 2087 1738 1888 1734 1945 2267 2591 2871 3332 4052 4347 4740 4753

3. Crude petroleum 3402 2889 2774 2409 2000 3030 2789 2734 1523 752 2128 1383 1296 1661 1325 2696 2737 1687

4. Coal 654 748 743 702 771 1011 1110 1132 1068 1084 1459 2667 2532 2750 3811 4272 3681 3295

5. Cereals 544 1075 1547 1473 1532 80 187 1177 1494 1186 1694 1098 1718 2657 828 1519 1154 2696

Imports, by HSC

Animal and animal products ... ... 510 549 816 865 953 917 1055 1729 2280 2355 2709 3308 3735 4258 4663 6023

Vegetable products ... ... 1987 1277 1612 4140 3406 2330 2502 2668 4321 4749 4063 7174 11031 11161 10976 15053

Animal or vegetable fats ... ... 540 516 1827 2623 1695 1678 1488 1359 1023 776 1580 2925 4209 3311 3921 7575

Prepared foodstuffs ... ... 1093 841 1038 1926 2410 2564 1947 1286 1811 1883 1979 2107 2810 3458 4074 4543

Mineral products ... ... 4781 7157 5530 7229 9234 13010 9337 11578 24522 22474 24478 37703 67101 92293 123544 161969

Chemical products71755608696310403104131030211035140601810019071243023178942602505835622168523

Plastics and rubber5309555369429000102511145611574130781636217330198462474532798388934627754911

Hides and skins

Wood and wood products1420159116381576157119891982294137403491416946675235574664958013

Wood pulp products21842035266533434237498150115930696267587374863010306110031189314528

Textiles and textile articles1011496681285815819166841721514390139231656416259169931929223007234452567825376

Footwear, headgear506513454451456454377380409430400487608671775944

Articles of stone, plaster, cement, asbestos457550733948101210461148130717801878208226283248338439634347

Pearls, precious or semiprecious stones, metals8608491032102710491378123520632419988133218472655347046166257

Base metals and articles thereof7844165401326412166126711252212467150932061121913262813938448548565935979577694

Machinery, mechanical appliances, electrical equipment24462358474165246996490214675850985630708517796416125388175409233914271119328185381048

Transportation equipment9703105481559219472198352972035014

Instrumentsmeasuring, musical29913380367045064644467249275904819110654144212617341335511886007571140

Arms and ammunition35755415710618612736433322

Miscellaneous manufactured articles u75880189110431103821741788927984114315911961210324233399

Works of art ... ... 3 ... ... ... ... ... ... ... ... ... ... ... ... 7 12 10

1. United States 5314 6198 8599 16977 21421 24744 26731 32744 38001 42003 52162 54395 70064 92633 125155 163348 203898 237822

2. Hong Kong, China 27163 32138 37511 22068 32365 36004 32904 43798 38782 36891 44520 46503 58483 76289 100878 124505 155435 185651

3. Japan 9210 10252 11699 15782 21490 28466 30888 31820 29718 32399 41654 45078 48483 59423 73514 84097 91773 101697

4. Korea, Republic of 433 2179 2438 2860 4376 6688 7527 9136 6266 7808 11293 12544 15508 20096 27818 35117 44558 55553

5. Germany 2062 2356 2447 3971 4762 5672 5852 6493 7350 7778 9278 9759 11382 17536 23756 32537 40302 49554

6. Netherlands 943 1063 1200 1609 2272 3233 3539 4410 5162 5412 6687 7294 9070 13505 18519 25876 30843 41485

7. United Kingdom 664 728 923 1928 2414 2791 3199 3821 4633 4879 6310 6786 8059 10824 14968 18983 24159 32447

8. Singapore 2016 2014 2031 2245 2563 3500 3753 4321 3901 4502 5761 5795 6969 8869 12687 16716 23188 29429

9. Russian Federation 2337 2692 1578 1674 1693 2035 1833 1497 2233 2715 3522 6035 9103 13211 15829 27788

10. Italy 873 932 1096 1306 1591 2067 1838 2242 2573 2929 3802 4005 4828 6654 9226 11697 15981 21087

1. Japan 7656 10032 13686 23303 26319 29007 29190 28990 28307 33768 41520 42810 53489 74151 94372 100468 115811 134291

2. Korea, Republic of 236 1066 2623 5360 7318 10288 12485 14885 15021 17228 23208 23396 28581 43135 62250 76874 89819 104500

3. United States 6591 8010 8903 10633 13977 16123 16179 16290 16997 19489 22376 26221 27251 33939 44773 48995 59326 71230

4. Germany 2980 3049 4023 6056 7136 8035 7325 6184 6998 8336 10411 13695 16434 24341 30368 30668 37888 44777

5. Malaysia 852 804 830 1084 1623 2065 2246 2485 2675 3606 5480 6206 9295 13987 18174 20108 23577 28633

6. Australia 1361 1556 1671 1945 2448 2585 3438 3245 2693 3607 5099 5430 5852 7301 11553 16147 19195 25290

7. Singapore 849 1063 1238 2647 2481 3398 3613 4385 4226 4061 5060 5143 7054 10484 13997 16531 17675 18615

8. Russian Federation 3512 4986 3466 3799 5156 4084 3627 4223 5769 7959 8405 9726 12130 15886 17539 19166

9. Thailand 386 422 424 601 864 1611 1890 2005 2423 2780 4380 4713 5599 8827 11542 13994 17962 21966

10. Philippines 90 130 155 213 272 276 372 327 517 908 1677 1945 3217 6306 9059 12870 17676 23101

Manufactures: Net export3159-7233-163118517144424357145899353244069341117433875161988585176566278898405523

(% of GDPfrom manuf)Mf:ExNet/Gdp1.7%-2.9%-0.7%6.2%4.1%11.0%11.2%8.2%8.4%7.8%7.6%7.8%11.2%18.7%24.4%28.7%

Import6411583010102519107435113218113612115878138549181315196178254283352237465692538036636118751196

Export67274757771008881259521276601571831617771738732220082372952976704038565542777146029150161156719

ManufExprt(% of GDPmf)Mf:Exp/Gdp36.1%30.8%44.6%42.2%36.0%39.6%39.4%40.1%45.9%45.1%51.9%60.8%70.4%75.8%79.9%82.0%

pop

NATIONAL ACCOUNTS : GDP by industrial originTable : Contribution of demand components to growth of GDPmp

ChinaChinaIndiaIndia

19901991199219931994199519961997199819992000200120022003200420052006200702/9007/0202/9107/02

GDP: Total3681401945905233591865637219789185069153992210745117231289514197156741741419486100%100%

1029105311031155120112611325137214201459149515361581162017231812190319736.9%5.1%

Mining

1091.81249.11513.91818.22161.82464.42772.53085.83010.236464003.44351.74786.85399.56020.56718.87585.68609.645.9%49.2%

Electricity, gas, and water

Construction206.4226.2273.7323367.3412.8447.9459.6500.9522.4552.2589.8641.7719.3777.6875.6995.511215.4%6.2%

Trade415.9434.6491.5532.8583.4628.4673.6743.7801.7874.69631052.51157.81285.11389.21497.61626.41829.79.2%8.7%

Transport and communications228.6252.8278.4313.2339.8377.2418.6457.2505.6567.3616.1670.3717.9761.7872.1970.71051.31177.46.1%5.9%

Finance

Public administration

835.8928.91078.31225.213851528.41671.51867.52027.42207.52439.52708.330273335.33673.24085.54551.75179.727.2%27.7%

4.20.9-3-17.2-19.5-116-114.7-139.5-142.7-153.5-121.4-151.1-122.5-65.1-33.276.785.2147.8

GNI at 2000 market prices3684.740204586.95215.35898.564477104.67751.28363.58999.1980010593.811600.312829.914164.215750.617498.919633.8Average contribution during period

ChinaChinaIndiaIndia

2002/19902007/20022002/19912007/2002

Private consumption186319802216243026823063344436893954427845864822512153965669604466137220Private Consumption40.5%27.0%56.5%45.8%

Government consumption521620717813908905101111211246140015661731186319572060221724752801Govt Consumption16.7%12.1%11.8%6.1%

Gross domestic capital formation133014521720232824982750292029943156336334843897443953136142678277578610Gross Investment38.7%53.7%30.2%57.0%

Net Exports: Goods & Services12814447-1017810814835536625923922827225536287213681811Net Exports1.8%19.8%3.8%-15.2%

3681401945905233591865637219789185069153992210745117231289514197156741741419486100%100%

Average gr rt

GDP3.89.214.214.013.110.910.09.37.87.68.48.39.110.010.110.411.111.910.310.7

Agriculture7.32.44.74.74.05.05.13.53.52.82.42.82.92.56.35.25.03.73.94.5

Industry3.213.921.219.918.413.912.110.58.98.19.48.49.812.711.111.713.013.412.712.4

Services2.38.912.412.211.19.89.410.78.49.39.710.310.49.510.110.512.112.610.411.0

Implicit GDP deflator0.510.540.590.680.810.930.991.000.990.981.001.021.031.051.131.171.221.28

Avg. Contribution during2002/19902007/2002

Agriculture6.9%5.1%

Manufacturing45.9%49.2%

Construction5.4%6.2%

Trade9.2%8.7%

Transport and communications6.1%5.9%

27.2%27.7%

GDP growth rate (CY)200720082009

(act)(est)(frcst)

China13.0%9.0%6.0%+/- 1%

India9.3%7.3%6.0%+/- 0.75%

Difference (Ch-Ind)3.7%1.7%0%+/- 0.75%

M&Pr

Average % Gdp

1990 to2002 to

Calender Year =>19901991199219931994199519961997199819992000200120022003200420052006200720072007

1867217826923533482060797118789784408968992210966120331358215988183872119224953

Agriculture d5065345876969571214140214441482147714951578165417382141230724042810

Mining

Manufacturing e68680910291419194824952945329234023586400343584743549565217723913110737

Electricity, gas, and water

Construction86102142227297373439462499517552593647749869101311851401

Trade1422092743204345476387318098799631079119513481525135415471817

Transport and communications117142169217279324378415466518616687749791930108412481460

Finance

Public administration

Others f330.2383493.3654.3905.31126.71316.51552.51783.519912292.32670.43045.53461.24000.74906.35676.96728

Net factor income from abroad5.14.51.4-7.4-8.9-98.3-103.4-132-137.8-148.8-121.4-158.7-123.7-64.9-29.287.1120.8195.1

GNI at current market prices1871.82182.62693.735264810.85981.17014.27806.18302.48847.9980010806.811909.613517.415958.718473.921313.225148.1

Structure of Output (% of GDP )

Agriculture27.124.521.819.719.92019.718.317.616.515.114.413.712.813.412.511.311.3

Industry41.341.843.546.646.647.247.547.546.245.845.945.244.84646.247.548.748.6

Services31.533.734.833.733.632.932.834.236.237.83940.541.541.240.439.94040.1

1867217826923533482060797118789784408968992210966120331358215988183872119224953

Private consumption94510731300164121842837339636923923419245864921525756836383709180489246

Government consumption26433642054974083899611221236137215661767191220622320260130123587

Gross fixed capital formation4836078511331173120892405259728573053338437764363534965127746901510522

Increase in stocks192180157241303459474400275242100202193247405210425503

Exports of goods and services356453435499102512301427171817171829231424783024401454286858846410149

Less: Imports of goods and services2913754075679621130128113631354157620752246274537465020583567987830

Statistical discrepancy-82-95.7-64.2-160.4-202-242.3-298.7-268.6-212.9-144.846.568.328.2-27.2-40.2-283.6-972.8-1224

Structure of Demand (% of GDP )

Private consumption50.649.348.346.445.346.747.746.846.546.746.244.943.741.839.938.638.037.144.339.1

Government consumption14.115.415.615.515.313.814.014.214.615.315.816.115.915.214.514.114.214.414.914.5

Gross domestic capital formation36.136.137.544.542.241.940.437.937.136.735.136.337.941.243.343.344.544.240.043.3

Net Exports: Goods & Services3.43.61.0-1.91.31.62.14.54.32.82.42.12.32.02.65.67.89.33.15.5

Exports of goods and services19.020.816.114.121.320.220.121.820.320.423.322.625.129.634.037.339.940.725.236.3

Imports of goods and services15.617.215.116.020.018.618.017.316.017.620.920.522.827.631.431.732.131.422.030.8

Investment Financing

Gross domestic capital formation67578710091572203425472879299731313295348439774557559669177956944011025

Gross national saving66477898013431898231826402994317932963701418948485918744589901048712609

Gross domestic saving65876997213431896240527263083328134043770427848645837728586951013312120

Net factor income from abroad5.14.51.4-7.4-8.9-98.3-103.4-132-137.8-148.8-121.4-158.7-123.7-64.9-29.287.1120.8195.1

Net current transfers from abroad i1.34.46.46.811.51217.742.635.440.952.270.3107.5146189.5208232.8294.2

Gross domestic saving35.235.336.138.039.339.638.339.038.938.038.039.040.443.045.647.347.848.640.746.5

Gross national saving35.635.736.438.039.438.137.137.937.736.837.338.240.343.646.648.949.550.540.747.8

Gross domestic capital formation36.136.137.544.542.241.940.437.937.136.735.136.337.941.243.343.344.544.240.043.3

At Current Market Prices Yuan

Per capita GDP16331881229829814022501958166388676571297828859293681051012300140621612218885

Per capita GNP16371884229929754014493857316314665570347732846892721046012277141291621419033

fiscal

BALANCE OF PAYMENTS million US Dollars; calendar year

199019911992199319941995199619971998199920002001200220032004200520062007

Current account11997132706401-119037658161872423696331471211142051917405354224587568659160818249866371833

Balance on goods916587435183-10654729018050195354622246614359803447434017441674465258982134189217746315381

Exports515195891969568756591025611281101510771826701835291947162491312660753256514382705933937624849696821220000

Imports-42354-50176-64385-86313-95271-110060-131542-136448-136916-158735-214657-232058-281484-393618-534410-628295-751936-904618

Services and income2558369763-2421-969-17866-14422-14402-19421-19810-20266-25104-21729-16411-132211244292117784

Credit88711069714844152882210424321279183028029480345784298142725480896282882978113363143239205237

Debit-6313-7000-14781-17709-23073-42187-42340-44682-48901-54388-63247-67829-69818-79239-96199-112119-140318-187453

Current transfers2748301155117213371434212951434278494363118492129841763422898253852919938668

Credit3768901206129017701826236854774661536768619125137951848224326277353157842646

Debit-102-60-51-118-433-392-239-334-382-424-550-632-811-848-1428-2349-2378-3978

Capital account-21-47-26-35-54-50-48-69410240203099

Financial account32558032-2512347432644386753996721036-62755205195834829323405277411072958862601770410

Direct investment2657345371562311531787338493806641674411183697837483373564679047229531316782160265121418

Portfolio investment-241235-573050354379017446942-3733-11234-3991-19406-103421142719690-4933-6755818672

Other investment8394344-7350-2691-26864036157-27580-43660-20540-3153516879-4107-588237908-402613309-69680

Net errors and omissions-3134-6748-8252-9804-9775-17812-15566-22254-18724-17788-11893-485677941842227045-16766-1287716402

Overall balance1211814554-210217673052722481316433572464268505105484732575507117023206364207016247025461744

Reserves and related items-12118-145542102-1767-30527-22481-31643-35724-6426-8505-10548-47325-75507-117023-206364-207016-247025-461744

Balance of Payments (% of GDP at current market prices)26.4

Exports13.214.414.212.318.317.617.619.218.018.020.820.122.426.730.734.036.537.2

Imports-10.9-12.3-13.2-14.1-17.0-15.1-15.4-14.3-13.4-14.7-17.9-17.5-19.4-24.0-27.7-28.0-28.3-27.6

Balance on goods2.32.11.1-1.71.32.52.34.94.63.32.92.63.02.73.16.08.29.6

Current account balance3.13.21.3-1.91.40.20.83.93.11.91.71.32.42.83.67.29.411.3

Overall balance3.13.6-0.40.35.53.13.73.80.60.80.93.65.27.110.79.29.314.1

Total30209443082123022999535607603610767614336314981215833616885621869829520241222561857482558810725641534354

Gold, national valuation6236346106126466606376016246085783093407440744074407440744074

Foreign exchange28594426641944321199516207357910502913989014495915467516557421216528640740325160993281887210663401528250

Reserve position in the Fund430433758704755121613962270355323121905259037233798332013911081840

SDRs56257741948453958261460267674179885199811021247125110681192

End of period5.225.435.755.808.458.328.308.288.288.288.288.288.288.288.288.077.817.30

ExRateAvg(Y/$)4.785.325.515.768.628.358.318.298.288.288.288.288.288.288.288.197.977.61

Total debt outstanding and disbursed55301602597242885928100457118090128817146697144007152085145729184820186132208452247701281612322845...

Long-term debt455154947958663706328297495764103410115233126667136905132649128520120452120359131931133345149468...

Public and publicly guaranteed455154947958463700768239194674102260112821994249921794860917768861385329897738285385802...

Private nonguaranteed200556583109011502412272433768837789367443183935030421585049263666...

Short-term debt 9317 10780 13765 15296 17483 22325 25407 31464 17340 15180 13080 56300 65680 88093 115770 148267 173377 ...200556583109011502412272433768837789367443183935030421585049263666...

Use of IMF credit469...

External debt as % of GNI15.51617.319.61816.515.315.614.414.212.314.212.912.812.812.512.2...

Total long-term debt as %of total debt82.382.18182.282.681.180.378.688909169.564.757.753.347.446.3...

Short-term debt as % of total debt16.817.91917.817.418.919.721.41210930.535.342.346.752.653.7...

Debt service as % of exports of goods and services11.711.910.211.18.99.98.78.58.611.79.37.98.37.33.43.12.5...

Debt service (mil US Dollars; transactions during the year)

Principal repayments on long-term debt331941195213672763439070102601152611209198351992516643247152986916289208481812225407

Interest on long-term debt253429522708263038444657468555535575588759996160423244994004321137147003

Interest on short-term debt64975469780994813408111365165111401168173521392622296333026041...

Average terms of new commitments

Interest (% per annum )7.56.16.25.55.56.56.66.56.166.65.95.73.53.84.76.2...

Maturity years16.618.414.91415.611.810.110.1171615.814.517.115.514.41418.5...

Grace period years3.94.83.53.952.92.93.23.43.12.54.135.96.94.84.3...

Grant element (%)15.625.119.322.125.415.414.214.822.221.617.322.525.239.738.128.322.8...

Output

POPULATION and Labour Force

199019911992199319941995199619971998199920002001200220032004200520062007

Total population million; as of 31 December1143.31158.21171.71185.21198.51211.21223.91236.31247.61257.91267.41276.31284.51292.31299.91307.61314.51321.3

Population density persons per square kilometer119121122123125126127129130131132133134135135136137138

Population annual change, percent1.41.31.21.11.11.1110.90.80.80.70.60.60.60.60.50.5

Urban population percent of total population26.426.927.52828.52930.531.933.434.836.237.739.140.541.84343.944.9

653.2660.9667.8674.7681.4688.6697.7708720.9727.9739.9744.3753.6760.8768.2778.8782.4786.5

647.5654.9661.5668.1674.6680.7689.5698.2706.4713.9720.9730.3737.4744.3752758.3764769.9

Agriculture389.1391387376.8366.3355.3348.2348.4351.8357.7360.4365.1368.7365.5352.7339.7325.6314.4

Manufacturing86.288.491.19396.19897.696.183.281.180.480.883.189.6............

Others172.1175.5183.5198.3212.1227.3243.7253.7271.4275.2280284.3285.6289.3............

3.83.53.64.24.85.25.55.85.75.866.87.78.88.38.48.58.3

Unemployment rate c percent2.52.32.32.62.82.933.13.13.13.13.644.34.24.24.14

Labor force annual change, percent17.31.21111.11.31.51.811.60.61.20.911.40.50.5

Source: Asian Development Bank (27 august 2008)

Prices and Money

199019911992199319941995199619971998199920002001200220032004200520062007

PRICE INDEXES period averages

Consumer (national) 1985 = 100165.2170.8181.7208.4258.6302.8327.9337.1334.4329.7331333.3330.6334.6347.7354359.3376.5

Urban 1978 = 100222233.3253.4294.2367.8429.6467.4481.9479472.8476.6479.9475.1479.4495.2503.1510.6533.6

Retail 1978 = 100207.7213.7225.2254.9310.2356.1377.8380.8370.9359.8354.4351.6347346.7356.4359.3362.9376.7

Implicit GDP deflator 2000 = 10050.754.258.767.581.492.698.6100.199.298100102.1102.6105.3112.6117.3121.7128.1

Price Index annual % change

Consumer price index3.13.46.414.724.117.18.32.8-0.8-1.40.40.7-0.81.23.91.81.54.8

Implicit GDP deflator5.86.88.215.120.613.76.41.5-0.9-1.32.12.10.62.66.94.23.75.2

MONEY AND BANKING l (bil Yuan; end of period)

Money supply (M1)695863.41173.11628.12054.12398.72851.53482.73895.44583.85314.75987.27088.28411.99596.910727.912603.615256

Currency in circulation264.4317.8433.6586.5728.9788.5880.21017.81120.41345.61465.31568.91727.81974.62146.82403.22707.33037.5

Demand deposits (excluding govt deposits)430.6545.6739.51041.61325.21610.21971.32464.927753238.23849.54418.35360.46437.37450.18324.79896.312218.5

Quasi-money834.3961.11261.31797.925383676.447585616.96554.57406.18146.3984311412.513710.415813.719147.721956.825088.2

Money supply (M2)1529.319352540.334884692.46075.17609.49099.51045011989.81346115830.218500.622122.325410.729875.634560.340344.2

Foreign assets (net)103.8145.6168.5222.3506.4637921.41366.11504.21702.82012.42642.53174.63773.35534.97559.610086.513775.1

Domestic credit1668.92002.724503481.14310.45333.466417868.19442.110580.71173113301.517262.420628.422526.224836.728873.833965.9

Claims on govt sector42.158.2101.1118.4133.3166.7218161.7484.5587.7587.61101.61333.21317.91549.61519.715352820.8

Claims on private sector m1626.81944.52348.93362.74177.15166.764237706.48957.6999311136.611453.914301.61727019298.320950.323953.628572.4

Claims on other financial institutions6.87461627.62040.51678.32366.73385.22572.8

Other items-243.4-213.3-78.2-215.4-124.4104.747-134.7-496.3-293.7-282.4-113.8-1936.4-2279.4-2650.4-2520.7-4399.9-7396.8

Money supply (M2) annual change, percent34.226.531.337.334.529.525.319.614.814.712.317.616.919.614.917.615.716.7

M2 (% of GDP) at current market prices81.988.894.498.797.499.9106.9115.2123.8133.7135.7144.4153.7162.9158.9162.5163.1161.7

Central Government

199019911992199319941995199619971998199920002001200220032004200520062007

Total revenue and grants

Total revenue293.7315347.7432.9521.8624.2740.8865.1987.61144.51339.51638.61889.82170.52637.8316538765130.4

Current revenue293.7315347.7432.9521.8624.2740.8865.1987.61144.51339.51638.61889.82170.52637.8316538765130.4

Taxes282.2299329.1423.5512.7603.8691823.4926.31068.31258.11530.11763.12000.72416.62877.934814561.3

Nontaxes11.515.918.79.49.120.449.841.761.376.281.4108.5126.7169.8221.2287.1395569.1

Capital receipts

Grants

Total expenditure and net lending

Total expenditure345.3381.4866.710151188.21409.61616.61914.32205.324652848.733934042.34956.5

Current expenditure o272.7307.4274.3332.8420.7512653.6769.6909.810651253.41498.11762.62015.1

Capital expenditure p 72.674............213.1245.4278.4344.6363.2416.2464.6468.2

Net lending

Current surplus/deficit217.674102.1101.1112.387.295.577.879.486.1140.5127.8156.5

Capital account surplus/deficit -72.6 -74.0 ... ... ... ... -213.1 -245.4 -278.4 -344.6 -363.2 -416.2 -464.6 -468.2 217.674102.1101.1112.387.295.577.879.486.1140.5127.8156.5

Overall budgetary surplus/deficit-51.6-66.4............-125.9-149.9-200.6-265.2-277.1-275.7-315-293.5-209-228.1-166.3173.9

Financing

Domestic borrowing9.419.939.631.5102.9151.1184.8241.2322.9370.2415.4448.4566602.9672.6692.3

Foreign borrowing17.81820.935.814.73.9126.58.2-7.32.312.1...12.114.5...

Use of cash balances24.428.5............-70.8-97.8-130.5-97.7-140.6-184.7-219.7-303.2-486...

Government Finance percent of GDP at current market prices

Total revenue15.714.512.912.310.810.310.41111.712.813.514.915.71616.517.218.320.6

Total expenditure18.517.512.212.914.115.716.317.518.318.117.818.519.119.9

Overall budgetary surplus/deficit-2.8-3-1.8-1.9-2.4-3-2.8-2.5-2.6-2.2-1.3-1.2-0.80.7

Total308.4338.7374.2464.2579.3682.4793.8923.41079.81318.81588.71890.32205.324652848.733934042.34956.5

General public services30.334.442.553.672.987.3104.1113.7132.7152.6178.8219.8314.3342.9343.8404.1439...

Defence293337.842.655.163.77281.393.5107.6120.8144.2170.8190.8220247.5297.9...

Education q73.88562.275.5101.9119.4..................397.9450.6514.4610.4742.6...

Health

Social security and welfare5.56.76.77.59.511.612.814.232.180.473.9133.5182.9176.1208.3253.4302.2...

Housing and community amenities

Economic services r154.6160.9182.1...........................667.4691.2793.3931.7......

Agriculture22.224.426.932.340435156.162.667.876.791.8110.3113.5169.4179.2214.8...

Industry

Electricity, gas, and water

Transport and communications s4.75.26.57.610.110.31213.612.212.8152023.228.536.844.4......

Other economic services127.8131.3148.7...........................533.9549.2587.1708......

Others...22.3..............................472613.4768.9945.9......

OUTPUT

199019911992199319941995199619971998199920002001200220032004200520062007

Mining

1. Crude petroleum138310140990142100145240146080150050157334160741161000160000163000163960167000169600175870181350183680186657

2. Iron ore, iron content6238067650758908739097410105293107225115114118637125392131015155543170846213667268310343752404167469446

3. Coal million metric tons10801087111611501240136113971373125010459981381145517221992220523822536

Manufacturing

1. Cement209710252610308220367880421180475606491189511738536000573000597000661040725000862081966820106884812350001360000

2. Crude steel663507100080940895609261095360101241108942115590124260128500151630182366222336282911353240422660489660

3. Nitrogenous fertilizers146361510115705152561736318592213612074922257247202398125274280852814533577380903869041871

4. Phosphate fertilizers4114459746224190504466266512714666686361663075268010978112468120621226412567

Agriculture 1999 2001 = 10060.963.266.171.574.880.685.989.993.396.3100.4103.4108.4111.1118.3122.6127.4

Mining 1978 | 2001 = 100..................126.6126.5118.7109.299.9|100108.3100.295.8.........

Manufacturing 1980 | 2001 = 100..................84.790.893.7101109.1|100109.4117.5129.9.........

Production138141142145146150157161161160163164167170176181185187

Exports3129292524252728231622202125222926...

Imports81221362937456857659791103132173172195...

Consumption115124134147150161174197198211224228248271317325349...

Production10801087111611501240136113971373125010459981381145517221992220523732536

Exports1720202024293631323755908494877263...

Imports2111123222231111192638...

Consumption10551104114112091285137714471392129512641245126213661637193621672392...

Production151616171818202323252730333541495969

Consumption151616222324222020...25273334404856...

Production6216787548389281008108011341166123913561481165419112203250028663278

Exports00004647791010101091112...

Imports23552100002223355...

Consumption623680759843926100210761128116012311347146316331903219724942859...

Growth of World Exports10 March, 2010AV*

AV

Investment Rate: China/India10 March, 2010AV*

AV

Tri-polar: USA, China, India20th August 2010TripolarInstPeace:av*

TripolarInstPeace:av

10 March, 2010AV*Global ImplicationBi-Polar (USA-China): 2020

US Fallibility => China Confidence => Global Assertiveness

Tri polar(US-China-India): 2035

Quadri-polar? EU- Opposite pulls

AV

10 March, 2010AV*CONCLUSIONIndia: Return to high growth path (8.5 -9%) by 2011-12Growth: Chinas < Indias (mid-decade) Can offset external demand by public investment for ~ 5 years (i.e. till 2012)China: Model change(2013-15)Demand: Export => DomesticPSU saving-inv => Private Income-Cons PSU investment: Manf. => ServicesPublic Inf expend: Physical => Social

AV

**Address at a World Bank-Korean Development Institute seminar, What Do We Mean by Export Competitiveness and How Do Countries Achieve It in an Uncertain World, on March 10, 2010 in Seoul. http://info.worldbank.org/etools/docs/WBIvideos/avirmani/avirmani.html . An earlier version is available at CPR website: http://www.cprindia.org/semiid.php?s=82 . CPR = Centre for Policy Research, New Delhi.**References: Arvind Virmani, Chinas Socialist Market Economy: Lessons of Success, Occasional Policy Paper, ICRIER, April 2005. Also WP 121, WP 122 and WP 160. See also Planning Commission Working Paper (under tag reports) on same topic.****Virtual Hero worship of USA by segments of the Party has been shattered. It is fallible, not a God!S China Sea is a Core National Interest.*18th August, 2010AV:CPR18th August, 2010*References: Arvind Virmani, Chinas Socialist Market Economy: Lessons of Success, Occasional Policy Paper, ICRIER, April 2005. Also WP 121, WP 122 and WP 160. See also Planning Commission Working Paper (under tag reports) on same topic.**Household saving rate about 25%, India about 20-22%. Indian PSUs required to pay minimum 20% of after tax profits as dividend.**Lardy (1999): SOE Return on capital has declined from 25% at the beginning of reforms to 6% in 1998.Chinas Socialist Market Economy: Lessons of Success, Arvind Virmani, Occasional Policy Paper, ICRIER, April 2003.**Variant of Market Socialism a la Oskar Lange(1938). Debated by Aba P Lerner.Market reform (liberalisation) and Institutional reform (management of assets/firms)Not a Socialist/communist economy like the USSR. N Korea & Cuba are red herrings (incompetent)Not a Nationalist Market Economy like Japan (1950s), S. Korea (1960-1980); Singapore, Goal similar but latter have clearer democratic impulse in the form of a Social Welfare Constraint. Greater role of Corporate Capitalism (Zaibatsu, Chaebols) in maximizing growth through reinvestment of profits and in exports. Greater efficiency & innovation than CCP bureaucrats/managers. Use of (adaptation of) existing institutions (Japan)(Not a Democratic Market Economy like USA, India).Objectives and broad approach is passed down to the lowest level, operational freedom/flexibility increases as we go down the hierarchy.China 2nd largest exporter in 2008 overtaking USA.Largest in 2009 exceeding Germany, with close to 10% of global exports.In 1990s share doubled from 2%(historical peak) to 4%.In 2000s it accelerated amazingly, to double to 8% in the next seven years.This is a faster rise in share than Japan in the 1960s or in the 1980s.Share of the three other large countries/exporters has been on a declining trend (Japan since mid-1980).Singapore and Korea, in which exports played a major /significant role in growth model/ development strategy had/have a small share of world exports, when compared to China. Thailand where exports played an intermediate role and India where they played a purely supporting role are also shown. Korea exports also showed phenomenal growth during 1970s and early 1980s. Singapore export growth was more fitfull but almost identical between over two decades to 1994. However export led model reached its limit for both countries in the 1990s with a maximum share of 2.75% for Korea and 2.3% for Singapore. Contrast: Thailand,s export share was rising quickly only from mid 1980 to mid 1990. Indias export share has just risen to its previous peak in early 1960. At about 1%, miniscule 1/10th of Chinas. Chinas size means that export-led model is likely to reach its limits much earlier than Koreas per capita income level.Even scaling for the larger size of Chinas economy, exports are much more important to it than they were for Korea and Singapore. This started in the 1990s and accelerated sharply in the 2000s, when exports became more important to its economy than they were to Japans. It is therefore likely to be the worst sufferer from the collapse in World demand for exports. Note that Indias share of exports in GDP has tracked Thailands and is now almost identical.BOP and foreign exchange management support the Investment-Export strategy. Rising merchandise trade surpluses (BOT/BOG) and Current account balances since 2004. Resulted in a current account surplus of over 12% of GDP in 2008. Macro-economic balance requires that exchange rate appreciate over time, unless the economy has an offsetting capital outflow. On the contrary China had a rising capital inflow in 2000s (gap between green and red line) that raised the capital surplus to 14.1% of GDP in 2007. Together these would have resulted in an appreciation that would bring imports and exports into balance. This would be inconsistent with it. Consequently the exchange rate has been kept virtually unchanged, with the marginal appreciation in 2005, 2006 halting the rise only in these years.What are the implications and consequences of this growth model for Chinas economy. This is seen in the contribution of different elements of demand in overall growth. (1) During 2003 to 2007, the contribution of the increase in private consumption to growth at 27% was about half the 53.7% contribution of gross domestic investment. (2) The contribution of net exports at 20% was more than 2/3rd that of private consumption and a little less than double that of govt consumption. (3) Interestingly the contribution of investment demand to GDP growth during this high growth period for India was even larger in India (57%)-partly because entire manufacturing sector had to be restructured. (4) It is in the other three components of demand where the differences are most stark: Private consumption at 46% continued to play a large role in demand growth, but the contribution of net exports was a negative 15% i.e. it reduced demand on balance. (5) Contribution of net exports declined tremendously in India from the previous 10 years, while that in China increased substantially. This confirms the difference in vulnerability to decline World demand for exports. (6) The contribution of private consumption during our high growth period was larger than its contribution in China during 1991-2002, when also its economy was growing fast. Chinas Investment-export led model shows not only high investment rates but also exceptionally low private consumption rates. This figure compares its consumption rates with other Asian HGEs which had high saving-investment rates and/or export led growth. Its private consumption to GDP rate has been on a down trend since 1990 and was the lower than Singapore in the 2000s. Koreas private consumption rate has the same as Chinas has tended upward through this period. Japans private consumption rate has been relatively high, higher even than Thailand. Indias position as the country with the highest private consumption rate has however been lost in 2006 because of investment led growth during 2003 to 2007. Exports of manufactured goods have doubled from about 40% of GDP from manufacturing during the 1990s to over 80% of manf. GDP in 2007 (left scale). Net exports of manufactures (exports-imports), have increased to 28% of GDP from manufacturing. If this taken as a rough measure of value added content of manufactured exports, they are almost a third of GDP from manufacturing. Import substitution in manufacturing is therefore an essential element of the investment-import growth model.The historical pattern of World trade growth provides an indication of what is likely to happen in the next 3 to 5 years. Sharp upticks in World trade is followed by a decline when GDP growth slows. (revised figure).The historical pattern of World trade growth provides an indication of what is likely to happen in the next 3 to 5 years. Sharp upticks in World Uni polar => Bi-polar => Tri-Polar -> Quadri-polar?. EU virtual state prospects are receding at this time, but could make come back in future possibility of quadri-polar by mid-century. Multi-polar fringe.*18th August, 2010AV:CPR**Short Term: Monetary and Fiscal expansion to counter negative impact of US crisis on Indian demand.Medium Term: Fiscal reform (subsidies, taxes, expenditure-UID); Capital Inflow(FDI, , Capital Markets(corporate debt); De-control (Sugar, Petrol, diesel, fertiliser, drugs, education), Energy(open access), Investment-Productivity (PPP).**Short Term: Monetary and Fiscal expansion to counter negative impact of US crisis on Indian demand.Medium Term: Fiscal reform (subsidies, taxes, expenditure-UID); Capital Inflow(FDI, , Capital Markets(corporate debt); De-control (Sugar, Petrol, diesel, fertiliser, drugs, education), Energy(open access), Investment-Productivity (PPP).