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How to Invest in China Kevin Liu. China Risks Overview. Key Judgment: The primary risks are political and civil unrest, caused by rising external challenges to the regime. Full-blown military conflict is unlikely unless Taiwan moves towards independence - PowerPoint PPT Presentation
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How to Invest in China
Kevin Liu
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Key Judgment: The primary risks are political and civil unrest, caused by rising external challenges to the regime.
China Risks Overview
• Full-blown military conflict is unlikely unless Taiwan moves towards independence
• The threat of Uyghur separatism has declined due to effective counterterrorism measures
• Widening social and economic inequality is at the root of unrest, which is greatest in the central and coastal provinces
• The internal struggle for control of the Communist Party is unlikely to undermine its authority before 2012
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Key Judgment: The Fifth Generation of Chinese leaders will be even more pro-business than their predecessors.
Fifth Generation of Chinese Leadership
• The ‘Harmonious Society’ – China’s peaceful rise based on economic growth
• Promote growth in the western and north-eastern provinces
• Accelerate growth and competitiveness of Chinese multinationals
• Ideologically conservative – hard-line policy on Taiwan and Tibet
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Key Judgment: Chinese multinationals face problems of skills shortages and an unfavourable Western perception.
Chinese Overseas Investment
• Overseas expansion of consumer brands is a growth priority
• Chinese overseas investment is dominated by state-owned companies
• Short of skills in brand marketing and overseas management
• Persistent foreign perception of China as producer of cheap goods
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Key Judgment: Moderate resurgence of bad loans & bankruptcies in the 5-yr outlook is unlikely to cause a full-blown financial crisis.
China’s Financial Landscape
• Growing number of experienced professional managers in the financial sector
• Consolidation of small and regional commercial banks• Asset management companies absorbing non-performing
loans• Strong state support for Big Five banksBUT• Likely bankruptcies in industries serving the construction &
auto sectors; conflict between Beijing & local governments over fiscal policy likely to increase
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Key Judgment: China’s primary energy concerns are promoting energy efficiency and security of supply.
Power and Environmental Issues
• China will become a major market for the carbon emissions credits scheme
• Opportunities in clean energy development
• Tougher environmental laws will target foreign companies
• Security of supply: South Asia and South Pacific
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