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Analysis: The days of 8% GDP growth for China are closer than expected

TaiShang

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Analysis: The days of 8% GDP growth for China are closer than expected

Edgar Perez




Editor's Note: Edgar Perez is a global keynote speaker and author on Financial Technology and Artificial Intelligence. He can be reached through his website at MrEdgarPerez.com. The article reflects the author's opinion, and not necessarily the views of CGTN.

A few years ago, Marc Andreessen, the legendary founder of Netscape, was asked to describe how his venture capital firm's referral network worked. He pointed out that it wasn't unusual to receive around two thousand referral a year for startups to invest into, a large percentage of which were coming through seed investors or angels. "So by far the best way to get the introductions to the A stage venture firms is to work through the seed investors," he concluded.

Seed investors or angels constitute the most straightforward financing mechanism for startups before venture capital firms become involved; think of the investors who gave Alibaba $5 million on October 1999. Now the number of seed investors in China for companies across all industries is set to exhibit significant growth as the number of high net-worth individuals expands. The recently released Hengchang Shaofang·Hurun China Rich List 2020, which carefully ranks the richest individuals in China, just documented the biggest ever wealth increase in the country. According to Rupert Hoogewerf, Hurun Report's chairman, "stock markets boom and a flurry of new listings have minted five new dollar billionaires in China a week for the past year."

The fact that the country has today 878 billionaires, up 257 from last year
, augurs well for a positive trend for new economy startups. Half of the members of the list live in the Big Six cities – Beijing, Shenzhen, Shanghai, Hangzhou, Guangzhou and Suzhou, all of which are well-known entrepreneur ecosystems. That is precisely the type of environment, aided by the continuous influx of talent, the progressive emergence of world-class universities and the growing interest from established corporations, that catapulted Silicon Valley to the forefront of the tech world, growing firms as innovative as Intel, HP, Apple and Google.

The aphorism "success breeds success" is widely expected to be authoritatively demonstrated with Ant Group's upcoming $35 billion dual-listing, which will be simultaneously launched in Hong Kong and Shanghai a few days after the U.S. presidential election on November 3. The watershed listing could be the world's largest initial public offering, surpassing the record set by Saudi Aramco's $29.4 billion transaction last December. Out of Ant Group's approximately 20,000 former and current employees, the company is expected to mint eighteen new billionaires and countless new millionaires across Hangzhou, Beijing and other major hubs. The sudden financial windfall spells great news for the startup communities in each of these cities as their opportunities to get funding increase.

The continued emergence of new companies with conscious aspirations to become the next Ant Group should provide a renewed enthusiasm for the Chinese economy. While its GDP growth rate has slowed down considerably since the last decade, from 14.2 percent in 2007 to the projected 2.1-2.3 percent for 2020, this compares favorably with the U.S., for instance, which will contract 4.3 percent this year, according to the IMF. Indeed, early signs of the recovery of the economy post-COVID-19 came with the announcement that GDP growth in the third quarter of 2020 reached 4.9 percent, a considerable improvement over the prior quarter. Ant Group's IPO, a seminal moment for the world's financial markets, bodes well for the return of the days of 8-percent GPD growth for China, as soon as 2021.

 

Chakar The Great

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China is an example for the world to follow.


What I don't understand is why doesn't China spend money in Pakistan??? Why not investment by China?? At least 300-400 $ Billion should be invested to industrialise Pakistan.
 
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Too many finance billionaires is not good. They still need to be kept under control to make sure that money is not tied up in paper assets or speculation, and that there is sufficient credit for real advancements in technology and production.
 

EGalois

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The more than 8% growth in 2021 is largely due to the relatively low growth (~2.0% per IMF forecast) this year. It's hard to imagine that 8% growth can last.

For the next decade or so, a relatively reasonable growth rate would be around 5%.
 

hualushui

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What I don't understand is why doesn't China spend money in Pakistan??? Why not investment by China?? At least 300-400 $ Billion should be invested to industrialise Pakistan.
Pakistan's internal political forces have influenced Chinese investment.
In addition, the Chinese government can order state-owned enterprises to invest in large-scale infrastructure projects, but cannot order private enterprises to invest in textile factories
 

TheTruth

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What I don't understand is why doesn't China spend money in Pakistan??? Why not investment by China?? At least 300-400 $ Billion should be invested to industrialise Pakistan.
It looks like CPEC is setting the groundwork for it. Need robust transport and energy infrastructure as a first step.
 

925boy

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What I don't understand is why doesn't China spend money in Pakistan??? Why not investment by China?? At least 300-400 $ Billion should be invested to industrialise Pakistan.
CHina already gave Pakistan CPEC....that was A BIG DEAL tbh...
 

Brainsucker

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Analysis: The days of 8% GDP growth for China are closer than expected

Edgar Perez




Editor's Note: Edgar Perez is a global keynote speaker and author on Financial Technology and Artificial Intelligence. He can be reached through his website at MrEdgarPerez.com. The article reflects the author's opinion, and not necessarily the views of CGTN.

A few years ago, Marc Andreessen, the legendary founder of Netscape, was asked to describe how his venture capital firm's referral network worked. He pointed out that it wasn't unusual to receive around two thousand referral a year for startups to invest into, a large percentage of which were coming through seed investors or angels. "So by far the best way to get the introductions to the A stage venture firms is to work through the seed investors," he concluded.

Seed investors or angels constitute the most straightforward financing mechanism for startups before venture capital firms become involved; think of the investors who gave Alibaba $5 million on October 1999. Now the number of seed investors in China for companies across all industries is set to exhibit significant growth as the number of high net-worth individuals expands. The recently released Hengchang Shaofang·Hurun China Rich List 2020, which carefully ranks the richest individuals in China, just documented the biggest ever wealth increase in the country. According to Rupert Hoogewerf, Hurun Report's chairman, "stock markets boom and a flurry of new listings have minted five new dollar billionaires in China a week for the past year."

The fact that the country has today 878 billionaires, up 257 from last year
, augurs well for a positive trend for new economy startups. Half of the members of the list live in the Big Six cities – Beijing, Shenzhen, Shanghai, Hangzhou, Guangzhou and Suzhou, all of which are well-known entrepreneur ecosystems. That is precisely the type of environment, aided by the continuous influx of talent, the progressive emergence of world-class universities and the growing interest from established corporations, that catapulted Silicon Valley to the forefront of the tech world, growing firms as innovative as Intel, HP, Apple and Google.

The aphorism "success breeds success" is widely expected to be authoritatively demonstrated with Ant Group's upcoming $35 billion dual-listing, which will be simultaneously launched in Hong Kong and Shanghai a few days after the U.S. presidential election on November 3. The watershed listing could be the world's largest initial public offering, surpassing the record set by Saudi Aramco's $29.4 billion transaction last December. Out of Ant Group's approximately 20,000 former and current employees, the company is expected to mint eighteen new billionaires and countless new millionaires across Hangzhou, Beijing and other major hubs. The sudden financial windfall spells great news for the startup communities in each of these cities as their opportunities to get funding increase.

The continued emergence of new companies with conscious aspirations to become the next Ant Group should provide a renewed enthusiasm for the Chinese economy. While its GDP growth rate has slowed down considerably since the last decade, from 14.2 percent in 2007 to the projected 2.1-2.3 percent for 2020, this compares favorably with the U.S., for instance, which will contract 4.3 percent this year, according to the IMF. Indeed, early signs of the recovery of the economy post-COVID-19 came with the announcement that GDP growth in the third quarter of 2020 reached 4.9 percent, a considerable improvement over the prior quarter. Ant Group's IPO, a seminal moment for the world's financial markets, bodes well for the return of the days of 8-percent GPD growth for China, as soon as 2021.

Welcome back.
 

mike2000 is back

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It looks like CPEC is setting the groundwork for it. Need robust transport and energy infrastructure as a first step.
Well, if a government/system is corrupt, incompetent and doesn't know it's priorities then no matter how much you invest there it won't change as much as it should since the wealth and impact won't be spread enough around the country to lift the country out of its decrepit state due to how the system is.

What is usually needed is complete change of mindset by the people and the elite, reform of the education system and policies , adopt and Maintain a reasonable government regulation which creates a fair playing field for all economic participants, Provide quality education and training( so you can have young talented workforce to help grow your companies and foreign ones who invest there ), Promote innovation and entrepreneurship while making it easy for small and medium sized firms to do business, ecourage provincial and municipal governments to pursue their own economic growth initiatives in tandem with their local private sectors (so make regional leaders priorities ans how they are judged on their economic performance via a vis other states and reward the best ones , i.e a meritocratic regional system instead of a religious/populist/political based policies ), adopt policies to limit corruption to a tolerable level which doesn't harm the economy or business activities etc etc. There are a few key things a poor underdeveloped country needs to rise up and develope itself . However for that to happen you need a national/countrywise rebirth and acknowledgement of their present situation and the need for that to Change and also the government role in reforming and changing itself( this will mean deep reforms which might hurt or affect several political big players but which will be better for the Country in the long term. However not every country leaders/government usually has the courage and ability to carry out such a drastic changes like for example Deng Xiaoping did in China despite stiff resistance and persecution he faced by the Maoists who wanted the status quo to remain since it favoured them and their ideology.
so Pakistan will have to make rough choices. Investing billions of dollars by foreign countries like China here and there won't change much if the core is still rotten and the system corrupt/outdated policies.
 

TheTruth

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Corruption does tend to go down as a country develops, as incentives for graft and bribery go down when salaries go up
 

redtom

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What I don't understand is why doesn't China spend money in Pakistan??? Why not investment by China?? At least 300-400 $ Billion should be invested to industrialise Pakistan.
Economic development brings about social change and change of power. Are you sure everyone inside Pakistan wants economic development? Because of its policy of non-intervention, China has little influence over the internal political struggle in Pakistan.
 

Kai Liu

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What I don't understand is why doesn't China spend money in Pakistan??? Why not investment by China?? At least 300-400 $ Billion should be invested to industrialise Pakistan.
Investment in infrastructure comes first, then in industry and service sectors, etc.
 

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