CHINA ECONOMIC
ANALYSIS 1990 -2014
Economic Variables
• The History of China’s Economic Development • China’s Economy Prior to
Reforms• Causes of China’s Economic
Growth• Measuring the
Size of China’s Economy• Foreign Direct Investment
(FDI) in China
• Financial Analysis Tools GDP Per capita GDP Annual Average Growth Rate
(AAGR) Present – Future Values (PV-FV) Pension Issue (ex) Bank Comparison
The History of
China’s Economic Development
• FROM 1979 TO 2013
• CURRENCY VALUES ACROSS 2000
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China’s Economy Prior to Reforms
LOCAL
NATIONALINTERNATIONAL
INDEX
Causes of China’s Economic Growth
• China’s real GDP growth averaged
• MADDISON PROJECT DATABASE
• UNIVERSITY OF PENNSYLVANIA
PER CAPITA GDP
1989-2010
2000-2014
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Measuring the Size of China’s Economy
Causes of China’s Economic Growth Economists generally attribute much of China’s rapid economic growth to two
main factors
large-scale
capital investme
nt
rapid productivity
growth
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Foreign Direct Investment (FDI) in China
CURRENCY
OPTIMUM AREA
Chinese industries or firms favored
by the government, and its failure to take
effective
Other concerns relating to
China’s economic growth
China’s Share of Global
Merchandise Exports: 1990-
2013
Comparisons of Chinese, Japanese, and U.S. GDP and Per Capita GDP in
Nominal U.S. Dollars and a
Purchasing Power Parity Basis: 2013
STOCK-EXCHANGE
RATE
China’s Merchandise Trade: 2000-
2013
Major Chinese Imports: 2013
Major Destinations of
Chinese Overseas Direct Investment in 2012: Flows and
Stock
According to U.S. trade data, total trade
between the two countries grew from $5 billion in 1980 to an estimated $562
billion in 2013INDEX
GDP• The gross domestic product (GDP) is one of the primary indicators
of a country's economic performance. It is calculated by either adding up everyone's income during the period or by adding the value of all final goods and services produced in the country during the year. • Per capita GDP is sometimes used as an indicator of standard of
living as well, with higher per capita GDP being interpreted as having a higher standard of living.
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Per capita GDP• Gross domestic product (GDP) is defined by OECD as "an aggregate
measure of production equal to the sum of the gross values added of all resident institutional units engaged in production (plus any taxes, and minus any subsidies, on products not included in the value of their outputs)."
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Annual Average Growth Rate (AAGR)
http://www.economist.com/content/global_debt_clock
GDP
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• Fundamental analysis is the study of a company’s accounting statements and future
prospects to determine its value.• People can employ fundamental analysis to try to
determine if a stock is undervalued, overvalued, or fairly valued.
Present – Future Values (PV-FV)
You are thinking of buying a six-acre lot for $70,000. The lot will be worth $100,000 in five years.
A. Should you buy the lot if r = 0.05?
B. Should you buy it if r = 0.10?
Use FVt = future value at time t
PV = value today (present value) t
ttt
tt
r
FVrFVPV
rPVFV
)1()1(
)1(
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