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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